Annual report
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Table of contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-K (Mark One) þ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2024 OR o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACTOF 1934 For the transition period from to Commission File Number: 814-00939 MSC Income Fund, Inc. (Exact name of registrant as specified in its charter) Maryland (State or other jurisdiction of incorporation or organization) 45-3999996 (I.R.S. Employer Identification No.) 1300 Post Oak Boulevard, 8th Floor Houston, TX (Address of principal executive offices) 77056 (Zip Code) (713) 350-6000 (Registrant’s telephone number, including area code) Securities registered pursuant to Section 12(b) of the Act: Title of Each Class Trading Symbol Name of Each Exchange on WhichRegistered Common Stock, par value $0.001 per share MSIF New York Stock Exchange Securities registered pursuant to Section 12(g) of the Act: None Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes þ No o Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes o No þ 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 (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files). Yes þ No o Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act. Large accelerated filer o Accelerated filer o Non-accelerated filer þ Smaller reporting company o Emerging growth company o If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. o If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. o Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). o Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No þ
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The aggregate market value of the registrant’s common stock held by non-affiliates of the registrant as of June 28, 2024 has not been provided because trading of the registrant’s common stock on the New York Stock Exchange did not commence until January 29, 2025. The number of shares outstanding of the issuer’s common stock as of March 19, 2025 was 46,849,531. DOCUMENTS INCORPORATED BY REFERENCE None.
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Table of contents TABLE OF CONTENTS PART I Item 1. Business 3 Item 1A. Risk Factors 18 Item 1B. Unresolved Staff Comments 42 Item 1C. Cybersecurity 42 Item 2. Properties 43 Item 3. Legal Proceedings 43 Item 4. Mine Safety Disclosures 43 PART II Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of EquitySecurities 44 Item 6. [Reserved.] 46 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 47 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 59 Item 8. Consolidated Financial Statements and Supplementary Data 62 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 162 Item 9A. Controls and Procedures 162 Item 9B. Other Information 162 Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections 162 PART III Item 10. Directors, Executive Officers and Corporate Governance 163 Item 11. Executive Compensation 168 Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 169 Item 13. Certain Relationships and Related Transactions, and Director Independence 171 Item 14. Principal Accountant Fees and Services 172 PART IV Item 15. Exhibits and Consolidated Financial Statement Schedules 173 Signatures 176
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Table of contents CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS This Annual Report on Form 10-K contains forward-looking statements regarding the plans and objectives of management for future operations and which relate to future events or our future performance or financial condition. Any such forward-looking statements may involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements to be materially different from future results, performance or achievements expressed or implied by any forward-looking statements. Forward-looking statements, which involve assumptions and describe our future plans, strategies and expectations, are generally identifiable by use of the words “may,” “will,” “should,” “expect,” “anticipate,” “estimate,” “believe,” “intend” or “project” or the negative of these words or other variations on these words or comparable terminology. These forward-looking statements are based on assumptions that may be incorrect, and we cannot assure you that the projections included in these forward-looking statements will come to pass. Our actual results could differ materially from those expressed or implied by the forward-looking statements as a result of various factors, including, without limitation, the factors discussed in Item 1A entitled “Risk Factors” in this Annual Report on Form 10-K and elsewhere in this Annual Report on Form 10-K and in other filings we may make with the Securities and Exchange Commission (“SEC”) from time to time. Other factors that could cause actual results to differ materially include changes in the economy and future changes in laws or regulations and conditions in our operating areas. We have based the forward-looking statements included in this Annual Report on Form 10-K on information available to us on the date of this Annual Report on Form 10-K, and we assume no obligation to update any such forward-looking statements, unless we are required to do so by applicable law. However, you are advised to refer to any additional disclosures that we may make directly to you or through reports that we in the future may file with the SEC, including subsequent annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K. 2
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Table of contents PART I Item 1. Business ORGANIZATION MSC Income Fund, Inc. (“MSIF” or, together with its consolidated subsidiaries, “MSC Income” or the “Company”) is a principal investment firm primarily focused on providing debt capital to private (“Private Loan”) companies owned by or in the process of being acquired by a private equity fund (its “Private Loan investment strategy”). MSC Income’s portfolio investments are typically made to support leveraged buyouts, recapitalizations, growth financings, refinancings and acquisitions of companies that operate in diverse industry sectors. MSC Income seeks to partner with private equity fund sponsors in its Private Loan investment strategy and primarily invests in secured debt investments of Private Loan companies generally headquartered in the United States. MSC Income also maintains a portfolio of customized long-term debt and equity investments in lower middle market (“LMM”) companies (its “LMM investment portfolio”), and through those investments MSC Income has partnered with entrepreneurs, business owners and management teams in co-investments with Main Street Capital Corporation (“Main Street”), a New York Stock Exchange (“NYSE”) listed BDC, utilizing the customized “one-stop” debt and equity financing solution provided in Main Street’s LMM investment strategy (the “LMM investment strategy”). Through the LMM investment strategy, MSC Income primarily invested in secured debt investments, equity investments, warrants and other securities of LMM companies typically based in the United States. Effective upon the MSC Income Listing (as defined below) on January 29, 2025, MSC Income changed its investment strategy for investments in new portfolio companies to be solely focused on its Private Loan investment strategy, rather than its historical focus primarily on its Private Loan investment strategy and secondarily on the LMM investment strategy (as further discussed below). MSC Income also maintains a legacy portfolio of investments in larger middle market (“Middle Market”) companies (its “Middle Market investment portfolio”) and a limited portfolio of other portfolio (“Other Portfolio”) investments. MSC Income’s Middle Market investments are generally debt investments in companies owned by a private equity fund that were originally issued through a syndication financing process. MSC Income has generally stopped making new Middle Market investments and expects the size of its Middle Market investment portfolio to continue to decline in future periods as its existing Middle Market investments are repaid or sold. MSC Income’s Other Portfolio investments primarily consist of investments that are not consistent with the typical profiles for its Private Loan, LMM or Middle Market portfolio investments, including investments in unaffiliated investment companies and private funds managed by third parties. Similar to its Middle Market investments, MSC Income has generally stopped making new Other Portfolio investments and expects the size of its Other Portfolio to continue to decline in future periods as its existing Other Portfolio investments are repaid or sold. The “Investment Portfolio,” as used herein, refers to all of MSC Income’s investments in Private Loan portfolio companies, investments in LMM portfolio companies, investments in Middle Market portfolio companies and Other Portfolio investments. MSIF was formed in November 2011 to operate as an externally managed business development company (“BDC”) under the Investment Company Act of 1940, as amended (the “1940 Act”). MSIF has elected to be treated for U.S. federal income tax purposes as a regulated investment company (“RIC”) under Subchapter M of the Internal Revenue Code of 1986, as amended (the “Code”). As a result, MSIF generally does not pay corporate-level U.S. federal income taxes on any net ordinary taxable income or capital gains that it distributes to its stockholders. On October 28, 2020, MSC Income’s stockholders approved the appointment of MSC Adviser I, LLC (the “Adviser”), which is wholly-owned by Main Street, as MSC Income’s investment adviser and administrator under an Investment Advisory and Administrative Services Agreement dated October 30, 2020 (the “Prior Investment Advisory Agreement”). On January 29, 2025, in connection with the MSC Income Listing (as defined below), MSC Income entered into an Amended and Restated Investment Advisory and Administrative Services Agreement (the “Advisory Agreement”) with the Adviser. The Advisory Agreement was approved by the affirmative vote of the holders of a majority of MSC Income’s outstanding voting securities, as defined in the 1940 Act, at a special meeting of MSC Income’s stockholders held on December 11, 2024 (the “2025 Special Meeting”), to become effective upon the MSC Income Listing. In such role, the Adviser has the responsibility to manage the business of MSC Income, including the responsibility to identify, evaluate, negotiate and structure prospective investments, make investment and portfolio management decisions, monitor MSC Income’s Investment Portfolio and provide ongoing administrative services. 3
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Table of contents On January 30, 2025, MSC Income closed a follow-on public offering of 5,500,000 shares of its common stock, at the public offering price of $15.53 per share, in connection with which MSC Income’s shares of common stock were listed and began trading on the NYSE under the ticker symbol “MSIF” on January 29, 2025 (the “MSC Income Listing”). In addition, on February 3, 2025, MSC Income issued and sold 825,000 additional shares of its common stock, at the public offering price of $15.53 per share, pursuant to the underwriters’ full exercise of their overallotment option. Net of underwriting discounts and commissions and offering expenses, MSC Income received net cash proceeds of approximately $91 million in connection with the follow-on public equity offering. Additionally, on December 16, 2024, in advance of the MSC Income Listing, the Company effectuated a 2-for-1 reverse stock split of its outstanding common stock pursuant to approval from the Board of Directors (the “Reverse Stock Split”). As a result of the Reverse Stock Split, every two shares of MSC Income’s issued and outstanding common stock were converted into one share of issued and outstanding common stock, without any change in the par value per share or the number of authorized shares of its common stock. Unless otherwise indicated, all figures in this Annual Report on Form 10-K reflect the implementation of the Reverse Stock Split. MSIF has certain direct and indirect wholly-owned subsidiaries that have elected to be taxable entities (the “Taxable Subsidiaries”). The primary purpose of the Taxable Subsidiaries is to permit MSIF to hold equity investments in portfolio companies which are “pass-through” entities for tax purposes. MSIF also has certain direct and indirect wholly-owned subsidiaries formed for financing purposes (the “Structured Subsidiaries”). Unless otherwise noted or the context otherwise indicates, the terms “we,” “us,” “our,” the “Company” and “MSC Income” refer to MSIF and its consolidated subsidiaries, which include the Taxable Subsidiaries and the Structured Subsidiaries. The following diagram depicts our organizational structure: ___________________________ (1) The Taxable Subsidiaries and Structured Subsidiaries were formed for operational purposes. Each of these companies is directly or indirectly wholly-owned by MSIF. CORPORATE INFORMATION Our principal executive offices are located at 1300 Post Oak Boulevard, 8 Floor, Houston, Texas 77056. We maintain a website on the Internet at www.mscincomefund.com. We make available free of charge on our website our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and all amendments to those reports as soon as reasonably practicable after such material is electronically filed with or furnished to the SEC. Information contained on our website is not incorporated by reference into this Annual Report on Form 10-K, and you should not consider that information to be part of this Annual Report on Form 10-K. Our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and all amendments to those reports and other public filings are also available free of charge on the EDGAR Database on the SEC’s website at www.sec.gov. OVERVIEW OF OUR BUSINESS Our principal investment objective is to maximize our investment portfolio’s total return, primarily by generating current income from our debt investments and, to a lesser extent, by generating current income and capital appreciation th 4
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Table of contents from our equity and equity-related investments, including warrants, convertible securities and other rights to acquire equity securities in a portfolio company. We seek to achieve our investment objective through our Private Loan investment strategy and our LMM investment portfolio. Our Private Loan investment strategy involves investments in companies that generally have annual revenues between $25 million and $500 million and annual earnings before interest, tax, depreciation and amortization expenses (“EBITDA”) between $7.5 million and $50 million. Our LMM investment portfolio consists of investments in companies that generally have annual revenues between $10 million and $150 million and annual EBITDA between $3 million and $20 million. Our Private Loan and LMM investments generally range in size from $1 million to $30 million. Private Loan investments primarily consist of debt securities that have primarily been originated directly by our Adviser or, to a lesser extent, through our Adviser’s strategic relationships with other investment funds on a collaborative basis through investments that are often referred to in the debt markets as “club deals” because of the small lender group size. Our Private Loan investments are typically made in a company owned by or in the process of being acquired by a private equity fund. Our Private Loan portfolio debt investments are generally secured by a first priority lien on the assets of the portfolio company and typically have a term of between three and seven years from the original investment date. We may also co-invest with Main Street and the private equity funds in the equity securities of our Private Loan portfolio companies. We have also historically sought to fill the financing gap for LMM businesses, which, historically, have had limited access to financing from commercial banks and other traditional sources. The underserved nature of the LMM created the opportunity for us to meet the financing needs of LMM companies while also negotiating favorable transaction terms and equity participation. Our ability to invest across a company’s capital structure, from secured loans to equity securities, allowed us to offer portfolio companies a comprehensive suite of financing options, or a “one-stop” financing solution. Our LMM portfolio debt investments are generally secured by a first lien on the assets of the portfolio company and typically have a term of between five and seven years from the original investment date. In connection with the MSC Income Listing, our Board of Directors and the Adviser decided to change our investment strategy with respect to new platform investments to be solely focused on our Private Loan investment strategy. As a result, the size of our LMM investment portfolio is expected to decrease over time as our existing LMM investments are repaid or sold in the ordinary course of business. We do, however, plan to continue executing follow on investments in our existing LMM portfolio companies going forward in accordance with our existing SEC order for co-investment exemptive relief. Our Middle Market investments are generally debt investments in companies owned by private equity funds that were originally issued through a syndication financing process. We have generally stopped making new Middle Market investments and expect the size of our Middle Market investment portfolio to continue to decline in future periods as existing Middle Market investments are repaid or sold. Our Middle Market debt investments generally range in size from $1 million to $20 million, are generally secured by a first priority lien on the assets of the portfolio company and typically have an expected duration of between three and seven years from the original investment date. Our Other Portfolio investments primarily consist of investments that are not consistent with the typical profiles for our Private Loan, LMM or Middle Market portfolio investments, including investments in unaffiliated investment companies and private funds managed by third parties. In our Other Portfolio, we may incur indirect fees and expenses to third party managers. Similar to our Middle Market investments, we have generally stopped making new Other Portfolio investments and expect the size of our Other Portfolio to continue to decline in future periods as existing Other Portfolio investments are repaid or sold. Subject to changes in our cash and overall liquidity, we may in the future invest in short-term portfolio investments that are atypical of our Private Loan and LMM portfolio investments in that they would be intended to be a short-term deployment of capital. These assets would be expected to be realized in one year or less and would not be expected to be a significant portion of our total investments. Our portfolio investments are generally made through MSIF, the Taxable Subsidiaries and the Structured Subsidiaries. MSIF, the Taxable Subsidiaries and the Structured Subsidiaries share the same investment strategies and criteria. An investor’s return in MSIF will depend, in part, on the Taxable Subsidiaries’ and the Structured Subsidiaries’ investment returns as they are wholly-owned subsidiaries of MSIF. The level of new portfolio investment activity will fluctuate from period to period based upon our view of the current economic fundamentals, our ability to identify new investment opportunities that meet our investment criteria, and our ability to consummate the identified opportunities and our available liquidity. The level of new investment activity, and 5
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Table of contents associated interest and fee income, will directly impact future investment income. In addition, the level of dividends paid by portfolio companies and the portion of our portfolio debt investments on non-accrual status will directly impact future investment income. While we intend to grow our portfolio and our investment income over the long term, our growth and our operating results may be more limited during depressed economic periods. However, we intend to appropriately manage our cost structure and liquidity position based on applicable economic conditions and our investment outlook. The level of realized gains or losses and unrealized appreciation or depreciation on our investments will also fluctuate depending upon portfolio activity, economic conditions and the performance of our individual portfolio companies. The changes in realized gains and losses and unrealized appreciation or depreciation could have a material impact on our operating results. We have received an exemptive order from the SEC permitting co-investments among us, Main Street and other advisory clients of our Adviser in certain negotiated transactions where co-investing would otherwise be prohibited under the 1940 Act. We have made co- investments with, and in the future intend to continue to make co-investments with Main Street and other advisory clients of our Adviser, in accordance with the conditions of the order. The order requires, among other things, that Main Street and our Adviser consider whether each such investment opportunity is appropriate for us, Main Street and the other advisory clients of our Adviser, as applicable, and if it is appropriate, to propose an allocation of the investment opportunity between such parties. Because our Adviser is wholly-owned by Main Street and is not managing our investment activities as its sole activity, this may provide our Adviser an incentive to allocate opportunities to Main Street or its other advisory clients instead of us. However, both we and our Adviser have policies and procedures in place to manage this conflict, including approval of investment allocations and oversight of co-investments by the independent members of our Board of Directors. In addition to the co-investment program described above, we also co-invest in syndicated deals and other transactions where price is the only negotiated point by us and our affiliates. BUSINESS STRATEGIES Our principal investment objective is to maximize our portfolio’s total return, primarily by generating current income from our debt investments and current income and capital appreciation from our equity and equity-related investments, including warrants, convertible securities and other rights to acquire equity securities in a portfolio company. We have adopted the following business strategies to achieve our investment objective: • Focus on Established Companies. We generally invest in companies with established market positions, experienced management teams and proven revenue streams. We believe that those companies generally possess better risk-adjusted return profiles than newer companies that are building their management teams or are in the early stages of building a revenue base. We also believe that established companies in our targeted size range also generally provide opportunities for capital appreciation. • Generate Unique Returns from our LMM Investment Portfolio. We believe that our existing investments in our LMM portfolio companies provide unique risk-adjusted return characteristics and also provide our stockholders with access to a large and attractive portion of the U.S. economy that has been and continues to be underserved from a financing standpoint. As a result, we believe that our existing LMM investment portfolio provides our stockholders the opportunity for superior future returns. • Leverage the Skills and Experience of our Adviser’s Investment Team. Our Adviser’s investment team has significant experience in lending to and investing in Private Loan, LMM and Middle Market companies. The members of our Adviser’s investment team have broad investment backgrounds, with significant experience and long-term tenure with our Adviser and prior experience at private investment funds, corporate entities with active acquisition growth strategies and activities, investment banks and other financial services companies. The expertise of our Adviser’s investment team in analyzing, valuing, structuring, negotiating and closing transactions should provide us with competitive advantages by allowing us to consider customized financing solutions and non-traditional or complex structures for our portfolio companies. • Invest Across Multiple Companies, Industries, Regions and End Markets. We seek to maintain a portfolio of investments that is appropriately balanced among various companies, industries, geographic regions and end markets. This portfolio balance is intended to mitigate the potential effects of negative economic events for particular companies, regions, industries and end markets. • Capitalize on Strong Transaction Sourcing Network. Our Adviser’s investment team seeks to leverage its extensive network of referral sources for portfolio company investments. Main Street has developed a reputation in our marketplace as a responsive, efficient and reliable source of financing, which has created a growing stream of proprietary deal flow for us. 6
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Table of contents • Benefit from Lower, Fixed, Long-Term Cost of Capital. We maintain an investment grade rating from Kroll Bond Rating Agency, LLC, which provides us the opportunity and flexibility to obtain additional, attractive long-term financing options to supplement our capital structure, including the unsecured notes with fixed interest rates we issue. INVESTMENT CRITERIA Our Adviser’s investment team has identified the following investment criteria that it believes are important in evaluating prospective portfolio companies. Our Adviser’s investment team uses these criteria in evaluating investment opportunities. However, not all of these criteria have been, or will be, met in connection with each of our investments: • Established Companies with Positive Cash Flow. We seek to invest in established companies with sound historical financial performance. We primarily pursue investments in Private Loan companies that have historically generated annual EBITDA of $7.5 million to $50 million. We also maintain a portfolio of investments in LMM companies that have historically generated annual EBITDA of $3 million to $20 million. We generally do not invest in start-up companies or companies with speculative business plans. • Defensible Competitive Advantages/Favorable Industry Position. We primarily focus on companies having competitive advantages in their respective markets and/or operating in industries with barriers to entry, which may help to protect their market position and profitability. • Proven Management Team. We look for operationally-oriented management with direct industry experience and a successful track record. We believe management teams with these attributes are more likely to manage the companies in a manner that protects our investment. • Exit Alternatives. We exit our debt investments primarily through the repayment of our investment from internally generated cash flow of the portfolio company and/or a refinancing. In addition, we seek to invest in companies whose business models and expected future cash flows may provide alternate methods of repaying our investment, such as through a strategic acquisition by other industry participants or a recapitalization. INVESTMENT PORTFOLIO Our Private Loan portfolio investments primarily consist of investments in debt securities that are primarily originated directly by our Adviser, or to a lesser extent, through our Adviser’s strategic relationships with other investment funds on a collaborative basis through investments that are often referred to in the debt markets as “club deals” because of the small lender group size. In both cases, our Private Loan investments are typically made in a company owned by or in the process of being acquired by a private equity fund. Our LMM portfolio investments primarily consist of secured debt, direct equity investments and equity warrants in privately held, LMM companies based in the United States. Through those investments, we have partnered with entrepreneurs, business owners and management teams in co-investments with Main Street. Effective upon the MSC Income Listing, we changed our investment strategy and will no longer make investments in new LMM portfolio companies, with any future LMM investments limited to follow-on investments in our existing LMM portfolio companies. Our Middle Market portfolio investments are generally debt investments in companies owned by private equity funds that were originally issued through a syndication financing process. We have generally stopped making new Middle Market investments and expect the size of our Middle Market investment portfolio to continue to decline in future periods as existing Middle Market investments are repaid or sold. Our Other Portfolio investments primarily consist of investments that are not consistent with the typical profiles for our Private Loan, LMM and Middle Market portfolio investments, including investments which may be managed by third parties. In our Other Portfolio, we may incur indirect fees and expenses in connection with investments managed by third parties, such as investments in other investment companies or private funds. Similar to our Middle Market investments, we have generally stopped making new Other Portfolio investments and expect the size of our Other Portfolio to continue to decline in future periods as existing Other Portfolio investments are repaid or sold. Debt Investments The debt investments in our Private Loan portfolio have rights and protections that may include affirmative and negative covenants, default penalties, lien protection, change of control provisions, guarantees and equity pledges. Our Private Loan portfolio debt investments are generally secured by a first priority lien and typically have a term of between 7
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Table of contents three and seven years from the original investment date. Our Private Loan debt investments generally have floating interest rates at the Secured Overnight Financing Rate (“SOFR”) or the Prime rate typically subject to a contractual minimum interest rate (an “interest rate floor”), plus a margin. Historically, we have made LMM debt investments principally in the form of single tranche debt. Single tranche debt financing involves issuing one debt security that blends the risk and return profiles of both first lien secured and subordinated debt. We believe that single tranche debt is more appropriate for many LMM companies given their size in order to reduce structural complexity and potential conflicts among creditors. Our LMM debt investments generally have a term of five to seven years from the original investment date, with limited required amortization prior to maturity, and provide for monthly or quarterly payment of interest at interest rates generally between 10% and 14% per annum, payable currently in cash on either a fixed or floating rate basis. The LMM debt investments with floating interest rates will generally bear interest at the SOFR or the Prime rate typically subject to an interest rate floor, plus a margin. In addition, certain LMM debt investments may have a form of interest that is not paid currently but is accrued and added to the loan balance and paid at maturity. We refer to this form of interest as payment-in-kind, or PIK, interest. We typically structure our LMM debt investments with the maximum seniority and collateral that we can reasonably obtain while seeking to achieve our total return target. In most cases, our LMM debt investment will be collateralized by a first priority lien on substantially all the assets of the portfolio company. In addition to seeking a senior lien position in the capital structure of our LMM portfolio companies, we seek to limit the downside potential of our LMM debt investments by negotiating covenants that are designed to protect our LMM debt investments while affording our portfolio companies as much flexibility in managing their businesses as is reasonable. Such restrictions may include affirmative and negative covenants, default penalties, lien protection, change of control or change of management provisions, key-man life insurance, guarantees, equity pledges, personal guaranties, where appropriate, and put rights. In addition, we typically seek board representation or observation rights in all of our LMM portfolio companies. Our Middle Market portfolio debt investments are generally secured by a first priority lien on the assets of the portfolio company and typically have a term of between three and seven years from the original investment date. The debt investments in our Middle Market portfolio usually have rights and protections that are similar to those in our Private Loan and LMM debt investments. The Middle Market debt investments generally have floating interest rates at the SOFR or Prime rate typically subject to an interest rate floor, plus a margin. Direct Equity Investments We have also historically sought to make direct equity investments to align our interests with key management and stockholders of our LMM portfolio companies, and to allow for participation in the appreciation in the equity values of our LMM portfolio companies. We usually made our direct equity investments in connection with debt investments in our LMM portfolio companies. In addition, we may have both equity warrants and direct equity positions in some of our LMM portfolio companies. We, on a combined basis together with Main Street and other investment advisory clients of our Adviser, have historically sought to maintain fully diluted equity positions in our LMM portfolio companies of 5% to 50%, and may have controlling equity interests in some instances. We have had a value orientation toward our direct equity investments and have traditionally been able to purchase our equity investments at reasonable valuations. We will also have, from time to time, the opportunity to co-invest with Main Street and the private equity funds in the equity securities of our Private Loan portfolio companies. The equity co-investment aligns our interests with those of the private equity fund and provides us with the opportunity to benefit from appreciation in the equity values of our Private Loan portfolio companies. Warrants In connection with our LMM debt investments, we occasionally received equity warrants to establish or increase our equity interest in the portfolio company. Warrants that we received in connection with a debt investment typically require only a nominal cost to exercise, and thus, as a portfolio company appreciates in value, we may achieve additional investment return from this equity interest. We typically structured the warrants to provide provisions protecting our rights as a minority-interest holder, as well as secured or unsecured put rights, or rights to sell such securities back to the portfolio company, upon the occurrence of specified events. In certain cases, we also may obtain registration rights in connection with these equity interests, which may include demand and “piggyback” registration rights. INVESTMENT PROCESS Our Adviser’s investment committee has oversight over all aspects of our investment processes. The current members of the investment committee are Dwayne L. Hyzak, our Chief Executive Officer, David Magdol, our President and Chief Investment Officer, and Vincent D. Foster, Chairman of Main Street’s board of directors. 8
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Table of contents Our Adviser’s investment processes for portfolio investments are outlined below. Our Adviser’s investment strategy involves a “team” approach, whereby potential transactions are screened by several members of our Adviser’s investment team before being presented to the investment committee. The investment committee meets on an as-needed basis depending on transaction volume. Our Adviser generally categorizes our investment process into seven distinct stages: Deal Generation/Origination Deal generation and origination is maximized through our Adviser’s long-standing and extensive relationships with industry contacts, brokers, commercial and investment bankers, entrepreneurs, service providers such as lawyers, financial advisors and accountants, and current and former portfolio companies and investors. Our Adviser’s investment team has developed a reputation as a knowledgeable, reliable and active source of capital and assistance in these markets. Screening During the screening process, if a transaction initially meets our investment criteria, our Adviser will perform preliminary due diligence, taking into consideration some or all of the following information: • a comprehensive financial model based on quantitative analysis of historical financial performance, projections and pro forma adjustments to determine the estimated internal rate of return; • a brief industry and market analysis; • direct industry expertise imported from other portfolio companies or investors; • preliminary qualitative analysis of the management team’s competencies and backgrounds; • potential investment structures and pricing terms; and • regulatory compliance. Upon successful screening of a proposed transaction, the investment team makes a recommendation to the investment committee. If the investment committee concurs with moving forward on the proposed transaction, we typically issue a non-binding term sheet or letter of intent to the company. Term Sheet For proposed transactions, the non-binding term sheet or letter of intent will include the key economic terms based upon our analysis performed during the screening process, as well as a proposed timeline and our qualitative expectation for the transaction. While the term sheet or letter of intent for investments is non-binding, we typically receive an expense deposit in order to move the transaction to the due diligence phase. Upon execution of a term sheet or letter of intent, our Adviser begins the formal due diligence process. Due Diligence Due diligence on a proposed investment is generally performed on materials and information obtained from certain external resources and assessed internally by a minimum of three of our Adviser’s investment professionals, who work to understand the relationships among the prospective portfolio company’s business plan, operations and financial performance using the accumulated due diligence information. Our Adviser’s typical due diligence review includes some or all of the following: • detailed review of historical and projected financial statements; • site visits or other discussions with management and key personnel; • in-depth industry, market, operational and strategy analysis; • regulatory compliance analysis; and • detailed review of the company’s management team and their capabilities. 9
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Table of contents During the due diligence process, significant attention is given to sensitivity analyses and how the company might be expected to perform given downside, base-case and upside scenarios. In certain cases, we may decide not to make an investment based on the results of the diligence process. Document and Close Upon completion of a satisfactory due diligence review of a proposed portfolio investment, the investment team presents the findings and a recommendation to the investment committee. The presentation contains information which can include, but is not limited to, the following: • company history and overview; • transaction overview, history and rationale, including an analysis of transaction strengths and risks; • overview and history of the private equity fund sponsor as the company’s equity owner; • analysis of key customers and suppliers; • an analysis of the company’s business strategy; • investment structure and expected returns; • anticipated sources of repayment and potential exit strategies; • pro forma capitalization and ownership; • regulatory compliance analysis findings; and • an analysis of historical financial results and key financial ratios. If any adjustments to the transaction terms or structures are proposed by the investment committee, such changes are made and applicable analyses are updated prior to approval of the transaction. Approval for the transaction must be made by the affirmative vote from a majority of the members of the investment committee, with the committee member managing the transaction, if any, abstaining from the vote. Upon receipt of transaction approval, the investment team will re-confirm regulatory compliance, process and finalize all required legal documents, and fund the investment. Post-Investment Our Adviser continuously monitors the status and progress of our portfolio companies. Our Adviser generally offers managerial assistance to our portfolio companies, giving them access to our Adviser’s investment experience, direct industry expertise and contacts. The same investment team that was involved in the investment process will continue its involvement in the portfolio company post- investment. This provides for continuity of knowledge and allows the investment team to maintain a strong business relationship with key management of our portfolio companies for post-investment assistance and monitoring purposes. As part of the monitoring process of our Private Loan and Middle Market portfolio investments, the investment team will analyze monthly and quarterly financial statements versus the previous periods and year, review financial projections and review all compliance certificates and covenants. Depending upon the nature of our Private Loan and Middle Market portfolio investments, the investment team may also attend board meetings, and meet and discuss issues or opportunities with the portfolio company’s management team or private equity owners, however, due to the nature of our “lender only” relationship with these Private Loan and Middle Market companies in comparison to our LMM portfolio companies, it is not practical to have as much direct management interface. As part of the monitoring process of our LMM portfolio investments, the investment team will analyze monthly and quarterly financial statements versus the previous periods and year, review financial projections, meet and discuss issues or opportunities with management, attend board meetings and review all compliance certificates and covenants. While the investment team maintains limited involvement in the ordinary course operations of our LMM portfolio companies, the investment team maintains a higher level of involvement in non-ordinary course financing or strategic activities and any non-performing scenarios. Our Adviser utilizes an internally developed investment rating system to rate the performance of each Private Loan, LMM and Middle Market portfolio company and to monitor our expected level of returns on each of our Private 10
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Table of contents Loan, LMM and Middle Market investments in relation to our expectations for the portfolio company. The investment rating system takes into consideration various factors, including, but not limited to, each investment’s expected level of returns, the collectability of our debt investments and the ability to receive a return of the invested capital in our equity investments, comparisons to competitors and other industry participants, the portfolio company’s future outlook and other factors that are deemed to be significant to the portfolio company. Exit Strategies/Refinancing While we generally exit most investments through the refinancing or repayment of our debt and redemption or sale of our equity positions, the refinancing or repayment of Private Loan investments and Middle Market debt investments typically do not require our Adviser’s assistance due to the additional resources available to these larger Private Loan and Middle Market companies. Our Adviser typically assists our LMM portfolio companies in developing and planning exit opportunities, including any sale or merger of our portfolio companies. Our Adviser may also assist in the structure, timing, execution and transition of the exit strategy. DETERMINATION OF NET ASSET VALUE AND INVESTMENT PORTFOLIO VALUATION PROCESS We determine the net asset value (“NAV”) per share of our common stock on a quarterly basis. The NAV per share is equal to our total assets minus total liabilities divided by the total number of shares of common stock outstanding. We are required to report our investments at fair value. As a result, the most significant determination inherent in the preparation of our consolidated financial statements is the valuation of our Investment Portfolio and the related amounts of unrealized appreciation and depreciation. We follow the provisions of the Financial Accounting Standards Board Accounting Standards Codification (“ASC”) 820, Fair Value Measurements and Disclosures (“ASC 820”). ASC 820 defines fair value, establishes a framework for measuring fair value, establishes a fair value hierarchy based on the quality of inputs used to measure fair value and enhances disclosure requirements for fair value measurements. ASC 820 requires us to assume that the portfolio investment is to be sold in the principal market to independent market participants, which may be a hypothetical market. Market participants are defined as buyers and sellers in the principal market that are independent, knowledgeable and willing and able to transact. We determine in good faith the fair value of our Investment Portfolio pursuant to a valuation policy in accordance with ASC 820 and a valuation process approved by our Board of Directors and in accordance with the 1940 Act. Our valuation policies and processes are intended to provide a consistent basis for determining the fair value of our Investment Portfolio. See Note B.1. — Summary of Significant Accounting Policies — Valuation of the Investment Portfolio included in Item 8. Consolidated Financial Statements and Supplementary Data of this Annual Report on Form 10-K for a detailed discussion of our Investment Portfolio valuation process and procedures. Due to the inherent uncertainty in the valuation process, our determination of fair value for our Investment Portfolio may differ materially from the values that would have been determined had a ready market for the securities existed. In addition, changes in the market environment, portfolio company performance and other events that may occur over the lives of the investments may cause the gains or losses ultimately realized on these investments to be materially different than the valuations currently assigned. We determine the fair value of each individual investment and record changes in fair value as unrealized appreciation or depreciation. The 1940 Act requires valuation of a portfolio security at “market value” if market quotations for the security are “readily available.” Portfolio securities for which market quotations are not readily available must be valued at fair value as determined in good faith by the board of directors. Rule 2a-5 under the 1940 Act permits a BDC’s board of directors to designate its executive officers or investment adviser as a valuation designee to determine the fair value for its investment portfolio, subject to the active oversight of the board. Our Board of Directors has approved policies and procedures pursuant to Rule 2a-5 (the “Valuation Procedures”) and designated our Adviser, led by a group of our Adviser’s executive officers, to serve as the Board’s valuation designee thereunder (the “Valuation Committee”). Pursuant to the Valuation Procedures, we undertake a multi-step process each quarter in connection with determining the fair value of our investments. The following outlines our valuation process as established under the Valuation Procedures: • Our quarterly process begins with an initial valuation of each portfolio investment performed by the Adviser’s valuation team consisting of several professionals who apply the appropriate valuation methodology depending on the type of investment. 11
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Table of contents • Each valuation model is then reviewed by the investment team responsible for monitoring the portfolio investment for accuracy, with any recommended changes reviewed by the valuation team. • Updated valuation conclusions are then reviewed by and discussed with the Valuation Committee at quarterly valuation meetings. Valuation meetings are generally attended by the Valuation Committee, the valuation team, members of the investment team responsible for each investment and members of the compliance team. Valuation models and valuation conclusions are adjusted as necessary following such meetings. • A nationally recognized independent financial advisory services firm analyzes and provides observations, recommendations and an assurance certification regarding the determinations of the fair value for the majority of our portfolio companies on a rotational basis. • After incorporating commentary by the Valuation Committee and review of recommendations provided by the independent financial advisory services firm, valuation results are finalized and approved by the Valuation Committee. • The Board of Directors oversees the process through its Audit Committee in accordance with Rule 2a-5 pursuant to the Valuation Procedures. Determination of fair value involves subjective judgments and estimates. The notes to our consolidated financial statements refer to the uncertainty with respect to the possible effect of such valuations, and any change in such valuations, on our financial results and financial condition. COMPETITION We compete for investments with a number of investment funds (including private equity funds, mezzanine funds, BDCs and small business investment companies (“SBICs”)), as well as traditional financial services companies such as commercial banks and other sources of financing. Many of the entities that compete with us are larger and have more resources available to them. We believe we are able to be competitive with these entities primarily on the basis of the experience and contacts of our Adviser’s management team and our ability to co-invest with Main Street and other advisory clients of our Adviser, the less competitive nature of the market for companies described in our Private Loan investment strategy, our Adviser’s responsive and efficient investment analysis and decision-making processes, our comprehensive suite of customized financing solutions and the investment terms we offer. We believe that some of our competitors make senior secured loans, junior secured loans and subordinated debt investments with interest rates and returns that are comparable to or lower than the rates and returns that we target. Therefore, we do not seek to compete primarily on the interest rates and returns that we offer to potential portfolio companies. For additional information concerning the competitive risks we face, see Item 1A. Risk Factors — Risks Related to Our Business and Structure — We face increasing competition for investment opportunities. HUMAN CAPITAL We do not currently have any employees and do not expect to have any employees in the future. Services necessary for the operation of our business are provided by individuals who are employees of Main Street, which wholly-owns our Adviser, pursuant to the terms of the Advisory Agreement. Each of our executive officers is an employee of Main Street. Our day-to-day investment activities are managed by the Adviser. The services necessary for the origination and monitoring of our Investment Portfolio are provided by investment professionals of the Adviser, who are all employed by Main Street. As of December 31, 2024, Main Street had 104 employees, 58 of whom it categorizes as investment and portfolio management professionals, and the others include operations professionals and administrative staff. Because we have no employees, we do not have a formal employee relations policy. REGULATION Regulation as a Business Development Company We have elected to be regulated as a BDC under the 1940 Act. The 1940 Act contains prohibitions and restrictions relating to transactions between BDCs and their affiliates, principal underwriters and affiliates of those affiliates or underwriters. The 1940 Act requires that a majority of the members of the board of directors of a BDC be persons other than “interested persons,” as that term is defined in the 1940 Act. In addition, the 1940 Act provides that we may not change the nature of our business so as to cease to be, or to withdraw our election as, a BDC unless approved by a majority of our outstanding voting securities. 12
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Table of contents The 1940 Act defines “a majority of the outstanding voting securities” as the lesser of (i) 67% or more of the voting securities present at a meeting if the holders of more than 50% of our outstanding voting securities are present or represented by proxy or (ii) more than 50% of our outstanding voting securities. 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 business are any of the following: (1) 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 (as defined below), 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. (2) Securities of any eligible portfolio company that we control. (3) 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. (4) 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. (5) Securities received in exchange for or distributed on or with respect to securities described in (1) through (4) above, or pursuant to the exercise of warrants or rights relating to such securities. (6) Cash, cash equivalents, U.S. government securities or high-quality debt securities maturing in one year or less from the time of investment. In addition, a BDC must have been organized and have its principal place of business in the United States and must be operated for the purpose of making investments in the types of securities described in (1), (2) or (3) above. An eligible portfolio company is defined in the 1940 Act as any issuer which: (a) is organized under the laws of, and has its principal place of business in, the United States; (b) 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 (c) satisfies any of the following: (i) does not have any class of securities that is traded on a national securities exchange or has a class of securities listed on a national securities exchange but has an aggregate market value of outstanding voting and non-voting common equity of less than $250 million; (ii) is controlled by a BDC or a group of companies including a BDC and the BDC has an affiliated person who is a director of the eligible portfolio company; or (iii) is a small and solvent company having total assets of not more than $4 million and capital and surplus of not less than $2 million. Managerial Assistance to Portfolio Companies As noted above, a BDC must be operated for the purpose of making investments in the type of securities described in (1), (2) or (3) above under the heading entitled “— Qualifying Assets.” In addition, BDCs must generally offer to make available to such issuer of the securities (other than small and solvent companies described above) significant managerial assistance. Making available managerial assistance means, among other things, any arrangement whereby the BDC, 13
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Table of contents through its directors, officers or employees, offers to provide, and, if accepted, does so provide, significant guidance and counsel concerning the management, operations or business objectives and policies of a portfolio company. However, if a BDC purchases securities in conjunction with one or more other persons acting together, one of the other persons in the group may make available such significant managerial assistance on behalf of all investors in the group. Temporary Investments Pending investment in “qualifying assets,” as described above, our investments may consist of cash, cash equivalents, U.S. government securities and high-quality debt securities maturing in one year or less from time of investment therein, so that 70% of our assets are qualifying assets. Senior Securities Prior to 2018 legislation that modified the asset coverage requirements of the 1940 Act, we were permitted, as a BDC, to issue senior securities only in amounts such that our asset coverage, or BDC asset coverage ratio, as defined in the 1940 Act, equals at least 200% of all debt and/or senior stock immediately after each such issuance. However, 2018 legislation modified the 1940 Act by allowing a BDC to increase the maximum amount of leverage it may incur such that a BDC’s asset coverage ratio could be reduced from an asset coverage ratio of 200% to an asset coverage ratio of 150%, if certain requirements are met. On January 29, 2025, the Board, including a “required majority” (as such term is defined in Section 57(o) of the 1940 Act) of the Board, approved the application of the modified asset coverage requirements set forth in Section 61(a)(2) of the 1940 Act, which will result in the Company’s asset coverage requirements applicable to senior securities being reduced from 200% to 150%, effective on January 29, 2026. We are permitted to increase our leverage capacity sooner if stockholders representing at least a majority of the votes cast, when quorum is met, approve a proposal to do so. If we receive such stockholder approval, we would be permitted to increase our leverage capacity on the first day after such approval. In addition, while any senior securities remain outstanding (other than senior securities representing indebtedness issued in consideration of a privately arranged loan which is not intended to be publicly distributed), we must generally include provisions in the documents governing new senior securities to prohibit any cash distribution to our stockholders or the repurchase of such securities or shares unless we meet the applicable asset coverage ratios at the time of the distribution or repurchase. We may also borrow amounts up to 5% of the value of our total assets for temporary or emergency purposes without regard to asset coverage with such borrowings not constituting senior securities for purposes of the asset coverage ratio requirements of the 1940 Act. A loan is presumed to be for temporary purposes if it is repaid within sixty days and not extended or renewed. For a discussion of the risks associated with leverage, see Item 1A. Risk Factors — Risks Related to Leverage, including, without limitation, — Because we borrow money, the potential for gain or loss on amounts invested in us is magnified and may increase the risk of investing in us. Common Stock We are not generally able to issue and sell our common stock at a price below NAV per share. We may, however, sell our common stock, warrants, options or rights to acquire our common stock, at a price below the current NAV of the common stock if our Board of Directors determines that such sale is in our best interests and that of our stockholders, and our stockholders approve such sale. In any such case, the price at which our securities are to be issued and sold may not be less than a price which, in the determination of our Board of Directors, closely approximates the market value of such securities (less any distributing commission or discount). We generally have not sought stockholder authorization to sell shares of our common stock below the then current NAV per share of our common stock; however, at the 2025 Special Meeting, in advance of the MSC Income Listing, we received approval from our stockholders to have the flexibility, with the approval of the Board of Directors, to offer and sell shares of our common stock at a price below the current net asset value per share until December 11, 2025. In conjunction with the MSC Income Listing, we entered into a share repurchase plan to purchase up to $65.0 million in the aggregate of our common stock in the open market for a twelve-month period beginning in March 2025, at times when the market price per share of our common stock is trading below the most recently reported NAV per share of our common stock by certain pre-determined levels (including any updates, corrections or adjustments publicly announced by us to any previously announced NAV per share). Code of Ethics We have adopted a code of ethics pursuant to Rule 17j-1 under the 1940 Act that establishes procedures for personal investments and restricts certain personal securities transactions. Personnel subject to the code may invest in securities for their personal investment accounts, including securities that may be purchased or held by us, so long as such 14
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Table of contents investments are made in accordance with the code’s requirements. The code of ethics is available on the EDGAR Database on the SEC’s website at http://www.sec.gov. Proxy Voting Policies and Procedures We vote proxies relating to our portfolio securities in a manner in which we believe is consistent with the best interest of our stockholders. We review on a case-by-case basis each proposal submitted to a stockholder vote to determine its impact on the portfolio securities held by us. Although we generally vote against proposals that we expect would have a negative impact on our portfolio securities, we may vote for such a proposal if there exists compelling long-term reasons to do so. Our proxy voting decisions are made by the investment team which is responsible for monitoring each of our investments. To ensure that our vote is not the product of a conflict of interest, we require that anyone involved in the decision-making process discloses to our chief compliance officer any potential conflict regarding a proxy vote of which he or she is aware. Stockholders may obtain information, without charge, regarding how we voted proxies with respect to our portfolio securities by making a written request for proxy voting information to: Chief Compliance Officer, 1300 Post Oak Boulevard, 8th Floor, Houston, Texas 77056. Other 1940 Act Regulations We are also prohibited under the 1940 Act from knowingly participating in certain transactions with our affiliates without the prior approval of our Board of Directors who are not interested persons and, in some cases, prior approval by the SEC. We are required to provide and maintain a bond issued by a reputable fidelity insurance company to protect us against larceny and embezzlement. Furthermore, as a BDC, we are prohibited from protecting any director or officer against any liability to us or our stockholders arising from willful misfeasance, bad faith, gross negligence or reckless disregard of the duties involved in the conduct of such person’s office. We and our Adviser are required to adopt and implement written policies and procedures reasonably designed to prevent violation of the federal securities laws, review these policies and procedures no less frequently than annually for their adequacy and the effectiveness of their implementation, and to designate a chief compliance officer to be responsible for administering the policies and procedures. We may be periodically examined by the SEC for compliance with the 1940 Act. Securities Exchange Act of 1934 and Sarbanes-Oxley Act Compliance We are subject to the reporting and disclosure requirements of the Securities Exchange Act of 1934 (the “Exchange Act”), including the filing of quarterly, annual and current reports, proxy statements and other required items. In addition, we are subject to the Sarbanes-Oxley Act of 2002, which imposes a wide variety of regulatory requirements on publicly-held companies and their insiders. For example: • pursuant to Rule 13a-14 of the Exchange Act, our Chief Executive Officer and Chief Financial Officer are required to certify the accuracy of the consolidated financial statements contained in our periodic reports; • pursuant to Item 307 of Regulation S-K, our periodic reports are required to disclose our conclusions about the effectiveness of our disclosure controls and procedures; • pursuant to Rule 13a-15 of the Exchange Act, our management is required to prepare a report regarding its assessment of our internal control over financial reporting and, to the extent we are an accelerated filer or a large accelerated filer, we must obtain an audit of the effectiveness of our internal control over financial reporting performed by our independent registered public accounting firm; and • pursuant to Item 308 of Regulation S-K and Rule 13a-15 of the Exchange Act, our periodic reports must disclose whether there were significant changes in our internal control over financial reporting 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 New York Stock Exchange Corporate Governance Regulations 15
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Table of contents The NYSE has adopted corporate governance regulations that listed companies must comply with. We believe we are in compliance with such corporate governance listing standards. We intend to monitor our compliance with all future listing standards and to take all necessary actions to ensure that we stay in compliance. Investment Adviser Regulations Our Adviser is subject to regulation under the Investment Advisers Act of 1940, as amended (the “Advisers Act”). The Advisers Act establishes, among other things, recordkeeping and reporting requirements, disclosure requirements, limitations on transactions between the adviser’s account and an advisory client’s account, limitations on transactions between the accounts of advisory clients, and general anti-fraud prohibitions. Our Adviser may be examined by the SEC from time to time for compliance with the Advisers Act. Taxation as a Regulated Investment Company MSIF has elected to be treated for U.S. federal income tax purposes as a RIC under Subchapter M of the Code. MSIF’s taxable income includes the taxable income generated by MSIF and certain of its subsidiaries, which are treated as disregarded entities for tax purposes. As a RIC, MSIF generally will not pay corporate-level U.S. federal income taxes on any income that we distribute to our stockholders as dividends. To qualify as a RIC, we must, among other things, meet certain source-of-income and asset diversification requirements (as described below). In addition, in order to obtain RIC tax treatment, we must distribute to our stockholders, for each taxable year, at least 90% of our “investment company taxable income,” which is generally our net ordinary taxable income plus the excess of realized net short-term capital gains over realized net long-term capital losses, and 90% of our tax-exempt income (the “Annual Distribution Requirement”). As part of maintaining RIC status, undistributed taxable income (subject to a 4% non-deductible U.S. federal excise tax) pertaining to a given fiscal year may be distributed up to 12 months subsequent to the end of that fiscal year, provided such dividends are declared on or prior to the later of (i) filing of the U.S. federal income tax return for the applicable fiscal year or (ii) the fifteenth day of the ninth month following the close of the year in which such taxable income was generated. For any taxable year in which we qualify as a RIC and satisfy the Annual Distribution Requirement, we will not be subject to U.S. federal income tax on the portion of our income or capital gains we distribute (or are deemed to distribute) to stockholders. We will be subject to U.S. federal income tax at the regular corporate rates on any income or capital gains not distributed (or deemed distributed) to our stockholders. We are subject to a 4% non-deductible U.S. federal excise tax on certain undistributed income unless we distribute in a timely manner an amount at least equal to the sum of (1) 98% of our net ordinary taxable income for each calendar year, (2) 98.2% of our capital gain net income for the one-year period ending December 31 in that calendar year and (3) any taxable income recognized, but not distributed, in preceding years on which we paid no U.S. federal income tax (the “Excise Tax Avoidance Requirement”). Dividends declared and paid by us in a year will generally differ from taxable income for that year as such dividends may include the distribution of current year taxable income, exclude amounts carried over into the following year, and include the distribution of prior year taxable income carried over into and distributed in the current year. For amounts we carry over into the following year, we will be required to pay the 4% U.S. federal excise tax on the excess of 98% of our annual investment company taxable income and 98.2% of our capital gain net income over our distributions for the year. In order to qualify as a RIC for U.S. federal income tax purposes, we must, among other things: • continue to qualify as a BDC under the 1940 Act at all times during each taxable year; • derive in each taxable year at least 90% of our gross income from dividends, interest, payments with respect to certain securities loans, gains from the sale of stock or other securities, net income from certain “qualified publicly traded partnerships,” or other income derived with respect to our business of investing in such stock or securities (the “90% Income Test”); and • diversify our holdings so that at the end of each quarter of the taxable year: • at least 50% of the value of our assets consists of cash, cash equivalents, U.S. government securities, securities of other RICs, and other securities if such other securities of any one issuer do not represent more than 5% of the value of our assets or more than 10% of the outstanding voting securities of the issuer; and 16
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Table of contents • no more than 25% of the value of our assets is invested in the securities, other than U.S. government securities or securities of other RICs, (i) of one issuer, (ii) of two or more issuers that are controlled, as determined under applicable Code rules, by us and that are engaged in the same or similar or related trades or businesses or (iii) of certain “qualified publicly traded partnerships” (collectively, the “Diversification Tests”). In order to comply with the 90% Income Test, we formed the Taxable Subsidiaries as wholly-owned taxable subsidiaries for the primary purpose of permitting us to own equity interests in portfolio companies which are “pass-through” entities for tax purposes. Absent the taxable status of the Taxable Subsidiaries, a portion of the gross income from such portfolio companies would flow directly to us for purposes of the 90% Income Test. To the extent such income did not consist of income derived from securities, such as dividends and interest, it could jeopardize our ability to qualify as a RIC and, therefore, cause us to incur significant U.S. federal income taxes. The Taxable Subsidiaries are consolidated with MSC Income for generally accepted accounting principles in the United States of America (“U.S. GAAP”) purposes and are included in our consolidated financial statements, and the portfolio investments held by the Taxable Subsidiaries are included in our consolidated financial statements. The Taxable Subsidiaries are not consolidated with MSIF for income tax purposes and may generate income tax expense, or benefit, as a result of their ownership of the portfolio investments. The income tax expense, or benefit, if any, and any related tax assets and liabilities, are reflected in our consolidated financial statements. We may be required to recognize taxable income in circumstances in which we do not receive cash. For example, if we hold debt obligations that are treated under applicable tax rules as having original issue discount (such as debt instruments issued with warrants and debt securities invested in at a discount to par), we must include in income each year a portion of the original issue discount that accrues over the life of the obligation, regardless of whether cash representing such income is received by us in the same taxable year. We may also have to include in income other amounts that we have not yet received in cash such as PIK interest, cumulative dividends or amounts that are received in non-cash compensation such as warrants or stock. Because any original issue discount or other amounts accrued will be included in our investment company taxable income for the year of accrual, we may be required to make a distribution to our stockholders in order to satisfy the Annual Distribution Requirement, even though we will not have received any corresponding cash amount. Although we do not presently expect to do so, we are authorized to borrow funds and to sell assets in order to satisfy distribution requirements. However, under the 1940 Act, we are not permitted to make distributions to our stockholders in certain circumstances while our debt obligations and other senior securities are outstanding unless certain “asset coverage” tests are met. See Regulation — Regulation as a Business Development Company — Senior Securities. Moreover, our ability to dispose of assets to meet our distribution requirements may be limited by (1) the illiquid nature of our portfolio and/or (2) other requirements relating to our status as a RIC, including the Diversification Tests. If we dispose of assets in order to meet the Annual Distribution Requirement or the Excise Tax Avoidance Requirement, we may make such dispositions at times that, from an investment standpoint, are not advantageous. We may distribute taxable dividends that are payable in part in our stock. Under certain applicable provisions of the Code and the U.S. Department of the Treasury (“Treasury”) regulations, distributions payable by us in cash or in shares of stock (at the stockholders’ election) would satisfy the Annual Distribution Requirement. The Internal Revenue Service has issued guidance indicating that this rule will apply even where the total amount of cash that may be distributed is limited to no more than 20% of the total distribution. According to this guidance, if too many stockholders elect to receive their distributions in cash, each such stockholder would receive a pro rata share of the total cash to be distributed and would receive the remainder of their distribution in shares of stock. Taxable stockholders receiving such dividends will be required to include the full amount of the dividend (whether received in cash, our stock, or a combination thereof) as (i) ordinary income (including any qualified dividend income that, in the case of a noncorporate stockholder, may be eligible for the same reduced maximum tax rate applicable to long-term capital gains to the extent such distribution is properly reported by us as qualified dividend income and such stockholder satisfies certain minimum holding period requirements with respect to our stock) or (ii) long-term capital gain (to the extent such distribution is properly reported as a capital gain dividend), to the extent of our current and accumulated earnings and profits for U.S. federal income tax purposes. As a result, a U.S. stockholder may be required to pay tax with respect to such dividends in excess of any cash received. If a U.S. stockholder sells the stock it receives in order to pay this tax, the sales proceeds may be less than the amount included in income with respect to the dividend, depending on the market price of our stock at the time of the sale. Furthermore, with respect to non-U.S. stockholders, we may be required to withhold U.S. tax with respect to such dividends, including in respect of all or a portion of such dividend that is payable in stock. In addition, if a significant number of our stockholders determine to sell shares of our stock in order to pay taxes owed on dividends, it may put downward pressure on the trading price of our stock. 17
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Table of contents Failure to Qualify as a RIC If we fail to satisfy the 90% Income Test or the Diversification Tests for any taxable year, we may nevertheless continue to qualify as a RIC for such year if certain relief provisions are applicable (which may, among other things, require us to pay certain corporate-level U.S. federal taxes or to dispose of certain assets). We cannot assure you that we will qualify for any such relief should we fail the 90% Income Test or the Diversification Tests. If we were unable to qualify for treatment as a RIC and the foregoing relief provisions are not applicable, we would be subject to tax on all of our taxable income at regular corporate rates. We would not be able to deduct distributions to stockholders, nor would we be required to make distributions. If we were subject to tax on all of our taxable income at regular corporate rates, then distributions we make after being subject to such tax would be taxable to our stockholders and, provided certain holding period and other requirements were met, could qualify for treatment as “qualified dividend income” eligible for the maximum 20% rate (plus a 3.8% Medicare surtax, if applicable) applicable to qualified dividends to the extent of our current and accumulated earnings and profits. Subject to certain limitations under the Code, corporate taxpayers would be eligible for a dividends-received deduction on distributions they receive. Distributions in excess of our current and accumulated earnings and profits would be treated first as a return of capital to the extent of the stockholder’s tax basis, and any remaining distributions would be treated as a capital gain. To requalify as a RIC in a subsequent taxable year, we would be required to satisfy the RIC qualification requirements for that year and dispose of any earnings and profits from any year in which we failed to qualify as a RIC. Subject to a limited exception applicable to RICs that qualified as such under Subchapter M of the Code for at least one year prior to disqualification and that requalify as a RIC no later than the second year following the nonqualifying year, we could be subject to tax on any unrealized net built-in gains in the assets held by us during the period in which we failed to qualify as a RIC that are recognized within the subsequent five years, unless we made a special election to pay corporate-level U.S. federal income tax on such built-in gain at the time of our requalification as a RIC. Item 1A. Risk Factors Investing in our securities involves a number of significant risks. In addition to the other information contained in this Annual Report on Form 10-K, you should consider carefully the following information before making an investment in our securities. The risks set out below are not the only risks we face. Additional risks and uncertainties not presently known to us or not presently deemed material by us might also impair our operations and performance. If any of the following events occur, our business, financial condition and results of operations could be materially and adversely affected. In such case, our NAV, the trading price of our common stock and the value of our other securities could decline, and you may lose all or part of your investment. SUMMARY OF RISK FACTORS The following is a summary of the principal risk factors associated with an investment in our securities. Further details regarding each risk included in the below summary list can be found further below. Risks Related to our Business and Structure • Because our Investment Portfolio is recorded at fair value, there is and will continue to be uncertainty as to the value of our portfolio investments. • Our financial condition and results of operations depends on our Adviser’s ability to effectively manage and deploy capital. • We are subject to risks associated with the interest rate environment and changes in interest rates will affect our cost of capital, net investment income and the value of our investments. • We face increasing competition for investment opportunities. • We are dependent upon our Adviser’s key investment personnel for our future success. • Our success depends on our Adviser’s ability to attract and retain qualified personnel in a competitive environment. • We may not replicate the historical results achieved by Main Street or by other advisory clients of our Adviser. • Our business model depends to a significant extent upon strong referral relationships. • Our Board of Directors may change our operating policies and strategies without prior notice or stockholder approval, the effects of which may be adverse. Risks Related to our Investments • The types of portfolio companies in which we invest involve significant risks and we could lose all or part of our investment. • Economic recessions or downturns could impair our portfolio companies’ performance and defaults by our portfolio companies will harm our operating results. 18
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Table of contents • Rising credit spreads could affect the value of our investments, and rising interest rates make it more difficult for portfolio companies to make periodic payments on their loans. • Inflation could adversely affect the business, results of operations and financial condition of our portfolio companies. • We may be exposed to higher risks with respect to our investments that include original issue discount or PIK interest. • The lack of liquidity in our investments may adversely affect our business. • We may not have the funds or ability to make additional investments in our portfolio companies. • There may be circumstances where our debt investments could be subordinated to claims of other creditors or we could be subject to lender liability claims. • We generally will not control our portfolio companies. • Defaults by our portfolio companies will harm our operating results. • Any unrealized depreciation that we experience in our portfolio may be an indication of future realized losses, which could reduce our income and gains available for distribution. • Prepayments of our debt investments by our portfolio companies could adversely impact our results of operations and reduce our return on equity. • We may be subject to risks associated with “covenant-lite” loans. • We may not realize gains from our equity investments. Risks Related to Leverage • Because we borrow money, the potential for gain or loss on amounts invested in us is magnified and may increase the risk of investing in us. • Substantially all of our assets are subject to security interests under our senior securities and if we default on our obligations under our senior securities, we may suffer adverse consequences, including foreclosure on our assets. • We are subject to risks associated with any revolving credit facility that utilizes a Structured Subsidiary as our interests in any Structured Subsidiary are subordinated and we could be prevented from receiving cash on our equity interests from a Structured Subsidiary. Risks Related to our Adviser and its Affiliates • Our Adviser has conflicts of interest that may create an incentive for the Adviser to enter into investments that are riskier or more speculative than would otherwise be the case and our Adviser may have an incentive to increase portfolio leverage in order to earn higher management fees. • We may be obligated to pay our Adviser incentive compensation even if we incur a net loss due to a decline in the value of our portfolio. • Our Adviser may face conflicts of interest in allocating investment opportunities between us, Main Street and the other advisory clients of our Adviser. • Our Adviser’s liability is limited under the Advisory Agreement, and we have agreed to indemnify our Adviser against certain liabilities, which may lead our Adviser to act in a riskier manner on our behalf than it would when acting for its own account. • Our Adviser can resign on 120 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. Risks Related to BDCs • Operating under the constraints imposed on us as a BDC and RIC may hinder the achievement of our investment objectives. Risks Related to our Securities • Investing in our securities may involve a high degree of risk. • Shares of closed-end investment companies, including BDCs, may trade at a discount to their NAV. • We may not be able to pay distributions to our stockholders, our distributions may not grow over time, and a portion of distributions paid to our stockholders may be a return of capital. Federal Income Tax Risks • We will be subject to corporate-level U.S. federal income tax if we are unable to qualify as a RIC under Subchapter M of the Code. • We may have difficulty paying the distributions required to maintain RIC tax treatment under the Code if we recognize income before or without receiving cash representing such income. 19
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Table of contents General Risk Factors • Events outside of our control, including public health crises, supply chain disruptions and inflation, could negatively affect our portfolio companies and the results of our operations. • 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. • Failure to comply with applicable laws or regulations and changes in laws or regulations governing our operations may adversely affect our business or cause us to alter our business strategy. RISKS RELATED TO OUR BUSINESS AND STRUCTURE Because our Investment Portfolio is recorded at fair value, there is and will continue to be uncertainty as to the value of our portfolio investments. Under the 1940 Act, we are required to carry our portfolio investments at market value or, if there is no readily available market value, at fair value as determined by us pursuant to procedures established and overseen by our Board of Directors. Typically, there is not a public market for the securities of the privately held companies in which we invest through our Private Loan investment strategy and in our LMM investment portfolio. As a result, we value these securities quarterly at fair value based on inputs from management and a nationally recognized independent financial advisory services firm (on a rotational basis) pursuant to Valuation Procedures approved by our Board of Directors. In addition, the market for investments in companies in our Middle Market investment portfolio is generally not a liquid market, and therefore, we primarily use a combination of observable inputs in non-active markets for which sufficient observable inputs were not available to determine the fair value of these investments and unobservable inputs, pursuant to our Valuation Procedures. See Note B.1. — Summary of Significant Accounting Policies — Valuation of the Investment Portfolio included in Item 8. Consolidated Financial Statements and Supplementary Data of this Annual Report on Form 10-K for a detailed discussion of our Investment Portfolio valuation process and procedures. The determination of fair value and consequently, the amount of unrealized gains and losses in our portfolio, are to a certain degree, subjective and dependent on a valuation process approved by our Board of Directors. Certain factors that may be considered in determining the fair value of our investments include external events, such as private mergers, sales and acquisitions involving comparable companies. Because such valuations, and particularly valuations of securities in privately held companies, are inherently uncertain, may fluctuate over short periods of time and may be based on estimates, our determinations of fair value may differ materially from the values that would have been used if a ready market for these securities existed. Due to this uncertainty, our fair value determinations may cause our NAV 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 NAV would pay a higher price than the value of our investments might warrant. Conversely, investors selling our securities during a period in which the NAV understates the value of our investments may receive a lower price for their securities than the value of our investments might warrant. Our financial condition and results of operations depends on our Adviser’s ability to effectively manage and deploy capital. Our ability to achieve our investment objective of maximizing our portfolio’s total return, primarily by generating current income from our debt investments and, to a lesser extent, by generating current income and capital appreciation from our equity and equity-related investments, including warrants, convertible securities and other rights to acquire equity securities in a portfolio company, depends on our Adviser’s ability to effectively manage and deploy capital, which depends, in turn, on our Adviser’s investment team’s ability to identify, evaluate and monitor, and our ability to finance and invest in, companies that meet our investment criteria. Accomplishing our investment objective on a cost-effective basis is largely a function of our investment team’s handling of the investment process, its ability to provide competent, attentive and efficient services and our access to investments offering acceptable terms. In addition to monitoring the performance of our existing investments, members of our investment team are also called upon, from time to time, to provide managerial assistance to some of our portfolio companies. These demands on their time may distract them or slow the rate of investment. Even if we are able to grow and build upon our investment operations, any failure to manage our growth effectively could have a material adverse effect on our business, financial condition, results of operations and prospects. The results of our operations will depend on many factors, including the availability of opportunities for investment, readily accessible short and long-term funding alternatives in the financial markets and economic conditions. Furthermore, if our Adviser cannot successfully operate our business or implement our investment policies and strategies as described herein, it could negatively impact our ability to pay dividends. 20
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Table of contents We are subject to risks associated with the interest rate environment and changes in interest rates will affect our cost of capital, net investment income and the value of our investments. To the extent we borrow money or issue debt securities or preferred stock to make investments, our net investment income will depend, in part, upon the difference between the rate at which we borrow funds or pay interest or dividends on such debt securities or preferred stock and the rate at which we invest these funds. In addition, many of our debt investments and borrowings have floating interest rates that reset on a periodic basis, and many of our investments are subject to interest rate floors. As a result, a change in market interest rates could have a material adverse effect on our net investment income. In periods of rising interest rates, our cost of funds will increase because the interest rates on the amounts borrowed under our credit facilities are floating, and any new fixed rate debt may be issued at higher coupon rates, which could reduce our net investment income to the extent any debt investments have either fixed interest rates, or in periods when debt investments with floating interest rates are subject to an interest rate floor above then current levels. In periods of declining interest rates, our interest income and our net investment income could be reduced as the interest income earned on our floating rate debt investments declines and any new fixed rate debt may be issued at lower coupon rates. See further discussion and analysis at Item 7A. Quantitative and Qualitative Disclosures about Market Risk. We can use interest rate risk management techniques in an effort to limit our exposure to interest rate fluctuations. Such techniques could include various interest rate hedging activities to the extent permitted by the 1940 Act and applicable commodities laws. These activities could limit our ability to participate in the benefits of lower interest rates with respect to the hedged borrowings. Adverse developments resulting from changes in interest rates or hedging transactions could have a material adverse effect on our business, financial condition and results of operations. An increase in the market pricing of the spreads charged over index rates on floating rate investments could lead to a decline in the fair value of the debt securities we own, which would adversely affect our NAV. Also, an increase in interest rates available to investors could make an investment in our common stock less attractive if we are not able to increase our dividends, which could reduce the value of our common stock. We face increasing competition for investment opportunities. We compete for investments with other investment funds (including private equity funds, debt funds, mezzanine funds, collateralized loan obligation funds, or CLOs, BDCs and SBICs), as well as traditional financial services companies such as commercial banks and other sources of funding. Many of our competitors are substantially larger and have considerably greater financial, technical and marketing resources than we do. For example, some competitors may have a lower cost of capital and access to funding sources that are not available to us. In addition, some of our competitors may have higher risk tolerances or different risk assessments than we have. These characteristics could allow our competitors to consider a wider variety of investments, establish more relationships and offer better pricing and more flexible structuring than we are able to do. We may lose investment opportunities if we do not match our competitors’ pricing, terms and structure. If we are forced to match our competitors’ pricing, terms and structure, we may not be able to achieve acceptable returns on our investments or may bear substantial risk of capital loss. Furthermore, many of our competitors are not subject to the regulatory restrictions that the 1940 Act imposes on us as a BDC. We are dependent upon our Adviser’s key investment personnel for our future success. We depend on the members of our Adviser’s investment team, particularly Dwayne L. Hyzak, David L. Magdol, Jesse E. Morris, Jaime Arreola, K. Colton Braud, III, Damian T. Burke, Samuel A. Cashiola, Diego Fernandez, Nicholas T. Meserve and Jonathan B. Montgomery for the identification, review, final selection, structuring, closing and monitoring of our investments. These individuals have significant investment expertise and relationships that we rely on to implement our business plan. Although these executive officers and other key personnel have entered into non-compete arrangements with our Adviser or an affiliate of our Adviser, we cannot guarantee that any of these individuals will remain available to us. If we lose the services of the individuals mentioned above, we may not be able to operate our business as we expect, and our ability to compete could be harmed, which could cause our operating results to suffer. Main Street and the Adviser have entered into a sharing agreement pursuant to which Main Street provides the Adviser with investment professionals and access to its resources. Because the Adviser does not have any employees, it depends solely on the investment professionals provided to it by Main Street pursuant to the sharing agreement for its infrastructure, business relationships and management expertise in connection with its provision of investment advisory services to us. Our success depends on our Adviser’s ability to attract and retain qualified personnel in a competitive environment. Our growth will require that our Adviser is able to retain new investment and administrative personnel in a competitive market. Our Adviser’s ability to attract and retain personnel with the requisite credentials, experience and skills depends on several factors including, but not limited to, our ability to offer competitive wages, benefits and professional 21
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Table of contents growth opportunities. Many of the entities, including investment funds (such as private equity funds, debt funds and mezzanine funds) and traditional financial services companies, with which our Adviser competes for experienced personnel have greater resources than our Adviser. The competitive environment for qualified personnel may require our Adviser to take certain measures to ensure that it is able to attract and retain experienced personnel. Such measures may include increasing the attractiveness of its overall compensation packages, altering the structure of its compensation packages through the use of additional forms of compensation, or other steps. The inability of our Adviser to attract and retain experienced personnel would have a material adverse effect on our business. We may not replicate the historical results achieved by Main Street or by other advisory clients of our Adviser. Although our investment strategy partly overlaps with the investment strategy of Main Street, the parent company of our Adviser, we cannot assure stockholders that we will be able to replicate the historical results achieved by Main Street or other advisory clients of our Adviser. Because of the differences in our business structure, investment strategy and portfolio composition and the changes to our investment strategy in connection with the MSC Income Listing, our investment returns could be substantially lower than the returns achieved by Main Street or other investment advisory clients of our Adviser in prior periods. Additionally, all or a portion of the prior results may have been achieved in particular market conditions that may never be repeated. Moreover, current or future market volatility and regulatory uncertainty may have an adverse impact on our future performance. Our business model depends to a significant extent upon strong referral relationships. We expect that members of our Adviser’s management team will maintain their relationships with intermediaries, financial institutions, investment bankers, commercial bankers, financial advisors, attorneys, accountants, consultants and other individuals within our network, and we will rely to a significant extent upon these relationships to provide us with potential investment opportunities. If our Adviser’s management team fails to maintain its existing relationships or develop new relationships with sources of investment opportunities, we will not be able to grow our Investment Portfolio. In addition, individuals with whom members of our Adviser’s management team have relationships are not obligated to provide us with investment opportunities, and, therefore, there is no assurance that such relationships will generate investment opportunities for us. Our Board of Directors may change our investment objective, operating policies and strategies without prior notice or stockholder approval, the effects of which may be adverse. Our Board of Directors has the authority, except as otherwise provided in the 1940 Act, to modify or waive our investment objective, current operating policies, investment criteria and strategies without prior notice and without stockholder approval. However, absent stockholder approval, we may not change the nature of our business so as to cease to be regulated as, or withdraw our election as, a BDC. We cannot predict the effect any changes to our investment objective, current operating policies, investment criteria and strategies would have on our business, NAV, operating results and value of our stock. However, the effects might be material and adverse, which could negatively affect our business and impair our ability to pay interest and principal payments to holders of our debt instruments and to make distributions to our stockholders and cause our investors to lose all or part of their investment in us. We are a non-diversified investment company within the meaning of the 1940 Act, and therefore we are not limited with respect to the proportion of our assets that may be invested in securities of a single issuer. We are classified as a non-diversified investment company within the meaning of the 1940 Act, which means that we are not limited by the 1940 Act with respect to the proportion of our assets that we may invest in securities of a single issuer. Under the 1940 Act, a “diversified” investment company is required to invest at least 75% of the value of its total assets in cash and cash items, government securities, securities of other investment companies and other securities limited in respect of any one issuer to an amount not greater than 5% of the value of the total assets of such company and no more than 10% of the outstanding voting securities of such issuer. As a non- diversified investment company, we are not subject to this requirement. To the extent that we assume large positions in the securities of a small number of issuers, our NAV may fluctuate to a greater extent than that of a diversified investment company as a result of changes in the financial condition or the market’s assessment of the issuer. We may also be more susceptible to any single economic or regulatory occurrence than a diversified investment company. Beyond our RIC asset diversification requirements and any requirements under our financing arrangements, we do not have fixed guidelines for diversification, and our investments could be concentrated in relatively few portfolio companies. See Risk Factors — Federal Income Tax Risks — We will be subject to corporate-level U.S. federal income tax if we are unable to qualify as a RIC under Subchapter M of the Code. Although we have historically operated as a non-diversified investment company within the meaning of the 1940 Act, our 22
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Table of contents investment portfolio may, from time to time, be comprised of assets that could permit us to qualify as a “diversified” investment company under the 1940 Act. To the extent that we operate as a non-diversified investment company, we may be subject to greater risk. We and our portfolio companies may maintain cash balances at financial institutions that exceed federally insured limits and may otherwise be materially affected by adverse developments affecting the financial services industry, such as actual events or concerns involving liquidity, defaults or non-performance by financial institutions or transactional counterparties. Cash held by us and by our portfolio companies in non-interest-bearing and interest-bearing operating accounts may exceed the Federal Deposit Insurance Corporation (“FDIC”) insurance limits. If such banking institutions were to fail, we or our portfolio companies could lose all or a portion of those amounts held in excess of such insurance limitations. In addition, actual events involving limited liquidity, defaults, non-performance or other adverse developments that affect financial institutions, transactional counterparties or other companies in the financial services industry or the financial services industry generally, or concerns or rumors about any events of these kinds or other similar risks, have in the past and may in the future lead to market-wide liquidity problems, which could adversely affect our and our portfolio companies’ business, financial condition, results of operations and prospects. Although we assess our portfolio companies’ banking relationships as we believe necessary or appropriate, our and our portfolio companies’ access to funding sources and other credit arrangements in amounts adequate to finance or capitalize our respective current and projected future business operations could be significantly impaired by factors that affect us or our portfolio companies, the financial institutions with which we or our portfolio companies have arrangements directly or the financial services industry or economy in general. These factors could include, among others, events such as liquidity constraints or failures, the ability to perform obligations under various types of financial, credit or liquidity agreements or arrangements, disruptions or instability in the financial services industry or financial markets or concerns or negative expectations about the prospects for companies in the financial services industry. These factors could involve financial institutions or financial services industry companies with which we or our portfolio companies have financial or business relationships, but could also include factors involving financial markets or the financial services industry generally. In addition, investor concerns regarding the U.S. or international financial systems could result in less favorable commercial financing terms, including higher interest rates or costs and tighter financial and operating covenants or systemic limitations on access to credit and liquidity sources, thereby making it more difficult for us or our portfolio companies to acquire financing on acceptable terms or at all. We are subject to risks related to corporate social responsibility. Our business faces increasing public scrutiny related to environmental, social and governance (“ESG”) activities. We risk damage to our brand and reputation if we or our Adviser fail to act responsibly in a number of areas, such as environmental stewardship, support for local communities, corporate governance and transparency and considering ESG factors in our investment processes. Adverse incidents with respect to ESG activities could impact the value of our brand, the cost of our operations and relationships with investors, all of which could adversely affect our business and results of operations. Additionally, new regulatory initiatives related to ESG could adversely affect our business. 23
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Table of contents Our bylaws include an exclusive forum selection provision, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers or other agents. Our bylaws provides that, unless we consent in writing to the selection of a different forum, the Circuit Court for Baltimore City, Maryland, or, if that court does not have jurisdiction, the United States District Court for the District of Maryland, Baltimore Division, shall be, except for any claims made under the federal U.S. securities laws, the sole and exclusive forum for (a) any derivative action or proceeding brought on behalf of the Company, (b) any action asserting a claim of breach of any duty owed by a director or officer or other employee of the Company to the Company or to the stockholders of the Company, (c) any action asserting a claim against the Company or any director or officer or other employee of the Company arising pursuant to any provision of the Maryland General Corporation Law, our articles of incorporation or our bylaws, or (d) any action asserting a claim against the Company or any director or officer or other employee of the Company that is governed by the internal affairs doctrine. Such provision does not apply to any claims, suits, actions or proceedings arising under the federal securities laws. This provision may increase costs for stockholders in bringing a claim against us or our directors, officers or other agents. Any person or entity purchasing or otherwise acquiring any interest in shares of our capital stock will be deemed, to the fullest extent permitted by law, to have notice of and consented to these exclusive forum provisions. The exclusive forum selection provision in our bylaws may limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers or other agents, which may discourage lawsuits against us and such persons. It is also possible that, notwithstanding such exclusive forum selection provision, a court could rule that such provision is inapplicable or unenforceable. If this occurred, we may incur additional costs associated with resolving such action in another forum, which could materially adversely affect our business, financial condition and results of operations. RISKS RELATED TO OUR INVESTMENTS The types of portfolio companies in which we invest involve significant risks and we could lose all or part of our investment. Investing in the types of companies that comprise our portfolio companies exposes us to a number of significant risks. Among other things, these companies: • may have limited financial resources and may be unable to meet their obligations under their debt instruments that we hold, which may be accompanied by a deterioration in the value of any collateral and a reduction in the likelihood of us realizing any guarantees from subsidiaries or affiliates of our portfolio companies that we may have obtained in connection with our investment, as well as a corresponding decrease in the value of our investments; • may have shorter operating histories, narrower product lines, smaller market shares and/or significant customer concentrations than larger businesses, which tend to render them more vulnerable to competitors’ actions and market conditions, as well as general economic downturns; • are more likely to depend on the management talents and efforts of a small group of persons; therefore, the death, disability, resignation, termination or significant under-performance of one or more of these persons could have a material adverse impact on our portfolio company and, in turn, on us; • 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; and • generally have less publicly available information about their businesses, operations and financial condition. We are required to rely on the ability of our Adviser’s management team and investment professionals to obtain adequate information to evaluate the potential returns from investing in these companies. If we are unable to uncover all material information about these companies, we may not make a fully informed investment decision, and may lose all or part of our investment. In addition certain of our officers or our Adviser’s officers may serve as directors on the boards of our portfolio companies. To the extent that litigation arises out of our investments in these companies, our officers or our Adviser’s officers may be named as defendants in such litigation, which could result in an expenditure of funds (through our indemnification of such officers and directors) and the diversion of management time and resources. 24
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Table of contents Economic recessions or downturns could impair our portfolio companies’ performance and defaults by our portfolio companies will harm our operating results. Many of our portfolio companies are susceptible to economic slowdowns or recessions and could be unable to repay our loans during these periods. Therefore, the number of non-performing assets are likely to increase and the value of our portfolio is likely to decrease during these periods. Adverse economic conditions could decrease the value of collateral securing any of our loans and the value of any equity investments. A severe recession could further decrease the value of such collateral and result in losses of value in our portfolio and a decrease in our revenues, net income, assets and net worth. 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 maintaining or increasing the level of our investments and harm our operating results. Any deterioration of general economic conditions could lead to significant declines in corporate earnings or loan performance, and the ability of corporate borrowers to service their debt, any of which could trigger a period of global economic slowdown, and have an adverse impact on our performance and financial results, and the value and the liquidity of our investments. In an economic downturn, we could have non-performing assets or an increase in non-performing assets, and we would anticipate that the value of our portfolio would decrease during these periods. Failure to satisfy financial or operating covenants imposed by lenders, including us, to a portfolio company could lead to defaults and, potentially, acceleration of payments on such loans and foreclosure on the assets representing collateral for the portfolio company’s obligations. Cross default provisions under other agreements could be triggered and thus limit the portfolio company’s ability to satisfy its obligations under any debt that we hold and affect the value of any securities we own. We would expect to incur expenses to the extent necessary to seek recovery upon default or to negotiate new terms with a portfolio company following or in anticipation of a default. Rising credit spreads could affect the value of our investments, and rising interest rates make it more difficult for portfolio companies to make periodic payments on their loans. Some of our portfolio investments are debt securities that bear interest at variable rates and may be negatively affected by changes in market interest rates. Rising interest rates make it more difficult for borrowers to repay debt, which could increase the risk of payment defaults and cause the portfolio companies to defer or cancel needed investment. Any failure of one or more portfolio companies to repay or refinance its debt at or prior to maturity or the inability of one or more portfolio companies to make ongoing payments following an increase in contractual interest rates could have a material adverse effect on our business, financial condition, results of operations and cash flows. The value of our securities could also be reduced from an increase in market credit spreads as rates available to investors could make an investment in our securities less attractive than alternative investments. Conversely, decreases in market interest rates could negatively impact the interest income from our variable rate debt investments while the interest we pay on our fixed rate debt securities does not change. A decrease in market interest rates may also have an adverse impact on our returns by requiring us to accept lower yields on our debt investments and by increasing the risk that our portfolio companies will prepay our debt investments, resulting in the need to redeploy capital at potentially lower rates. Inflation could adversely affect the business, results of operations and financial condition of our portfolio companies. Certain of our portfolio companies are in industries that could be impacted by inflation. If such portfolio companies are unable to pass any increases in their costs of operations along to their customers, it could adversely affect their operating results and impact their ability to pay dividends on our equity investments and/or interest and principal on our loans, particularly if interest rates rise in response to inflation. In addition, any projected future decreases in our portfolio companies’ operating results due to inflation could adversely impact the fair value of those investments. Any decreases in the fair value of our investments could result in future realized or unrealized losses and therefore reduce our net increase (decrease) in net assets resulting from operations. We may be exposed to higher risks with respect to our investments that include original issue discount or PIK interest. Our investments may include original issue discount and contractual PIK interest, which represents contractual interest added to a loan balance and due at the end of such loan’s term. To the extent original issue discount or PIK interest 25
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Table of contents constitute a portion of our income, we are exposed to typical risks associated with such income being required to be included in taxable and accounting income prior to receipt of cash, including the following: • original issue discount and PIK instruments may have higher yields, which reflect the payment deferral and credit risk associated with these instruments; • cash distributions paid to investors representing original issue discount income may be effectively paid from offering proceeds or borrowings during any given period; thus, although the source for the cash used to pay a distribution of original issue discount income may come from the cash invested by investors, or our borrowings, the 1940 Act does not require that investors be given notice of this fact; • original issue discount and PIK instruments may have unreliable valuations because their continuing accruals require continuing judgments about the collectability of the deferred payments and the value of the collateral; and • original issue discount and PIK instruments may represent a higher credit risk than coupon loans; even if the conditions for income accrual under U.S. GAAP are satisfied, a borrower could still default when actual payment is due upon the maturity of such loan. The lack of liquidity in our investments may adversely affect our business. We generally invest in companies whose securities are not publicly traded and whose securities will be subject to legal and other restrictions on resale or will otherwise be less liquid than publicly traded securities. The illiquidity of these investments may make it difficult for us to sell these investments when desired. In addition, if we are required to liquidate all or a portion of our portfolio quickly, we may realize significantly less than the value at which we had previously recorded these investments. As a result, we do not expect to achieve liquidity in our investments in the near-term. The illiquidity of most of our investments may make it difficult for us to dispose of them at a favorable price and, as a result, we may suffer losses. We may not have the funds or ability to make additional investments in our portfolio companies. We may not have the funds or ability to make additional investments in our portfolio companies. After our initial investment in a portfolio company, we may be called upon from time to time to provide additional funds to such company or have the opportunity to increase our investment through the extension of additional loans, the exercise of a warrant to purchase equity securities, or the funding of additional equity investments. There is no assurance that we will make, or will have sufficient funds to make, follow-on investments. Any decisions not to make a follow-on investment or any inability on our part to make such an investment may have a negative impact on a portfolio company in need of such an investment, may result in a missed opportunity for us to increase our participation in a successful operation, may reduce our ability to protect an existing investment or may reduce the expected yield on the investment. There may be circumstances where our debt investments could be subordinated to claims of other creditors or we could be subject to lender liability claims. Our portfolio companies may have, or may be permitted to incur, other debt that ranks equally with, or senior to, the debt in which we invest. By their terms, such debt instruments may entitle the holders to receive payment of interest or principal on or before the dates on which we are entitled to receive payments with respect to the debt instruments in which we invest. Also, in the event of insolvency, liquidation, dissolution, reorganization or bankruptcy of a portfolio company, holders of debt instruments ranking senior to our investment in that portfolio company would typically be entitled to receive payment in full before we receive any distribution. After repaying such senior creditors, such portfolio company may not have any remaining assets to use for repaying its obligation to us. In the case of debt ranking equally with debt instruments in which we invest, we would have to share on an equal basis any distributions with other creditors holding such debt in the event of an insolvency, liquidation, dissolution, reorganization or bankruptcy of the relevant portfolio company. Even if our investment is structured as a senior-secured loan, principles of equitable subordination, as defined by existing case law, could lead a bankruptcy court to subordinate all or a portion of our claim to that of other creditors and transfer any lien securing such subordinated claim to the bankruptcy estate. The principles of equitable subordination defined by case law have generally indicated that a claim may be subordinated only if its holder is guilty of misconduct or where the senior loan is re-characterized as an equity investment and the senior lender has actually provided significant managerial assistance to the bankrupt debtor. We may also be subject to lender liability claims for actions taken by us with respect to a borrower’s business or instances where we exercise control over the borrower. It is possible that we could 26
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Table of contents become subject to a lender liability claim, including as a result of actions taken in rendering significant managerial assistance or actions to compel and collect payments from the borrower outside the ordinary course of business. We generally will not control our portfolio companies. We do not, and do not expect to, control the decision making in many of our portfolio companies, even though we may have board representation or board observation rights, and our debt agreements may contain certain restrictive covenants. As a result, we are subject to the risk that a portfolio company in which we invest will make business decisions with which we disagree and the management of such company will take risks or otherwise act in ways that do not serve our interests as debt investors or minority equity holders. Due to the lack of liquidity for our investments in non-traded companies, we may not be able to dispose of our interests in our portfolio companies as readily as we would like or at an appropriate valuation. As a result, a portfolio company may make decisions that would decrease the value of our portfolio holdings. Defaults by our portfolio companies will harm our operating results. A portfolio company’s failure to satisfy financial or operating covenants imposed by us or other lenders could lead to non- payment of interest and other defaults and, potentially, termination of its loans and foreclosure on its secured assets, which could trigger cross-defaults under other agreements and jeopardize a portfolio company’s ability to meet its obligations under the debt or equity securities that we hold. We may incur expenses to the extent necessary to seek recovery upon default or to negotiate new terms, which may include the waiver of certain financial covenants, with a defaulting portfolio company. Any unrealized depreciation that we experience in our portfolio may be an indication of future realized losses, which could reduce our income and gains available for distribution. As a BDC, we are required to carry our investments at market value or, if no market value is ascertainable, at the fair value as determined in accordance with our Valuation Procedures adopted pursuant to Rule 2a-5 under the 1940 Act. Decreases in the market values or fair values of our investments will be recorded as unrealized depreciation. Any unrealized depreciation in our portfolio could be an indication of a portfolio company’s inability to meet its repayment obligations to us with respect to affected loans or a potential impairment of the value of affected equity investments. This could result in realized losses in the future and ultimately in reductions of our income and gains available for distribution in future periods. Prepayments of our debt investments by our portfolio companies could adversely impact our results of operations and reduce our return on equity. We are subject to the risk that the investments we make in our portfolio companies may be repaid prior to maturity. When this occurs, we will generally reinvest these proceeds in temporary investments, pending their future investment in new portfolio companies. These temporary investments will typically have substantially lower yields than the debt being prepaid and we could experience significant delays in reinvesting these amounts. Any future investment in a new portfolio company may also be at lower yields than the debt that was repaid. As a result, our results of operations could be materially adversely affected if one or more of our portfolio companies elect to prepay amounts owed to us. Additionally, prepayments could negatively impact our return on equity, which could result in a decline in the market price of our securities. We may be subject to risks associated with “covenant-lite” loans. Some of the loans in which we invest may be “covenant-lite” loans, which means the loans contain fewer maintenance covenants than other loans (in some cases, none) and do not include terms which allow the lender to monitor the performance of the borrower and declare a default if certain criteria are breached. Generally, “covenant-lite” loans provide borrower companies more freedom to negatively impact lenders because their covenants are incurrence-based, which means they are only tested and can only be breached following an affirmative action of the borrower, rather than by a deterioration in the borrower’s financial condition. To the extent we invest in covenant- lite loans, we may have fewer rights against a borrower and may have a greater risk of loss on such investments as compared to investments in loans with finance maintenance covenants. We may not realize gains from our equity investments. Certain investments that we have made in the past and may make in the future include warrants or other equity securities. Investments in equity securities involve a number of significant risks, including the risk of further dilution as a result of additional issuances, inability to access additional capital and failure to pay current distributions. Investments in 27
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Table of contents preferred securities involve special risks, such as the risk of deferred distributions, credit risk, illiquidity and limited voting rights. In addition, we may from time to time make non-control, equity investments in portfolio companies. Our goal is ultimately to realize gains upon our disposition of such equity interests. However, these equity interests may not appreciate in value and, in fact, may decline in value. Accordingly, we may not be able to realize gains from our equity interests, and any gains that we do realize on the disposition of any equity interests may not be sufficient to offset any other losses we experience. We also may be unable to realize any value if a portfolio company does not have a liquidity event, such as a sale of the business, recapitalization or public offering, which would allow us to sell the underlying equity interests. We often seek puts or similar rights to give us the right to sell our equity securities back to the portfolio company issuer; however, we may be unable to exercise these put rights for the consideration provided in our investment documents if the issuer is in financial distress. Our investments in foreign securities may involve significant risks in addition to the risks inherent in U.S. investments. Our investment strategy contemplates potential investments in debt securities of foreign companies. Investing in foreign companies may expose us to additional risks not typically associated with investing in securities of U.S. companies. These risks include changes in exchange control regulations, political and social instability, expropriation, imposition of foreign taxes, less liquid markets and less available information than is generally the case in the U.S., higher transaction costs, less government supervision of exchanges, brokers and issuers, less developed bankruptcy laws, difficulty in enforcing contractual obligations, lack of uniform accounting and auditing standards and greater price volatility. Although most of our investments will be U.S. dollar denominated, any investments denominated in a foreign currency will be subject to the risk that the value of a particular currency will change in relation to one or more other currencies. Among the factors that may affect currency values are trade balances, the level of short-term interest rates, differences in relative values of similar assets in different currencies, long-term opportunities for investment and capital appreciation, and political developments. RISKS RELATED TO LEVERAGE Because we borrow money, the potential for gain or loss on amounts invested in us is magnified and may increase the risk of investing in us. Borrowings, also known as leverage, magnify the potential for loss on investments in our indebtedness and gain or loss on investments in our equity capital. As we use leverage to partially finance our investments, you will experience increased risks of investing in our securities. Accordingly, any event that adversely affects the value of an investment would be magnified to the extent we use leverage. Such events could result in a substantial loss to us, which would be greater than if leverage had not been used. In addition, our investment objectives are dependent on the continued availability of leverage at attractive relative interest rates. We may also borrow from banks and other lenders and may issue debt securities or enter into other types of borrowing arrangements in the future. Lenders of these senior securities will have fixed dollar claims on our assets that are superior to the claims of our common stockholders, and we would expect such lenders to seek recovery against our assets in the event of a default. We have the ability to pledge up to 100% of our assets and can grant a security interest in all of our assets under the terms of any debt instruments we could enter into with lenders. The terms of our existing indebtedness require us to comply with certain financial and operational covenants, and we expect similar covenants in future debt instruments. Failure to comply with such covenants could result in a default under the applicable credit facility or debt instrument if we are unable to obtain a waiver from the applicable lender or holder, and such lender or holder could accelerate repayment under such indebtedness and negatively affect our business, financial condition, results of operations and cash flows. In addition, under the terms of any credit facility or other debt instrument we enter into, in the event of a default, we are likely to be required by its terms to use the net proceeds of any investments that we sell to repay a portion of the amount borrowed under such facility or instrument before applying such net proceeds to any other uses. See Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources — Capital Resources for a discussion regarding our outstanding indebtedness. If the value of our assets decreases, leveraging would cause NAV to decline more sharply than it otherwise would have had we not leveraged our business. Similarly, any decrease in our income would cause net investment income to decline more sharply than it would have had we not leveraged our business. Such a decline could negatively affect our ability to pay common stock dividends, scheduled debt payments or other payments related to our securities. 28
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Table of contents Illustration: The following table illustrates the effect of leverage on returns from an investment in our common stock assuming various annual returns, net of expenses. The calculations in the table below are hypothetical and actual returns may be higher or lower than those appearing below. Assumed Return on Our Portfolio (net of expenses) (10.0)% (5.0)% 0.0% 5.0% 10.0% Corresponding Net Return to Common Stockholder (25.4)% (15.6)% (5.8)% 4.0% 13.8% _____________________________ (1) Assumes, as of December 31, 2024, $1,224.7 million in total assets, $565.7 million in debt outstanding, $624.9 million in net assets and a weighted-average interest rate of 6.4%. Actual interest payments may be different. (2) In order for us to cover our annual interest payments on indebtedness, we must achieve annual returns on our December 31, 2024 total assets of at least 3.0%. Our ability to achieve our investment objective may depend in part on our ability to access additional leverage on favorable terms and there can be no assurance that such additional leverage can in fact be achieved. If we are unable to obtain leverage or if the interest rates of such leverage are not attractive, we could experience diminished returns. The number of leverage providers and the total amount of financing available could decrease or remain static. Substantially all of our assets are subject to security interests under our senior securities and if we default on our obligations under our senior securities, we may suffer adverse consequences, including foreclosure on our assets. Substantially all of our assets are currently pledged as collateral under our secured debt obligations. If we default on our obligations under our secured debt obligations, our lenders may have the right to foreclose upon and sell, or otherwise transfer, the collateral subject to their security interests or their superior claim. In such event, we may be forced to sell our investments to raise funds to repay our outstanding borrowings in order to avoid foreclosure and these forced sales may be at times and at prices we would not consider advantageous. Moreover, such deleveraging of our company could significantly impair our ability to effectively operate our business in the manner in which we have historically operated. As a result, we could be forced to curtail or cease new investment activities and lower or eliminate the dividends that we have historically paid to our stockholders. In addition, if the lenders exercise their right to sell the assets pledged under our secured debt obligations, such sales may be completed at distressed sale prices, thereby diminishing or potentially eliminating the amount of cash available to us after repayment of the amounts of outstanding borrowings. If our operating performance declines and we are not able to generate sufficient cash flow to service our debt obligations, we may in the future need to refinance or restructure our debt, sell assets, reduce or delay capital investments, seek to raise additional capital or seek to obtain waivers from the required lenders under our debt obligations to avoid being in default. If we are unable to implement one or more of these alternatives, we may not be able to meet our payment obligations under our debt obligations. If we breach our covenants under our debt obligations and seek a waiver, we may not be able to obtain a waiver from the required lenders or debt holders. If this occurs, we would be in default under our debt obligations, the lenders or debt holders could exercise their rights as described above, and we could be forced into bankruptcy or liquidation. If we are unable to repay debt, lenders having secured obligations could proceed against the collateral securing the debt. Because certain of our debt obligations have customary cross-default provisions, if the indebtedness under our debt obligations is accelerated, we may be unable to repay or finance the amounts due. We are subject to risks associated with any revolving credit facility that utilizes a Structured Subsidiary as our interests in any Structured Subsidiary are subordinated and we could be prevented from receiving cash on our equity interests from a Structured Subsidiary. We own directly or indirectly 100% of the equity interests in MSIF Funding, LLC (“MSIF Funding”), a special purpose Structured Subsidiary utilized in our senior secured special purpose vehicle revolving credit facility (the “SPV Facility”). We consolidate the financial statements of MSIF Funding in our consolidated financial statements and treat the indebtedness under the SPV Facility as our leverage. Our interest in MSIF Funding is subordinated in priority of payment to every other obligation of MSIF Funding and is subject to certain payment restrictions set forth in the SPV Facility. We receive cash from MSIF Funding only to the extent that we receive distributions on our equity interests therein. MSIF Funding could make distributions on its equity interests only to the extent permitted by the payment priority provisions of the SPV Facility. The SPV Facility generally provides that payments on the respective interests could not be made on any payment date unless all amounts owing to the lenders and other secured parties are paid in full. In addition, if (1) (2) 29
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Table of contents MSIF Funding does not meet the leverage and borrowing base requirements set forth in the agreement governing the SPV Facility, a default could occur. In the event of a default under the SPV Facility credit agreement, cash would be diverted from us to pay the applicable lenders and other secured parties in amounts sufficient to cause such tests to be satisfied. In the event that we fail to receive cash from MSIF Funding, we could be unable to make distributions to our stockholders in amounts sufficient to maintain our status as a RIC, or at all. We also could be forced to sell investments in portfolio companies at less than their fair value in order to continue making such distributions. We cannot assure you that distributions on the assets held by MSIF Funding will be sufficient to make any distributions to us or that such distributions will meet our expectations. Our equity interest in MSIF Funding ranks behind all of the secured and unsecured creditors, known or unknown, including the lenders in the SPV Facility. Consequently, to the extent that the value of MSIF Funding’s portfolio of loan investments has been reduced as a result of conditions in the credit markets, defaulted loans, capital gains and losses on the underlying assets, prepayment or changes in interest rates, the returns on our investments in MSIF Funding could be reduced. Accordingly, our investments in MSIF Funding could be subject to up to 100% loss. The ability to sell investments held by a Structured Subsidiary is limited. The credit agreement governing the SPV Facility places significant restrictions on our ability, as servicer, to sell investments. As a result, there could be times or circumstances during which we are unable to sell investments or take other actions that might be in our best interests. We may invest in derivatives or other assets that expose us to certain risks, including market risk, liquidity risk and other risks similar to those associated with the use of leverage. We may invest in derivatives and other assets that are subject to many of the same types of risks related to the use of leverage. Derivative transactions, if any, will generally create leverage for us and involve significant risks. The primary risks related to derivative transactions include counterparty, correlation, liquidity, leverage, volatility, over-the-counter trading, operational and legal risks. In addition, a small investment in derivatives could have a large potential impact on our performance, effecting a form of investment leverage on our portfolio. In certain types of derivative transactions, we could lose the entire amount of our investment; in other types of derivative transactions the potential loss is theoretically unlimited. Under SEC Rule 18f-4 under the 1940 Act (“Rule 18f-4”), related to use of derivatives, short sales, reverse repurchase agreements and certain other transactions by BDCs, we are permitted to enter into derivatives and other transactions that create future payment or delivery obligations, including short sales, notwithstanding the senior security provision of the 1940 Act if we comply with certain value-at-risk leverage limits, adopt a derivatives risk management program and implement board oversight and reporting requirements or otherwise comply with a “limited derivatives users” exception. Rule 18f-4 also permits us to enter into reverse repurchase agreements or similar financing transactions notwithstanding the senior security provision of the 1940 Act if we aggregate the amount of indebtedness associated with our reverse repurchase agreements or similar financing transactions with the aggregate amount of any other senior securities representing indebtedness when calculating the asset coverage ratios as discussed herein. In addition, we are permitted to invest in a security on a when-issued or forward-settling basis, or with a non-standard settlement cycle, and the transaction will be deemed not to involve a senior security under the 1940 Act, provided that (i) we intend to physically settle the transaction and (ii) the transaction will settle within 35 days of its trade date (the “Delayed-Settlement Securities Provision”). We may otherwise engage in such transaction as a “derivatives transaction” for purposes of compliance with the rule. Furthermore, we are permitted to enter into an unfunded commitment agreement, and such unfunded commitment agreement will not be subject to the asset coverage requirements under the 1940 Act if we reasonably believe, at the time we enter into such agreement, that we will have sufficient cash and cash equivalents to meet our obligations with respect to all such agreements as they come due. We cannot predict the effects of these requirements. We have adopted updated policies and procedures in compliance with Rule 18f-4. We expect to qualify as a “limited derivatives user.” Future legislation or rules may modify how we treat derivatives and other financial arrangements for purposes of our compliance with the leverage limitations of the 1940 Act, which may be materially adverse to us and our investors. 30
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Table of contents RISKS RELATED TO OUR ADVISER AND ITS AFFILIATES Our Adviser has conflicts of interest that may create an incentive for the Adviser to enter into investments that are riskier or more speculative than would otherwise be the case and our Adviser may have an incentive to increase portfolio leverage in order to earn higher management fees. Our Adviser and its affiliates, including our officers, may have conflicts of interest as a result of compensation arrangements, time constraints and competition for investments, which they will attempt to resolve in a fair and equitable manner, but which may result in actions that are not in the best interests of our stockholders. Our Adviser receives substantial fees from us in return for its services and these fees could influence the investment and other decisions they make on our behalf. Among other matters, the compensation arrangements could affect its judgment with respect to public offerings of equity by us, which may allow our Adviser to earn increased management fees. The incentive fee payable by us to our Adviser may create an incentive for it 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 fee payable to our Adviser is determined may encourage it to use leverage to increase the return on our investments. As additional leverage would magnify positive returns, if any, on our portfolio, our incentive fee would become payable to our Adviser (i.e., exceed the hurdle rate) at a lower average gross return on our portfolio. Additionally, the incentive fee payable by us to the Adviser may create an incentive for the Adviser to cause us to realize capital gains or losses that may not be in the best interests of us or our stockholders. Under the incentive fee structure, the Adviser benefits when we recognize capital gains and, because the Adviser determines when an investment is sold, the Adviser can influence the timing of the recognition of such capital gains. In addition, the fact that our management fee is payable based upon our total assets, which includes any investments funded through increased borrowings, may encourage our Adviser to use leverage to make additional investments. Under certain circumstances, the use of leverage (or an investment in companies that are highly leveraged) may increase the likelihood of default, which would result in higher investment losses. We may be obligated to pay our Adviser incentive compensation even if we incur a net loss due to a decline in the value of our portfolio. The Advisory Agreement entitles our Adviser to receive incentive compensation on income regardless of any capital losses. In such case, we may be required to pay our Adviser incentive compensation for a fiscal quarter even if there is a decline in the value of our portfolio or if we incur a net loss for that quarter. Any incentive fee payable by us that relates to our net investment income may be computed and paid on income that may include interest that has been accrued but not yet received. If a portfolio company defaults on a loan that is structured to provide accrued interest, it is possible that accrued interest previously included in the calculation of the incentive fee will become uncollectible. Pursuant to the Advisory Agreement, our Adviser will not be under any obligation to reimburse us for any part of the incentive fee it received that was based on accrued income that we never received in cash as a result of a default by an entity on the obligation that resulted in the accrual of such income and such circumstances would result in our paying an incentive fee on income we never received in cash. Our Adviser may face conflicts of interest in allocating investment opportunities between us, Main Street and the other advisory clients of our Adviser. The investment professionals utilized by our Adviser are also the investment professionals responsible for investing and managing Main Street’s investment portfolio as well as the investment portfolios of other advisory clients of our Adviser. These professionals are responsible for allocating investment opportunities between us, Main Street and other advisory clients managed by it. We have made and, in the future, intend to make co-investments with Main Street and other advisory clients of the Adviser in accordance with the conditions of an exemptive relief order from the SEC permitting such co-investment transactions. The order requires, among other things, that Main Street and the Adviser consider whether each such investment opportunity is appropriate for us, Main Street and the Adviser’s advised clients and, if it is appropriate, to propose an allocation of the investment opportunity between such other parties. As a consequence, it may be more difficult for us to maintain or increase the size of our Investment Portfolio in the future. Although the Adviser and Main Street will endeavor to allocate investment opportunities in a fair and equitable manner, including in accordance with the conditions set forth in the order issued by the SEC when relying on such order, we may face conflicts in allocating investment opportunities between us, Main Street and other advisory clients of the Adviser. Because our Adviser may receive performance-based fee compensation from other advisory clients it manages, if such clients have more favorable terms or provisions than with us, this may provide our Adviser an incentive to allocate opportunities to other advisory clients our Adviser manages, instead of us. Our Adviser and Main Street have implemented an allocation policy to ensure 31
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Table of contents the equitable distribution of investment opportunities and, as a result, we may be unable to participate in certain investments based upon such allocation policy. Main Street owns approximately 2.9% of our common stock, which could result in its influence over the outcome of matters submitted to the vote of our stockholders. Main Street owns approximately 2.9% of our outstanding common stock and may acquire additional shares in the future. As a result, Main Street may have influence over the outcome of matters submitted to a vote of our stockholders, including the election of our directors or transactions involving a change in control. Their interests may conflict with, or differ from, the interests of our other stockholders. So long as Main Street continues to own shares of our common stock, it could influence our corporate decisions submitted to our stockholders for approval, regardless of whether we terminate the management agreement with the Adviser. Our Adviser’s liability is limited under the Advisory Agreement, and we have agreed to indemnify our Adviser against certain liabilities, which may lead our Adviser to act in a riskier manner on our behalf than it would when acting for its own account. Under the Advisory Agreement, our Adviser and its officers, directors, managers, partners, shareholders, members (and their shareholders or members, including the owners of their shareholders or members), agents, employees, controlling persons and any other person or entity affiliated with or acting on behalf of the Adviser are not liable to us for acts or omissions performed by our Adviser in accordance with and pursuant to the Advisory Agreement, except those resulting from acts constituting fraud, 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 the Advisory Agreement. In addition, we have agreed to indemnify our Adviser and its officers, directors, managers, partners, shareholders, members (and their shareholders or members, including the owners of their shareholders or members), agents, employees, controlling persons and any other person or entity affiliated with or acting on behalf of the Adviser from and against any claims or liabilities, including reasonable legal fees, arising out of or in connection with any action taken or omitted on our behalf pursuant to authority granted by the Advisory Agreement, except where attributable to fraud, 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 the Advisory Agreement. These protections may lead our Adviser to act in a riskier manner when acting on our behalf than they would when acting for their own account. Our Adviser can resign on 120 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. Our Adviser has the right, under the Advisory Agreement, to resign at any time upon not less than 120 days’ written notice, whether we have found a replacement or not. If our Adviser resigns, we may not be able to find a replacement or hire internal management with similar expertise and ability to provide the same or equivalent services on acceptable terms within 120 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 value of our shares may decline. 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 business, financial condition, results of operations and cash flows. RISKS RELATED TO BDCs Failure to maintain our status as a BDC would reduce our operating flexibility. If we do not remain a BDC, we might be regulated as a closed-end investment company under the 1940 Act, which would subject us to substantially more regulatory restrictions under the 1940 Act and correspondingly decrease our operating flexibility. Operating under the constraints imposed on us as a BDC and RIC may hinder the achievement of our investment objectives. The 1940 Act and the Code impose numerous constraints on the operations of BDCs and RICs that do not apply to certain of the other investment vehicles that we may compete with. BDCs are required, for example, to invest at least 70% of their total assets in certain qualifying assets, including U.S. private or thinly traded public companies, cash, cash equivalents, U.S. government securities and other high-quality debt instruments that mature in one year or less from the date of investment. Moreover, qualification for taxation as a RIC requires satisfaction of source-of-income, asset 32
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Table of contents diversification and distribution requirements. Operating under these constraints may hinder our ability to take advantage of attractive investment opportunities and to achieve our investment objective. Any failure to do so could subject us to enforcement action by the SEC, cause us to fail to satisfy the requirements associated with RIC status and subject us to entity-level corporate income taxation, cause us to fail the 70% test described above or otherwise have a material adverse effect on our business, financial condition or results of operations. We may be precluded from investing in what our Adviser believes are attractive investments if such investments are not qualifying assets for purposes of the 1940 Act. If we do not invest a sufficient portion of our assets in qualifying assets, we will be prohibited from making any additional investment that is not a qualifying asset and could be forced to forgo attractive investment opportunities. Similarly, these rules could prevent us from making follow-on investments in existing portfolio companies (which could result in the dilution of our position). If we fail to maintain our status as a BDC, we might be regulated as a closed-end investment company that is required to register under the 1940 Act, which would subject us to additional regulatory restrictions and significantly decrease our operating flexibility. In addition, any such failure could cause an event of default under any outstanding indebtedness we might have, which could have a material adverse effect on our business, financial condition or results of operations. Regulations governing our operation as a BDC will affect our ability to, and the way in which we, raise additional capital. Our business will require capital to operate and grow. We may acquire such additional capital from the following sources: Senior Securities We may issue debt securities or preferred stock and/or borrow money from banks or other financial institutions, which we refer to collectively as senior securities. As a result of issuing senior securities, we will be exposed to additional risks, including the following: • Prior to 2018 legislation that modified the asset coverage requirements of the 1940 Act, we were permitted, as a BDC, to issue senior securities only in amounts such that our asset coverage, or BDC asset coverage ratio, as defined in the 1940 Act, equals at least 200% of all debt and/or senior stock immediately after each such issuance. However, 2018 legislation modified the 1940 Act by allowing a BDC to increase the maximum amount of leverage it may incur such that a BDC’s asset coverage ratio could be reduced from an asset coverage ratio of 200% to an asset coverage ratio of 150%, if certain requirements are met. On January 29, 2025, the Board, including a “required majority” (as such term is defined in Section 57(o) of the 1940 Act) of the Board, approved the application of the modified asset coverage requirements set forth in Section 61(a)(2) of the 1940 Act, which will result in the Company’s asset coverage requirements applicable to senior securities being reduced from 200% to 150%, effective on January 29, 2026. We are permitted to increase our leverage capacity sooner if stockholders representing at least a majority of the votes cast, when quorum is met, approve a proposal to do so. If we receive such stockholder approval, we would be permitted to increase our leverage capacity on the first day after such approval. • If the value of our assets declines, we may be unable to satisfy the asset coverage requirement tests. If that happens, we will be prohibited from issuing debt securities or preferred stock and/or borrowing money from banks or other financial institutions and may not be permitted to declare a cash dividend or make any cash distribution to stockholders or repurchase shares until such time as we satisfy this test. • Any amounts that we use to service our debt or make payments on preferred stock will not be available for dividends to our common stockholders. • It is likely that any senior securities or other indebtedness we issue will be governed by an indenture or other instrument containing covenants restricting our operating flexibility. Additionally, some of these securities or other indebtedness may be rated by rating agencies, and in obtaining a rating for such securities and other indebtedness, we may be required to abide by operating and investment guidelines that further restrict operating and financial flexibility. • We and, indirectly, our stockholders will bear the cost of issuing and servicing such securities and other indebtedness. 33
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Table of contents • Preferred stock or any convertible or exchangeable securities that we issue in the future may have rights, preferences and privileges more favorable than those of our common stock, including separate voting rights and could delay or prevent a transaction or a change in control to the detriment of the holders of our common stock. • Any unsecured debt issued by us would generally rank (i) pari passu with our current and future unsecured indebtedness and effectively subordinated to all of our existing and future secured indebtedness, to the extent of the value of the assets securing such indebtedness, and (ii) structurally subordinated to all existing and future indebtedness and other obligations of any of our subsidiaries. Additional Common Stock We are not generally able to issue and sell our common stock at a price below NAV per share. We may, however, sell our common stock, warrants, options or rights to acquire our common stock, at a price below the current NAV per share of the common stock if our Board of Directors determines that such sale is in the best interests of our stockholders, and our stockholders approve such sale. See Risk Factors — Risks Related to our Securities — Stockholders may incur dilution if we sell shares of our common stock in one or more offerings at prices below the then current NAV per share of our common stock or issue securities to subscribe to, convert to or purchase shares of our common stock. for a discussion related to us issuing shares of our common stock below NAV. Our stockholders have authorized us to issue warrants, options or rights to subscribe for, convert to, or purchase shares of our common stock at a price per share below the NAV per share, subject to the applicable requirements of the 1940 Act. There is no expiration date on our ability to issue such warrants, options, rights or convertible securities based on this stockholder approval. If we raise additional funds by issuing more common stock or senior securities convertible into, or exchangeable for, our common stock, the percentage ownership of our stockholders at that time would decrease, and they may experience dilution. Moreover, we can offer no assurance that we will be able to issue and sell additional equity securities in the future, on favorable terms or at all. RISKS RELATED TO OUR SECURITIES Investing in our securities may involve a high degree of risk. The investments we make in accordance with our investment objective may result in a higher amount of risk than alternative investment options and a higher risk of volatility or loss of principal. Our investments in portfolio companies involve higher levels of risk, and therefore, an investment in our securities may not be suitable for someone with lower risk tolerance. Shares of closed-end investment companies, including BDCs, may trade at a discount to their NAV per share. Shares of closed-end investment companies, including BDCs, may trade at a discount to NAV per share. This characteristic of closed-end investment companies and BDCs is separate and distinct from the risk that our NAV per share may decline. We cannot predict whether our common stock will trade at, above or below NAV. In addition, if our common stock trades below our NAV per share, we will generally not be able to issue additional common stock at the market price unless our stockholders approve such a sale and our Board of Directors makes certain determinations. See Risk Factors — Risks Related to our Securities — Stockholders may incur dilution if we sell shares of our common stock in one or more offerings at prices below the then current NAV per share of our common stock or issue securities to subscribe to, convert to or purchase shares of our common stock. for a discussion related to us issuing shares of our common stock below NAV. The market price of our securities may be volatile and fluctuate significantly. Fluctuations in the trading prices of our securities may adversely affect the liquidity of the trading market for our securities and, if we seek to raise capital through future securities offerings, our ability to raise such capital. The market price and liquidity of the market for our securities may be 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 our sector, which are not necessarily related to the operating performance of these companies; • changes in regulatory policies, accounting pronouncements or tax guidelines; • the exclusion of BDC common stock from certain market indices, such as what happened with respect to the Russell indices and the Standard and Poor’s indices, could reduce the ability of certain investment funds to own our common stock and limit the number of owners of our common stock and otherwise negatively impact the market price of our common stock; 34
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Table of contents • inability to obtain any exemptive relief that may be required by us in the future from the SEC; • loss of our BDC or RIC status or any of the Funds’ status as an SBIC; • changes in our earnings or variations in our operating results; • changes in the value of our portfolio of investments; • any shortfall in our investment income or net investment income or any increase in losses from levels expected by investors or securities analysts; • loss of a major funding source; • fluctuations in interest rates; • the operating performance of companies comparable to us; • departure of our key personnel; • proposed, or completed, offerings of our securities, including classes other than our common stock; • global or national credit market changes; and • general economic trends and other external factors. We may not be able to pay distributions to our stockholders, our distributions may not grow over time, and a portion of distributions paid to our stockholders may be a return of capital. We intend to pay distributions to our stockholders out of assets legally available for distribution. We cannot assure you that we will achieve investment results that will allow us to pay a specified level of cash distributions, previously projected distributions for future periods, or year-to-year increases in cash distributions. Our ability to pay distributions might be adversely affected by, among other things, the impact of one or more of the risk factors described herein. In addition, the inability to satisfy the asset coverage test applicable to us as a BDC could limit our ability to pay distributions. All distributions will be paid at the discretion of our Board of Directors and will depend on our earnings, our financial condition, maintenance of our RIC status, compliance with applicable BDC regulations, compliance with our debt covenants and such other factors as our Board of Directors may deem relevant from time to time. We cannot assure you that we will pay distributions to our stockholders in the future. When we make distributions, we will be required to determine the extent to which such distributions are paid out of current or accumulated taxable earnings, recognized capital gains or capital. To the extent there is a return of capital, investors will be required to reduce their basis in our stock for U.S. federal income tax purposes, which may result in higher tax liability when the shares are sold, even if they have not increased in value or have lost value. In addition, any return of capital will be net of any sales load and offering expenses associated with sales of shares of our common stock. In the future, our distributions may include a return of capital. Stockholders may incur dilution if we sell shares of our common stock in one or more offerings at prices below the then current NAV per share of our common stock or issue securities to subscribe to, convert to or purchase shares of our common stock. The 1940 Act prohibits us from selling shares of our common stock at a price below the current NAV per share of such stock, with certain exceptions. One such exception is prior stockholder approval of issuances below NAV provided that our Board of Directors makes certain determinations. We generally have not sought stockholder authorization to sell shares of our common stock below the then current NAV per share of our common stock; however, at the 2025 Special Meeting, in advance of the MSC Income Listing, we received approval from our stockholders to have the flexibility, with the approval of the Board of Directors, to offer and sell shares of our common stock at a price below the current net asset value per share until December 11, 2025. We may also seek such authorization at future annual or special meetings of stockholders. Any decision to sell shares of our common stock below the then current NAV per share of our common stock would be subject to the determination by our Board of Directors that such issuance is in our and our stockholders’ best interests. If we were to sell shares of our common stock below NAV per share, such sales would result in an immediate dilution to the NAV per share. This dilution would occur as a result of the sale of shares at a price below the then current 35
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Table of contents NAV per share of our common stock and a proportionately greater decrease in a stockholder’s interest in our earnings and assets and voting interest in us than the increase in our assets resulting from such issuance. Because the number of shares of common stock that could be so issued and the timing of any issuance is not currently known, the actual dilutive effect cannot be predicted; however, the example below illustrates the effect of dilution to existing stockholders resulting from the sale of common stock at prices below the NAV of such shares. Illustration: Example of Dilutive Effect of the Issuance of Shares Below NAV. Assume that Company XYZ has 1,000,000 total shares outstanding, $15,000,000 in total assets and $5,000,000 in total liabilities. The NAV per share of the common stock of Company XYZ is $10.00. The following table illustrates the reduction to NAV and the dilution experienced by Stockholder A following the sale of 40,000 shares of the common stock of Company XYZ at $9.50 per share, a price below its NAV per share. Prior to Sale BelowNAV Following Sale BelowNAV Percentage Change Reduction to NAV Total Shares Outstanding 1,000,000 1,040,000 4.0 % NAV per share $ 10.00 $ 9.98 (0.2)% Dilution to Existing Stockholder(1) Shares Held by Stockholder A 10,000 10,000 — % Percentage Held by Stockholder A 1.00 % 0.96 % (4.0)% Total Interest of Stockholder A in NAV $ 100,000 $ 99,808 (0.2)% (1) Assumes that Stockholder A does not purchase additional shares in the sale of shares below NAV. Our common stockholders’ interest in us will be diluted if we issue additional shares, which could reduce the overall value of their investment. Our investors do not have preemptive rights to purchase any shares of common stock we issue in the future. Our articles of incorporation authorize us to issue up to 450,000,000 shares of common stock. Pursuant to our articles of incorporation, a majority of our entire Board of Directors may amend our Articles of Incorporation from time to time to increase or decrease the aggregate number of authorized shares of stock or the number of authorized shares of stock of any class or series without stockholder approval. Our Board of Directors may elect to sell additional shares in future public offerings or issue equity interests in private offerings. To the extent we issue additional equity interests, our stockholders’ percentage ownership interest in us will be diluted. In addition, depending upon the terms and pricing of any additional offerings and the value of our investments, stockholders may also experience dilution in the book value and fair value of their shares of common stock. Purchases of shares of our common stock by us or Main Street under open-market purchase programs may result in the price of shares of our common stock being higher than the price that otherwise might exist in the open market. Our Board of Directors authorized us to repurchase shares of our common stock through an open-market share repurchase program for up to $65.0 million in the aggregate of shares of our common stock for a 12-month period starting in March 2025. Pursuant to such authorization, we have entered into the Company Rule 10b5-1 Stock Repurchase Plan to facilitate the repurchase of up to the full $65.0 million in shares of our common stock authorized under the share repurchase program in accordance with the guidelines specified in Rule 10b-18 and Rule 10b5-1 of the Exchange Act. In addition, Main Street intends to purchase up to $20.0 million in the aggregate of shares of our common stock in the open market for a 12-month period starting in March 2025, pursuant to the terms of the Main Street Rule 10b5-1 Stock Purchase Plan. The purchases of shares pursuant to the Main Street Rule 10b5-1 Stock Purchase Plan will be implemented in accordance with Rule 10b5-1 and Rule 10b-18 under the Exchange Act. These activities may have the effect of maintaining the market price of shares our common stock or mitigating a decline in the market price of the shares of our common stock, and, as a result, the price of our shares of common stock may be higher than the price that otherwise might exist in the open market. 36
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Table of contents Provisions of the Maryland General Corporation Law and our articles of incorporation and bylaws could deter takeover attempts and have an adverse impact on the price of our common stock. The Maryland General Corporation Law and our articles of incorporation and bylaws contain provisions that may have the effect of discouraging, delaying or making difficult a change in control of our company or the removal of our incumbent directors. The existence of these provisions, among others, may have a negative impact on the price of our common stock and may discourage third-party bids for ownership of our company. These provisions may prevent any premiums being offered to you for our common stock. We may in the future determine to issue preferred stock, which could adversely affect the market value of our common stock. The issuance of shares of preferred stock with dividend or conversion rights, liquidation preferences or other economic terms favorable to the holders of preferred stock could adversely affect the market price for our common stock by making an investment in the common stock less attractive. In addition, the dividends on any preferred stock we issue must be cumulative. Payment of dividends and repayment of the liquidation preference of preferred stock must take preference over any dividends or other payments to our common stockholders, and holders of preferred stock are not subject to any of our expenses or losses and are not entitled to participate in any income or appreciation in excess of their stated preference (other than convertible preferred stock that converts into common stock). In addition, under the 1940 Act, preferred stock constitutes a “senior security” for purposes of the asset coverage test. 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. FEDERAL INCOME TAX RISKS We will be subject to corporate-level U.S. federal income tax if we are unable to qualify as a RIC under Subchapter M of the Code. To maintain RIC tax treatment under the Code, we must meet the following annual distribution, income source and asset diversification requirements: • The Annual Distribution Requirement for a RIC will be satisfied if we distribute to our stockholders on an annual basis at least 90% of our net ordinary taxable income and realized net short-term capital gains in excess of realized net long-term capital losses, if any. Depending on the level of taxable income earned in a tax year, we may choose to carry forward taxable income in excess of current year distributions into the next tax year and pay a 4% U.S. federal excise tax on such income. Any such carryover taxable income must be distributed through a dividend declared prior to the later of (i) the filing of the final tax return related to the year which generated such taxable income or (ii) the fifteenth day of the ninth month following the close of the year in which such taxable income was generated. For more information regarding tax treatment, see Business — Regulation — Taxation as a Regulated Investment Company. Because we use debt financing, we are subject to certain asset coverage ratio requirements under the 1940 Act and are (and may in the future become) subject to certain financial covenants under loan and credit agreements that could, under certain circumstances, restrict us from making distributions necessary to satisfy the distribution requirement. In addition, because we receive non-cash sources of income such as PIK interest which involves us recognizing taxable income without receiving the cash representing such income, we may have difficulty meeting the distribution requirement. If we are unable to obtain cash from other sources, we could fail to qualify for RIC tax treatment and thus become subject to corporate- level U.S. federal income tax. • The source-of-income requirement will be satisfied if we obtain at least 90% of our gross income for each year from dividends, interest, gains from the sale of stock or securities or similar sources. • The asset diversification requirement will be satisfied if we meet certain asset diversification requirements at the end of each quarter of our taxable year. To satisfy this requirement, at least 50% of the value of our assets must consist of cash, cash equivalents, U.S. government securities, securities of other RICs, and other acceptable securities; and no more than 25% of the value of our assets can be invested in the securities, other than U.S. government securities or securities of other RICs, (i) of one issuer, (ii) of two or more issuers that are controlled, 37
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Table of contents as determined under applicable Code rules, by us and that are engaged in the same or similar or related trades or businesses or (iii) of certain “qualified publicly traded partnerships.” Failure to meet these requirements may result in our having to dispose of certain investments quickly in order to prevent the loss of RIC status. Because most of our investments are in privately held companies, and therefore illiquid, any such dispositions could be made at disadvantageous prices and could result in substantial losses. Moreover, if we fail to maintain RIC tax treatment for any reason and are subject to corporate income tax, the resulting corporate taxes could substantially reduce our net assets, the amount of income available for distribution and the amount of our distributions. We may have difficulty paying the distributions required to maintain RIC tax treatment under the Code if we recognize income before or without receiving cash representing such income. We will include in income certain amounts that we have not yet received in cash, such as: (i) amortization of original issue discount, which may arise if we receive warrants in connection with the origination of a loan such that ascribing a value to the warrants creates original issue discount in the debt instrument, if we invest in a debt investment at a discount to the par value of the debt security or possibly in other circumstances; (ii) contractual payment-in-kind, or PIK, interest, which represents contractual interest added to the loan balance and due at the end of the loan term; (iii) contractual preferred dividends, which represents contractual dividends added to the preferred stock and due at the end of the preferred stock term, subject to adequate profitability at the portfolio company; or (iv) amortization of market discount, which is associated with loans purchased in the secondary market at a discount to par value. Such amortization of original issue discounts, increases in loan balances as a result of contractual PIK arrangements, cumulative preferred dividends, or amortization of market discount will be included in income before we receive the corresponding cash payments. We also may be required to include in income certain other amounts before we receive such amounts in cash. Investments structured with these features may represent a higher level of credit risk compared to investments generating income which must be paid in cash on a current basis. Since, in certain cases, we may recognize taxable income before or without receiving cash representing such income, we may have difficulty meeting the Annual Distribution Requirement necessary to maintain RIC tax treatment under the Code. Accordingly, we may have to sell some of our investments at times and/or at prices we would not consider advantageous, raise additional debt or equity capital or forgo new investment opportunities for this purpose. If we are not able to obtain cash from other sources, we may fail to qualify for RIC tax treatment and thus become subject to corporate-level U.S. federal income tax. For additional discussion regarding the tax implications of a RIC, please see Item 1. Business — Regulation — Taxation as a Regulated Investment Company. We may in the future choose to pay dividends in our own stock, in which case you may be required to pay tax in excess of the cash you receive. We may distribute taxable dividends that are payable in part in our stock. Under certain applicable provisions of the Code and the Treasury regulations, distributions payable by us in cash or in shares of stock (at the stockholders’ election) would satisfy the Annual Distribution Requirement. The Internal Revenue Service has issued guidance providing that a dividend payable in stock or in cash at the election of the stockholders will be treated as a taxable dividend eligible for the dividends paid deduction provided at least 20% of the total distribution is payable in cash and certain other requirements are satisfied. According to this guidance, if too many stockholders elect to receive their distributions in cash, each such stockholder would receive a pro rata share of the total cash to be distributed and would receive the remainder of their distribution in shares of stock. Taxable stockholders receiving such dividends will be required to include the full amount of the dividend as ordinary income (or as long-term capital gain to the extent such dividend is properly reported as a capital gain dividend) to the extent of our current and accumulated earnings and profits for U.S. federal income tax purposes. As a result, a U.S. stockholder may be required to pay tax with respect to such dividends in excess of any cash received. If a U.S. stockholder sells the stock it receives as a dividend in order to pay this tax, the sales proceeds may be less than the amount included in income with respect to the dividend, depending on the market price of our stock at the time of the sale. Furthermore, with respect to non-U.S. stockholders, we may be required to withhold U.S. tax with respect to such dividends, including in respect of all or a portion of such dividend that is payable in stock. In addition, if a significant number of our stockholders determine to sell shares of our stock in order to pay taxes owed on dividends, it may put downward pressure on the trading price of our stock. Stockholders may have current tax liability on dividends they elect to reinvest in our common stock but would not receive cash from such dividends to pay such tax liability. If stockholders participate in our dividend reinvestment plan, they will be deemed to have received, and for federal income tax purposes will be taxed on, the amount reinvested in our common stock to the extent the amount reinvested was not a tax-free return of capital. As a result, unless a stockholder is a tax-exempt entity, it may have to use 38
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Table of contents funds from other sources to pay its tax liability on the value of the dividend that they have elected to have reinvested in our common stock. Legislative or regulatory tax changes could adversely affect our stockholders. At any time, the federal income tax laws governing RICs or the administrative interpretations of those laws or regulations may be amended. Any new laws, regulations or interpretations may take effect retroactively and could adversely affect the taxation of us or our stockholders. Therefore, changes in tax laws, regulations or administrative interpretations or any amendments thereto could diminish the value of an investment in our shares or the value or the resale potential of our investments. If we do not comply with applicable laws and regulations, we could lose any licenses that we then hold for the conduct of our business and may be subject to civil fines and criminal penalties. GENERAL RISK FACTORS Events outside of our control, including public health crises, supply chain disruptions and inflation, could negatively affect our portfolio companies and the results of our operations. Periods of market volatility could occur in response to pandemics or other events outside of our control. We and the portfolio companies in which we invest in could be affected by force majeure events (i.e., events beyond the control of the party claiming that the event has occurred, such as acts of God, fire, flood, earthquakes, outbreaks of an infectious disease, pandemic or any other serious public health concern, war, terrorism, labor strikes, major plant breakdowns, pipeline or electricity line ruptures, failure of technology, defective design and construction, accidents, demographic changes, government macroeconomic policies, social instability, etc.). Some force majeure events could adversely affect the ability of a party (including us, a portfolio company or a counterparty to us) to perform its obligations until it is able to remedy the force majeure event. In addition, force majeure events, such as the cessation of the operation of equipment for repair or upgrade, could similarly lead to the unavailability of essential equipment and technologies. These risks could, among other effects, adversely impact the cash flows available from a portfolio company, cause personal injury or loss of life, including to an officer, director or a member of our investment team, damage property, or instigate disruptions of service. In addition, the cost to a portfolio company or us of repairing or replacing damaged assets resulting from such force majeure event could be considerable. It will not be possible to insure against all such events, and insurance proceeds received, if any, could be inadequate to completely or even partially cover any loss of revenues or investments, any increases in operating and maintenance expenses, or any replacements or rehabilitation of property. Certain events causing catastrophic loss could be either uninsurable, or insurable at such high rates as to adversely impact us or portfolio companies, as applicable. Force majeure events that are incapable of or are too costly to cure could have permanent adverse effects. Certain force majeure events (such as war or an outbreak of an infectious disease) could have a broader negative impact on the world economy and international business activity generally, or in any of the countries in which we invest or our portfolio companies operate specifically. Such force majeure events could result in or coincide with: increased volatility in the global securities, derivatives and currency markets; a decrease in the reliability of market prices and difficulty in valuing assets; greater fluctuations in currency exchange rates; increased risk of default (by both government and private issuers); further social, economic, and political instability; nationalization of private enterprise; greater governmental involvement in the economy or in social factors that impact the economy; less governmental regulation and supervision of the securities markets and market participants and decreased monitoring of the markets by governments or self-regulatory organizations and reduced enforcement of regulations; limited, or limitations on, the activities of investors in such markets; controls or restrictions on foreign investment, capital controls and limitations on repatriation of invested capital; inability to purchase and sell investments or otherwise settle security or derivative transactions (i.e., a market freeze); unavailability of currency hedging techniques; substantial, and in some periods extremely high, rates of inflation, which can last many years and have substantial negative effects on credit and securities markets as well as the economy as a whole; recessions; and difficulties in obtaining and/or enforcing legal judgments. 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. The success of our activities is affected by general economic and market conditions, including, among others, interest rates, availability of credit, inflation rates, economic uncertainty, changes in laws, and trade barriers. These factors could affect the level and volatility of securities prices and the liquidity of our investments. Volatility or illiquidity could impair our profitability or result in losses. These factors also could adversely affect the availability or cost of our leverage, which would result in lower returns. 39
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Table of contents Disruptions in the capital markets could increase the spread between the yields realized on risk-free and higher risk securities, resulting in illiquidity in parts of the capital markets. Such disruptions could adversely affect our business, financial condition, results of operations and cash flows, and future market disruptions and/or illiquidity could negatively impact us. These unfavorable economic conditions could increase our funding costs and limit our access to the capital markets, and could result in a decision by lenders not to extend credit to us in the future. These events could limit our investments, our ability to grow and could negatively impact our operating results and the fair values of our debt and equity investments. Uncertainty about presidential administration initiatives could negatively impact our business, financial condition and results of operations. There is significant uncertainty with respect to legislation, regulation and government policy at the federal level, as well as the state and local levels. Recent events, including the 2024 U.S. presidential election, have created a climate of heightened uncertainty and introduced new and difficult-to-quantify macroeconomic and political risks with potentially far-reaching implications. The presidential administration’s changes to U.S. policy may impact, among other things, the U.S. and global economy, international trade and relations, unemployment, immigration, taxes, healthcare, the U.S. regulatory environment, inflation and other areas. Although we cannot predict the impact, if any, of these changes to our business, they could adversely affect our business, financial condition, operating results and cash flows. Until we know what policy changes are made and how those changes impact our business and the business of our competitors over the long term, we will not know if, overall, we will benefit from them or be negatively affected by them. Failure to comply with applicable laws or regulations and changes in laws or regulations governing our operations may adversely affect our business or cause us to alter our business strategy. We, our Adviser and our portfolio companies are subject to applicable local, state and federal laws and regulations. Failure to comply with any applicable local, state or federal law or regulation could negatively impact our reputation and our business results. New legislation may also be enacted or new interpretations, rulings or regulations could be adopted, including those governing the types of investments we are permitted to make, any of which could harm us and our stockholders, potentially with retroactive effect. Additionally, any changes to the laws and regulations governing our operations relating to permitted investments may cause us to alter our investment strategy in order to avail ourselves of new or different opportunities. Such changes could result in material differences to the strategies and plans set forth herein and may result in our investment focus shifting from the areas of expertise of our Adviser’s investment team to other types of investments in which our Adviser’s investment team may have less expertise or little or no experience. Thus, any such changes, if they occur, could have a material adverse effect on our results of operations and the value of your investment. We may experience fluctuations in our operating results. We could experience fluctuations in our operating results due to a number of factors, including our ability or inability to make investments in companies that meet our investment criteria, the interest rate payable on the debt securities we acquire, the level of portfolio dividend and fee income, the level of our expenses, variations in and the timing of the recognition of realized and unrealized gains or losses, the degree to which we encounter competition in our markets and general economic conditions. As a result of these factors, operating results for any period should not be relied upon as being indicative of performance in future periods. Technological innovations and industry disruptions may negatively impact us. Technological innovations have disrupted traditional approaches in multiple industries and can permit younger companies to achieve success and in the process disrupt markets and market practices. We can provide no assurance that new businesses and approaches will not be created that would compete with us and/or our portfolio companies or alter the market practices in which we have been designed to function within and on which we depend on for our investment return. New approaches could damage our investments, disrupt the market in which we operate and subject us to increased competition, which could materially and adversely affect our business, financial condition and results of investments. We are highly dependent on information systems and systems failures could significantly disrupt our business, which may, in turn, negatively affect the market price of our common stock and our ability to pay dividends. Our business is highly dependent on our and third parties’ communications and information systems. Any failure or interruption of those systems, including as a result of the termination of an agreement with any third-party service providers, could cause delays or other problems in our activities. Our and our Adviser’s financial, accounting, data processing, backup or other operating systems and facilities may fail to operate properly or become disabled or damaged as 40
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Table of contents 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, including software viruses, ransomware, malware and phishing and vishing schemes. The failure in cybersecurity systems, as well as the occurrence of events unanticipated in our and our Adviser’s 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 and our Adviser’s 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 and our Adviser’s 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. Third parties with which we do business (including, but not limited to, service providers, such as accountants, custodians, transfer agents and administrators, and the issuers of securities in which we invest) may also be sources or targets of cybersecurity or other technological risks. While our Adviser engages in actions to reduce our exposure resulting from outsourcing, we and our Adviser cannot control the cybersecurity plans and systems put in place by these third parties and ongoing threats may result in unauthorized access, loss, exposure or destruction of data, or other cybersecurity incidents, with increased costs and other consequences, including those described above. Privacy and information security laws and regulation changes, and compliance with those changes, may also result in cost increases due to system changes and the development of new administrative processes. We are subject to risks associated with artificial intelligence and machine learning technology. Artificial intelligence, including machine learning and similar tools and technologies that collect, aggregate, analyze or generate data or other materials, or collectively, AI, and its current and potential future applications including in the private investment and financial industries, as well as the legal and regulatory frameworks within which AI operates, continue to rapidly evolve. Recent technological advances in AI pose risks to us, our Adviser and our portfolio investments. We and our portfolio investments could also be exposed to the risks of AI if third-party service providers or any counterparties, whether or not known to us, also use AI in their business activities. We and our portfolio companies may not be in a position to control the use of AI technology in third- party products or services. Use of AI could include the input of confidential information in contravention of applicable policies, contractual or other obligations or restrictions, resulting in such confidential information becoming part accessible by other third-party AI applications and users. While the Adviser does not currently use AI to make investment recommendations, the use of AI could also exacerbate or create new and unpredictable risks to our business, our Adviser’s business and the business of our portfolio companies, including by potentially significantly disrupting the markets in which we and our portfolio companies operate or subjecting us, the Adviser and our portfolio companies to increased competition and regulation, which could materially and adversely affect business, financial condition or results of operations of us, our Adviser and our portfolio 41
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Table of contents companies. In addition, the use of AI by bad actors could heighten the sophistication and effectiveness of cyber and security attacks experienced by us, our Adviser or our portfolio companies. Independent of its context of use, AI technology is generally highly reliant on the collection and analysis of large amounts of data, and it is not possible or practicable to incorporate all relevant data into the model that AI technology utilizes to operate. Certain data in such models will inevitably contain a degree of inaccuracy and error—potentially materially so—and could otherwise be inadequate or flawed, which would be likely to degrade the effectiveness of AI technology. To the extent that we or our portfolio investments are exposed to the risks of AI use, any such inaccuracies or errors could have adverse impacts on us or our investments. AI technology and its applications, including in the private investment and financial sectors, continue to develop rapidly, and it is impossible to predict the future risks that may arise from such developments. Item 1B. Unresolved Staff Comments None. Item 1C. Cybersecurity Main Street and our Adviser maintain, and routinely review and evaluate their and the Company’s information technology (“IT”) and cybersecurity policies, practices and procedures (the “Cybersecurity Program”), which includes processes for assessing, identifying and managing material risks from cybersecurity threats. The Cybersecurity Program has various policies and procedures including a Cyber Incident Response Plan as part of Main Street’s Crisis Management Plan. The Cybersecurity Program is administered by Main Street’s IT Manager, who is managed on a day-to-day basis by Main Street’s General Counsel and overseen by Main Street’s IT Steering Committee consisting of Main Street’s Chief Executive Officer, Main Street’s Chief Operating Officer and Main Street’s General Counsel. Main Street’s General Counsel also serves as the crisis response team leader in connection with any material cybersecurity incident under the Cyber Incident Response Plan, with Main Street’s Chief Operating Officer and Main Street’s IT Manager also included on the crisis response team. Main Street and our Adviser also utilize the services of IT and cybersecurity advisers, consultants and experts in the evaluation and periodic testing of Main Street’s IT and cybersecurity systems, to recommend improvements to the Cybersecurity Program and in connection with any cybersecurity incident. Main Street’s IT Manager has over 10 years of experience advising on and managing risks from cybersecurity threats as well as developing and implementing cybersecurity systems, policies and procedures. Main Street’s General Counsel has served in his oversight function as General Counsel for over 16 years and previously as Main Street’s Chief Compliance Officer for over 12 years, during which time he has gained expertise in assessing and managing risk applicable to the Company. Similarly, each of Main Street’s Chief Executive Officer and our Main Street’s Chief Operating Officer have served in various executive management roles at the Company and, in the case of our Main Street’s Chief Operating Officer, other publicly traded organizations, involving extensive oversight and management of risks, including cybersecurity related risks, for over 20 years. As part of our overall risk management process, our management engages at least annually in an enterprise risk management review and evaluation, during which management reviews the principal risks relating to our business and operations. Included in this process is a review and evaluation of our risks relating to the Cybersecurity Program. Additionally, as part of our Rule 38a-1 compliance program, we review at least annually the compliance policies and procedures of our key service providers, including our Adviser and Main Street, including documentation discussing each service providers’ information security and privacy controls. Any failure in our or our key service providers’ cybersecurity systems could have a material impact on our operating results. See Item 1A. Risk Factors — General Risk Factors — The failure in cybersecurity systems, as well as the occurrence of events unanticipated in our and our Adviser’s disaster recovery systems and management continuity planning could impair our ability to conduct business effectively. Our Board as a whole has responsibility for the Company’s risk oversight, with reviews of certain areas being conducted by the relevant Board committees that report on their deliberations to the full Board. The oversight responsibility of the Board and its committees is enabled by management reporting processes that are designed to provide visibility to the Board about the identification, assessment and management of critical risks and management’s risk mitigation strategies. Oversight of risks relating to IT and cybersecurity has been delegated by our Board to its Audit Committee. The Audit Committee includes members of the Board who, in addition to each being designated as an “audit committee financial expert,” possess backgrounds and experience which we believe enable them to provide effective oversight of our IT and cybersecurity risks. Our management routinely reports to the Audit Committee on the status of the Cybersecurity Program and material risks from cybersecurity threats at the Audit Committee’s quarterly meetings. Such reports generally 42
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Table of contents detail any testing, observations or developments concerning the Cybersecurity Program that occurred during the prior quarter. The results of periodic testing related to the Cybersecurity Program are also described in the Chief Compliance Officer’s annual report to the Board, provided pursuant to Rule 38a-1 under the 1940 Act. The crisis response team leader also collaborates with the Audit Committee chair to ensure that the Board is apprised of any material cybersecurity incident. During the reporting period, the Company has not identified any impacts from cybersecurity threats, including as a result of previous cybersecurity incidents, that the Company believes have materially affected, or are reasonably likely to materially affect, the Company, including its business strategy, operational results and financial condition. Item 2. Properties We do not own any real estate or other physical properties materially important to our operations. Currently, Main Street leases office space in Houston, Texas for its and its affiliates’ corporate headquarters, including ours. We believe that our current office facilities are adequate to meet our needs. Item 3. Legal Proceedings We, the Adviser and/or Main Street may, from time to time, be involved in litigation arising out of our operations in the normal course of business or otherwise. Furthermore, third parties may seek to impose liability on us, the Adviser and/or Main Street in connection with the activities of our portfolio companies. While the outcome of any current legal proceedings cannot at this time be predicted with certainty, we do not expect any current matters will materially affect our, the Adviser’s or Main Street’s financial condition or results of operations; however, there can be no assurance whether any pending or future legal proceedings will have a material adverse effect on our, the Adviser’s or Main Street’s financial condition or results of operations in any future reporting period. Item 4. Mine Safety Disclosures Not applicable. 43
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Table of contents PART II Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities COMMON STOCK AND HOLDERS Our common stock began trading on the NYSE under the symbol “MSIF” on January 29, 2025. The following table sets forth, for the periods indicated, the range of high and low closing prices of our common stock as reported on the NYSE, and the sales price as a percentage of the NAV per share of our common stock. Price Range Premium ofHigh SalesPrice to Premium ofLow SalesPrice to NAV(1) High Low NAV(2) NAV(2) Year ending December 31, 2025 First Quarter (January 29, 2025 throughMarch 18, 2025) * $17.84 $15.82 * * ___________________________ * NAV has not yet been determined for the first quarter of 2025. (1) NAV 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 closing prices. The net asset values shown are based on outstanding shares at the end of each period. (2) Calculated for each quarter as (i) NAV subtracted from the respective high or low share price divided by (ii) NAV. On March 18, 2025, the last sale price of our common stock on the NYSE was $17.01 per share, and there were 17,382 holders of record of our common stock which did not include stockholders for whom shares are held in “nominee” or “street name.” The NAV per share of our common stock on December 31, 2024 was $15.53, and the premium of the March 18, 2025 closing price of our common stock was 10% to this NAV per share. Shares of BDCs may trade at a market price that is less than the value of the net assets attributable to those shares. The possibility that our shares of common stock will trade at a discount from NAV per share or at premiums that are unsustainable over the long term are separate and distinct from the risk that our NAV per share will decrease. It is not possible to predict whether our common stock will trade at, above, or below NAV per share. Since our listing on the NYSE in January 2025, our shares of common stock have traded at prices both less than and exceeding our NAV per share. DIVIDEND/DISTRIBUTION POLICY We currently intend to distribute dividends or make distributions to our stockholders out of assets legally available for distribution. Our dividends and other distributions, if any, will be determined by our Board of Directors from time to time. Our ability to declare dividends depends on our earnings, our overall financial condition (including our liquidity position), maintenance of our RIC status and such other factors as our Board of Directors may deem relevant from time to time. When we make distributions, we are required to determine the extent to which such distributions are paid out of current or accumulated earnings, recognized capital gains or capital. To the extent there is a return of capital (a distribution of the stockholders’ invested capital), investors will be required to reduce their basis in our stock for federal tax purposes. In the future, our distributions may include a return of capital. We have adopted a dividend reinvestment plan. The previous plan (the “Prior DRIP”) was effective during the years covered in this report. Effective as of the date of the Company’s Board of Directors’ first declaration of a dividend or distribution on the Company’s common stock following the MSC Income Listing, the Company has adopted an “opt out” dividend reinvestment plan (the “New DRIP” and, together with the Prior DRIP, the “DRIP”; See Note H - Dividend Reinvestment Plan included in Item 8. Consolidated Financial Statements and Supplementary Data of this Annual Report on Form 10-K for further detail). The New DRIP provides for the reinvestment of dividends on behalf of our stockholders, unless a stockholder has elected to receive dividends in cash. As a result, if we declare a cash dividend, our stockholders who have not properly “opted out” of the New DRIP will have their cash dividend automatically reinvested into additional shares of our common stock. The share requirements of the New DRIP may be satisfied through the issuance of new shares of common stock or through open market purchases of common stock by the DRIP plan administrator. Newly issued shares will be valued based upon the final closing price of our common stock reported on the NYSE on the trading day 44
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Table of contents immediately preceding the dividend payment date for each dividend. Shares purchased in the open market to satisfy the New DRIP requirements will be valued based upon the average price of the applicable shares purchased by the DRIP plan administrator, before any associated brokerage or other costs. Our DRIP is administered by our transfer agent on behalf of our record holders and participating brokerage firms. Brokerage firms and other financial intermediaries may decide not to participate in our DRIP but may provide a similar dividend reinvestment plan for their clients. SALES OF UNREGISTERED SECURITIES During the year ended December 31, 2024, we issued 1,132,714 shares of our common stock under the DRIP. These issuances were not subject to the registration requirements of the Securities Act of 1933, as amended (the “Securities Act”). In addition, during the year ended December 31, 2024, on certain dividend payment dates we sold shares of our common stock to Main Street at the price at which we issued new shares in connection with reinvestments of dividends pursuant to the DRIP. In each of these transactions, the issuance and sale of shares were exempt from registration under Section 4(a)(2) of the Securities Act and were unanimously approved by our Board of Directors, including each director who is not an “interested person,” as such term is defined in Section 2(a)(19) of the 1940 Act, of the Company or our Adviser. The following table describes the terms of these exempt sales of common stock: Date of Transaction Total number ofshares sold Sale price per share Proceeds to theCompany (dollars in thousands, except per share amounts) January 31, 2024 157,035 $ 15.92 $ 2,500 May 1, 2024 157,629 $ 15.86 $ 2,500 August 1, 2024 125,314 $ 15.96 $ 2,000 The aggregate value of the shares of our common stock issued during 2024 under the DRIP and pursuant to the exempt sale transactions described above was $25.0 million. PURCHASES OF EQUITY SECURITIES Prior to the MSC Income Listing, we maintained a quarterly share repurchase program whereby we made quarterly offers to purchase shares at the estimated NAV per share, as determined within 48 hours prior to the repurchase date. The amount of shares of our common stock to be repurchased during any calendar quarter was equal to the lesser of (i) the number of shares of common stock we could repurchase with the proceeds we received from the issuance of common stock under our dividend reinvestment plan as then in effect or (ii) 2.5% of the weighted-average number of shares of common stock outstanding in the prior four calendar quarters. Repurchase offers were limited to the number of shares of common stock that we could repurchase with 90% of the cash retained as a result of issuances of common stock under the then-effective dividend reinvestment plan. On November 13, 2024, our Board of Directors, including each director who is not an “interested person,” as such term is defined in Section 2(a)(19) of the 1940 Act, of the Company or our Adviser, unanimously approved suspending our quarterly share repurchase program in anticipation of the MSC Income Listing. While our quarterly share repurchase program ultimately terminated upon the MSC Income Listing, our Board of Directors has authorized us to repurchase shares of our common stock through an open-market share repurchase program for up to $65.0 million in the aggregate of shares of our common stock for a 12-month period beginning in March 2025. Pursuant to such authorization, we entered into the Company Rule 10b5-1 Stock Repurchase Plan to facilitate the repurchase of up to $65.0 million in shares of our common stock authorized under the open-market share repurchase program, in accordance with the guidelines specified in Rule 10b-18 and Rule 10b5-1 of the Exchange Act. See Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations — Recent Developments for additional information. 45
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Table of contents The following table lists shares we repurchased under our quarterly share repurchase program during the fourth quarter of 2024: Period Total number ofshares purchased Average price paidper share Total number ofshares purchased aspart of publiclyannounced plans orprograms Approximate dollarvalue of shares thatmay yet bepurchased under theplans or programs October 1 through October 31, 2024 — — — N/A November 1 through November 30, 2024 256,421 $ 15.48 256,421 N/A December 1 through December 31, 2024 — — — N/A Item 6. [Reserved.] 46
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Table of contents Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations The following discussion should be read in conjunction with our consolidated financial statements and the notes thereto included elsewhere in this Annual Report on Form 10-K. Statements we make in the following discussion which express a belief, expectation or intention, as well as those that are not historical fact, are forward-looking statements that are subject to risks, uncertainties and assumptions. Our actual results, performance or achievements, or industry results, could differ materially from those we express in the following discussion as a result of a variety of factors, including the risks and uncertainties we have referred to under the headings “Cautionary Statement Concerning Forward- Looking Statements” and “Risk Factors” in this report. INVESTMENT PORTFOLIO SUMMARY The following tables provide a summary of our investments in the Private Loan, LMM and Middle Market portfolios as of December 31, 2024 and 2023 (this information excludes Other Portfolio investments, which are discussed further below). As of December 31, 2024 Private Loan LMM (a) Middle Market (dollars in millions) Number of portfolio companies 84 57 10 Fair value $ 677.9 $ 436.1 $ 39.4 Cost $ 697.5 $ 357.1 $ 66.3 Debt investments as a % of portfolio (at cost) 93.9 % 67.8 % 87.8 % Equity investments as a % of portfolio (at cost) 6.1 % 32.2 % 12.2 % % of debt investments at cost secured by first priority lien 99.9 % 99.9 % 99.9 % Weighted-average annual effective yield (b) 12.0 % 13.0 % 14.1 % Average EBITDA (c) $ 28.6 $ 10.8 $ 38.2 _____________________________ (a) As of December 31, 2024, we had equity ownership in all of our LMM portfolio companies, and the average fully diluted equity ownership in those portfolio companies was 9%. (b) The weighted-average annual effective yields were computed using the effective interest rates for all debt investments as of December 31, 2024, including amortization of deferred debt origination fees and accretion of original issue discount but excluding fees payable upon repayment of the debt instruments and any debt investments on non-accrual status, and are weighted based upon the principal amount of each applicable debt investment as of December 31, 2024. The weighted-average annual effective yield on our debt portfolio as of December 31, 2024, including debt investments on non-accrual status, was 11.4% for our Private Loan portfolio, 12.2% for our LMM portfolio and 9.0% for our Middle Market portfolio. The weighted-average annual effective yield is not reflective of what an investor in shares of our common stock will realize on its investment because it does not reflect our utilization of debt capital in our capital structure, our expenses or any sales load paid by an investor. (c) The average EBITDA is calculated using a weighted-average for the Private Loan and Middle Market portfolios and a simple average for the LMM portfolio. These calculations exclude certain portfolio companies, including two Private Loan portfolio companies, three LMM portfolio companies and one Middle Market portfolio company, as EBITDA is not a meaningful valuation metric for our investments in these portfolio companies, and those portfolio companies whose primary purpose is to own real estate and those portfolio companies whose primary operations have ceased and only residual value remains. 47
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Table of contents As of December 31, 2023 Private Loan LMM (a) Middle Market (dollars in millions) Number of portfolio companies 78 50 16 Fair value $ 595.3 $ 387.0 $ 86.0 Cost $ 586.4 $ 315.7 $ 114.7 Debt investments as a % of portfolio (at cost) 94.1 % 70.2 % 93.1 % Equity investments as a % of portfolio (at cost) 5.9 % 29.8 % 6.9 % % of debt investments at cost secured by first priority lien 100.0 % 99.9 % 100.0 % Weighted-average annual effective yield (b) 13.1 % 13.0 % 13.0 % Average EBITDA (c) $ 30.5 $ 8.8 $ 74.2 _____________________________ (a) As of December 31, 2023, we had equity ownership in all of our LMM portfolio companies, and the average fully diluted equity ownership in those portfolio companies was 9%. (b) The weighted-average annual effective yields were computed using the effective interest rates for all debt investments as of December 31, 2023, including amortization of deferred debt origination fees and accretion of original issue discount but excluding fees payable upon repayment of the debt instruments and any debt investments on non-accrual status, and are weighted based upon the principal amount of each applicable debt investment as of December 31, 2023. The weighted-average annual effective yield on our debt portfolio as of December 31, 2023, including debt investments on non-accrual status, was 12.6% for our Private Loan portfolio, 13.0% for our LMM portfolio and 9.9% for our Middle Market portfolio. The weighted-average annual effective yield is not reflective of what an investor in shares of our common stock will realize on its investment because it does not reflect our utilization of debt capital in our capital structure, our expenses or any sales load paid by an investor. (c) The average EBITDA is calculated using a weighted-average for the Private Loan and Middle Market portfolios and a simple average for the LMM portfolio. These calculations exclude certain portfolio companies, including one Private Loan portfolio company, as EBITDA is not a meaningful valuation metric for our investment in this portfolio company, and those portfolio companies whose primary purpose is to own real estate. For the years ended December 31, 2024 and 2023, we achieved a total return on investments of 12.4% and 13.6%, respectively. Total return on investments is calculated using the interest, dividend and fee income, as well as the realized and unrealized change in fair value of the Investment Portfolio for the specified period. Our total return on investments is not reflective of what an investor in shares of our common stock will realize on its investment because it does not reflect our utilization of debt capital in our capital structure, our expenses or any sales load paid by an investor. As of December 31, 2024, we had Other Portfolio investments in six entities, spread across four investment managers, collectively totaling $24.1 million in fair value and $17.9 million in cost basis, which comprised 2.0% and 1.6% of our Investment Portfolio at fair value and cost, respectively. As of December 31, 2023, we had Other Portfolio investments in six entities, spread across four investment managers, collectively totaling $24.6 million in fair value and $21.5 million in cost basis, which comprised 2.3% and 2.1% of our Investment Portfolio at fair value and cost, respectively. CRITICAL ACCOUNTING POLICIES The preparation of financial statements and related disclosures in conformity with generally accepted accounting principles (“U.S. GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and contingent assets and liabilities at the date of the financial statements, and revenues and expenses during the periods reported. Actual results could materially differ from those estimates. Critical accounting policies are those that require management to make subjective or complex judgments about the effect of matters that are inherently uncertain and may change in subsequent periods. Changes that may be required in the underlying assumptions or estimates in these areas could have a material impact on our current and future financial condition and results of operations. Management has discussed the development and selection of each critical accounting policy and estimate with the Audit Committee of the Board of Directors. Our critical accounting policies and estimates include the Investment Portfolio Valuation and Revenue Recognition policies described below. Our significant accounting policies are described in greater 48
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Table of contents detail in Note B — Summary of Significant Accounting Policies to the consolidated financial statements included in Item 8. Consolidated Financial Statements and Supplementary Data of this Annual Report on Form 10-K. Investment Portfolio Valuation The most significant determination inherent in the preparation of our consolidated financial statements is the valuation of our Investment Portfolio and the related amounts of unrealized appreciation and depreciation. We consider this determination to be a critical accounting estimate, given the significant judgments and subjective measurements required. As of both December 31, 2024 and 2023, our Investment Portfolio valued at fair value represented 96% of our total assets. We are required to report our investments at fair value. We follow the provisions of FASB ASC 820, Fair Value Measurements and Disclosures (“ASC 820”). ASC 820 defines fair value, establishes a framework for measuring fair value, establishes a fair value hierarchy based on the quality of inputs used to measure fair value and enhances disclosure requirements for fair value measurements. ASC 820 requires us to assume that the portfolio investment is to be sold in the principal market to independent market participants, which may be a hypothetical market. Market participants are defined as buyers and sellers in the principal market that are independent, knowledgeable and willing and able to transact. See Note B.1. — Summary of Significant Accounting Policies — Valuation of the Investment Portfolio included in Item 8. Consolidated Financial Statements and Supplementary Data of this Annual Report on Form 10-K for a detailed discussion of our Investment Portfolio valuation process and procedures. Due to the inherent uncertainty in the valuation process, our determination of fair value for our Investment Portfolio may differ materially from the values that would have been determined had a ready market for the securities existed. In addition, changes in the market environment, portfolio company performance and other events that may occur over the lives of the investments may cause the gains or losses ultimately realized on these investments to be materially different than the valuations currently assigned. We determine the fair value of each individual investment and record changes in fair value as unrealized appreciation or depreciation. Rule 2a-5 under the 1940 Act permits a BDC’s board of directors to designate its executive officers or investment adviser as a valuation designee to determine the fair value for its investment portfolio, subject to the active oversight of the board. Our Board of Directors has approved policies and procedures pursuant to Rule 2a-5 (the “Valuation Procedures”) and has designated our Adviser, led by a group of Main Street’s and our Adviser’s executive officers, to serve as the Board of Directors’ valuation designee. We believe our Investment Portfolio as of December 31, 2024 and 2023 approximates fair value as of those dates based on the markets in which we operate and other conditions in existence on those reporting dates. Revenue Recognition Interest and Dividend Income We record interest and dividend income on the accrual basis to the extent amounts are expected to be collected. Dividend income is recorded as dividends are declared by the portfolio company or at the point an obligation exists for the portfolio company to make a distribution. We evaluate accrued interest and dividend income periodically for collectability. When a loan or debt security becomes 90 days or more past due, and if we otherwise do not expect the debtor to be able to service its debt obligation, we will generally place the loan or debt security on non-accrual status and cease recognizing interest income on that loan or debt security until the borrower has demonstrated the ability and intent to pay contractual amounts due. If a loan or debt security’s status significantly improves regarding the debtor’s ability to service the debt obligation, or if a loan or debt security is sold or written off, we remove it from non-accrual status. Fee Income We may periodically provide services, including structuring and advisory services to our portfolio companies or other third parties. For services that are separately identifiable and evidence exists to substantiate fair value, fee income is recognized as earned, which is generally when the investment or other applicable transaction closes. Fees received in connection with debt financing transactions for services that do not meet these criteria are treated as debt origination fees and are generally deferred and accreted into income over the life of the financing. Payment-in-Kind (“PIK”) Interest and Cumulative Dividends We hold certain debt and preferred equity instruments in our Investment Portfolio that contain PIK interest and cumulative dividend provisions. The PIK interest, computed at the contractual rate specified in each debt agreement, is periodically added to the principal balance of the debt and is recorded as interest income. Thus, the actual collection of this interest may be deferred until the time of debt principal repayment. Cumulative dividends are recorded as dividend income, and any dividends in arrears are added to the balance of the preferred equity investment. The actual collection of these dividends in arrears may be deferred until such time as the preferred equity is redeemed or sold. To maintain RIC tax 49
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Table of contents treatment (as discussed in Note B.7. — Summary of Significant Accounting Policies — Income Taxes included in Item 8. Consolidated Financial Statements and Supplementary Data of this Annual Report on Form 10-K), these non-cash sources of income may need to be paid out to stockholders in the form of distributions, even though we may not have collected the PIK interest and cumulative dividends in cash. We stop accruing PIK interest and cumulative dividends and write off any accrued and uncollected interest and dividends in arrears when we determine that such PIK interest and dividends in arrears are no longer collectible. For the years ended December 31, 2024, 2023 and 2022 (i) 6.2%, 3.8% and 2.5%, respectively, of our total investment income was attributable to PIK interest income not paid currently in cash and (ii) 0.1%, 0.1% and 0.6%, respectively, of our total investment income was attributable to cumulative dividend income not paid currently in cash. INVESTMENT PORTFOLIO COMPOSITION The following tables summarize the composition of our total combined Private Loan, LMM and Middle Market portfolio investments at cost and fair value by type of investment as a percentage of the total combined Private Loan, LMM and Middle Market portfolio investments as of December 31, 2024 and 2023 (this information excludes Other Portfolio investments). Cost: December 31, 2024 December 31, 2023 First lien debt 85.2 % 86.5 % Equity 14.5 13.3 Equity warrants 0.3 0.2 Other — — 100.0 % 100.0 % Fair Value: December 31, 2024 December 31, 2023 First lien debt 77.6 % 78.4 % Equity 22.0 21.5 Equity warrants 0.4 0.1 Other — — 100.0 % 100.0 % Our Private Loan, LMM and Middle Market portfolio investments carry a number of risks including: (1) investing in companies which may have limited operating histories and financial resources; (2) holding investments that generally are not publicly traded and which may be subject to legal and other restrictions on resale; and (3) other risks common to investing in below investment-grade debt and equity investments in our Investment Portfolio. Please see Item 1A. Risk Factors — Risks Related to our Investments contained in this Annual Report on Form 10-K for a more complete discussion of the risks involved with investing in our Investment Portfolio. PORTFOLIO ASSET QUALITY Our Adviser utilizes an internally developed investment rating system to rate the performance of each Private Loan, LMM and Middle Market portfolio company and to monitor our expected level of returns on each of our Private Loan, LMM and Middle Market investments in relation to our expectations for the portfolio company. The investment rating system takes into consideration various factors, including, but not limited to, each investment’s expected level of returns, the collectability of our debt investments and the ability to receive a return of the invested capital in our equity investments, comparisons to competitors and other industry participants, the portfolio company’s future outlook and other factors that are deemed to be significant to the portfolio company. As of December 31, 2024, investments on non-accrual status comprised 1.5% of our total Investment Portfolio at fair value and 5.6% at cost. As of December 31, 2023, investments on non-accrual status comprised 1.1% of our total Investment Portfolio at fair value and 4.0% at cost. The operating results of our portfolio companies are impacted by changes in the broader fundamentals of the United States economy. In periods during which the United States economy contracts, it is likely that the financial results of small to mid-sized companies, like those in which we invest, could experience deterioration or limited growth from current levels, which could ultimately lead to difficulty in meeting their debt service requirements, to an increase in 50
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Table of contents defaults on our debt investments or in realized losses on our investments and to difficulty in maintaining historical dividend payment rates and unrealized appreciation on our equity investments. Consequently, we can provide no assurance that the performance of certain portfolio companies will not be negatively impacted by future economic cycles or other conditions, which could also have a negative impact on our future results. DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS Set forth below is a comparison of the results of operations and changes in financial condition for the years ended December 31, 2024 and 2023. The comparison of, and changes between, the fiscal years ended December 31, 2023 and 2022 can be found within Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023, which is incorporated herein by reference. On December 16, 2024, we effectuated the Reverse Stock Split. As a result of the Reverse Stock Split, every two shares of our issued and outstanding common stock were converted into one share of issued and outstanding common stock, without any change in the par value per share or the number of authorized shares of our common stock. Comparison of the years ended December 31, 2024 and 2023 Year Ended December 31, Net Change 2024 2023 Amount % (dollars in thousands) Total investment income $ 134,828 $ 131,386 $ 3,442 3 % Total expenses, net of expense waivers (77,506) (73,717) (3,789) 5 % Net investment income 57,322 57,669 (347) (1)% Net realized gain (loss) 15,776 (34,010) 49,786 NM Net unrealized appreciation (depreciation) (15,439) 46,319 (61,758) NM Income tax provision (1,106) (3,769) 2,663 (71)% Net increase in net assets resulting from operations $ 56,553 $ 66,209 $ (9,656) (15)% _____________________________ NM — Net Change % not meaningful Investment Income Total investment income for the year ended December 31, 2024 was $134.8 million, a 3% increase from the $131.4 million of total investment income for the prior year. The following table provides a summary of the changes in the comparable period activity. Year EndedDecember 31, Net Change 2024 2023 Amount % (dollars in thousands) Interest income $ 117,816 $ 116,976 $ 840 1 % Dividend income 11,696 11,255 441 4 % Fee income 5,316 3,155 2,161 68 %(a) Total investment income $ 134,828 $ 131,386 $ 3,442 3 %(b) _____________________________ (a) The increase in fee income was primarily related to (i) a $1.4 million increase in fees received from the refinancing and prepayment of debt investments and (ii) a $0.8 million increase in fees related to increased investment activity. (b) The increase in total investment income includes a net increase of $0.3 million in certain income considered less consistent or non- recurring, including a $1.8 million increase in such fee income, partially offset by (i) a $1.0 million decrease in such interest income from accelerated prepayment, repricing and other activity related to certain Investment Portfolio debt investments and (ii) a $0.4 million decrease in such dividend income. 51
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Table of contents Expenses Total expenses, net of fee and expense waivers, for the year ended December 31, 2024 were $77.5 million, a 5% increase from $73.7 million in the prior year. The following table provides a summary of the changes in the comparable period activity. Year Ended December 31, Net Change 2024 2023 Amount % (dollars in thousands) Interest $ 39,035 $ 36,458 $ 2,577 7 %(a) Base management fees 20,922 19,828 1,094 6 %(b) Incentive fees 12,494 12,569 (75) (1)% Internal administrative services fees 10,089 8,916 1,173 13 %(c) General and administrative 4,416 4,254 162 4 % Total expenses before expense waivers 86,956 82,025 4,931 6 % Waiver of internal administrative services expenses (9,450) (8,308) (1,142) 14 % Total expenses, net of expense waivers $ 77,506 $ 73,717 $ 3,789 5 % _____________________________ (a) The increase in interest expense was primarily related to higher weighted-average outstanding borrowings used to fund the growth in our Investment Portfolio. (b) The increase in base management fees was due to an increase in average total assets. (c) The increase in internal administrative service fees was primarily related to increased expenses incurred by the Adviser associated with its activities and services under the Prior Investment Advisory Agreement. Consistent with prior practice, the vast majority of such internal administrative service fees, or all fees other than $0.6 million, were waived by the Adviser. The only fees not waived are the cost of services previously provided by a sub-administrator prior to January 1, 2022 and assumed by the Adviser thereafter (see Note J.1. — Related Party Transactions — Advisory Agreements and Conditional Expense Reimbursement Waivers included in Item 8. Consolidated Financial Statements and Supplementary Data). Net Investment Income Net investment income for the year ended December 31, 2024 decreased 1% to $57.3 million, or $1.43 per share, compared to net investment income of $57.7 million, or $1.44 per share, in 2023. The decrease in net investment income was attributable to an increase in total expenses, partially offset by an increase in total investment income, both as discussed above. The decrease in net investment income and net investment income per share includes a $0.3 million, or $0.01 per share, increase in investment income considered less consistent or non-recurring, as discussed above. 52
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Table of contents Net Realized Gain (Loss) The following table provides a summary of the primary components of the total net realized gain on investments of $15.8 million for the year ended December 31, 2024. Year Ended December 31, 2024 Full Exits Partial Exits Restructures Other (a) Total NetGain/(Loss) # ofInvestments NetGain/(Loss) # ofInvestments NetGain/(Loss) # ofInvestments NetGain/(Loss) NetGain/(Loss) (dollars in thousands) Private Loan portfolio $ 24,832 2 $ — — $ (5,617) 2 $ (17) $ 19,198 LMM portfolio (3,560) 1 2,591 1 — — 163 (806) Middle Market portfolio (2,842) 2 — — (773) 1 852 (2,763) Other Portfolio — — — — — — 147 147 Total net realized gain(loss) $ 18,430 5 $ 2,591 1 $ (6,390) 3 $ 1,145 $ 15,776 _____________________________ (a) Other activity includes realized gains and losses from transactions involving 15 portfolio companies which are not considered to be significant individually or in the aggregate. The following table provides a summary of the primary components of the total net realized loss on investments of $34.0 million for the year ended December 31, 2023. Year Ended December 31, 2023 Full Exits Partial Exits Restructures Other (a) Total NetGain/(Loss) # ofInvestments NetGain/(Loss) # ofInvestments NetGain/(Loss) # ofInvestments NetGain/(Loss) NetGain/(Loss) (dollars in thousands) Private Loan portfolio $ 554 2 $ — — $ (18,505) 2 $ (90) $ (18,041) LMM portfolio (9,414) 3 — — (1,541) 1 — (10,955) Middle Marketportfolio 3,127 3 — — (10,606) 2 242 (7,237) Other Portfolio — — 2,223 1 — — — 2,223 Total net realized gain(loss) $ (5,733) 8 $ 2,223 1 $ (30,652) 5 $ 152 $ (34,010) _____________________________ (a) Other activity includes realized gains and losses from transactions involving 15 portfolio companies which are not considered to be significant individually or in the aggregate. 53
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Table of contents Net Unrealized Appreciation (Depreciation) The following table provides a summary of the total net unrealized depreciation of $15.4 million for the year ended December 31, 2024. Year Ended December 31, 2024 PrivateLoan (a) LMM (b) MiddleMarket Other Total (dollars in thousands) Accounting reversals of net unrealized (appreciation) depreciation recognized in prior periods due to net realized (gains / income) losses recognized during the current period $ (20,676) $ 169 $ 3,513 $ (147) $ (17,141) Net unrealized appreciation (depreciation) relating to portfolio investments (7,482) 7,651 (1,647) 3,180 1,702 Total net unrealized appreciation (depreciation) relating to portfolio investments $ (28,158) $ 7,820 $ 1,866 $ 3,033 $ (15,439) _____________________________ (a) The $20.7 million reversal of net unrealized appreciation on the Private Loan investment portfolio is primarily due to a realized gain of $25.5 million on the full exit of one Private Loan portfolio investment. (b) Includes unrealized appreciation on 30 LMM portfolio investments and unrealized depreciation on 21 LMM portfolio investments. The following table provides a summary of the total net unrealized appreciation of $46.3 million for the year ended December 31, 2023. Year Ended December 31, 2023 PrivateLoan LMM(a) MiddleMarket Other Total (dollars in thousands) Accounting reversals of net unrealized (appreciation) depreciationrecognized in prior periods due to net realized (gains / income)losses recognized during the current period $ 18,295 $ 10,428 $ 7,785 $ (2,225) $ 34,283 Net unrealized appreciation (depreciation) relating to portfolioinvestments (6,144) 20,729 (3,574) 1,025 12,036 Total net unrealized appreciation (depreciation) relating to portfolioinvestments $ 12,151 $ 31,157 $ 4,211 $ (1,200) $ 46,319 _____________________________ (a) Includes unrealized appreciation on 25 LMM portfolio investments and unrealized depreciation on 19 LMM portfolio investments. Income Tax Benefit (Provision) The income tax provision for the year ended December 31, 2024 of $1.1 million principally consisted of a current tax provision of $5.0 million related to a $4.1 million provision for current federal and state income taxes and a $0.9 million provision for excise tax on our estimated undistributed taxable income, partially offset by a deferred tax benefit of $3.9 million, which is primarily the result of the net activity relating to our portfolio investments held in our Taxable Subsidiaries, including changes in loss carryforwards, changes in net unrealized appreciation/depreciation and other temporary book-tax differences. The income tax provision for the year ended December 31, 2023 of $3.8 million consisted of (i) a deferred tax provision of $2.9 million, which is primarily the result of the net activity relating to our portfolio investments held in our Taxable Subsidiaries, including changes in loss carryforwards, changes in net unrealized appreciation/depreciation and other temporary book-tax differences and (ii) a current tax provision of $0.9 million related to a $0.5 million provision for excise tax on our estimated undistributed taxable income and a $0.4 million provision for current federal and state income taxes. 54
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Table of contents Net Increase in Net Assets Resulting from Operations The net increase in net assets resulting from operations for the year ended December 31, 2024 was $56.6 million, or $1.41 per share, compared to $66.2 million, or $1.65 per share, during the year ended December 31, 2023. The tables above provide a summary of the reasons for the change in net increase in net assets resulting from operations for the year ended December 31, 2024 as compared to the year ended December 31, 2023. LIQUIDITY AND CAPITAL RESOURCES Cash Flows For the year ended December 31, 2024, we realized a net decrease in cash and cash equivalents of $2.4 million, which is the net result of $28.1 million of cash used in our operating activities and $25.7 million of cash provided by our financing activities. The $28.1 million of cash used in our operating activities resulted primarily from (i) cash uses totaling $325.1 million for the funding of new and follow-on portfolio investments and (ii) $1.0 million in cash outflows related to changes in other assets and liabilities, partially offset by (i) cash proceeds totaling $259.0 million from the sales and repayments of debt investments and sales of and return of capital from equity investments and (ii) cash flows that we generated from the operating profits earned totaling $44.0 million, which is our net investment income, excluding the non-cash effects of the accretion of unearned income, payment-in-kind interest income, cumulative dividends and the amortization expense for deferred financing costs. The $25.7 million of cash provided by our financing activities principally consisted of (i) $80.0 million in net cash borrowings related to our Credit Facilities and (ii) $7.0 million in cash proceeds related to common stock issuance, partially offset by (i) $39.8 million in cash dividends paid to stockholders and (ii) $20.7 million for the repurchases of our common stock. For the year ended December 31, 2023, we realized a net increase in cash and cash equivalents of $9.4 million, which is the net result of $50.2 million of cash provided by our operating activities and $40.8 million of cash used in our financing activities. The $50.2 million of cash provided by our operating activities resulted primarily from (i) cash proceeds totaling $238.7 million from the sales and repayments of debt investments and sales of and return of capital from equity investments, (ii) cash flows that we generated from the operating profits earned totaling $46.7 million, which is our net investment income, excluding the non-cash effects of the accretion of unearned income, payment-in-kind interest income, cumulative dividends and the amortization expense for deferred financing costs and (iii) cash proceeds of $1.9 million related to changes in other assets and liabilities, partially offset by the funding of new and follow-on portfolio company investments of $236.4 million. The $40.8 million of cash used in our financing activities principally consisted of (i) $36.4 million in cash dividends paid to stockholders, (ii) $24.4 million for the repurchase of common stock and (iii) $2.3 million for deferred financing costs, partially offset by (i) $14.0 million in net repayments on our Credit Facilities and (ii) $8.5 million in cash proceeds related to our common stock issuance. Share Repurchases Prior to the MSC Income Listing, we maintained a quarterly share repurchase program whereby we made quarterly offers to purchase shares at the estimated NAV per share, as determined within 48 hours prior to the repurchase date. The amount of shares of our common stock to be repurchased during any calendar quarter was equal to the lesser of (i) the number of shares of common stock we could repurchase with the proceeds we received from the issuance of common stock under our dividend reinvestment plan as then in effect or (ii) 2.5% of the weighted-average number of shares of common stock outstanding in the prior four calendar quarters. Repurchase offers were limited to the number of shares of common stock that we could repurchase with 90% of the cash retained as a result of issuances of common stock under the then-effective dividend reinvestment plan. On November 13, 2024, our Board of Directors, including each director who is not an “interested person,” as such term is defined in Section 2(a)(19) of the 1940 Act, of the Company or our Adviser, unanimously approved suspending our quarterly share repurchase program in anticipation of the MSC Income Listing. While our quarterly share repurchase program ultimately terminated upon the MSC Income Listing, our Board of Directors has authorized us to repurchase shares of our common stock through an open-market share repurchase program for up to $65.0 million in the aggregate of shares of our common stock for a 12-month period beginning in March 2025. Pursuant to such authorization, we entered 55
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Table of contents into the Company Rule 10b5-1 Stock Repurchase Plan to facilitate the repurchase of up to $65.0 million in shares of our common stock authorized under the open-market share repurchase program, in accordance with the guidelines specified in Rule 10b-18 and Rule 10b5-1 of the Exchange Act. See Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations — Recent Developments for additional information. On February 5, 2024, we commenced a $2.5 million modified “Dutch Auction” tender offer (the “February 2024 Dutch Auction Tender Offer”) pursuant to the Offer to Purchase, dated February 5, 2024, which expired on March 4, 2024. On May 17, 2024, we commenced a $2.0 million modified “Dutch Auction” tender offer (the “May 2024 Dutch Auction Tender Offer”) pursuant to the Offer to Purchase, dated May 17, 2024, which expired on June 20, 2024. In addition to our quarterly share repurchase program, during the fiscal year ended December 31, 2023, we used proceeds from the sale of our shares during 2023 to complete three modified “Dutch auction” tender offers, pursuant to which we offered to purchase up to a specified amount of shares of our common stock at the lowest clearing purchase price elected by participating stockholders within a specified range that allowed us to purchase the maximum amount offered. All shares purchased in a “Dutch auction” tender offer were purchased at the clearing purchase price. SEC rules permitted us to increase the number of shares accepted for purchase in any offer by up to 2% of our outstanding shares without amending the offer. For the year ended December 31, 2023, we purchased 633,834 shares of our common stock for $7.8 million through our modified Dutch auction tender offers. See Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities of this Annual Report on Form 10-K and Item 2. Unregistered Sales of Equity Securities and Use of Proceeds of our quarterly reports on Form 10-Q for more information regarding repurchases of our common stock during the year ended December 31, 2024. Capital Resources As of December 31, 2024, we had $28.4 million in cash and cash equivalents and $49.3 million of unused capacity under our Credit Facilities, which we maintain to support our investment and operating activities. As of December 31, 2024, our NAV totaled $624.9 million, or $15.53 per share. As of December 31, 2024, we had $149.0 million outstanding and $16.0 million of undrawn commitments under our floating rate multi-year revolving credit facility (the “Corporate Facility”) and $266.7 million outstanding and $33.3 million of undrawn commitments under our special purpose vehicle revolving credit facility (the “SPV Facility” and, together with the Corporate Facility, the “Credit Facilities”), both of which we estimated approximated fair value. Availability under our Credit Facilities is subject to certain leverage and borrowing base limitations, various covenants, reporting requirements and other customary requirements for similar credit facilities. On November 8, 2024, we entered into an amendment to our Corporate Facility to, among other things: (i) extend the revolving period from September 2025 to November 2028, (ii) extend the final maturity date from March 2026 to May 2029 and (iii) reduce the interest rate, subject to our election, to (a) SOFR plus 2.05% or (b) the base rate plus 1.05%. For further information on our Credit Facilities, including key terms and financial covenants, refer to Note D — Debt included in Item 8. Consolidated Financial Statements and Supplementary Data of this Annual Report on Form 10-K. In October 2021, we issued $77.5 million in aggregate principal amount of our 4.04% Series A Senior Notes due 2026 (the “Series A Notes”), and we issued an additional $72.5 million of Series A Notes in January 2022. The aggregate principal amount of the Series A Notes was $150.0 million as of both December 31, 2024 and 2023. For more information on our Series A Notes, including key terms and financial covenants, refer to Note D — Debt included in Item 8. Consolidated Financial Statements and Supplementary Data of this Annual Report on Form 10-K. During the years ended December 31, 2024 and 2023, on certain dividend payment dates we sold shares of our common stock to Main Street at the price at which we issued new shares in connection with reinvestments of dividends pursuant to our dividend reinvestment plan as then in effect. In each of these transactions, the issuance and sale of shares were exempt from registration under Section 4(a)(2) of the Securities Act, and were unanimously approved by our Board of Directors, including each director who is not an “interested person,” as such term is defined in Section 2(a)(19) of the 1940 Act, of the Company or our Adviser. During the year ended December 31, 2024, we sold 439,978 shares to Main Street at a weighted-average price of $15.91 for total proceeds, prior to payment of expenses, of $7.0 million. During the year ended December 31, 2023, we sold 540,093 shares to Main Street at a price of $15.74 for total proceeds, prior to payment of expenses, of $8.5 million. 56
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Table of contents We periodically invest excess cash balances into marketable securities and idle funds investments. The primary investment objective of marketable securities and idle funds investments is to generate incremental cash returns on excess cash balances prior to utilizing those funds for investment in our Private Loan and LMM portfolio investments. Marketable securities and idle funds investments generally consist of money market funds and certificates of deposit with financial institutions. If our common stock trades below our NAV per share, we will generally not be able to issue additional common stock at the market price, unless our stockholders approve such a sale and our Board of Directors makes certain determinations. We generally have not sought stockholder authorization to sell shares of our common stock below the then current NAV per share of our common stock; however, at the 2025 Special Meeting, in advance of the MSC Income Listing, we received approval from our stockholders to have the flexibility, with the approval of the Board of Directors, to offer and sell shares of our common stock at a price below the current net asset value per share until December 11, 2025. We may also seek such authorization at future annual or special meetings of stockholders. Any decision to sell shares of our common stock below the then current NAV per share of our common stock would be subject to the determination by our Board of Directors that such issuance is in our and our stockholders’ best interests. In order to satisfy the Code requirements applicable to a RIC, we intend to distribute to our stockholders, after consideration and application of our ability under the Code to carry forward certain excess undistributed taxable income from one tax year into the next tax year, substantially all of our taxable income. In addition, as a BDC, we generally are required to meet a coverage ratio, or BDC asset coverage ratio, of total assets to total senior securities, which include borrowings and any preferred stock we may issue in the future, of at least 200% (or 150% if certain requirements are met). On January 29, 2025, the Board, including a “required majority” (as such term is defined in Section 57(o) of the 1940 Act) of the Board, approved the application of the modified asset coverage requirements set forth in Section 61(a)(2) of the 1940 Act, which will result in the Company’s asset coverage requirements applicable to senior securities being reduced from 200% to 150%, effective on January 29, 2026. As of December 31, 2024, our BDC asset coverage ratio was 210%. Although we have been able to secure access to additional liquidity, including through the Credit Facilities and the master note purchase agreement, dated October 22, 2021, governing the Series A Notes (the “Note Purchase Agreement”), there is no assurance that debt or equity capital will be available to us in the future on favorable terms, or at all. Recently Issued or Adopted Accounting Standards From time to time, new accounting pronouncements are issued by the FASB or other standards setting bodies that are adopted by us as of the specified effective date. We believe that the impact of recently issued standards and any that are not yet effective will not have a material impact on our consolidated financial statements upon adoption. For a description of recently issued or adopted accounting standards, see Note B.12. — Summary of Significant Accounting Policies — Recently Issued or Adopted Accounting Standards included in Item 8. Consolidated Financial Statements and Supplementary Data of this Annual Report on Form 10-K. Inflation Inflation has not historically had a significant effect on our results of operations in any of the reporting periods presented herein. However, our portfolio companies have experienced, specifically including over the last few years, as a result of recent geopolitical events, supply chain and labor issues, and may continue to experience, the increasing impacts of inflation on their operating results, including periodic escalations in their costs for labor, raw materials and third-party services and required energy consumption. These issues and challenges related to inflation are receiving significant attention from our investment teams and the management teams of our portfolio companies as we work to manage these growing challenges. Prolonged or more severe impacts of inflation to our portfolio companies could continue to affect their operating profits and, thereby, increase their borrowing costs, and as a result negatively impact their ability to service their debt obligations and/or reduce their available cash for distributions. In addition, these factors could have a negative effect on the fair value of our investments in these portfolio companies. The combined impacts therefrom in turn could negatively affect our results of operations. Off-Balance Sheet Arrangements We may be a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financial needs of our portfolio companies. These instruments include commitments to extend credit and fund equity capital and involve, to varying degrees, elements of liquidity and credit risk in excess of the amount recognized in the Consolidated Balance Sheets. As of December 31, 2024, we had a total of $79.6 million in outstanding commitments 57
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Table of contents comprised of (i) 70 commitments to fund revolving loans that had not been fully drawn or term loans with additional commitments not yet funded and (ii) two investments with equity capital commitments that had not been fully called. Contractual Obligations As of December 31, 2024, we had $565.7 million in total borrowings outstanding under our Credit Facilities and Series A Notes. The SPV Facility is scheduled to mature on February 3, 2028. The Corporate Facility is scheduled to mature on May 8, 2029. The Series A Notes are scheduled to mature on October 30, 2026. See further discussion of the terms of our Credit Facilities, Series A Notes and other debt in Note D — Debt included in Item 8. Consolidated Financial Statements and Supplementary Data of this Annual Report on Form 10- K. A summary of our significant contractual payment obligations for the repayment of outstanding borrowings as of December 31, 2024 is as follows. 2025 2026 2027 2028 2029 Thereafter Total (dollars in thousands) SPV Facility $ — $ — $ — $ 266,688 $ — $ — $ 266,688 Series A Notes — 150,000 — — — — 150,000 Corporate Facility — — — — 149,000 — 149,000 Total $ — $ 150,000 $ — $ 266,688 $ 149,000 $ — $ 565,688 _____________________________ (1) As of December 31, 2024, $33.3 million remained available to borrow under the SPV Facility; however, our borrowing ability is limited to leverage and borrowing base restrictions imposed by the SPV Facility and the 1940 Act, as discussed above. (2) As of December 31, 2024, $16.0 million remained available to borrow under the Corporate Facility; however, our borrowing ability is limited to leverage and borrowing base restrictions imposed by the Corporate Facility and the 1940 Act, as discussed above. The Corporate Facility was amended in February 2025 to increase the total commitments from $165.0 million to $245.0 million (see Note K — Subsequent Events included in Item 8. Consolidated Financial Statements and Supplementary Data of this Annual Report on Form 10-K for further detail). Related Party Transactions and Agreements We have entered into agreements with our Adviser and/or certain of its affiliates and other parties whereby we pay certain fees and reimbursements to these entities. These included payments for selling commissions and fees and for reimbursement of offering costs. In addition, we make payments for certain services that include the identification, execution and management of our investments and also the management of our day-to-day operations provided to us by our Adviser, pursuant to various agreements that we have entered into. See Item 13. Certain Relationships and Related Transactions, and Director Independence in this Annual Report on Form 10-K and Note J — Related Party Transactions included in Item 8. Consolidated Financial Statements and Supplementary Data of this Annual Report on Form 10-K for additional information regarding these related party transactions and agreements. Recent Developments On January 30, 2025, we closed a follow-on public offering of 5,500,000 shares of our common stock, at the public offering price of $15.53 per share, in connection with which the MSC Income Listing occurred. In addition, on February 3, 2025, we issued and sold 825,000 additional shares of our common stock, at the public offering price of $15.53 per share, pursuant to the underwriters’ full exercise of their overallotment option. Net of underwriting discounts and commissions and offering expenses, we received net cash proceeds of approximately $91 million in connection with the follow-on public equity offering. Following the MSC Income Listing, and pursuant to Board authorization, we entered into a share repurchase plan to repurchase up to $65.0 million in the aggregate of shares of our common stock in the open market for a twelve-month period beginning in March 2025, at times when the market price per share of our common stock is trading below the most recently reported NAV per share of our common stock by certain pre-determined levels (including any updates, corrections or adjustments publicly announced by us to any previously announced NAV per share). The repurchases of shares of our common stock pursuant to the share purchase plan are intended to satisfy the conditions of Rule 10b5-1 and Rule 10b-18 under the Exchange Act and will otherwise be subject to applicable law, including Regulation M, which may prohibit purchases under certain circumstances. Main Street also entered into a share purchase plan to purchase up to $20.0 million (1) (2) 58
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Table of contents in the aggregate of our common stock in the open market with terms and conditions substantially similar to our share repurchase plan for shares of our common stock, and daily purchases under the two plans, if any, are expected to be split pro rata (or as close thereto as reasonably possible) between us and Main Street based on the respective plan sizes. On January 20, 2025, in connection with Main Street’s potential acquisition in excess of 3% of our outstanding common stock, we entered into a Fund of Funds Investment Agreement with Main Street (the “Main Street Fund of Funds Agreement”). The Main Street Fund of Funds Agreement provides for the acquisition of our shares of common stock by Main Street, and our sale of such shares to Main Street, in a manner consistent with the requirements of Rule 12d1-4 under the 1940 Act. Additionally, in connection with the MSC Income Listing, on January 29, 2025, we entered into the Advisory Agreement with the Adviser to, among other things, (i) reduce the annual base management fees payable by us to the Adviser from 1.75% of our average total assets to 1.5% of our average total assets (including cash and cash equivalents), payable quarterly in arrears (with additional future contractual reductions based upon changes to our investment portfolio composition), (ii) reduce to 17.5% the subordinated incentive fee on pre-incentive fee net investment income above a specified investment return hurdle rate payable by us to the Adviser, subject to a 50% / 50% catch-up feature, (iii) reduce to 17.5% and reset the incentive fee on cumulative net realized capital gains payable by us to the Adviser, (iv) establish a cap on the amount of expenses payable by us relating to certain internal administrative services, which varies based on the value of our total assets and (v) implement other changes to delete provisions required by the Omnibus Guidelines promulgated by the North American Securities Administrators Association, Inc. (the “NASAA Guidelines”). For more information, see Note J — Related Party Transactions included in Item 8. Consolidated Financial Statements and Supplementary Data of this Annual Report on Form 10-K. On January 29, 2025, in connection with the MSC Income Listing, we amended and restated our Articles of Amendment and Restatement, as amended, by filing new Articles of Amendment and Restatement of the Company (the “New Articles”) with the State Department of Assessments and Taxation of the State of Maryland. The New Articles revised our charter to, among other things, (i) include a provision that limits the transferability of shares of our common stock outstanding at the time of the MSC Income Listing during the 365-day period following the MSC Income Listing, (ii) reflect an amendment to delete provisions regarding restrictions and requirements applicable to our dividend reinvestment plan, (iii) reflect an amendment to delete provisions prohibiting acquisitions of assets in exchange for shares of our common stock and restricting certain transactions between us and the Adviser and its affiliates and (iv) delete certain provisions required by, and remove references to, the NASAA Guidelines in order to conform certain provisions of our charter more closely to provisions in the charters of other BDCs whose securities are listed and publicly-traded on a national securities exchange. On February 27, 2025, we entered into an amendment to the Corporate Facility to, among other things: (i) increase the total commitments from $165.0 million to $245.0 million and (ii) increase the accordion feature from up to a total of $200.0 million to up to a total of $300.0 million. On March 6, 2025, our Board of Directors declared a regular quarterly dividend of $0.35 per share and a supplemental quarterly dividend of $0.01 per share, both payable on May 1, 2025 to stockholders of record as of March 31, 2025. Item 7A. Quantitative and Qualitative Disclosures about Market Risk We are subject to financial market risks, including changes in interest rates, and changes in interest rates may affect both our interest expense on the debt outstanding under our Credit Facilities and our interest income from portfolio investments. Our risk management systems and procedures are designed to identify and analyze our risk, to set appropriate policies and limits and to continually monitor these risks. Our investment income will be affected by changes in various interest rate indices, including SOFR and Prime rates, to the extent that any debt investments include floating interest rates. See Risk Factors — Risks Related to our Business and Structure — We are subject to risks associated with the interest rate environment and changes in interest rates will affect our cost of capital, net investment income and the value of our investments and Risk Factors — Risks Related to Leverage — Because we borrow money, the potential for gain or loss on amounts invested in us is magnified and may increase the risk of investing in us. included in Item 1A. Risk Factors of this Annual Report on Form 10-K for more information regarding risks associated with our debt investments and borrowings that utilize SOFR or Prime as a reference rate. The majority of our debt investments are made with either fixed interest rates or floating rates that are subject to contractual minimum interest rates for the term of the investment. As of December 31, 2024, 78% of our debt Investment Portfolio (at cost) bore interest at floating rates, 96% of which were subject to contractual minimum interest rates. As of December 31, 2024, 26% of our debt obligations bore interest at fixed rates. Our interest expense will be affected by changes in the published SOFR rate in connection with our Credit Facilities; however, the interest rates on our outstanding 59
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Table of contents Series A Notes are fixed for the life of such debt. As of December 31, 2024, we had not entered into any interest rate hedging arrangements. Due to our limited use of derivatives, we have claimed an exclusion from the definition of the term “commodity pool operator” under the Commodity Exchange Act and, therefore, are not subject to registration or regulation as a pool operator under such Act. The Company expects to operate as a “limited derivatives user” under Rule 18f-4 under the 1940 Act. The following table shows the approximate annualized increase or decrease in the components of net investment income due to hypothetical base rate changes in interest rates, assuming no changes in our investments and borrowings as of December 31, 2024. The pro forma changes in incentive fee expense are calculated based upon the actual incentive fee expense for the fourth quarter of 2024 on an annualized basis, as adjusted for (i) the pro forma changes in pre-incentive fee net investment income resulting from (a) the assumed interest income and interest expense changes noted in the table and (b) the revised base management fee included in the Advisory Agreement as detailed in footnote (1) below and (ii) the revised subordinated incentive fee on pre-incentive fee net investment income included in the Advisory Agreement. Basis Point Change Increase (Decrease) in Interest Income (Increase) Decrease in Interest Expense Increase (Decrease) in Pre- Incentive Fee Net Investment Income (Increase) Decrease in Incentive Fee Expense Increase (Decrease) in Net Investment Income Increase (Decrease) in Net Investment Income per Share (dollars in thousands, except per share amounts) (200) $ (14,457) $ 8,314 $ (3,024) $ 529 $ (2,494) $ (0.06) (175) (12,641) 7,275 (2,247) 393 (1,853) (0.05) (150) (10,824) 6,235 (1,470) 257 (1,212) (0.03) (125) (9,008) 5,196 (693) 121 (571) (0.01) (100) (7,191) 4,157 85 (15) 70 — (75) (5,375) 3,118 862 (151) 711 0.02 (50) (3,561) 2,078 1,636 (286) 1,350 0.03 (25) (1,766) 1,039 2,392 (419) 1,974 0.05 25 1,763 (1,039) 3,843 (673) 3,171 0.08 50 3,525 (2,078) 4,566 (799) 3,767 0.09 75 5,288 (3,118) 5,289 (926) 4,364 0.11 100 7,054 (4,157) 6,016 (1,053) 4,964 0.12 125 8,820 (5,196) 6,743 (1,180) 5,563 0.14 150 10,586 (6,235) 7,470 (1,307) 6,163 0.15 175 12,352 (7,275) 8,196 (1,434) 6,762 0.17 200 14,118 (8,314) 8,923 (1,562) 7,362 0.18 _____________________________ (1) The pro forma changes in pre-incentive fee net investment income include the impact of the reduction in base management fee percentage included in the Advisory Agreement from 1.75% of average total assets to 1.5% of average total assets. If such reduction in base management fee percentage had been in effect for the fourth quarter of 2024, the base management fee would have been $3.1 million lower and pre-incentive fee net investment income would have been $3.1 million higher, each on an annualized basis, in all base interest rate change scenarios presented above. (2) Based on the revised terms included in the Advisory Agreement. Although we believe that this analysis is indicative of the impact of interest rate changes to our net investment income as of December 31, 2024, the analysis does not take into consideration future changes in the credit market, credit quality, or other business or economic developments that could affect our net investment income. Accordingly, we can offer no assurances that actual results would not differ materially from the analysis above. The hypothetical results assume that all SOFR and Prime rate changes would be effective on the first day of the period. However, the contractual SOFR and Prime rate reset dates would vary throughout the period. The majority of our investments are based on contracts which reset quarterly while our Corporate Facility and our SPV Facility reset on a monthly and quarterly basis, respectively. The hypothetical results would also be impacted by the changes in the amount of outstanding debt under our Credit Facilities (1) (2) (2) (2) 60
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Table of contents (with an increase (decrease) in the debt outstanding under the Credit Facilities resulting in an (increase) decrease in the hypothetical interest expense). 61
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Table of contents Item 8. Consolidated Financial Statements and Supplementary Data Index to Consolidated Financial Statements Report of Independent Registered Public Accounting Firm (PCAOB ID Number 248) 63 Consolidated Balance Sheets – As of December 31, 2024 and 2023 65 Consolidated Statements of Operations — For the years ended December 31, 2024, 2023 and 2022 66 Consolidated Statements of Changes in Net Assets — For the years ended December 31, 2024, 2023 and 2022 67 Consolidated Statements of Cash Flows — For the years ended December 31, 2024, 2023 and 2022 68 Consolidated Schedule of Investments — December 31, 2024 69 Consolidated Schedule of Investments — December 31, 2023 89 Notes to Consolidated Financial Statements 109 Consolidated Schedules of Investments In and Advances to Affiliates - For the years ended December 31, 2024 and 2023 150 62
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Table of contents REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM Board of Directors and Stockholders MSC Income Fund, Inc. Opinion on the financial statements We have audited the accompanying consolidated balance sheets of MSC Income Fund, Inc. (a Maryland corporation) and subsidiaries (the “Company”), including the consolidated schedules of investments, as of December 31, 2024 and 2023, the related consolidated statements of operations, changes in net assets, and cash flows for each of the three years in the period ended December 31, 2024, and the related notes and consolidated financial statement schedule included under Item 15(b) (collectively referred to as the “ consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2024, in conformity with accounting principles generally accepted in the United States of America. Basis for opinion These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting 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. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our procedures included verification by confirmation of securities as of December 31, 2024 and 2023, by correspondence with the portfolio companies, agent banks and custodians; or by other appropriate auditing procedures where replies were not received. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical audit matter The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. Fair Value of Investments As described further in Note C to the financial statements, the Company’s investments recorded at fair value, categorized as Level 3 investments within the fair value hierarchy, totaled $1,177,507 thousand at December 31, 2024. Approximately 97% of these investments have no readily available market values and are measured using significant unobservable inputs and assumptions, and generally use valuation techniques such as the income and market approach. The significant unobservable inputs disclosed by management include, among others, weighted-average cost of capital (“WACC”) inputs and market multiples for equity investments, and risk adjusted discount rates, and percentage of expected principal recovery for debt investments. Changes in these assumptions could have a significant impact on the determination of fair value. As such, we identified fair value of Level 3 investments measured using significant unobservable inputs and assumptions as a critical audit matter. The principal consideration for our determination that the fair value of Level 3 investments measured using significant unobservable inputs and assumptions is a critical audit matter is management’s judgement used in identifying and evaluating significant unobservable inputs which result in estimation uncertainty for the fair value of Level 3 63
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Table of contents investments. Auditing these investments requires a high degree of subjective auditor judgment, including use of valuation professionals with specialized skills and knowledge, to evaluate the reasonableness of unobservable inputs and assumptions. Our audit procedures related to the fair value of Level 3 investments measured using significant unobservable inputs and assumptions included the following, among others: • We tested the design and operating effectiveness of management’s review controls relating to the Level 3 fair value measurement of investments. This included identifying and evaluating significant assumptions used in the estimation of fair value, such as the relevance, adequacy and appropriateness of these significant assumptions and valuation methods used to determine investment fair value as of the reporting date. • With the assistance of internal valuation specialists, we tested management’s process for developing Level 3 investment fair values. For a selection of investments, we assessed the appropriateness of the methods and significant assumptions used in developing the estimate. The significant assumptions tested by us included, but were not limited to, the following: • enterprise values, • WACC, • discount rates, • forecasted cash flows and long-term growth rates, • discount for lack of marketability, • market multiples, • weighting between valuation techniques, • risk adjusted discount factor, • market debt yields, or • percentage of expected principal recovery /s/ GRANT THORNTON LLP We have served as the Company’s auditor since 2012. Houston, Texas March 20, 2025 64
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Table of contents MSC INCOME FUND, INC. Consolidated Balance Sheets (dollars in thousands, except shares and per share amounts) December 31, 2024 December 31, 2023 ASSETS Investments at fair value: Control investments (cost: $54,560 and $43,159 as of December 31, 2024 and 2023, respectively) $ 69,878 $ 53,644 Affiliate investments (cost: $284,211 and $231,378 as of December 31, 2024 and 2023, respectively) 351,360 291,279 Non ‑ Control/Non ‑ Affiliate investments (cost: $799,974 and $763,781 as of December 31, 2024 and 2023, respectively) 756,269 747,972 Total investments (cost: $1,138,745 and $1,038,318 as of December 31, 2024 and 2023, respectively) 1,177,507 1,092,895 Cash and cash equivalents 28,375 30,786 Interest and dividend receivable 11,925 10,541 Receivable for securities sold 141 171 Deferred financing costs (net of accumulated amortization of $6,449 and $4,168 as ofDecember 31, 2024 and 2023, respectively) 1,985 3,416 Prepaids and other assets 4,113 2,091 Deferred tax asset, net 625 — Total assets $ 1,224,671 $ 1,139,900 LIABILITIES Credit Facilities $ 415,688 $ 335,688 Series A Notes due 2026 (par: $150,000 as of both December 31, 2024 and 2023) 149,453 149,155 Accounts payable and other liabilities 4,723 255 Payable for securities purchased — 206 Interest payable 6,909 6,266 Dividend payable 14,487 14,019 Management and incentive fees payable 8,508 8,745 Deferred tax liability, net — 3,259 Total liabilities 599,768 517,593 Commitments and contingencies (Note I) NET ASSETS (1) Common stock, $0.001 par value per share (450,000,000 shares authorized; 40,240,358 and40,054,433 shares issued and outstanding as of December 31, 2024 and 2023, respectively) 40 40 Additional paid ‑ in capital 689,580 686,176 Total overdistributed earnings (64,717) (63,909) Total net assets 624,903 622,307 Total liabilities and net assets $ 1,224,671 $ 1,139,900 NET ASSET VALUE PER SHARE (1) $ 15.53 $ 15.54 (1) As discussed in Note A.3 - Reverse Stock Split, the Company completed a two-for-one reverse stock split, effective as of December 16, 2024. The accompanying notes are an integral part of these consolidated financial statements 65
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Table of contents MSC INCOME FUND, INC. Consolidated Statements of Operations (dollars in thousands, except shares and per share amounts) Year Ended December 31, 2024 2023 2022 INVESTMENT INCOME: Interest, fee and dividend income: Control investments $ 3,441 $ 3,101 $ 3,223 Affiliate investments 31,222 29,805 24,057 Non ‑ Control/Non ‑ Affiliate investments 100,165 98,480 76,485 Total investment income 134,828 131,386 103,765 EXPENSES: Interest (39,035) (36,458) (24,423) Base management fees (20,922) (19,828) (19,831) Incentive fees (12,494) (12,569) (2,130) Internal administrative services expenses (10,089) (8,916) (5,147) General and administrative (4,416) (4,254) (3,905) Total expenses before expense waivers (86,956) (82,025) (55,436) Waiver of internal administrative services expenses 9,450 8,308 4,540 Total expenses, net of expense waivers (77,506) (73,717) (50,896) NET INVESTMENT INCOME 57,322 57,669 52,869 NET REALIZED GAIN (LOSS): Control investments 147 2,223 — Affiliate investments (3,560) (7,188) (7,327) Non ‑ Control/Non ‑ Affiliate investments 19,189 (29,045) 3,391 Total net realized gain (loss) 15,776 (34,010) (3,936) NET UNREALIZED APPRECIATION (DEPRECIATION): Control investments 4,833 (1,289) 1,503 Affiliate investments 7,791 25,116 15,689 Non ‑ Control/Non ‑ Affiliate investments (28,063) 22,492 (18,894) Total net unrealized appreciation (depreciation) (15,439) 46,319 (1,702) INCOME TAXES: Federal and state income, excise and other taxes (4,989) (872) (1,281) Deferred taxes 3,883 (2,897) (362) Total income tax provision (1,106) (3,769) (1,643) NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 56,553 $ 66,209 $ 45,588 NET INVESTMENT INCOME PER SHARE—BASIC AND DILUTED(1) $ 1.43 $ 1.44 $ 1.32 NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONSPER SHARE—BASIC AND DILUTED (1) $ 1.41 $ 1.65 $ 1.14 WEIGHTED-AVERAGE SHARESOUTSTANDING—BASIC AND DILUTED (1) 40,174,311 40,134,501 39,996,520 (1) As discussed in Note A.3 - Reverse Stock Split, the Company completed a two-for-one reverse stock split, effective as of December 16, 2024. The accompanying notes are an integral part of these consolidated financial statements 66
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Table of contents MSC INCOME FUND, INC. Consolidated Statements of Changes in Net Assets (dollars in thousands, except shares) Common Stock (1) Additional Paid-In Capital (1) Total Overdistributed Earnings Total Net Asset Value Number of Shares Par Value Balances as of December 31, 2021 39,913,303 $ 40 $ 682,466 $ (69,336) $ 613,170 Issuance of common stock 47,349 — 750 — 750 Dividend reinvestment 1,129,806 2 17,748 — 17,750 Common stock repurchased (1,037,458) (2) (15,984) — (15,986) Net increase resulting from operations — — — 45,588 45,588 Dividends to stockholders — — — (51,607) (51,607) Reclassification for certain permanentbook-to-tax differences — — (775) 775 — Balances as of December 31, 2022 40,053,000 $ 40 $ 684,205 $ (74,580) $ 609,665 Issuance of common stock 540,093 1 8,499 — 8,500 Dividend reinvestment 1,172,623 2 18,415 — 18,417 Common stock repurchased (1,711,283) (3) (24,424) — (24,427) Net increase resulting from operations — — — 66,209 66,209 Dividends to stockholders — — — (56,057) (56,057) Reclassification for certain permanentbook-to-tax differences — — (519) 519 — Balances as of December 31, 2023 40,054,433 $ 40 $ 686,176 $ (63,909) $ 622,307 Issuance of common stock 439,978 — 7,000 — 7,000 Dividend reinvestment 1,132,714 1 17,982 — 17,983 Common stock repurchased (1,386,767) (1) (20,727) — (20,728) Net increase resulting from operations — — — 56,553 56,553 Dividends to stockholders — — — (58,212) (58,212) Reclassification for certain permanentbook-to-tax differences — — (851) 851 — Balances as of December 31, 2024 40,240,358 $ 40 $ 689,580 $ (64,717) $ 624,903 (1) As discussed in Note A.3 - Reverse Stock Split, the Company completed a two-for-one reverse stock split, effective as of December 16, 2024. The accompanying notes are an integral part of these consolidated financial statements 67
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Table of contents MSC INCOME FUND, INC. Consolidated Statements of Cash Flows (dollars in thousands) Year EndedDecember 31, 2024 2023 2022 CASH FLOWS FROM OPERATING ACTIVITIES Net increase in net assets resulting from operations $ 56,553 $ 66,209 $ 45,588 Adjustments to reconcile net increase in net assets resulting from operations to net cashprovided by (used in) operating activities: Investments in portfolio companies (325,053) (236,404) (217,226) Proceeds from sales and repayments of debt investments in portfolio companies 217,454 223,154 247,455 Proceeds from sales and return of capital of equity investments in portfolio companies 41,516 15,595 — Net unrealized (appreciation) depreciation 15,439 (46,319) 1,702 Net realized (gain) loss on portfolio investments (15,776) 34,010 3,936 Amortization of deferred financing costs 2,579 2,053 1,463 Amortization of deferred offering costs — 129 276 Accretion of unearned income (7,669) (7,833) (5,054) Payment-in-kind interest (7,977) (5,023) (4,057) Cumulative dividends (265) (172) (669) Deferred taxes (3,883) 2,897 362 Changes in other assets and liabilities: Interest and dividend receivable (3,846) 116 1,074 Prepaid and other assets (2,022) 329 (361) Management and incentive fees payable (237) 1,703 1,853 Interest payable 643 823 2,350 Accounts payable and other liabilities 4,468 (1,037) (2,016) Net cash provided by (used in) operating activities (28,076) 50,230 76,676 CASH FLOWS FROM FINANCING ACTIVITIES Issuance of common stock 6,996 8,500 750 Redemption of common stock (20,724) (24,427) (15,984) Payment of offering costs — (129) (276) Dividends paid (39,756) (36,438) (33,018) Proceeds from Credit Facilities 281,000 150,000 115,000 Repayments on Credit Facilities (201,000) (136,000) (220,000) Proceeds from Series A Notes due 2026 — — 72,500 Payment of deferred financing costs (851) (2,262) (149) Net cash provided by (used in) financing activities 25,665 (40,756) (81,177) Net increase (decrease) in cash and cash equivalents (2,411) 9,474 (4,501) CASH AND CASH EQUIVALENTS AS OF BEGINNING OF PERIOD 30,786 21,312 25,813 CASH AND CASH EQUIVALENTS AS OF END OF PERIOD $ 28,375 $ 30,786 $ 21,312 Supplemental cash flow disclosures: Interest paid $ 35,813 $ 33,594 $ 20,610 Taxes paid $ 709 $ 2,003 $ 2,469 Non-cash financing activities: Dividends declared and unpaid $ 14,487 $ 14,019 $ 12,816 Value of shares issued pursuant to the DRIP $ 17,983 $ 18,417 $ 17,750 The accompanying notes are an integral part of these consolidated financial statements 68
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Table of contents MSC INCOME FUND, INC. Consolidated Schedule of Investments December 31, 2024 (dollars in thousands) Portfolio Company (1) (20) Business Description Type of Investment(2) (3) (15) InvestmentDate (22)Shares/UnitsTotalRate ReferenceRate andSpread (25) PIKRate(19) MaturityDate Principal (4)Cost (4) Fair Value(18) Control Investments (5) BDB Holdings, LLC Casual Restaurant Group Preferred Equity 11/4/202412,504,663 $ 13,025 $ 12,610 Copper Trail FundInvestments (12) (13)Investment Partnership LP Interests(CTMH, LP) (24) 7/17/2017 38.75% 655 530 GRT Rubber TechnologiesLLC Manufacturer of Engineered RubberProducts Secured Debt 12/21/2018 10.66% SF+6.00% 10/29/2026 1,550 1,539 1,550 Secured Debt 12/19/2014 12.66% SF+8.00% 10/29/2026 19,944 19,852 19,944 Member Units 12/19/2014 2,896 6,435 22,600 27,826 44,094 Harris Preston FundInvestments (12) (13)Investment Partnership LP Interests (2717MH, L.P.) (8) (24)10/1/2017 49.3% 3,345 8,740 Volusion, LLC Provider of Online Software-as-a-Service eCommerce Solutions Secured Debt 3/31/2023 10.00% 3/31/2025 900 900 900 Preferred MemberUnits 3/31/20232,184,683 1,705 3,004 Preferred MemberUnits 3/31/2023 61,077 — — Preferred MemberUnits 1/26/20152,090,001 6,000 — Common Stock 3/31/2023 772,620 1,104 — 9,709 3,904 Subtotal Control Investments(11.2% of net assets at fairvalue) $ 54,560 $ 69,878 Affiliate Investments (6) Analytical Systems KecoHoldings, LLC Manufacturer of Liquid and GasAnalyzers Secured Debt (30) 8/16/2019 8/16/2029$ — $ — $ — Secured Debt 8/16/2019 13.75% 8/16/2029 1,024 1,012 1,012 Preferred MemberUnits 5/20/2021 607 607 1,330 Preferred MemberUnits 8/16/2019 800 800 — Warrants (27) 8/16/2019 105 8/16/2029 79 — 2,498 2,342 Barfly Ventures, LLC (10) Casual Restaurant Group Member Units 10/26/2020 12.25% 528 1,953 Batjer TopCo, LLC HVAC Mechanical Contractor Secured Debt 3/7/2022 10.00% 3/7/2027 50 50 50 Secured Debt 3/7/2022 10.00% 3/7/2027 30 30 30 Secured Debt 3/7/2022 10.00% 3/7/2027 1,175 1,165 1,165 Preferred Stock (8) 3/7/2022 453 455 570 1,700 1,815 Brewer Crane Holdings, LLC Provider of Crane Rental and OperatingServices Secured Debt (9) 1/9/2018 14.66% SF+10.00% 12/31/2025 1,254 1,254 1,254 69
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Table of contents MSC INCOME FUND, INC. Consolidated Schedule of Investments (Continued) December 31, 2024 (dollars in thousands) Portfolio Company (1) (20) Business Description Type of Investment(2) (3) (15) InvestmentDate (22)Shares/UnitsTotalRate ReferenceRate andSpread (25) PIKRate(19) MaturityDate Principal(4) Cost (4) Fair Value(18) Preferred MemberUnits (8) 1/9/2018 737 1,070 1,170 2,324 2,424 Centre Technologies Holdings,LLC Provider of IT Hardware Services andSoftware Solutions Secured Debt (9) (30) 1/4/2019 SF+9.00% 1/4/2028 — — — Secured Debt (9) 11/29/2024 13.66% SF+9.00% 1/4/2028 6,384 6,356 6,384 Preferred MemberUnits 1/4/2019 3,471 1,596 3,110 7,952 9,494 Chamberlin Holding LLC Roofing and Waterproofing SpecialtyContractor Secured Debt (9) (30)2/26/2018 SF+6.00% 2/26/2026 — (26) — Secured Debt (9) 2/26/2018 12.74% SF+8.00% 2/26/2026 3,905 3,904 3,905 Member Units (8) 2/26/2018 1,087 2,860 8,280 Member Units (8) (23)11/2/2018 261,786 443 888 7,181 13,073 Charps, LLC Pipeline Maintenance and Construction Preferred MemberUnits (8) 2/3/2017 457 491 3,900 Clad-Rex Steel, LLC Specialty Manufacturer of Vinyl-CladMetal Secured Debt (30) 10/28/2022 1/15/2027 — — — Secured Debt 12/20/2016 9.00% 1/15/2027 1,690 1,681 1,690 Secured Debt 12/20/2016 10.00% 12/20/2036 243 242 243 Member Units (8) 12/20/2016 179 1,820 2,750 Member Units (23) 12/20/2016 200 127 237 3,870 4,920 Cody Pools, Inc. Designer of Residential and CommercialPools Secured Debt (30) 3/6/2020 12/17/2026 — (3) — Secured Debt 3/6/2020 12.50% 12/17/2026 6,598 6,585 6,598 Preferred MemberUnits (8) (23) 3/6/2020 147 2,079 16,950 8,661 23,548 Colonial Electric CompanyLLC Provider of Electrical ContractingServices Secured Debt (30) 3/31/2021 3/31/2026 — — — Secured Debt 3/31/2021 12.00% 3/31/2026 3,578 3,554 3,578 Preferred MemberUnits (8) 3/31/2021 4,320 1,920 3,390 5,474 6,968 Compass Systems & Sales,LLC Designer of End-to-End MaterialHandling Solutions Secured Debt (30) 11/22/2023 11/22/2028 — (16) (16) Secured Debt 11/22/2023 13.50% 11/22/2028 4,300 4,201 4,201 Preferred Equity 11/22/2023 1,863 1,863 1,860 6,048 6,045 Datacom, LLC Technology and TelecommunicationsProvider Secured Debt 3/1/2022 7.50% 12/31/2025 55 55 55 Secured Debt 3/31/2021 10.00% 12/31/2025 898 878 878 Preferred MemberUnits 3/31/2021 1,000 290 30 1,223 963 Digital Products HoldingsLLC Designer and Distributor of ConsumerElectronics Secured Debt (9) 4/1/2018 14.56% SF+10.00% 4/27/2026 3,154 3,140 3,105 70
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Table of contents MSC INCOME FUND, INC. Consolidated Schedule of Investments (Continued) December 31, 2024 (dollars in thousands) Portfolio Company (1) (20) Business Description Type of Investment(2) (3) (15) InvestmentDate (22)Shares/UnitsTotalRate ReferenceRate andSpread (25) PIKRate(19) MaturityDate Principal(4) Cost (4) Fair Value(18) Preferred MemberUnits (8) 4/1/2018 964 2,375 2,459 5,515 5,564 Direct Marketing Solutions,Inc. Provider of Omni-Channel DirectMarketing Services Secured Debt (30) 2/13/2018 2/13/2026 — (2) — Secured Debt 12/27/2022 14.00% 2/13/2026 4,668 4,656 4,668 Preferred Stock 2/13/2018 2,100 2,100 4,480 6,754 9,148 DMA Industries, LLC Distributor of Aftermarket Ride ControlProducts Secured Debt 6/18/2024 12.00% 6/19/2029 140 138 138 Secured Debt 11/19/2021 12.00% 6/19/2029 4,200 4,161 4,161 Preferred Equity 11/19/2021 1,486 1,486 1,486 Preferred Equity (8) 6/18/2024 767 15.00% 15.00% 810 810 6,595 6,595 Flame King Holdings, LLC Propane Tank and AccessoriesDistributor Preferred Equity (8) 10/29/2021 2,340 2,600 8,980 Freeport Financial Funds(12) (13)Investment Partnership LP Interests(Freeport First LienLoan Fund III LP) (8) (24)7/31/2015 5.95% 1,659 1,263 Gamber-Johnson Holdings,LLC Manufacturer of Ruggedized ComputerMounting Systems Secured Debt (9) (32)(30) 6/24/2016 SF+7.00% 1/1/2028 — — — Secured Debt (9) (32)11/22/2024 11.00% SF+7.00% 1/1/2028 18,282 18,166 18,282 Member Units (8) 6/24/2016 2,261 4,423 28,690 22,589 46,972 GFG Group, LLC Grower and Distributor of a Variety ofPlants and Products to OtherWholesalers, Retailers and GardenCenters Secured Debt 3/31/2021 8.00% 3/31/2026 2,046 2,030 2,046 Preferred MemberUnits (8) 3/31/2021 56.39% 1,225 2,640 3,255 4,686 Gulf Publishing Holdings,LLC Energy Industry Focused Media andPublishing Secured Debt (9) (14)(30) 9/29/2017 SF+9.50% 7/1/2027 — — — Secured Debt (14) 7/1/2022 12.50% 12.50% 7/1/2027 600 581 378 Preferred Equity 7/1/2022 15,930 1,400 — Member Units 4/29/2016 920 920 — 2,901 378 Harris Preston FundInvestments (12) (13)Investment Partnership LP Interests (HPEP3, L.P.) (24) 8/9/2017 8.2% 2,296 4,472 IG Investor, LLC Military and Other Tactical Gear Secured Debt 6/21/2023 13.00% 6/21/2028 400 379 379 71
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Table of contents MSC INCOME FUND, INC. Consolidated Schedule of Investments (Continued) December 31, 2024 (dollars in thousands) Portfolio Company (1) (20) Business Description Type of Investment(2) (3) (15) InvestmentDate (22)Shares/UnitsTotalRate ReferenceRate andSpread (25) PIKRate(19) MaturityDate Principal(4) Cost (4) Fair Value(18) Secured Debt 6/21/2023 13.00% 6/21/2028 8,876 8,693 8,693 Common Equity 6/21/2023 3,600 3,600 4,060 12,672 13,132 Independent Pet PartnersIntermediate Holdings, LLC(10) Omnichannel Retailer of Specialty PetProducts Common Equity 4/7/2023 6,436,566 6,540 7,290 Integral Energy Services(10) Nuclear Power Staffing Services Secured Debt (9) 8/20/2021 12.35% SF+7.50% 8/20/2026 15,090 14,986 14,872 Preferred Equity (8) 12/7/2023 3,725 10.00% 10.00% 297 535 Common Stock 8/20/2021 11,647 1,584 640 16,867 16,047 Kickhaefer ManufacturingCompany, LLC Precision Metal Parts Manufacturing Secured Debt 10/31/2018 11.50% 10/31/2026 3,750 3,741 3,741 Secured Debt 10/31/2018 9.00% 10/31/2048 990 982 982 Preferred Equity 10/31/2018 145 3,060 3,060 Member Units (8) (23)10/31/2018 200 248 678 8,031 8,461 Mills Fleet Farm Group, LLC(10) Omnichannel Retailer of Work, Farmand Lifestyle Merchandise Common Equity (23) 12/19/2024 53,505 12/31/2026 11,166 11,166 Mystic Logistics Holdings,LLC Logistics and Distribution ServicesProvider for Large Volume Mailers Secured Debt (30) 8/18/2014 1/31/2027 — — — Secured Debt 8/18/2014 10.00% 1/31/2027 1,436 1,433 1,436 Common Stock (8) 8/18/2014 1,468 680 6,590 2,113 8,026 Nello Industries Investco, LLCManufacturer of Steel Poles and TowersFor Critical Infrastructure Secured Debt (9) (30) 6/4/2024 SF+6.50% 6/4/2025 — (12) (12) Secured Debt 6/4/2024 13.50% 6/4/2029 6,800 6,619 6,619 Common Equity (8) 6/4/2024 91,145 3,030 3,890 9,637 10,497 NexRev LLC Provider of Energy Efficiency Products& Services Secured Debt 2/28/2018 2/28/2025 — — — Secured Debt 2/28/2018 9.00% 2/28/2025 2,453 2,450 2,453 Preferred MemberUnits (8) 2/28/201825,786,046 2,053 2,970 4,503 5,423 NuStep, LLC Designer, Manufacturer and Distributorof Fitness Equipment Secured Debt (9) 1/31/2017 11.16% SF+6.50% 1/31/2025 900 900 900 Secured Debt 1/31/2017 12.00% 1/31/2025 4,610 4,610 4,610 Preferred MemberUnits 11/2/2022 600 696 1,500 Preferred MemberUnits 1/31/2017 122 2,966 2,890 9,172 9,900 Oneliance, LLC Construction Cleaning Company Preferred Stock 8/6/2021 282 282 640 72
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Table of contents MSC INCOME FUND, INC. Consolidated Schedule of Investments (Continued) December 31, 2024 (dollars in thousands) Portfolio Company (1) (20) Business Description Type of Investment(2) (3) (15) InvestmentDate (22)Shares/UnitsTotalRate ReferenceRate andSpread (25) PIKRate(19) MaturityDate Principal(4) Cost (4) Fair Value(18) Orttech Holdings, LLC Distributor of Industrial Clutches,Brakes and Other Components Secured Debt (9) (30)7/30/2021 SF+11.00% 7/31/2026 — (1) — Secured Debt (9) 7/30/2021 15.66% SF+11.00% 7/31/2026 5,490 5,456 5,490 Preferred Stock (8) (23)7/30/2021 2,500 2,500 3,360 7,955 8,850 Pinnacle TopCo, LLC Manufacturer and Distributor ofGarbage Can Liners, Poly Bags,Produce Bags, and Other SimilarProducts Secured Debt (30) 12/21/2023 12/31/2028 — (8) — Secured Debt 12/21/2023 13.00% 12/31/2028 7,160 7,019 7,160 Preferred Equity (8) 12/21/2023 110 3,135 4,590 10,146 11,750 RA Outdoors LLC (10) (13)Software Solutions Provider forOutdoor Activity Management Secured Debt (9) 4/8/2021 11.74% SF+6.75% 11.74% 4/8/2026 1,311 1,307 1,215 Secured Debt (9) 4/8/2021 11.74% SF+6.75% 11.74% 4/8/2026 13,714 13,665 12,710 Common Equity 8/12/2024 107 SF+6.75% 11.59% 4/8/2026 — — 14,972 13,925 Robbins Bros. Jewelry, Inc. Bridal Jewelry Retailer Secured Debt (14)(30) 12/15/2021 10.00% 12/15/2026 — (7) (7) Secured Debt (14) 12/15/2021 12.50% 10.00% 12/15/2026 3,740 3,604 1,617 Preferred Equity 12/15/2021 1,230 1,230 — 4,827 1,610 SI East, LLC Rigid Industrial PackagingManufacturing Secured Debt 8/31/2018 11.75% 6/16/2028 750 744 750 Secured Debt (33) 6/16/2023 12.79% 6/16/2028 22,554 22,533 22,554 Preferred MemberUnits (8) 8/31/2018 55 508 4,550 23,785 27,854 Student Resource Center,LLC (10) Higher Education Services Secured Debt 9/11/2024 8.50% 8.50% 12/31/2027 227 227 227 Secured Debt (14) 12/31/2022 8.50% 8.50% 12/31/2027 5,918 5,425 1,826 Preferred Equity 12/31/20226,564,055 — — 5,652 2,053 Tedder Industries, LLC Manufacturer of Firearm Holsters andAccessories Secured Debt (14)(17) 8/31/2018 12.00% 12.00% 8/31/2023 460 455 412 Secured Debt (14)(17) 8/31/2018 12.00% 12.00% 8/31/2023 3,800 3,761 901 Preferred MemberUnits 8/28/2023 1,651 165 — Preferred MemberUnits 2/1/2023 1,411 141 — Preferred MemberUnits 8/31/2018 136 2,311 — 6,833 1,313 Trantech Radiator Topco,LLC Transformer Cooling Products andServices Secured Debt (30) 5/31/2019 5/31/2027 — (1) (1) Secured Debt 5/31/2019 13.50% 5/31/2027 1,980 1,962 1,962 Common Stock (8) 5/31/2019 154 1,164 2,140 3,125 4,101 Urgent DSO LLC General and Emergency DentistryPractice 73
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Table of contents MSC INCOME FUND, INC. Consolidated Schedule of Investments (Continued) December 31, 2024 (dollars in thousands) Portfolio Company (1) (20) Business Description Type of Investment(2) (3) (15) InvestmentDate (22)Shares/UnitsTotalRate ReferenceRate andSpread (25) PIKRate(19) MaturityDate Principal(4) Cost (4) Fair Value(18) Secured Debt 2/16/2024 13.50% 2/16/2029 2,200 2,145 2,145 Preferred Equity (8) 2/16/2024 1,000 9.00% 9.00% 1,080 1,080 3,225 3,225 Victory Energy Operations,LLC Provider of Industrial and CommercialCombustion Systems Secured Debt (30) 10/3/2024 10/3/2029 — (5) (5) Secured Debt 10/3/2024 13.00% 10/3/2029 7,749 7,529 7,529 Preferred Equity 10/3/2024 8,338 3,644 3,644 11,168 11,168 VVS Holdco LLC Omnichannel Retailer of Animal HealthProducts Secured Debt (9) (30)12/1/2021 SF+6.00% 12/1/2025 — — — Secured Debt 12/1/2021 11.50% 12/1/2026 6,440 6,366 6,366 Preferred Equity (8) (23)12/1/2021 3,060 3,060 3,060 9,426 9,426 Subtotal Affiliate Investments(56.2% of net assets at fairvalue) $ 284,211 $ 351,360 Non-Control/Non-AffiliateInvestments (7) AAC Holdings, Inc. (11) Substance Abuse Treatment ServiceProvider Secured Debt 1/31/2023 18.00% 18.00% 6/25/2025$ 210 $ 210 $ 209 Secured Debt 12/11/2020 18.00% 18.00% 6/25/2025 6,013 5,971 5,975 Common Stock 12/11/2020 593,927 3,148 $ — Warrants (27) 12/11/2020 197,717 12/11/2025 — — 9,329 6,184 Adams Publishing Group,LLC (10) Local Newspaper Operator Secured Debt (9) (29)3/11/2022 11.00% SF+7.00% 1.00% 3/11/2027 946 946 928 Secured Debt (9) (29)3/11/2022 11.00% SF+7.00% 1.00% 3/11/2027 2,251 2,248 2,209 3,194 3,137 AMEREQUIP LLC (10) Full Services Provider IncludingDesign, Engineering andManufacturing of Commercial andAgricultural Equipment Common Stock (8) 8/31/2022 11 83 30 American Health StaffingGroup, Inc. (10) Healthcare Temporary Staffing Secured Debt (9) (30)11/19/2021 P+ 5.00% 11/19/2026 — (6) (6) Secured Debt (9) 11/19/2021 12.50% P+ 5.00% 11/19/2026 7,703 7,673 7,703 7,667 7,697 American Nuts, LLC (10) Roaster, Mixer and Packager of BulkNuts and Seeds Secured Debt (9) 3/11/2022 14.49% SF+9.75% 14.49% 4/10/2026 5,626 5,614 4,480 Secured Debt (9) (14)3/11/2022 16.49% SF+11.75% 16.49% 4/10/2026 4,270 4,244 2,621 9,858 7,101 American TeleconferencingServices, Ltd. (11) Provider of Audio Conferencing andVideo Collaboration Solutions Secured Debt (14)(17) 9/17/2021 4/7/2023 2,425 2,375 59 Secured Debt (14)(17) 5/19/2016 6/8/2023 11,693 11,451 282 13,826 341 Ansira Partners II, LLC(10) Provider of Data-Driven MarketingServices Secured Debt (9) (30) 7/1/2024 SF+6.75% 7/1/2029 — (45) (45) 74
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Table of contents MSC INCOME FUND, INC. Consolidated Schedule of Investments (Continued) December 31, 2024 (dollars in thousands) Portfolio Company (1) (20) Business Description Type of Investment(2) (3) (15) InvestmentDate (22)Shares/UnitsTotalRate ReferenceRate andSpread (25) PIKRate(19) MaturityDate Principal(4) Cost (4) Fair Value(18) Secured Debt (9) 7/1/2024 11.25% SF+6.75% 7/1/2029 17,659 17,239 17,375 17,194 17,330 ArborWorks, LLC (10) Vegetation Management Services Secured Debt 11/6/2023 15.00% 15.00% 11/6/2028 1,061 1,061 1,061 Secured Debt (9) 11/6/2023 11.08% SF+6.50% 11.08% 11/6/2028 4,278 4,278 4,278 Preferred Equity 11/6/2023 17,265 7,468 6,667 Preferred Equity 11/6/2023 17,265 — — Common Equity 11/9/2021 2,070 124 — 12,931 12,006 Archer Systems, LLC (10) Mass Tort Settlement AdministrationSolutions Provider Common Stock 8/11/2022 62,403 62 110 ATS Operating, LLC (10) For-Profit Thrift Retailer Secured Debt (9) 1/18/2022 10.85% SF+6.00% 1/18/2027 50 50 50 Secured Debt (9) 1/18/2022 9.85% SF+5.00% 1/18/2027 925 916 925 Secured Debt (9) 1/18/2022 11.85% SF+7.00% 1/18/2027 925 916 925 Common Stock 1/18/2022 100,000 100 120 1,982 2,020 AVEX Aviation Holdings, LLC(10) Specialty Aircraft Dealer & MROProvider Secured Debt (9) (30)12/23/2022 SF+7.25% 12/23/2027 — (12) (12) Secured Debt (9) 12/23/2022 11.73% SF+7.25% 12/23/2027 3,343 3,271 3,343 Common Equity (8) 12/15/2021 137 130 124 3,389 3,455 Berry Aviation, Inc. (10) Charter Airline Services Preferred MemberUnits 3/8/2024 286,109 286 — Preferred MemberUnits (23) 11/12/2019 122,416 — — Preferred MemberUnits (23) 7/6/2018 1,548,387 — — 286 — Bettercloud, Inc. (10) SaaS Provider of WorkflowManagement and Business ApplicationSolutions Secured Debt (9) (30)6/30/2022 SF+10.25% 6/30/2028 — (14) (14) Secured Debt (9) 6/30/2022 15.76% SF+10.25% 9.25% 6/30/2028 9,230 9,139 6,963 9,125 6,949 Binswanger Enterprises, LLC(10) Glass Repair and Installation ServiceProvider Member Units 3/10/20171,050,000 1,050 650 Bluestem Brands, Inc. (11) Multi-Channel Retailer of GeneralMerchandise Secured Debt (9) 1/9/2024 13.17% SF+8.50% 12.17% 8/28/2025 215 138 181 Secured Debt (9) 10/19/2022 15.00% P+ 7.50% 14.75% 8/28/2025 3,304 3,304 2,792 Secured Debt (9) 8/28/2020 13.17% SF+8.50% 12.17% 8/28/2025 4,486 4,231 3,790 Common Stock 10/1/2020 700,446 — — Warrants (27) 10/19/2022175,110 10/19/2032 1,111 — 8,784 6,763 Boccella Precast ProductsLLC Manufacturer of Precast Hollow CoreConcrete Secured Debt 9/23/2021 10.00% 2/28/2027 80 80 66 Member Units 6/30/2017 540,000 564 80 75
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Table of contents MSC INCOME FUND, INC. Consolidated Schedule of Investments (Continued) December 31, 2024 (dollars in thousands) Portfolio Company (1) (20) Business Description Type of Investment(2) (3) (15) InvestmentDate (22)Shares/UnitsTotalRate ReferenceRate andSpread (25) PIKRate(19) MaturityDate Principal(4) Cost (4) Fair Value(18) 644 146 Bond Brand Loyalty ULC(10) (13)(21) Provider of Loyalty Marketing Services Secured Debt (9) 5/1/2023 11.65% SF+7.00% 5/1/2028 360 348 360 Secured Debt (9) 5/1/2023 10.74% SF+6.00% 5/1/2028 3,999 3,945 3,999 Secured Debt (9) 5/1/2023 12.74% SF+8.00% 5/1/2028 3,999 3,945 3,999 Preferred Equity 5/1/2023 360 360 310 Common Equity 5/1/2023 360 — — 8,598 8,668 BP Loenbro Holdings Inc. (10) Specialty Industrial MaintenanceServices Secured Debt (9) (28) 2/1/2024 10.68% SF+6.25% 2/1/2029 514 493 514 Secured Debt (9) (30) 2/1/2024 SF+6.25% 2/1/2029 — (10) (10) Secured Debt (9) 2/1/2024 10.92% SF+6.25% 2/1/2029 11,217 11,031 11,217 Common Equity 2/1/2024 1,000,000 1,000 1,550 12,514 13,271 Brightwood Capital FundInvestments (12) (13)Investment Partnership LP Interests(Brightwood CapitalFund III, LP) (24) 7/21/2014 0.52% 1,899 1,039 LP Interests(Brightwood CapitalFund IV, LP) (8) (24)10/26/2016 1.17% 8,064 8,031 9,963 9,070 Buca C, LLC Casual Restaurant Group Secured Debt (14)(17) 8/7/2024 15.00% 15.00% 11/4/2024 4,291 3,717 — Secured Debt (14) 6/28/2024 15.00% 15.00% 4/1/2025 10 — — Secured Debt (14)(17) 6/30/2015 15.00% 15.00% 8/31/2023 6,369 4,078 — Preferred MemberUnits 6/30/2015 4 6.00% 6.00% 3,040 — 10,835 — Burning Glass IntermediateHolding Company, Inc. (10) Provider of Skills-Based Labor MarketAnalytics Secured Debt (9) (30)6/14/2021 SF+5.00% 6/10/2026 — (8) — Secured Debt (9) 6/14/2021 9.46% SF+5.00% 6/10/2028 11,575 11,469 11,575 11,461 11,575 CAI Software LLC Provider of Specialized EnterpriseResource Planning Software Preferred Equity 12/13/2021454,344 454 513 Preferred Equity 12/13/2021126,446 — — 454 513 Career Team Holdings, LLC Provider of Workforce Training andCareer Development Services Secured Debt (9) 12/17/2021 10.56% SF+6.00% 12/17/2026 100 97 97 Secured Debt 12/17/2021 12.50% 12/17/2026 2,160 2,134 2,134 Common Stock 12/17/2021 50,000 500 530 2,731 2,761 CaseWorthy, Inc. (10) SaaS Provider of Case ManagementSolutions Common Equity 12/30/2022 80,000 80 160 CenterPeak Holdings, LLC Executive Search Services Secured Debt (30) 12/10/2021 12/10/2026 — (3) — 76
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Table of contents MSC INCOME FUND, INC. Consolidated Schedule of Investments (Continued) December 31, 2024 (dollars in thousands) Portfolio Company (1) (20) Business Description Type of Investment(2) (3) (15) InvestmentDate (22)Shares/UnitsTotalRate ReferenceRate andSpread (25) PIKRate(19) MaturityDate Principal(4) Cost (4) Fair Value(18) Secured Debt 12/10/2021 15.00% 12/10/2026 2,390 2,364 2,390 Preferred Equity (8) 12/10/2021 368 404 1,610 2,765 4,000 Channel PartnersIntermediateco, LLC (10) Outsourced Consumer ServicesProvider Secured Debt (9) (28) 2/7/2022 11.53% SF+7.00% 2/7/2027 467 456 444 Secured Debt (9) 2/7/2022 11.93% SF+7.00% 2/7/2027 3,326 3,297 3,166 Secured Debt (9) 6/24/2022 11.93% SF+7.00% 2/7/2027 184 183 175 Secured Debt (9) 3/27/2023 11.93% SF+7.00% 2/7/2027 445 439 424 4,375 4,209 Clarius BIGS, LLC (10) Prints & Advertising Film Financing Secured Debt (14)(17) 9/23/2014 1/5/2015 2,666 2,321 19 Classic H&G Holdings, LLC Provider of Engineered PackagingSolutions Preferred MemberUnits (8) 3/12/2020 39 — 710 Computer Data Source, LLC (10) Third Party Maintenance Provider tothe Data Center Ecosystem Secured Debt (9) (28) 8/6/2021 12.93% SF+8.25% 8/6/2026 6,531 6,461 6,118 Secured Debt (9) (30)3/29/2024 SF+8.25% 8/6/2026 — (42) (42) Secured Debt (9) 8/6/2021 12.92% SF+8.25% 8/6/2026 15,807 15,656 14,807 22,075 20,883 Connect TelecommunicationsSolutions Holdings, Inc. (13) Value-added Distributor of FiberProducts and Equipment Secured Debt 10/9/2024 13.00% 10/9/2029 3,064 2,977 2,977 Preferred Equity 10/9/2024 2,478 1,400 1,400 4,377 4,377 Coregistics Buyer LLC (10) (13)(21) Contract Packaging Service Provider Secured Debt (9) 6/29/2024 10.39% SF+6.00% 6/28/2029 449 427 440 Secured Debt (9) 6/29/2024 10.36% SF+6.00% 6/28/2029 2,877 2,816 2,824 Secured Debt (9) 8/15/2024 10.40% SF+6.00% 6/28/2029 1,913 1,878 1,878 Secured Debt (9) 6/29/2024 10.61% SF+6.25% 6/28/2029 8,611 8,417 8,109 13,538 13,251 CQ Fluency, LLC (10) Global Language Services Provider Secured Debt (9) (30)12/27/2023 SF+6.75% 6/27/2027 — (31) (31) Secured Debt (9) (30)12/27/2023 SF+6.75% 6/27/2027 — (31) (31) Secured Debt (9) 12/27/2023 11.18% SF+6.75% 6/27/2027 7,219 7,064 7,169 7,002 7,107 Creative Foam Corporation(10) Manufacturer of Custom EngineeredDie Cut, Formed Foam, Nonwoven, andMulti-material Component Solutionsfor the Automotive and HealthcareMarkets Secured Debt (9) (30)6/27/2024 SF+5.75% 6/27/2029 — (28) (28) Secured Debt (9) 6/27/2024 10.11% SF+5.75% 6/27/2029 10,801 10,610 10,694 10,582 10,666 Dalton US Inc. (10) Provider of Supplemental LaborServices Common Stock 8/16/2022 37 52 50 77
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Table of contents MSC INCOME FUND, INC. Consolidated Schedule of Investments (Continued) December 31, 2024 (dollars in thousands) Portfolio Company (1) (20) Business Description Type of Investment(2) (3) (15) InvestmentDate (22)Shares/UnitsTotalRate ReferenceRate andSpread (25) PIKRate(19) MaturityDate Principal(4) Cost (4) Fair Value(18) DTE Enterprises, LLC (10) Industrial Powertrain Repair andServices Class AA PreferredMember Units (non-voting) (8) 4/13/2018 10.00% 10.00% 1,316 438 Class A PreferredMember Units 4/13/2018 776,316 8.00% 8.00% 776 — 2,092 438 Dynamic Communities, LLC(10) Developer of Business Events andOnline Community Groups Secured Debt (9) 12/20/2022 11.46% SF+7.00% 11.46% 12/31/2026 2,318 2,160 2,220 Secured Debt (9) 12/20/2022 13.46% SF+9.00% 13.46% 12/31/2026 2,413 2,179 2,219 Preferred Equity 12/20/2022125,000 128 60 Preferred Equity 12/20/20222,376,241 — — Common Equity 12/20/20221,250,000 — — 4,467 4,499 Elgin AcquireCo, LLC Manufacturer and Distributor of Engineand Chassis Components Secured Debt (9) (30)10/3/2022 SF+6.00% 10/3/2027 — — — Secured Debt 10/3/2022 12.00% 10/3/2027 1,181 1,162 1,162 Secured Debt 10/3/2022 9.00% 10/3/2052 409 406 406 Common Stock 10/3/2022 19 374 370 Common Stock (23) 10/3/2022 61 102 199 2,044 2,137 Emerald TechnologiesAcquisition Co, Inc. (11) Design & Manufacturing Secured Debt (9) 2/10/2022 10.71% SF+6.25% 12/29/2027 2,328 2,303 1,863 Escalent, Inc. (10) Market Research and Consulting Firm Secured Debt (9) (30) 4/7/2023 SF+8.00% 4/7/2029 — (7) (7) Secured Debt (9) 10/2/2024 12.39% SF+8.00% 4/7/2029 364 358 358 Secured Debt (9) 4/7/2023 12.43% SF+8.00% 4/7/2029 6,855 6,707 6,855 Common Equity 4/7/2023 170,998 174 240 7,232 7,446 Event Holdco, LLC (10) Event and Learning ManagementSoftware for Healthcare Organizationsand Systems Secured Debt (9) 12/22/2021 12.59% SF+8.00% 12/22/2026 308 306 308 Secured Debt (9) 12/22/2021 12.59% SF+8.00% 6.00% 12/22/2026 3,969 3,955 3,969 4,261 4,277 FCC Intermediate Holdco,LLC Supply Chain Management Services Secured Debt 5/28/2024 13.00% 5/29/2029 8,200 7,135 7,135 Warrants (27) 5/28/2024 3 980 2,710 8,115 9,845 Garyline, LLC (10) Manufacturer of Consumer PlasticProducts Secured Debt (9) (28)11/10/2023 11.29% SF+6.75% 11/10/2028 2,416 2,355 2,416 Secured Debt (9) 11/10/2023 11.34% SF+6.75% 11/10/2028 9,567 9,346 9,567 Common Equity 11/10/2023 210,084 210 150 11,911 12,133 GradeEight Corp. (10) Distributor of maintenance and repairparts Secured Debt (9) (30)10/4/2024 SF+ 7.25% 10/4/2029 — (45) (45) 78
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Table of contents MSC INCOME FUND, INC. Consolidated Schedule of Investments (Continued) December 31, 2024 (dollars in thousands) Portfolio Company (1) (20) Business Description Type of Investment(2) (3) (15) InvestmentDate (22)Shares/UnitsTotalRate ReferenceRate andSpread (25) PIKRate(19) MaturityDate Principal(4) Cost (4) Fair Value(18) Secured Debt (9) (30)10/4/2024 SF+ 7.25% 10/4/2029 — (22) (22) Secured Debt (9) 10/4/2024 11.74% SF+ 7.25% 10/4/2029 14,824 14,542 14,542 Common Equity 10/4/2024 471 471 471 14,946 14,946 Hawk Ridge Systems, LLC Value-Added Reseller of EngineeringDesign and Manufacturing Solutions Secured Debt (9) 12/2/2016 10.73% SF+6.00% 1/15/2026 661 661 661 Secured Debt 12/2/2016 12.50% 1/15/2026 9,744 9,721 9,744 Preferred MemberUnits (8) 12/2/2016 56 713 5,060 Preferred MemberUnits (23) 12/2/2016 56 38 270 11,133 15,735 HDC/HW IntermediateHoldings (10) Managed Services and Hosting Provider Secured Debt (9) 3/7/2024 8.75% SF+3.50% 2.50% 6/21/2026 1,361 1,307 1,307 Secured Debt (14) 3/7/2024 2.50% 2.50% 6/21/2026 914 401 235 Common Equity 3/7/2024 35,971 — — 1,708 1,542 HEADLANDS OP-CO LLC(10) Clinical Trial Sites Operator Secured Debt (9) (30) 8/1/2022 SF+6.50% 8/1/2027 — (10) (10) Secured Debt (9) 8/1/2022 10.86% SF+6.50% 8/1/2027 1,975 1,951 1,975 Secured Debt (9) 6/3/2024 10.86% SF+6.50% 8/1/2027 1,397 1,362 1,396 Secured Debt (9) 8/1/2022 10.86% SF+6.50% 8/1/2027 4,875 4,824 4,875 Secured Debt (9) 6/3/2024 10.86% SF+6.50% 8/1/2027 2,382 2,363 2,382 10,490 10,618 Hornblower Sub, LLC (10) Marine Tourism and Transportation Secured Debt (9) 7/3/2024 9.92% SF+5.50% 7/3/2029 1,215 1,192 1,204 Secured Debt (9) 7/3/2024 10.11% SF+5.50% 7/3/2029 15,490 15,338 15,338 16,530 16,542 Hybrid Promotions, LLC (10) Wholesaler of Licensed, Branded andPrivate Label Apparel Secured Debt (9) 6/30/2021 13.10% SF+8.25% 12/31/2027 8,000 7,859 8,000 IG Parent Corporation (11) Software Engineering Secured Debt (9) (30)7/30/2021 SF+5.75% 7/30/2026 — (8) — Secured Debt (9) 7/30/2021 10.21% SF+5.75% 7/30/2028 6,154 6,102 6,154 Secured Debt (9) 7/30/2021 10.21% SF+5.75% 7/30/2028 1,922 1,906 1,922 8,000 8,076 Imaging Business Machines,L.L.C. (10) Technology Hardware & Equipment Secured Debt (9) (28) 6/8/2023 11.39% SF+7.00% 6/30/2028 791 791 791 Secured Debt (9) 6/8/2023 11.62% SF+7.00% 6/30/2028 10,280 10,034 10,280 Common Equity 6/8/2023 422 580 510 11,405 11,581 Implus Footcare, LLC (10) Provider of Footwear and RelatedAccessories Secured Debt (9) 6/1/2017 13.73% SF+7.75% 1.50% 7/31/2025 17,066 17,066 14,524 Infinity X1 Holdings, LLC Manufacturer and Supplier of PersonalLighting Products Secured Debt 3/31/2023 12.00% 3/31/2028 3,763 3,714 3,763 79
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Table of contents MSC INCOME FUND, INC. Consolidated Schedule of Investments (Continued) December 31, 2024 (dollars in thousands) Portfolio Company (1) (20) Business Description Type of Investment(2) (3) (15) InvestmentDate (22)Shares/UnitsTotalRate ReferenceRate andSpread (25) PIKRate(19) MaturityDate Principal(4) Cost (4) Fair Value(18) Preferred Equity (8) 3/31/2023 21,840 1,092 2,310 4,806 6,073 Insight Borrower Corporation(10) Test, Inspection, and CertificationInstrument Provider Secured Debt (9) (30)7/19/2023 SF+6.25% 7/19/2028 — (32) (32) Secured Debt (9) (30)7/19/2023 SF+6.25% 7/19/2029 — (27) (27) Secured Debt (9) 7/19/2023 10.87% SF+6.25% 7/19/2029 8,289 8,100 7,869 Common Equity 7/19/2023 47,847 239 120 8,280 7,930 Inspire AestheticsManagement, LLC (10) Surgical and Non-Surgical PlasticSurgery and Aesthetics Provider Secured Debt (9) (28) 4/3/2023 14.69% SF+10.00% 4/3/2028 677 664 620 Secured Debt (9) 4/3/2023 14.58% SF+10.00% 4/3/2028 6,198 6,091 5,681 Secured Debt (9) 6/14/2023 14.58% SF+10.00% 4/3/2028 1,248 1,227 1,144 Common Equity 4/3/2023 128,727 349 21 8,331 7,466 Interface Security Systems,L.L.C (10) Commercial Security & Alarm Services Secured Debt (17)(28) 12/9/2021 14.54% SF+10.00% 14.54% 8/7/2023 2,075 2,075 1,580 Secured Debt (9) (14)(17) 8/7/2019 11.67% SF+7.00% 11.67% 8/7/2023 7,334 7,254 13 Common Stock 12/7/2021 2,143 — — 9,329 1,593 Invincible Boat Company,LLC. (10) Manufacturer of Sport Fishing Boats Secured Debt (9) (28)8/28/2019 12.01% SF+7.50% 12/31/2026 1,037 1,033 996 Secured Debt (9) 8/28/2019 12.01% SF+7.50% 12/31/2026 16,771 16,704 16,098 17,737 17,094 Iron-Main Investments, LLC Consumer Reporting Agency ProvidingEmployment Background Checks andDrug Testing Secured Debt 8/2/2021 13.00% 1/31/2028 1,128 1,113 1,113 Secured Debt 9/1/2021 13.00% 1/31/2028 735 725 725 Secured Debt 11/15/2021 13.00% 1/31/2028 2,236 2,236 2,236 Secured Debt 11/15/2021 13.00% 1/31/2028 4,406 4,344 4,344 Secured Debt 1/31/2023 13.00% 1/31/2028 2,461 2,379 2,379 Preferred Equity 6/26/2024 177,800 25.00% 25.00% 178 190 Common Stock 8/3/2021 50,753 689 710 11,664 11,697 Isagenix International, LLC(11) Direct Marketer of Health & WellnessProducts Secured Debt (9) 4/13/2023 11.25% SF+6.60% 8.75% 4/14/2028 2,962 2,778 622 Common Equity 4/13/2023 186,322 — — 2,778 622 Island Pump and Tank, LLC(10) Provider of Facility and MaintenanceServices to Fuel Retailers in NortheastU.S. Secured Debt (9) (30)5/20/2024 SF+6.50% 5/17/2029 — (5) (5) Secured Debt (9) 5/20/2024 10.35% SF+5.50% 5/17/2029 1,735 1,708 1,722 Secured Debt (9) 5/20/2024 11.35% SF+6.50% 5/17/2029 1,735 1,708 1,722 Secured Debt (9) 5/20/2024 12.35% SF+7.50% 5/17/2029 1,735 1,708 1,722 5,119 5,161 ITA Holdings Group, LLC Air Ambulance Services 80
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Table of contents MSC INCOME FUND, INC. Consolidated Schedule of Investments (Continued) December 31, 2024 (dollars in thousands) Portfolio Company (1) (20) Business Description Type of Investment(2) (3) (15) InvestmentDate (22)Shares/UnitsTotalRate ReferenceRate andSpread (25) PIKRate(19) MaturityDate Principal(4) Cost (4) Fair Value(18) Secured Debt (9) 6/21/2023 13.78% SF+9.00% 6/21/2027 295 290 295 Secured Debt (9) 6/21/2023 13.78% SF+9.00% 6/21/2027 248 245 248 Secured Debt (9) 6/21/2023 12.78% SF+8.00% 6/21/2027 1,110 937 1,110 Secured Debt (9) 6/21/2023 14.78% SF+10.00% 6/21/2027 1,110 937 1,110 Warrants (27) 6/21/2023 48,327 6/21/2033 523 1,420 2,932 4,183 Jackmont Hospitality, Inc. (10) Franchisee of Casual DiningRestaurants Secured Debt (9) (26)10/26/2022 12.18% SF+7.50% 11/4/2026 1,585 1,567 1,585 Secured Debt (9) 2/27/2024 12.19% SF+7.50% 11/4/2026 1,251 1,236 1,251 Secured Debt (9) 2/27/2024 12.18% SF+7.50% 11/4/2026 121 96 121 Secured Debt (9) 11/8/2021 12.18% SF+7.50% 11/4/2026 3,685 3,643 3,685 Preferred Equity 11/8/2021 5,653,333 216 1,740 6,758 8,382 JDC Power Services, LLC(10) Provider of Electrical Equipment andMaintenance Services for Datacenters Secured Debt (9) (30)6/28/2024 SF+6.50% 6/28/2029 — (47) (47) Secured Debt (9) 6/28/2024 10.83% SF+6.50% 6/28/2029 17,671 17,277 17,489 17,230 17,442 Joerns Healthcare, LLC (11) Manufacturer and Distributor of HealthCare Equipment & Supplies Secured Debt (9) (14)(17) 8/21/2019 21.59% SF+16.00% 21.59% 8/21/2024 942 942 — Secured Debt (9) (14)(17) 8/21/2019 21.59% SF+16.00% 21.59% 8/21/2024 906 906 — Secured Debt (9) 3/30/2024 13.21% SF+8.75% 6.00% 3/29/2029 1,470 1,470 1,470 Secured Debt (9) 3/30/2024 13.18% SF+8.75% 13.18% 3/29/2029 1,091 1,091 1,091 Common Stock 8/21/2019 392,514 3,678 — Common Stock 3/29/20244,535,784 166 110 8,253 2,671 JorVet Holdings, LLC Supplier and Distributor of VeterinaryEquipment and Supplies Secured Debt 3/28/2022 12.00% 3/28/2027 2,591 2,568 2,568 Preferred Equity (8) 3/28/2022 12,214 1,221 1,460 3,789 4,028 JTI Electrical & Mechanical,LLC (10) Electrical, Mechanical and AutomationServices Secured Debt (9) (28)12/22/2021 12.72% SF+8.00% 12/22/2026 702 696 665 Secured Debt (9) 12/22/2021 12.58% SF+8.00% 12/22/2026 2,980 2,956 2,823 Secured Debt (9) 2/1/2024 12.58% SF+8.00% 12/22/2026 279 273 265 Common Equity 12/22/2021140,351 140 30 4,065 3,783 KMS, LLC (10) Wholesaler of Closeout and Value-priced Products Secured Debt (9) (14)10/4/2021 14.50% SF+9.75% 10/4/2026 1,286 1,238 829 Secured Debt (9) 11/27/2024 14.23% SF+9.75% 14.23% 10/4/2026 562 562 562 Secured Debt (9) 11/27/2024 14.23% SF+9.75% 14.23% 10/4/2026 550 550 550 Secured Debt (9) (14)10/4/2021 14.50% SF+9.75% 10/4/2026 9,262 9,175 5,973 11,525 7,914 Lightbox Holdings, L.P. (11) Provider of Commercial Real EstateSoftware Secured Debt 5/9/2019 9.44% SF+5.00% 5/9/2026 5,705 5,688 5,534 81
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Table of contents MSC INCOME FUND, INC. Consolidated Schedule of Investments (Continued) December 31, 2024 (dollars in thousands) Portfolio Company (1) (20) Business Description Type of Investment(2) (3) (15) InvestmentDate (22)Shares/UnitsTotalRate ReferenceRate andSpread (25) PIKRate(19) MaturityDate Principal(4) Cost (4) Fair Value(18) LL Management, Inc. (10) Medical Transportation ServiceProvider Secured Debt (9) 9/17/2024 11.89% SF+7.25% 12/31/2025 701 701 701 Secured Debt (9) 5/2/2019 11.92% SF+7.25% 12/31/2025 7,850 7,791 7,850 Secured Debt (9) 5/2/2019 11.71% SF+7.25% 12/31/2025 5,181 5,141 5,181 Secured Debt (9) 2/26/2021 11.92% SF+7.25% 12/31/2025 860 854 860 Secured Debt (9) 5/12/2022 11.71% SF+7.25% 12/31/2025 8,716 8,647 8,716 23,134 23,308 LLFlex, LLC (10) Provider of Metal-Based Laminates Secured Debt (9) 8/16/2021 12.74% SF+8.00% 3.00% 8/16/2026 4,592 4,560 3,684 Logix Acquisition Company,LLC (10) Competitive Local Exchange Carrier Secured Debt (9) (17) 1/8/2018 12.25% P+ 4.25% 12/22/2024 11,552 11,552 9,191 Mako Steel, LP (10) Self-Storage Design & Construction Secured Debt (9) (30)3/15/2021 SF+7.50% 3/15/2026 — (19) — Secured Debt (9) 3/28/2024 12.00% SF+7.50% 3/15/2026 21,081 20,910 21,081 20,891 21,081 Metalforming Holdings, LLC Distributor of Sheet Metal Folding andMetal Forming Equipment Secured Debt (30) 10/19/2022 10/19/2025 — — — Secured Debt 10/19/2022 9.75% 10/19/2027 1,539 1,513 1,513 Preferred Equity (8) 10/19/2022434,331 8.00% 8.00% 434 470 Common Stock 10/19/2022112,865 113 500 2,060 2,483 Microbe Formulas, LLC (10) Nutritional Supplements Provider Secured Debt (9) (30) 4/4/2022 SF+5.75% 4/3/2028 — (5) (5) Secured Debt (9) 11/20/2024 10.22% SF+5.75% 4/3/2028 1,342 1,323 1,342 Secured Debt (9) 4/4/2022 10.21% SF+5.75% 4/3/2028 2,389 2,361 2,389 3,679 3,726 Mini Melts of America, LLC(10) Manufacturer and Distributor ofBranded Premium Beaded Ice Cream Secured Debt (9) (28)11/30/2023 10.74% SF+6.25% 11/30/2028 375 353 375 Secured Debt (9) (26)11/30/2023 10.77% SF+6.25% 11/30/2028 858 841 858 Secured Debt (9) 11/30/2023 9.76% SF+5.25% 11/30/2028 3,201 3,140 3,201 Secured Debt (9) 11/30/2023 11.76% SF+7.25% 11/30/2028 3,201 3,138 3,201 Common Equity 11/30/2023 336,496 336 280 7,808 7,915 MoneyThumb Acquisition,LLC Provider of Software-as-a-ServiceFinancial File Conversion andReconciliation Secured Debt 8/19/2024 14.00% 8/19/2029 2,400 2,197 2,197 Preferred MemberUnits (8) 8/19/2024 40,821 12.00% 12.00% 427 427 Warrants (27) 8/19/2024 14,842 148 148 2,772 2,772 MonitorUS Holding, LLC(10) (13)(21) SaaS Provider of Media IntelligenceServices Secured Debt (9) 5/24/2022 11.59% SF+7.00% 5/24/2027 1,181 1,171 1,125 Secured Debt (9) 5/24/2022 11.59% SF+7.00% 5/24/2027 3,071 3,042 3,160 Secured Debt (9) 5/24/2022 11.59% SF+7.00% 5/24/2027 5,213 5,166 5,213 82
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Table of contents MSC INCOME FUND, INC. Consolidated Schedule of Investments (Continued) December 31, 2024 (dollars in thousands) Portfolio Company (1) (20) Business Description Type of Investment(2) (3) (15) InvestmentDate (22)Shares/UnitsTotalRate ReferenceRate andSpread (25) PIKRate(19) MaturityDate Principal(4) Cost (4) Fair Value(18) Unsecured Debt 11/14/2023 8.00% 8.00% 3/31/2025 34 34 Unsecured Debt 3/15/2024 8.00% 8.00% 6/30/2025 15 15 Unsecured Debt 9/25/2024 8.00% 8.00% 12/21/2025 31 31 Common Stock 8/30/202212,798,820 256 226 9,715 9,804 NinjaTrader, LLC (10) Operator of Futures Trading Platform Secured Debt (9) (30)12/18/2019 SF+6.50% 12/18/2026 — (3) (3) Secured Debt (9) 12/18/2019 11.24% SF+6.50% 12/18/2026 14,436 14,320 14,436 14,317 14,433 Obra Capital, Inc. (10) Provider of Asset Management ServicesSpecialized in Insurance-LinkedStrategies Secured Debt (9) (30)6/21/2024 SF+7.50% 12/21/2028 — (14) (14) Secured Debt (9) 6/21/2024 11.97% SF+7.50% 6/21/2029 11,979 11,661 11,766 11,647 11,752 OnPoint Industrial Services,LLC (10) Environmental & Facilities Services Secured Debt (9) 12/18/2024 11.35% SF+7.00% 11/16/2027 1,050 1,040 1,040 Secured Debt (9) 4/1/2024 11.33% SF+7.00% 11/16/2027 2,910 2,888 2,888 3,928 3,928 Peaches Holding Corporation Wholesale Provider of ConsumerPackaging Solutions Common Equity 5/22/2024 806 1,805 1,140 Power System Solutions (10) Backup Power Generation Secured Debt (9) (30) 6/7/2023 SF+6.50% 6/7/2028 — (27) (27) Secured Debt (9) 6/7/2023 10.86% SF+6.50% 6/7/2028 2,640 2,581 2,640 Secured Debt (9) 6/7/2023 10.90% SF+6.50% 6/7/2028 7,859 7,697 7,859 Common Equity 6/7/2023 532 532 1,640 10,783 12,112 PrimeFlight Aviation Services(10) Air Freight & Logistics Secured Debt (9) 5/1/2023 10.58% SF+5.50% 5/1/2029 5,910 5,751 5,910 Secured Debt (9) 9/7/2023 9.83% SF+5.50% 5/1/2029 564 548 564 Secured Debt (9) 1/30/2024 9.83% SF+5.50% 5/1/2029 567 555 567 Secured Debt (9) 6/28/2024 9.58% SF+5.25% 5/1/2029 644 636 644 7,490 7,685 PTL US Bidco, Inc (10) (13)(21) Manufacturers of Equipment, IncludingDrilling Rigs and Equipment, andProviders of Supplies and Services toCompanies Involved in the Drilling,Evaluation and Completion of Oil andGas Wells Secured Debt (9) 8/19/2022 13.03% SF+8.25% 8/19/2027 448 441 443 Secured Debt (9) 8/19/2022 13.03% SF+8.25% 8/19/2027 1,167 1,153 1,155 1,594 1,598 Purge Rite, LLC (10) HVAC Flushing and Filtration Services Preferred Equity 10/2/2023 13,021 1,289 1,289 Common Equity 4/1/2024 13,021 13 820 1,302 2,109 Richardson Sales Solutions(10) Business Services Secured Debt (9) (28)8/24/2023 11.22% SF+6.75% 8/24/2028 1,075 1,033 1,075 Secured Debt (9) 8/24/2023 11.38% SF+6.75% 8/24/2028 10,288 10,058 10,288 83
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Table of contents MSC INCOME FUND, INC. Consolidated Schedule of Investments (Continued) December 31, 2024 (dollars in thousands) Portfolio Company (1) (20) Business Description Type of Investment(2) (3) (15) InvestmentDate (22)Shares/UnitsTotalRate ReferenceRate andSpread (25) PIKRate(19) MaturityDate Principal(4) Cost (4) Fair Value(18) Secured Debt (9) 9/10/2024 11.43% SF+6.75% 8/24/2028 5,065 4,972 5,065 16,063 16,428 Roof Opco, LLC (10) Residential Re-Roofing/Repair Secured Debt (9) (30)8/27/2021 SF+8.00% 8/27/2026 — (6) — Secured Debt (9) 8/27/2021 11.85% SF+7.00% 8/27/2026 4,219 4,163 3,840 Secured Debt (9) 8/27/2021 13.85% SF+9.00% 8/27/2026 4,219 4,163 3,815 8,320 7,655 Rug Doctor, LLC. (10) Carpet Cleaning Products andMachinery Secured Debt (9) 7/16/2021 12.52% SF+8.00% 2.00% 11/16/2025 6,542 6,532 6,542 Secured Debt (9) 7/16/2021 12.52% SF+8.00% 2.00% 11/16/2025 8,277 8,262 8,277 14,794 14,819 Slick Innovations, LLC Text Message Marketing Platform Secured Debt 9/13/2018 14.00% 12/22/2027 4,080 3,978 4,080 Common Stock (8) 9/13/2018 17,500 — 630 3,978 4,710 South Coast TerminalsHoldings, LLC (10) Specialty Toll Chemical Manufacturer Secured Debt (9) (30) 8/8/2024 SF+5.25% 8/8/2029 — — — Secured Debt (9) 8/8/2024 9.71% SF+5.25% 8/8/2029 4,388 4,357 4,388 Common Equity 12/10/2021 61 61 62 4,418 4,450 SPAU Holdings, LLC (10) Digital Photo Product Provider Secured Debt (9) (30) 7/1/2022 SF+7.50% 7/1/2027 — (10) — Secured Debt (9) 7/1/2022 11.98% SF+7.50% 7/1/2027 4,875 4,826 4,875 Common Stock 7/1/2022 200,000 200 190 5,016 5,065 TEC Services, LLC (10) Provider of Janitorial Service for FoodRetailers Secured Debt (9) (30)12/31/2024 SF+5.75% 12/31/2029 — (7) (7) Secured Debt (9) (30)12/31/2024 SF+5.75% 12/31/2029 — (5) (5) Secured Debt (9) 12/31/2024 10.13% SF+5.75% 12/31/2029 2,333 2,299 2,299 2,287 2,287 Tex Tech Tennis, LLC (10) Sporting Goods & Textiles Preferred Equity (23) 7/7/2021 1,000,000 1,000 2,290 The Affiliati Network, LLC Performance Marketing Solutions Secured Debt 8/9/2021 10.00% 8/9/2026 100 98 98 Secured Debt 8/9/2021 10.00% 8/9/2026 1,300 1,290 1,274 Preferred Stock (8) 9/1/2023 71,827 72 72 Preferred Stock (8) 8/9/2021 320,000 1,600 1,600 3,060 3,044 Titan Meter Midco Corp. (10) Value Added Distributor of a Variety ofMetering and Measurement Productsand Solutions to the Energy Industry Secured Debt (9) (30)3/11/2024 SF+6.50% 3/11/2029 — (40) (40) Secured Debt (9) 3/11/2024 10.83% SF+6.50% 3/11/2029 13,049 12,666 13,049 Preferred Equity 3/11/2024 468,750 8.00% 8.00% 469 540 13,095 13,549 U.S. TelePacific Corp. (11) Provider of Communications andManaged Services 84
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Table of contents MSC INCOME FUND, INC. Consolidated Schedule of Investments (Continued) December 31, 2024 (dollars in thousands) Portfolio Company (1) (20) Business Description Type of Investment(2) (3) (15) InvestmentDate (22)Shares/UnitsTotalRate ReferenceRate andSpread (25) PIKRate(19) MaturityDate Principal(4) Cost (4) Fair Value(18) Secured Debt (9) (14) 6/1/2023 11.90% SF+7.40% 6.00% 5/2/2027 6,750 2,229 2,686 Secured Debt (14) 6/1/2023 5/2/2027 692 15 — 2,244 2,686 UPS Intermediate, LLC(10) Provider of Maintenance, Repair, andOverhaul Services for IndustrialEquipment Serving the Refining,Chemical, Midstream, Renewables,Power, and Utilities End Markets Secured Debt (9) 7/29/2024 10.36% SF+6.00% 7/27/2029 19,490 19,118 19,294 Common Equity 7/29/2024 412,371 412 412 19,530 19,706 UserZoom Technologies, Inc.(10) Provider of User Experience ResearchAutomation Software Secured Debt (9) 1/11/2023 12.75% SF+7.50% 4/5/2029 3,000 2,938 3,000 Vistar Media, Inc. (10) Operator of Digital Out-of-HomeAdvertising Platform Preferred Stock 4/3/2019 70,207 767 4,676 Vitesse Systems (10) Component Manufacturing andMachining Platform Secured Debt 12/22/2023 11.55% SF+7.00% 12/22/2028 1,705 1,669 1,705 Secured Debt (9) 12/22/2023 11.47% SF+7.00% 12/22/2028 12,375 12,130 12,375 13,799 14,080 VORTEQ Coil Finishers, LLC(10) Specialty Coating of Aluminum andLight-Gauge Steel Common Equity (8) 11/30/2021 769,231 769 1,950 Wall Street Prep, Inc. (10) Financial Training Services Secured Debt (9) (30)7/19/2021 SF+7.00% 7/19/2026 — (3) (3) Secured Debt (9) 7/19/2021 11.74% SF+7.00% 7/19/2026 2,199 2,183 2,199 Common Stock 7/19/2021 500,000 500 1,510 2,680 3,706 Watterson Brands, LLC(10) Facility Management Services Secured Debt 12/17/2021 12.00% 4.00% 12/17/2026 309 307 292 Secured Debt 12/17/2021 12.00% 4.00% 12/17/2026 53 49 50 Secured Debt 12/17/2021 12.00% 4.00% 12/17/2026 2,200 2,187 2,076 Secured Debt 12/17/2021 12.00% 4.00% 12/17/2026 1,986 1,973 1,874 4,516 4,292 West Star AviationAcquisition, LLC (10) Aircraft, Aircraft Engine and EngineParts Secured Debt (9) 3/1/2022 9.47% SF+5.00% 3/1/2028 658 649 658 Secured Debt (9) 3/1/2022 9.60% SF+5.00% 3/1/2028 2,918 2,884 2,917 Secured Debt (9) 11/3/2023 9.60% SF+5.00% 3/1/2028 1,452 1,429 1,452 Common Stock (8) 3/1/2022 200,000 200 640 5,162 5,667 Winter Services LLC (10) Provider of Snow Removal and IceManagement Services Secured Debt (9) 11/19/2021 12.81% SF+8.00% 11/19/2026 2,750 2,701 2,672 Secured Debt (9) 11/19/2021 12.85% SF+8.00% 11/19/2026 2,343 2,310 2,276 Secured Debt (9) 1/16/2024 11.85% SF+7.00% 11/19/2026 9,050 8,911 8,794 Secured Debt (9) 1/16/2024 13.85% SF+9.00% 11/19/2026 9,050 8,911 8,794 85
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Table of contents MSC INCOME FUND, INC. Consolidated Schedule of Investments (Continued) December 31, 2024 (dollars in thousands) Portfolio Company (1) (20) Business Description Type of Investment(2) (3) (15) InvestmentDate (22)Shares/UnitsTotalRate ReferenceRate andSpread (25) PIKRate(19) MaturityDate Principal(4) Cost (4) Fair Value(18) 22,833 22,536 World Micro Holdings, LLC Supply Chain Management Secured Debt 12/12/2022 13.00% 12/12/2027 1,485 1,468 1,468 Preferred Equity (8) 12/12/2022 530 530 530 1,998 1,998 Xenon Arc, Inc. (10) Tech-enabled Distribution Services toChemicals and Food IngredientsPrimary Producers Secured Debt (9) 12/17/2021 9.70% SF+5.25% 12/20/2028 1,176 1,157 1,176 Secured Debt (9) 12/17/2021 9.98% SF+5.25% 12/20/2028 2,328 2,304 2,328 3,461 3,504 YS Garments, LLC (11) Designer and Provider of BrandedActivewear Secured Debt (9) 8/22/2018 12.25% SF+7.50% 8/9/2026 5,106 5,048 4,661 Zips Car Wash, LLC (10) Express Car Wash Operator Secured Debt (9) 2/11/2022 11.91% SF+7.25% 11.91% 12/31/2024 2,458 $ 2,458 $ 2,025 Secured Debt (9) 2/11/2022 11.91% SF+7.25% 11.91% 12/31/2024 616 616 508 3,074 2,533 ZRG Partners, LLC (10) Talent Advisory Services Provider Secured Debt (9) 6/14/2024 12.50% P+ 5.00% 6/14/2029 86 64 86 Secured Debt (9) 6/14/2024 10.74% SF+6.00% 6/14/2029 517 496 517 Secured Debt (9) 6/14/2024 10.28% SF+6.00% 6/14/2029 817 806 817 Secured Debt (9) 6/14/2024 10.66% SF+6.00% 6/14/2029 5,852 5,748 5,852 7,114 7,272 Subtotal Non-Control/Non-Affiliate Investments (121.0%of net assets at fair value) $ 799,974 $ 756,269 Total Portfolio Investments,December 31, 2024 (188.4% ofnet assets at fair value) $ 1,138,745 $ 1,177,507 Money market funds(included in cash and cashequivalents) First American TreasuryObligations Fund Class Z(16) $ 12,261 $ 12,261 Fidelity Government PortfolioFund Class III (34) 2,099 2,099 Total money market funds $ 14,360 $ 14,360 ___________________________________________________ (1) All investments are Lower Middle Market portfolio investments, unless otherwise noted. See Note C — Fair Value Hierarchy for Investments — Portfolio Composition for a description of Lower Middle Market portfolio investments. All of the Company’s investments, unless otherwise noted, are encumbered as security for one of the Company’s Credit Facilities. (2) Debt investments are income producing, unless otherwise noted by footnote (14), as described below. Equity and warrants are non-income producing, unless otherwise noted by footnote (8), as described below. (3) See Note C — Fair Value Hierarchy for Investments — Portfolio Composition and Schedule 12-14 for a summary of geographic location of portfolio companies. 86
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Table of contents MSC INCOME FUND, INC. Consolidated Schedule of Investments (Continued) December 31, 2024 (dollars in thousands) (4) Principal is net of repayments. Cost is net of repayments and accumulated unearned income. Negative cost is the result of the capitalized discount being greater than the principal amount outstanding on the loan. (5) Control investments are defined by the 1940 Act as investments in which more than 25% of the voting securities are owned or where the ability to nominate greater than 50% of the board representation is maintained. (6) Affiliate investments are defined by the 1940 Act as investments in which between 5% and 25% (inclusive) of the voting securities are owned and the investments are not classified as Control investments. (7) Non-Control/Non-Affiliate investments are defined by the 1940 Act as investments that are neither Control investments nor Affiliate investments. (8) Income producing through dividends or distributions. (9) Index based floating interest rate is subject to contractual minimum interest rate. As noted in this schedule, 96% of the loans (based on the par amount) contain Term SOFR (“SOFR”) floors which range between 0.75% and 5.25%, with a weighted-average floor of 1.28%. (10) Private Loan portfolio investment. See Note C—Fair Value Hierarchy for Investments—Portfolio Composition for a description of Private Loan portfolio investments. (11) Middle Market portfolio investment. See Note C—Fair Value Hierarchy for Investments—Portfolio Composition for a description of Middle Market portfolio investments. (12) Other Portfolio investment. See Note C—Fair Value Hierarchy for Investments—Portfolio Composition for a description of Other Portfolio investments. (13) Investment is not a qualifying asset as defined under Section 55(a) of the 1940 Act. Qualifying assets must represent at least 70% of total assets at the time of acquisition of any additional non-qualifying assets. (14) Non-accrual and non-income producing debt investment. (15) All of the Company’s portfolio investments are generally subject to restrictions on resale as “restricted securities.” (16) Effective yield as of December 31, 2024 was approximately 4.41% on the First American Treasury Obligations Fund Class Z. (17) Maturity date is under on-going negotiations with the portfolio company and other lenders, if applicable. (18) Investment fair value was determined using significant unobservable inputs, unless otherwise noted. See Note C—Fair Value Hierarchy for Investments—Portfolio Composition for further discussion. Negative fair value is the result of the capitalized discount on the loan or the unfunded commitment being valued below par. (19) Investments may have a portion, or all, of their income received from Paid-in-Kind (“PIK”) interest or dividends. PIK interest income and cumulative dividend income represent income not paid currently in cash. The difference between the Total Rate and PIK Rate represents the cash rate as of December 31, 2024. (20) All portfolio company headquarters are based in the United States, unless otherwise noted. (21) Portfolio company headquarters are located outside of the United States. (22) Investment date represents the date of initial investment in the security position. (23) Shares/Units represent ownership in a related Real Estate or HoldCo entity. (24) Investment is not unitized. Presentation is made in percent of fully diluted ownership unless otherwise indicated. (25) A majority of the variable rate loans in the Company’s Investment Portfolio (defined below) bear interest at a rate that may be determined by reference to either SOFR (“SF”) or an alternate base rate (commonly based on the Federal Funds Rate or the Prime rate (“P”)), which typically resets every one, three, or six months at the borrower’s option. SOFR based contracts may include a credit spread adjustment (the “Adjustment”) that is charged in addition to the stated spread. The Adjustment is applied when the SOFR rate, plus the Adjustment, exceeds the stated floor rate, as applicable. As of December 31, 2024, SOFR based contracts in the portfolio had Adjustments ranging from 0.10% to 0.26%. (26) Each new draw or funding on the facility has a different floating rate reset date. The rate presented represents a weighted-average rate for borrowings under the facility, as of December 31, 2024. (27) Warrants are presented in equivalent shares/units with a strike price of $0.01 per share/unit. 87
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Table of contents MSC INCOME FUND, INC. Consolidated Schedule of Investments (Continued) December 31, 2024 (dollars in thousands) (28) RLOC facility permits the borrower to make an interest rate election regarding the base rate on each draw under the facility. The rate presented represents a weighted-average rate for borrowings under the facility, as of December 31, 2024. (29) Index based floating interest rate is subject to contractual maximum base rate of 3.00%. (30) The position is unfunded and no interest income is being earned as of December 31, 2024. The position may earn a nominal unused facility fee on committed amounts. (31) Warrants are presented in equivalent shares/units with a strike price of $1.00 per share/unit. (32) Index based floating interest rate is subject to contractual maximum base rate of 4.00%. (33) The Company has entered into an intercreditor agreement that entitles the Company to the “last out” tranche of the first lien secured loans, whereby the “first out” tranche will receive priority as to the “last out” tranche with respect to payments of principal, interest, and any other amounts due thereunder. Therefore, the Company receives a higher interest rate than the contractual stated interest rate of 11.75% per the credit agreement and the Consolidated Schedule of Investments above reflects such higher rate. (34) Effective yield as of December 31, 2024 was approximately 4.13% on the Fidelity Government Portfolio Fund Class III. 88
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Table of contents MSC INCOME FUND, INC. Consolidated Schedule of Investments December 31, 2023 (dollars in thousands) Portfolio Company (1) (20) Business Description Type of Investment(2) (3) (15) InvestmentDate (22)Shares/UnitsTotalRate ReferenceRate andSpread (25) PIKRate(19) MaturityDate Principal (4)Cost (4) Fair Value(18) Control Investments (5) Copper Trail Fund Investments(12)(13) Investment Partnership LP Interests (CTMH,LP) (8) (24)7/17/2017 38.8% $ 693 $ 568 GRT Rubber Technologies LLC Manufacturer of Engineered RubberProducts Secured Debt 12/21/2018 11.48% SF+6.00% 10/29/2026 1,182 1,173 1,182 Secured Debt 12/19/2014 13.48% SF+8.00% 10/29/2026 19,944 19,803 19,944 Member Units 12/19/2014 2,896 6,435 21,890 27,411 43,016 Harris Preston FundInvestments (12)(13) Investment Partnership LP Interests (2717MH, L.P.) (8) (24)10/1/2017 49.3% 3,345 6,050 Volusion, LLC Provider of Online Software-as-a-Service eCommerce Solutions Secured Debt 3/31/2023 10.00% 3/31/2025 900 900 900 Preferred MemberUnits 3/31/20232,184,683 3,706 3,110 Preferred MemberUnits 3/31/2023 61,077 — — Preferred MemberUnits 1/26/20152,090,001 6,000 — Common Stock 3/31/2023 772,620 1,104 — 11,710 4,010 Subtotal Control Investments(8.6% of net assets at fair value) $ 43,159 $ 53,644 Affiliate Investments (6) Analytical Systems KecoHoldings, LLC Manufacturer of Liquid and GasAnalyzers Secured Debt (9) 8/16/2019 15.38% SF+10.00% 8/16/2024$ 55 $ 54 $ 54 Secured Debt (9) 8/16/2019 15.38% SF+10.00% 8/16/2024 1,031 1,020 1,020 Preferred MemberUnits 5/20/2021 607 607 1,210 Preferred MemberUnits 8/16/2019 800 14.13% 800 — Warrants (27) 8/16/2019 105 8/16/2029 79 — 2,560 2,284 Barfly Ventures, LLC (10) Casual Restaurant Group Member Units 10/26/2020 12 528 1,380 Batjer TopCo, LLC HVAC Mechanical Contractor Secured Debt (37) 3/7/2022 3/7/2027 — (1) — Secured Debt 3/7/2022 10.00% 3/7/2027 30 30 30 Secured Debt 3/7/2022 10.00% 3/7/2027 1,175 1,160 1,175 Preferred Stock (8) 3/7/2022 453 455 680 1,644 1,885 Brewer Crane Holdings, LLC Provider of Crane Rental andOperating Services Secured Debt (9) 1/9/2018 15.46% L+10.00% 1/9/2025 1,375 1,375 1,374 Preferred MemberUnits (8) 1/9/2018 737 1,070 1,400 2,445 2,774 Centre Technologies Holdings,LLC Provider of IT Hardware Services andSoftware Solutions 89
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Table of contents MSC INCOME FUND, INC. Consolidated Schedule of Investments (Continued) December 31, 2023 (dollars in thousands) Portfolio Company (1) (20) Business Description Type of Investment(2) (3) (15) InvestmentDate (22)Shares/UnitsTotalRate ReferenceRate andSpread (25) PIKRate(19) MaturityDate Principal(4) Cost (4) Fair Value(18) Secured Debt (9) (37) 1/4/2019 SF+9.00% 1/4/2026 — — — Secured Debt (9) 1/4/2019 14.48% SF+9.00% 1/4/2026 4,394 4,364 4,394 Preferred MemberUnits 1/4/2019 3,327 1,531 2,760 5,895 7,154 Chamberlin Holding LLC Roofing and Waterproofing SpecialtyContractor Secured Debt (9) (37)2/26/2018 SF+6.00% 2/26/2026 — (49) — Secured Debt (9) 2/26/2018 13.49% SF+8.00% 2/26/2026 3,905 3,903 3,905 Member Units (8) 2/26/2018 1,087 2,860 7,330 Member Units (8) (23)11/2/2018 261,786 443 715 7,157 11,950 Charps, LLC Pipeline Maintenance andConstruction Preferred MemberUnits (8) 2/3/2017 457 491 3,920 Clad-Rex Steel, LLC Specialty Manufacturer of Vinyl-CladMetal Secured Debt 12/20/2016 11.50% 1/15/2024 2,140 2,140 2,103 Secured Debt 12/20/2016 10.00% 12/20/2036 253 251 251 Member Units (8) 12/20/2016 179 1,820 1,300 Member Units (23) 12/20/2016 200 127 282 4,338 3,936 Cody Pools, Inc. Designer of Residential andCommercial Pools Secured Debt (37) 3/6/2020 12/17/2026 — (2) — Secured Debt 3/6/2020 12.50% 12/17/2026 7,111 7,089 7,111 Preferred MemberUnits (8) (23) 3/6/2020 147 2,079 18,120 9,166 25,231 Colonial Electric CompanyLLC Provider of Electrical ContractingServices Secured Debt (37) 3/31/2021 3/31/2026 — — — Secured Debt 3/31/2021 12.00% 3/31/2026 5,513 5,448 5,407 Preferred MemberUnits 6/27/2023 240 240 600 Preferred MemberUnits 3/31/2021 4,320 1,920 1,920 7,608 7,927 Compass Systems & Sales, LLCDesigner of End-to-End MaterialHandling Solutions Secured Debt (37) 11/22/2023 11/22/2028 — — — Secured Debt 11/22/2023 13.50% 11/22/2028 4,300 4,175 4,175 Preferred Equity 11/22/2023 1,863 1,863 1,863 6,038 6,038 Datacom, LLC Technology and TelecommunicationsProvider Secured Debt 3/1/2022 7.50% 12/31/2025 50 49 49 Secured Debt 3/31/2021 10.00% 12/31/2025 928 887 844 Preferred MemberUnits 3/31/2021 1,000 290 10 1,226 903 Digital Products Holdings LLC Designer and Distributor of ConsumerElectronics Secured Debt (9) 4/1/2018 15.38% SF+10.00% 4/27/2026 3,718 3,689 3,673 Preferred MemberUnits (8) 4/1/2018 964 2,375 2,459 6,064 6,132 90
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Table of contents MSC INCOME FUND, INC. Consolidated Schedule of Investments (Continued) December 31, 2023 (dollars in thousands) Portfolio Company (1) (20) Business Description Type of Investment(2) (3) (15) InvestmentDate (22)Shares/UnitsTotalRate ReferenceRate andSpread (25) PIKRate(19) MaturityDate Principal(4) Cost (4) Fair Value(18) Direct Marketing Solutions, Inc. Provider of Omni-Channel DirectMarketing Services Secured Debt 2/13/2018 14.00% 2/13/2026 217 213 217 Secured Debt 12/27/2022 14.00% 2/13/2026 5,002 4,974 5,002 Preferred Stock (8) 2/13/2018 2,100 2,100 5,180 7,287 10,399 Flame King Holdings, LLC Propane Tank and AccessoriesDistributor Preferred Equity (8) 10/29/2021 2,340 2,600 6,970 Freeport Financial Funds(12)(13) Investment Partnership LP Interests (FreeportFirst Lien Loan FundIII LP) (8) (24)7/31/2015 6.0% 4,160 3,705 Gamber-Johnson Holdings,LLC Manufacturer of RuggedizedComputer Mounting Systems Secured Debt (9) (36)(37) 6/24/2016 SF+7.50% 1/1/2028 — — — Secured Debt (9) (36)12/15/2022 10.50% SF+7.50% 1/1/2028 13,520 13,336 13,520 Member Units (8) 6/24/2016 2,261 4,423 24,180 17,759 37,700 GFG Group, LLC Grower and Distributor of a Variety ofPlants and Products to OtherWholesalers, Retailers and GardenCenters Secured Debt 3/31/2021 8.00% 3/31/2026 2,336 2,304 2,336 Preferred MemberUnits (8) 3/31/2021 56 1,225 2,870 3,529 5,206 Gulf Publishing Holdings, LLC Energy Industry Focused Media andPublishing Secured Debt (9) (37)9/29/2017 SF+9.50% 7/1/2027 — — — Secured Debt 7/1/2022 12.50% 7/1/2027 600 600 571 Preferred Equity 7/1/2022 15,930 1,400 620 Member Units 4/29/2016 920 920 — 2,920 1,191 Harris Preston FundInvestments (12)(13) Investment Partnership LP Interests (HPEP 3,L.P.) (24) 8/9/2017 8.2% 2,296 4,225 IG Investor, LLC Military and Other Tactical Gear Secured Debt (37) 6/21/2023 6/21/2028 — (27) (27) Secured Debt 6/21/2023 13.00% 6/21/2028 9,316 9,069 9,069 Common Equity 6/21/2023 3,600 3,600 3,600 12,642 12,642 Independent Pet PartnersIntermediate Holdings, LLC(10) Omnichannel Retailer of Specialty PetProducts Common Equity 4/7/2023 6,436,566 6,540 6,320 Integral Energy Services (10) Nuclear Power Staffing Services Secured Debt (9) 8/20/2021 13.16% SF+7.50% 8/20/2026 16,925 16,737 16,232 91
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Table of contents MSC INCOME FUND, INC. Consolidated Schedule of Investments (Continued) December 31, 2023 (dollars in thousands) Portfolio Company (1) (20) Business Description Type of Investment(2) (3) (15) InvestmentDate (22)Shares/UnitsTotalRate ReferenceRate andSpread (25) PIKRate(19) MaturityDate Principal(4) Cost (4) Fair Value(18) Preferred Equity 12/7/2023 3,725 10.00% 10.00% 265 350 Common Stock 8/20/2021 11,647 1,584 190 18,586 16,772 Kickhaefer ManufacturingCompany, LLC Precision Metal Parts Manufacturing Secured Debt 10/31/2018 12.00% 10/31/2026 4,950 4,933 4,933 Secured Debt 10/31/2018 9.00% 10/31/2048 960 951 951 Preferred Equity 10/31/2018 145 3,060 2,420 Member Units (23) 10/31/2018 200 248 683 9,192 8,987 MH Corbin Holding LLC Manufacturer and Distributor ofTraffic Safety Products Secured Debt (17) 8/31/2015 13.00% 12/31/2022 1,350 1,350 1,256 Preferred MemberUnits 3/15/2019 16,500 1,100 80 Preferred MemberUnits 9/1/2015 1,000 1,500 — 3,950 1,336 Mystic Logistics Holdings, LLCLogistics and Distribution ServicesProvider for Large Volume Mailers Secured Debt (37) 8/18/2014 1/31/2024 — — — Secured Debt 8/18/2014 10.00% 1/31/2024 1,436 1,436 1,436 Common Stock (8) 8/18/2014 1,468 680 6,598 2,116 8,034 NexRev LLC Provider of Energy EfficiencyProducts & Services Secured Debt (37) 2/28/2018 2/28/2025 — — — Secured Debt 2/28/2018 10.00% 2/28/2025 2,453 2,435 2,435 Preferred MemberUnits (8) 2/28/201825,786,046 2,053 1,590 4,488 4,025 NuStep, LLC Designer, Manufacturer andDistributor of Fitness Equipment Secured Debt (9) 1/31/2017 11.98% SF+6.50% 1/31/2025 900 899 899 Secured Debt 1/31/2017 12.00% 1/31/2025 4,610 4,606 4,606 Preferred MemberUnits 11/2/2022 515 515 1,290 Preferred MemberUnits 1/31/2017 102 2,550 2,310 8,570 9,105 Oneliance, LLC Construction Cleaning Company Secured Debt (9) 8/6/2021 16.48% SF+11.00% 8/6/2026 1,360 1,346 1,339 Preferred Stock 8/6/2021 282 282 282 1,628 1,621 Orttech Holdings, LLC Distributor of Industrial Clutches,Brakes and Other Components Secured Debt (9) (37)7/30/2021 SF+11.00% 7/31/2026 — (2) — Secured Debt (9) 7/30/2021 16.48% SF+11.00% 7/31/2026 5,510 5,452 5,510 Preferred Stock (8) (23)7/30/2021 2,500 2,500 4,260 7,950 9,770 Pinnacle TopCo, LLC Manufacturer and Distributor ofGarbage Can Liners, Poly Bags,Produce Bags, and Other SimilarProducts Secured Debt 12/21/2023 8.00% 12/31/2028 115 105 105 Secured Debt 12/21/2023 13.00% 12/31/2028 7,660 7,472 7,472 92
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Table of contents MSC INCOME FUND, INC. Consolidated Schedule of Investments (Continued) December 31, 2023 (dollars in thousands) Portfolio Company (1) (20) Business Description Type of Investment(2) (3) (15) InvestmentDate (22)Shares/UnitsTotalRate ReferenceRate andSpread (25) PIKRate(19) MaturityDate Principal(4) Cost (4) Fair Value(18) Preferred Equity 12/21/2023 110 3,135 3,135 10,712 10,712 Robbins Bros. Jewelry, Inc. Bridal Jewelry Retailer Secured Debt (37) 12/15/2021 12/15/2026 — (6) (6) Secured Debt 12/15/2021 12.50% 12/15/2026 3,790 3,745 3,421 Preferred Equity 12/15/2021 1,230 1,230 — 4,969 3,415 SI East, LLC Rigid Industrial PackagingManufacturing Secured Debt 8/31/2018 11.25% 6/16/2028 375 370 375 Secured Debt 6/16/2023 12.47% 6/16/2028 18,179 18,019 18,179 Preferred MemberUnits (8) 8/31/2018 55 508 6,390 18,897 24,944 Student Resource Center, LLC(10) Higher Education Services Secured Debt (14) 12/31/2022 8.50% 8.50% 12/31/2027 5,918 5,426 3,543 Preferred Equity 12/31/20226,564,055 — — 5,426 3,543 Tedder Industries, LLC Manufacturer of Firearm Holsters andAccessories Secured Debt (17) 8/31/2018 12.00% 8/31/2023 460 460 432 Secured Debt (17) 8/31/2018 12.00% 8/31/2023 3,800 3,800 3,565 Preferred MemberUnits 8/28/2023 1,651 165 — Preferred MemberUnits 2/1/2023 1,411 141 — Preferred MemberUnits 8/31/2018 136 2,311 — 6,877 3,997 Trantech Radiator Topco, LLC Transformer Cooling Products andServices Secured Debt (37) 5/31/2019 5/31/2024 — (1) — Secured Debt 5/31/2019 12.00% 5/31/2024 1,980 1,975 1,980 Common Stock (8) 5/31/2019 154 1,164 3,180 3,138 5,160 VVS Holdco LLC Omnichannel Retailer of AnimalHealth Products Secured Debt (9) (17)(37) 12/1/2021 SF+6.00% 12/1/2023 — — — Secured Debt 12/1/2021 11.50% 12/1/2026 7,050 6,926 6,926 Preferred Equity (8) (23)12/1/2021 3,060 3,060 3,060 9,986 9,986 Subtotal Affiliate Investments(46.8% of net assets at fairvalue) $ 231,378 $ 291,279 Non-Control/Non-AffiliateInvestments (7) AAC Holdings, Inc. (11) Substance Abuse Treatment ServiceProvider Secured Debt 1/31/2023 18.00% 18.00% 6/25/2025$ 151 $ 149 $ 149 Secured Debt 12/11/2020 18.00% 18.00% 6/25/2025 5,014 4,888 4,958 Common Stock 12/11/2020 593,927 3,148 — Warrants (27) 12/11/2020 197,717 12/11/2025 — — 8,185 5,107 AB Centers AcquisitionCorporation (10) Applied Behavior Analysis TherapyProvider Secured Debt (9) (37) 9/6/2022 P+ 5.00% 9/6/2028 — (20) — Secured Debt (9) 9/6/2022 11.43% SF+6.00% 9/6/2028 1,081 1,066 1,081 93
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Table of contents MSC INCOME FUND, INC. Consolidated Schedule of Investments (Continued) December 31, 2023 (dollars in thousands) Portfolio Company (1) (20) Business Description Type of Investment(2) (3) (15) InvestmentDate (22)Shares/UnitsTotalRate ReferenceRate andSpread (25) PIKRate(19) MaturityDate Principal(4) Cost (4) Fair Value(18) Secured Debt (9) 9/6/2022 11.43% SF+6.00% 9/6/2028 2,304 2,219 2,304 Secured Debt (9) 6/21/2023 11.43% SF+6.00% 9/6/2028 772 743 772 4,008 4,157 Acumera, Inc. (10) Managed Security Service Provider Secured Debt (9) (37) 6/7/2023 SF+7.50% 6/7/2028 — (8) (8) Secured Debt (9) 6/7/2023 12.98% SF+7.50% 6/7/2028 11,922 11,825 11,922 Warrants (40) 6/7/2023 14,953 5/19/2028 — 90 11,817 12,004 Adams Publishing Group, LLC(10) Local Newspaper Operator Secured Debt (9) (36)3/11/2022 11.00% SF+7.00% 1.00% 3/11/2027 936 936 917 Secured Debt (9) (36)3/11/2022 11.00% SF+7.00% 1.00% 3/11/2027 2,531 2,527 2,481 3,463 3,398 ADS Tactical, Inc. (11) Value-Added Logistics and SupplyChain Provider to the DefenseIndustry Secured Debt (9) 3/29/2021 11.22% SF+5.75% 3/19/2026 4,250 4,210 4,214 AMEREQUIP LLC (10) Full Services Provider IncludingDesign, Engineering andManufacturing of Commercial andAgricultural Equipment Secured Debt (9) (37)8/31/2022 SF+7.40% 8/31/2027 — — — Secured Debt (9) 8/31/2022 12.76% SF+7.40% 8/31/2027 1,538 1,538 1,538 Common Stock (8) 8/31/2022 11 83 100 1,621 1,638 American Health StaffingGroup, Inc. (10) Healthcare Temporary Staffing Secured Debt (9) (37)11/19/2021 P+ 5.00% 11/19/2026 — (10) (10) Secured Debt (9) 11/19/2021 13.50% P+ 5.00% 11/19/2026 8,188 8,140 8,188 8,130 8,178 American Nuts, LLC (10) Roaster, Mixer and Packager of BulkNuts and Seeds Secured Debt (9) 3/11/2022 15.29% SF+9.75% 15.29% 4/10/2026 4,833 4,812 4,102 Secured Debt (9) 3/11/2022 15.29% SF+9.75% 15.29% 4/10/2026 — — — Secured Debt (9) (14)3/11/2022 17.29% SF+11.75% 17.29% 4/10/2026 4,270 4,244 2,522 Secured Debt (9) (14)3/11/2022 17.29% SF+11.75% 17.29% 4/10/2026 — — — 9,056 6,624 American TeleconferencingServices, Ltd. (11) Provider of Audio Conferencing andVideo Collaboration Solutions Secured Debt (14)(17) 9/17/2021 4/7/2023 2,425 2,375 109 Secured Debt (14)(17) 5/19/2016 6/8/2023 11,693 11,451 526 13,826 635 ArborWorks, LLC (10) Vegetation Management Services Secured Debt 11/6/2023 15.00% 15.00% 11/6/2028 1,007 1,007 1,007 Secured Debt (9) 11/6/2023 12.04% SF+6.50% 12.04% 11/6/2028 3,765 3,765 3,765 Preferred Equity 11/6/2023 17,265 7,468 7,468 Preferred Equity 11/6/2023 17,265 — — Common Equity 11/9/2021 2,070 124 — 12,364 12,240 Archer Systems, LLC (10) Mass Tort Settlement AdministrationSolutions Provider 94
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Table of contents MSC INCOME FUND, INC. Consolidated Schedule of Investments (Continued) December 31, 2023 (dollars in thousands) Portfolio Company (1) (20) Business Description Type of Investment(2) (3) (15) InvestmentDate (22)Shares/UnitsTotalRate ReferenceRate andSpread (25) PIKRate(19) MaturityDate Principal(4) Cost (4) Fair Value(18) Common Stock 8/11/2022 62,402 62 100 ATS Operating, LLC (10) For-Profit Thrift Retailer Secured Debt (9) 1/18/2022 12.16% SF+6.50% 1/18/2027 50 50 50 Secured Debt (9) 1/18/2022 11.16% SF+5.50% 1/18/2027 925 911 925 Secured Debt (9) 1/18/2022 13.16% SF+7.50% 1/18/2027 925 911 925 Common Stock 1/18/2022 100,000 100 90 1,972 1,990 AVEX Aviation Holdings, LLC(10) Specialty Aircraft Dealer & MROProvider Secured Debt (9) (37)12/23/2022 SF+7.25% 12/23/2027 — (17) (5) Secured Debt (9) 12/23/2022 12.76% SF+7.25% 12/23/2027 3,417 3,321 3,344 Common Equity (8) 12/15/2021 137 134 124 3,438 3,463 Berry Aviation, Inc. (10) Charter Airline Services Preferred MemberUnits (23) 11/12/2019 122,416 — 200 Preferred MemberUnits (8) (23) 7/6/2018 1,548,387 — 2,560 — 2,760 Bettercloud, Inc. (10) SaaS Provider of WorkflowManagement and BusinessApplication Solutions Secured Debt (9) (37)6/30/2022 SF+7.25% 6/30/2028 — (18) (18) Secured Debt (9) 6/30/2022 12.64% SF+7.25% 6.25% 6/30/2028 8,535 8,419 7,998 8,401 7,980 Binswanger Enterprises, LLC(10) Glass Repair and Installation ServiceProvider Member Units 3/10/20171,050,000 1,050 120 Bluestem Brands, Inc. (11) Multi-Channel Retailer of GeneralMerchandise Secured Debt (9) 10/19/2022 16.00% P+ 7.50% 15.00% 8/28/2025 2,035 2,035 1,907 Secured Debt (9) 8/28/2020 13.96% SF+8.50% 12.96% 8/28/2025 3,941 3,305 3,695 Common Stock 10/1/2020 700,446 — 533 Warrants (27) 10/19/2022175,110 10/19/2032 1,111 129 6,451 6,264 Boccella Precast Products LLC Manufacturer of Precast Hollow CoreConcrete Secured Debt 9/23/2021 10.00% 2/28/2027 80 80 80 Member Units 6/30/2017 540,000 564 498 644 578 Bond Brand Loyalty ULC(10)(13)(21) Provider of Loyalty MarketingServices Secured Debt (9) (37) 5/1/2023 SF+7.00% 5/1/2028 — (16) (16) Secured Debt (9) 5/1/2023 11.54% SF+6.00% 5/1/2028 4,040 3,970 4,040 Secured Debt (9) 5/1/2023 13.54% SF+8.00% 5/1/2028 4,040 3,970 4,040 Preferred Equity 5/1/2023 360 360 310 Common Equity 5/1/2023 360 — — 8,284 8,374 Brightwood Capital FundInvestments (12)(13) Investment Partnership LP Interests(Brightwood CapitalFund III, LP) (24) 7/21/2014 0.5% 2,270 1,360 95
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Table of contents MSC INCOME FUND, INC. Consolidated Schedule of Investments (Continued) December 31, 2023 (dollars in thousands) Portfolio Company (1) (20) Business Description Type of Investment(2) (3) (15) InvestmentDate (22)Shares/UnitsTotalRate ReferenceRate andSpread (25) PIKRate(19) MaturityDate Principal(4) Cost (4) Fair Value(18) LP Interests(Brightwood CapitalFund IV, LP) (8) (24)10/26/2016 1.2% 8,737 8,716 11,007 10,076 Buca C, LLC Casual Restaurant Group Secured Debt (17) 6/30/2015 12.00% 8/31/2023 11,490 11,490 8,218 Preferred MemberUnits 6/30/2015 4 6.00% 6.00% 3,040 — 14,530 8,218 Burning Glass IntermediateHolding Company, Inc. (10) Provider of Skills-Based LaborMarket Analytics Secured Debt (9) 6/14/2021 10.46% SF+5.00% 6/10/2026 310 296 310 Secured Debt (9) 6/14/2021 10.46% SF+5.00% 6/10/2028 13,121 12,970 13,121 13,266 13,431 CAI Software LLC Provider of Specialized EnterpriseResource Planning Software Preferred Equity 12/13/2021379,338 379 379 Preferred Equity 12/13/2021126,446 — — 379 379 Career Team Holdings, LLC Provider of Workforce Training andCareer Development Services Secured Debt (9) 12/17/2021 11.38% SF+6.00% 12/17/2026 100 96 96 Secured Debt 12/17/2021 13.00% 12/17/2026 2,225 2,185 2,185 Common Stock 12/17/2021 50,000 500 500 2,781 2,781 CaseWorthy, Inc. (10) SaaS Provider of Case ManagementSolutions Secured Debt (9) (37)5/18/2022 SF+6.00% 5/18/2027 — (3) (3) Secured Debt (9) 5/18/2022 11.61% SF+6.00% 5/18/2027 2,581 2,561 2,581 Secured Debt (9) 5/18/2022 11.61% SF+6.00% 5/18/2027 1,985 1,971 1,985 Common Equity 12/30/2022 80,000 80 80 4,609 4,643 Channel PartnersIntermediateco, LLC (10) Outsourced Consumer ServicesProvider Secured Debt (9) (44) 2/7/2022 12.60% SF+7.00% 2/7/2027 190 175 183 Secured Debt (9) 2/7/2022 12.66% SF+7.00% 2/7/2027 3,360 3,317 3,224 Secured Debt (9) 6/24/2022 12.66% SF+7.00% 2/7/2027 186 184 179 Secured Debt (9) 3/27/2023 12.66% SF+7.00% 2/7/2027 450 440 432 4,116 4,018 Clarius BIGS, LLC (10) Prints & Advertising Film Financing Secured Debt (14)(17) 9/23/2014 1/5/2015 2,694 2,350 16 Classic H&G Holdings, LLC Provider of Engineered PackagingSolutions Secured Debt (9) 3/12/2020 11.69% SF+6.00% 3/12/2025 1,140 1,133 1,140 Secured Debt 3/12/2020 8.00% 3/12/2025 4,819 4,781 4,819 Preferred MemberUnits (8) 3/12/2020 39 1,440 4,000 7,354 9,959 Computer Data Source, LLC (10) Third Party Maintenance Provider tothe Data Center Ecosystem Secured Debt (9) (30) 8/6/2021 13.52% SF+8.00% 8/6/2026 4,167 4,123 4,040 Secured Debt (9) 8/6/2021 13.52% SF+8.00% 8/6/2026 15,260 15,098 14,797 19,221 18,837 96
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Table of contents MSC INCOME FUND, INC. Consolidated Schedule of Investments (Continued) December 31, 2023 (dollars in thousands) Portfolio Company (1) (20) Business Description Type of Investment(2) (3) (15) InvestmentDate (22)Shares/UnitsTotalRate ReferenceRate andSpread (25) PIKRate(19) MaturityDate Principal(4) Cost (4) Fair Value(18) Construction SupplyInvestments, LLC (10) Distribution Platform of SpecialtyConstruction Materials toProfessional Concrete and MasonryContractors Member Units 12/29/2016861,618 3,335 23,135 CQ Fluency, LLC (10) Global Language Services Provider Secured Debt (9) (37)12/27/2023 SF+7.00% 6/27/2027 — (44) (44) Secured Debt (9) (37)12/27/2023 SF+7.00% 6/27/2027 — (44) (44) Secured Debt (9) 12/27/2023 12.45% SF+7.00% 6/27/2027 7,500 7,280 7,280 7,192 7,192 Dalton US Inc. (10) Provider of Supplemental LaborServices Common Stock 8/16/2022 37 52 60 DMA Industries, LLC Distributor of Aftermarket RideControl Products Secured Debt 11/19/2021 12.00% 11/19/2026 4,700 4,642 4,700 Preferred Equity 11/19/2021 1,486 1,486 1,920 6,128 6,620 DTE Enterprises, LLC (10) Industrial Powertrain Repair andServices Class AA PreferredMember Units (non-voting) (8) 4/13/2018 10.00% 10.00% 1,284 1,283 Class A PreferredMember Units 4/13/2018 776,316 8.00% 8.00% 776 260 2,060 1,543 Dynamic Communities, LLC(10) Developer of Business Events andOnline Community Groups Secured Debt (9) 12/20/2022 10.45% SF+5.00% 10.45% 12/31/2026 2,070 1,912 1,912 Secured Debt (9) 12/20/2022 12.45% SF+7.00% 12.45% 12/31/2026 2,113 1,879 1,859 Preferred Equity 12/20/2022125,000 128 60 Preferred Equity 12/20/20222,376,241 — — Common Equity 12/20/20221,250,000 — — 3,919 3,831 Elgin AcquireCo, LLC Manufacturer and Distributor ofEngine and Chassis Components Secured Debt (9) (37)10/3/2022 SF+6.00% 10/3/2027 — — — Secured Debt 10/3/2022 12.00% 10/3/2027 1,227 1,200 1,200 Secured Debt 10/3/2022 9.00% 10/3/2052 412 409 409 Common Stock 10/3/2022 19 374 390 Common Stock (23) 10/3/2022 61 102 109 2,085 2,108 Emerald TechnologiesAcquisition Co, Inc. (11) Design & Manufacturing Secured Debt (9) 2/10/2022 11.79% SF+6.25% 12/29/2027 2,391 2,357 2,175 Engineering Research &Consulting, LLC (10) Provider of Engineering & ConsultingServices to US Department ofDefense Secured Debt (9) (37)5/23/2022 P+ 5.50% 5/23/2027 — (11) — Secured Debt (9) 5/23/2022 11.98% SF+6.50% 5/23/2028 5,095 5,023 5,095 97
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Table of contents MSC INCOME FUND, INC. Consolidated Schedule of Investments (Continued) December 31, 2023 (dollars in thousands) Portfolio Company (1) (20) Business Description Type of Investment(2) (3) (15) InvestmentDate (22)Shares/UnitsTotalRate ReferenceRate andSpread (25) PIKRate(19) MaturityDate Principal(4) Cost (4) Fair Value(18) 5,012 5,095 Escalent, Inc. (10) Market Research and Consulting Firm Secured Debt (9) (37) 4/7/2023 SF+8.00% 4/7/2029 — (9) (9) Secured Debt (9) 4/7/2023 13.45% SF+8.00% 4/7/2029 6,924 6,742 6,924 Common Equity 4/7/2023 170,998 174 190 6,907 7,105 Event Holdco, LLC (10) Event and Learning ManagementSoftware for HealthcareOrganizations and Systems Secured Debt (9) 12/22/2021 12.61% SF+7.00% 12/22/2026 308 306 302 Secured Debt (9) 12/22/2021 12.61% SF+7.00% 12/22/2026 3,681 3,659 3,614 3,965 3,916 Garyline, LLC (10) Manufacturer of Consumer PlasticProducts Secured Debt (9) (37)11/10/2023 SF+6.75% 11/10/2028 — (76) (76) Secured Debt (9) 11/10/2023 12.22% SF+6.75% 11/10/2028 9,664 9,384 9,384 Common Equity 11/10/2023 210,084 210 210 9,518 9,518 Hawk Ridge Systems, LLC Value-Added Reseller of EngineeringDesign and Manufacturing Solutions Secured Debt (9) 12/2/2016 11.65% SF+6.00% 1/15/2026 494 492 494 Secured Debt 12/2/2016 12.50% 1/15/2026 9,744 9,697 9,744 Preferred MemberUnits 12/2/2016 56 713 4,370 Preferred MemberUnits (23) 12/2/2016 56 38 230 10,940 14,838 HDC/HW IntermediateHoldings (10) Managed Services and HostingProvider Secured Debt (9) (17)12/21/2018 14.34% SF+9.50% 14.34% 12/21/2023 205 205 186 Secured Debt (9) (17)12/21/2018 14.34% SF+9.50% 14.34% 12/21/2023 2,036 2,036 1,849 2,241 2,035 HEADLANDS OP-CO LLC(10) Clinical Trial Sites Operator Secured Debt (9) (37) 8/1/2022 SF+6.50% 8/1/2027 — (14) (14) Secured Debt (9) 8/1/2022 11.86% SF+6.50% 8/1/2027 1,995 1,962 1,995 Secured Debt (9) 8/1/2022 11.86% SF+6.50% 8/1/2027 4,925 4,854 4,925 6,802 6,906 Hybrid Promotions, LLC (10) Wholesaler of Licensed, Branded andPrivate Label Apparel Secured Debt (9) 6/30/2021 15.91% SF+8.25% 2.00% 6/30/2026 7,964 7,813 7,313 IG Parent Corporation (11) Software Engineering Secured Debt (9) (37)7/30/2021 SF+5.75% 7/30/2026 — (13) — Secured Debt (9) 7/30/2021 10.96% SF+5.50% 7/30/2028 6,266 6,200 6,266 Secured Debt (9) 7/30/2021 10.96% SF+5.50% 7/30/2028 1,942 1,921 1,942 8,108 8,208 Imaging Business Machines,L.L.C. (10) Technology Hardware & Equipment Secured Debt (9) (29) 6/8/2023 12.41% SF+7.00% 6/30/2028 791 791 786 Secured Debt (9) 6/8/2023 12.45% SF+7.00% 6/30/2028 10,384 10,068 10,318 Common Equity 6/8/2023 422 580 550 11,439 11,654 Implus Footcare, LLC (10) Provider of Footwear and RelatedAccessories 98
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Table of contents MSC INCOME FUND, INC. Consolidated Schedule of Investments (Continued) December 31, 2023 (dollars in thousands) Portfolio Company (1) (20) Business Description Type of Investment(2) (3) (15) InvestmentDate (22)Shares/UnitsTotalRate ReferenceRate andSpread (25) PIKRate(19) MaturityDate Principal(4) Cost (4) Fair Value(18) Secured Debt (9) 6/1/2017 14.25% SF+7.75% 1.00% 7/31/2024 17,012 17,010 15,816 Industrial Services Acquisition,LLC (10) Industrial Cleaning Services Secured Debt (9) (32)8/13/2021 12.22% SF+6.75% 8/13/2026 752 734 752 Secured Debt (9) 8/13/2021 12.22% SF+6.75% 8/13/2026 11,436 11,330 11,436 Preferred MemberUnits (8) (23)1/31/2018 336 10.00% 10.00% 321 415 Preferred MemberUnits (8) (23)5/17/2019 187 20.00% 20.00% 240 279 Member Units (23) 6/17/2016 2,100 2,100 1,610 14,725 14,492 Infinity X1 Holdings, LLC Manufacturer and Supplier ofPersonal Lighting Products Secured Debt 3/31/2023 13.00% 3/31/2028 4,388 4,314 4,314 Preferred Equity 3/31/2023 20,000 1,000 1,000 5,314 5,314 Infolinks Media Buyco, LLC(10) Exclusive Placement Provider to theAdvertising Ecosystem Secured Debt (9) 11/1/2021 11.21% SF+5.75% 11/1/2026 1,881 1,829 1,881 Secured Debt (9) 11/1/2021 11.21% SF+5.75% 11/1/2026 9,690 9,579 9,690 11,408 11,571 Insight Borrower Corporation(10) Test, Inspection, and CertificationInstrument Provider Secured Debt (9) (37)7/19/2023 SF+6.25% 7/19/2028 — (40) (40) Secured Debt (9) (37)7/19/2023 SF+6.25% 7/19/2029 — (33) (33) Secured Debt (9) 7/19/2023 11.65% SF+6.25% 7/19/2029 8,373 8,143 8,287 Common Equity 7/19/2023 47,847 239 239 8,309 8,453 Inspire Aesthetics Management,LLC (10) Surgical and Non-Surgical PlasticSurgery and Aesthetics Provider Secured Debt (9) (31) 4/3/2023 13.53% SF+8.00% 4/3/2028 676 659 664 Secured Debt (9) 4/3/2023 13.55% SF+8.00% 4/3/2028 6,256 6,115 6,144 Secured Debt (9) 6/14/2023 13.55% SF+8.00% 4/3/2028 1,260 1,231 1,237 Common Equity 4/3/2023 101,719 322 190 8,327 8,235 Interface Security Systems,L.L.C (10) Commercial Security & AlarmServices Secured Debt (17)(28) 12/9/2021 15.48% SF+10.00% 8/7/2023 1,835 1,835 1,781 Secured Debt (9) (14)(17) 8/7/2019 12.46% SF+7.00% 12.46% 8/7/2023 7,334 7,254 433 Common Stock 12/7/2021 2,143 — — 9,089 2,214 Intermedia Holdings, Inc.(11) Unified Communications as a Service Secured Debt (9) 8/3/2018 11.47% SF+6.00% 7/19/2025 5,544 5,539 5,370 Invincible Boat Company, LLC.(10) Manufacturer of Sport Fishing Boats Secured Debt (9) 8/28/2019 12.00% SF+6.50% 8/28/2025 519 516 509 Secured Debt (9) 8/28/2019 12.00% SF+6.50% 8/28/2025 16,812 16,751 16,515 17,267 17,024 INW Manufacturing, LLC(11) Manufacturer of Nutrition andWellness Products 99
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Table of contents MSC INCOME FUND, INC. Consolidated Schedule of Investments (Continued) December 31, 2023 (dollars in thousands) Portfolio Company (1) (20) Business Description Type of Investment(2) (3) (15) InvestmentDate (22)Shares/UnitsTotalRate ReferenceRate andSpread (25) PIKRate(19) MaturityDate Principal(4) Cost (4) Fair Value(18) Secured Debt (9) 5/19/2021 11.36% SF+5.75% 3/25/2027 6,656 6,537 5,325 Iron-Main Investments, LLC Consumer Reporting AgencyProviding Employment BackgroundChecks and Drug Testing Secured Debt 8/2/2021 13.50% 1/31/2028 1,128 1,108 1,108 Secured Debt 9/1/2021 13.50% 1/31/2028 735 722 722 Secured Debt 11/15/2021 13.50% 1/31/2028 2,236 2,236 2,236 Secured Debt 11/15/2021 13.50% 1/31/2028 4,906 4,815 4,815 Secured Debt 1/31/2023 13.50% 1/31/2028 2,641 2,525 2,525 Common Stock 8/3/2021 50,753 689 670 12,095 12,076 Isagenix International, LLC(11) Direct Marketer of Health & WellnessProducts Secured Debt (9) 4/13/2023 11.04% SF+5.50% 8.54% 4/14/2028 2,615 2,374 2,301 Common Equity 4/13/2023 186,322 — — 2,374 2,301 ITA Holdings Group, LLC Air Ambulance Services Secured Debt (9) 6/21/2023 16.59% SF+9.00% 2.00% 6/21/2027 207 201 201 Secured Debt (9) 6/21/2023 16.59% SF+9.00% 2.00% 6/21/2027 178 174 174 Secured Debt (9) 6/21/2023 15.59% SF+8.00% 2.00% 6/21/2027 1,084 842 842 Secured Debt (9) 6/21/2023 17.59% SF+10.00% 2.00% 6/21/2027 1,091 848 848 Warrants (27) 6/21/2023 48,327 6/21/2033 523 523 2,588 2,588 Jackmont Hospitality, Inc. (10) Franchisee of Casual DiningRestaurants Secured Debt (9) (26)10/26/2022 12.46% SF+7.00% 11/4/2024 1,675 1,649 1,675 Secured Debt (9) 11/8/2021 12.46% SF+7.00% 11/4/2024 3,948 3,948 3,948 Preferred Equity 11/8/2021 5,653,333 216 2,190 5,813 7,813 Joerns Healthcare, LLC (11) Manufacturer and Distributor ofHealth Care Equipment & Supplies Secured Debt (9) (14)11/15/2021 23.63% SF+18.00% 23.63% 1/31/2024 2,048 2,048 1,747 Secured Debt (9) (14)8/21/2019 21.63% SF+16.00% 21.63% 8/21/2024 1,708 1,701 121 Secured Debt (9) (14)8/21/2019 21.63% SF+16.00% 21.63% 8/21/2024 1,643 1,635 117 Common Stock 8/21/2019 392,514 3,678 — 9,062 1,985 Johnson Downie Opco, LLC Executive Search Services Secured Debt (37) 12/10/2021 12/10/2026 — (4) — Secured Debt 12/10/2021 15.00% 12/10/2026 2,690 2,645 2,690 Preferred Equity 12/10/2021 368 404 1,070 3,045 3,760 JorVet Holdings, LLC Supplier and Distributor of VeterinaryEquipment and Supplies Secured Debt 3/28/2022 12.00% 3/28/2027 2,850 2,814 2,814 Preferred Equity (8) 3/28/2022 11,934 1,193 1,193 4,007 4,007 JTI Electrical & Mechanical,LLC (10) Electrical, Mechanical andAutomation Services Secured Debt (9) (41)12/22/2021 11.64% SF+6.00% 12/22/2026 261 253 261 Secured Debt (9) 12/22/2021 11.61% SF+6.00% 12/22/2026 3,000 2,963 3,000 100
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Table of contents MSC INCOME FUND, INC. Consolidated Schedule of Investments (Continued) December 31, 2023 (dollars in thousands) Portfolio Company (1) (20) Business Description Type of Investment(2) (3) (15) InvestmentDate (22)Shares/UnitsTotalRate ReferenceRate andSpread (25) PIKRate(19) MaturityDate Principal(4) Cost (4) Fair Value(18) Common Equity 12/22/2021140,351 140 140 3,356 3,401 KMS, LLC (10) Wholesaler of Closeout and Value-priced Products Secured Debt (9) 10/4/2021 14.75% SF+9.25% 10/4/2026 1,292 1,235 1,180 Secured Debt (9) 10/4/2021 14.75% SF+9.25% 10/4/2026 9,310 9,205 8,475 10,440 9,655 Lightbox Holdings, L.P. (11) Provider of Commercial Real EstateSoftware Secured Debt 5/9/2019 10.62% SF+5.00% 5/9/2026 5,765 5,736 5,592 LL Management, Inc. (10) Medical Transportation ServiceProvider Secured Debt (9) 5/2/2019 12.71% SF+7.25% 9/25/2024 7,960 7,933 7,960 Secured Debt (9) 5/2/2019 12.71% SF+7.25% 9/25/2024 5,246 5,228 5,246 Secured Debt (9) 11/20/2020 12.71% SF+7.25% 9/25/2024 — — — Secured Debt (9) 2/26/2021 12.71% SF+7.25% 9/25/2024 871 868 871 Secured Debt (9) 5/12/2022 12.71% SF+7.25% 9/25/2024 8,822 8,781 8,822 22,810 22,899 LLFlex, LLC (10) Provider of Metal-Based Laminates Secured Debt (9) 8/16/2021 15.54% SF+9.00% 1.00% 8/16/2026 4,920 4,861 4,417 Logix Acquisition Company,LLC (10) Competitive Local Exchange Carrier Secured Debt (9) 1/8/2018 13.25% P+ 4.75% 12/22/2024 11,552 11,285 9,069 Mako Steel, LP (10) Self-Storage Design & Construction Secured Debt (9) (37)3/15/2021 SF+6.75% 3/15/2026 — (36) — Secured Debt (9) 3/15/2021 12.28% SF+6.75% 3/15/2026 16,721 16,568 16,721 16,532 16,721 MB2 Dental Solutions, LLC(11) Dental Partnership Organization Secured Debt (9) 1/28/2021 11.46% SF+6.00% 1/29/2027 2,803 2,771 2,803 Secured Debt (9) 1/28/2021 11.46% SF+6.00% 1/29/2027 3,925 3,880 3,925 Secured Debt (9) 1/28/2021 11.46% SF+6.00% 1/29/2027 3,464 3,424 3,464 Secured Debt (9) 1/28/2021 11.46% SF+6.00% 1/29/2027 7,796 7,725 7,796 17,800 17,988 Metalforming Holdings, LLC Distributor of Sheet Metal Foldingand Metal Forming Equipment Secured Debt (37) 10/19/2022 10/19/2024 — — — Secured Debt 10/19/2022 12.75% 10/19/2027 1,748 1,707 1,707 Preferred Equity (8) 10/19/2022434,331 8.00% 8.00% 443 443 Common Stock 10/19/2022112,865 113 110 2,263 2,260 Microbe Formulas, LLC (10) Nutritional Supplements Provider Secured Debt (9) (37) 4/4/2022 SF+6.25% 4/3/2028 — (6) (6) Secured Debt (9) 4/4/2022 11.46% SF+6.00% 4/3/2028 2,671 2,632 2,671 2,626 2,665 Mills Fleet Farm Group, LLC(10) Omnichannel Retailer of Work, Farmand Lifestyle Merchandise 101
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Table of contents MSC INCOME FUND, INC. Consolidated Schedule of Investments (Continued) December 31, 2023 (dollars in thousands) Portfolio Company (1) (20) Business Description Type of Investment(2) (3) (15) InvestmentDate (22)Shares/UnitsTotalRate ReferenceRate andSpread (25) PIKRate(19) MaturityDate Principal(4) Cost (4) Fair Value(18) Secured Debt (9) 10/24/2018 12.52% SF+7.00% 12/31/2026 18,152 17,863 17,524 Mini Melts of America, LLC(10) Manufacturer and Distributor ofBranded Premium Beaded Ice Cream Secured Debt (9) (37)11/30/2023 SF+6.25% 11/30/2028 — (28) (28) Secured Debt (9) (37)11/30/2023 SF+6.25% 11/30/2028 — (10) (10) Secured Debt (9) 11/30/2023 10.64% SF+5.25% 11/30/2028 3,225 3,149 3,149 Secured Debt (9) 11/30/2023 12.64% SF+7.25% 11/30/2028 3,225 3,146 3,146 Common Equity 11/30/2023 300,000 300 300 6,557 6,557 MonitorUS Holding, LLC(10)(13)(21) SaaS Provider of Media IntelligenceServices Secured Debt 5/24/2022 14.00% 4.00% 5/24/2027 1,120 1,106 1,133 Secured Debt 5/24/2022 14.00% 4.00% 5/24/2027 2,912 2,870 3,184 Secured Debt 5/24/2022 14.00% 4.00% 5/24/2027 4,957 4,890 4,957 Common Stock 8/30/202212,798,820 256 197 9,122 9,471 NinjaTrader, LLC (10) Operator of Futures Trading Platform Secured Debt (9) (37)12/18/2019 SF+7.00% 12/18/2026 — (4) (3) Secured Debt (9) (37)12/18/2019 SF+7.00% 12/18/2026 — (12) (12) Secured Debt (9) 12/18/2019 12.54% SF+7.00% 12/18/2026 10,991 10,888 10,991 Secured Debt (9) 12/18/2023 12.52% SF+7.00% 12/18/2026 3,878 3,807 3,878 14,679 14,854 Obra Capital, Inc. (f/k/a VidaCapital, Inc.) (11) Alternative Asset Manager Secured Debt 10/10/2019 11.47% SF+6.00% 10/1/2026 7,043 6,711 6,039 Paragon Healthcare, Inc. (10) Infusion Therapy Treatment Provider Secured Debt (9) (37)1/19/2022 SF+5.75% 1/19/2027 — (11) — Secured Debt (9) (43)1/19/2022 11.24% SF+5.75% 1/19/2027 423 414 421 Secured Debt (9) 1/19/2022 11.25% SF+5.75% 1/19/2027 2,456 2,412 2,442 2,815 2,863 Power System Solutions (10) Backup Power Generation Secured Debt (9) (37) 6/7/2023 SF+6.75% 6/7/2028 — (35) (35) Secured Debt (9) (37) 6/7/2023 SF+6.75% 6/7/2028 — (35) (35) Secured Debt (9) 6/7/2023 12.12% SF+6.75% 6/7/2028 7,939 7,729 7,939 Common Equity 6/7/2023 532 532 500 8,191 8,369 PrimeFlight Aviation Services(10) Air Freight & Logistics Secured Debt (9) 5/1/2023 12.28% SF+6.85% 5/1/2029 5,970 5,813 5,970 Secured Debt (9) 9/7/2023 12.20% SF+6.85% 5/1/2029 570 553 570 6,366 6,540 PTL US Bidco, Inc (10)(13)(21) Manufacturers of Equipment,Including Drilling Rigs andEquipment, and Providers of Suppliesand Services to Companies Involvedin the Drilling, Evaluation andCompletion of Oil and Gas Wells Secured Debt (9) (45)8/19/2022 12.80% SF+7.25% 8/19/2027 198 189 196 102
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Table of contents MSC INCOME FUND, INC. Consolidated Schedule of Investments (Continued) December 31, 2023 (dollars in thousands) Portfolio Company (1) (20) Business Description Type of Investment(2) (3) (15) InvestmentDate (22)Shares/UnitsTotalRate ReferenceRate andSpread (25) PIKRate(19) MaturityDate Principal(4) Cost (4) Fair Value(18) Secured Debt (9) 8/19/2022 12.88% SF+7.25% 8/19/2027 1,734 1,707 1,720 1,896 1,916 Purge Rite, LLC (10) HVAC Flushing and FiltrationServices Secured Debt (9) (37)10/2/2023 SF+8.00% 10/2/2028 — (19) (19) Secured Debt (9) 10/2/2023 13.70% SF+8.00% 10/2/2028 3,906 3,813 3,813 Preferred Equity 10/2/20231,302,083 1,302 1,302 5,096 5,096 RA Outdoors LLC (10) Software Solutions Provider forOutdoor Activity Management Secured Debt (9) (32) 4/8/2021 12.22% SF+6.75% 4/8/2026 796 789 745 Secured Debt (9) 4/8/2021 12.21% SF+6.75% 4/8/2026 12,917 12,829 12,089 13,618 12,834 Research Now Group, Inc. andSurvey Sampling International,LLC (11) Provider of Outsourced OnlineSurveying Secured Debt (9) 12/29/2017 11.14% SF+5.50% 12/20/2024 9,691 9,691 7,237 Richardson Sales Solutions(10) Business Services Secured Debt (9) (34)8/24/2023 18.47% SF+6.50% 8/24/2028 833 781 818 Secured Debt (9) 8/24/2023 11.88% SF+6.50% 8/24/2028 10,553 10,261 10,362 11,042 11,180 Roof Opco, LLC (10) Residential Re-Roofing/Repair Secured Debt (9) (37)8/27/2021 SF+6.50% 8/27/2026 — (10) — Secured Debt (9) 8/27/2021 12.16% SF+6.50% 8/27/2026 4,219 4,150 4,142 Secured Debt (9) 8/27/2021 14.16% SF+8.50% 8/27/2026 4,219 4,150 4,082 8,290 8,224 Rug Doctor, LLC. (10) Carpet Cleaning Products andMachinery Secured Debt (9) 7/16/2021 13.54% SF+6.00% 2.00% 11/16/2025 6,410 6,389 6,383 Secured Debt (9) 7/16/2021 13.54% SF+6.00% 2.00% 11/16/2025 9,022 8,991 8,984 15,380 15,367 Slick Innovations, LLC Text Message Marketing Platform Secured Debt 9/13/2018 14.00% 12/22/2027 2,860 2,777 2,860 Common Stock 9/13/2018 17,500 114 600 2,891 3,460 South Coast TerminalsHoldings, LLC (10) Specialty Toll Chemical Manufacturer Secured Debt (9) 12/10/2021 11.46% SF+6.00% 12/13/2026 38 34 34 Secured Debt (9) 12/10/2021 11.70% SF+6.00% 12/13/2026 2,979 2,943 2,979 Common Equity 12/10/2021 60,606 61 59 3,038 3,072 SPAU Holdings, LLC (10) Digital Photo Product Provider Secured Debt (9) (37) 7/1/2022 SF+8.00% 7/1/2027 — (14) — Secured Debt (9) 7/1/2022 13.72% SF+8.00% 7/1/2027 4,925 4,857 4,925 Common Stock 7/1/2022 200,000 200 160 5,043 5,085 Tex Tech Tennis, LLC (10) Sporting Goods & Textiles Preferred Equity (23) 7/7/2021 1,000,000 1,000 2,840 103
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Table of contents MSC INCOME FUND, INC. Consolidated Schedule of Investments (Continued) December 31, 2023 (dollars in thousands) Portfolio Company (1) (20) Business Description Type of Investment(2) (3) (15) InvestmentDate (22)Shares/UnitsTotalRate ReferenceRate andSpread (25) PIKRate(19) MaturityDate Principal(4) Cost (4) Fair Value(18) The Affiliati Network, LLC Performance Marketing Solutions Secured Debt 8/9/2021 13.00% 8/9/2026 40 37 37 Secured Debt 8/9/2021 13.00% 8/9/2026 1,880 1,858 1,841 Preferred Stock 9/1/2023 43,027 43 43 Preferred Stock (8) 8/9/2021 320,000 1,600 1,600 3,538 3,521 U.S. TelePacific Corp. (11) Provider of Communications andManaged Services Secured Debt (9) (14) 6/1/2023 12.53% SF+7.15% 6.00% 5/2/2027 6,802 2,623 2,438 Secured Debt (14) 6/1/2023 5/2/2027 692 15 — 2,638 2,438 USA DeBusk LLC (10) Provider of Industrial CleaningServices Secured Debt (9) 10/22/2019 11.46% SF+6.00% 9/8/2026 12,405 12,308 12,405 Secured Debt (9) 7/19/2023 11.96% SF+6.50% 9/8/2026 4,825 4,742 4,825 Secured Debt (9) 11/21/2023 11.96% SF+6.50% 9/8/2026 2,515 2,468 2,515 19,518 19,745 UserZoom Technologies, Inc.(10) Provider of User Experience ResearchAutomation Software Secured Debt (9) 1/11/2023 12.99% SF+7.50% 4/5/2029 3,000 2,923 3,000 Vistar Media, Inc. (10) Operator of Digital Out-of-HomeAdvertising Platform Preferred Stock 4/3/2019 70,207 767 2,180 Vitesse Systems (10) Component Manufacturing andMachining Platform Secured Debt (9) 12/22/2023 12.63% SF+7.00% 12/22/2028 12,500 12,193 12,193 VORTEQ Coil Finishers, LLC(10) Specialty Coating of Aluminum andLight-Gauge Steel Common Equity (8) 11/30/2021 769,231 769 1,911 Wall Street Prep, Inc. (10) Financial Training Services Secured Debt (9) (37)7/19/2021 SF+7.00% 7/19/2026 — (5) (5) Secured Debt (9) 7/19/2021 12.54% SF+7.00% 7/19/2026 4,654 4,600 4,654 Common Stock 7/19/2021 500,000 500 910 5,095 5,559 Watterson Brands, LLC (10) Facility Management Services Secured Debt (9) (41)12/17/2021 11.50% SF+6.00% 12/17/2026 253 249 253 Secured Debt (9) 12/17/2021 11.50% SF+6.00% 12/17/2026 53 47 53 Secured Debt (9) 12/17/2021 11.50% SF+6.00% 12/17/2026 2,166 2,146 2,166 Secured Debt (9) 12/17/2021 11.50% SF+6.00% 12/17/2026 1,955 1,936 1,955 4,378 4,427 West Star Aviation Acquisition,LLC (10) Aircraft, Aircraft Engine and EngineParts Secured Debt (9) (42) 3/1/2022 11.34% SF+6.00% 3/1/2028 665 654 665 Secured Debt (9) 3/1/2022 11.35% SF+6.00% 3/1/2028 2,948 2,907 2,947 104
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Table of contents MSC INCOME FUND, INC. Consolidated Schedule of Investments (Continued) December 31, 2023 (dollars in thousands) Portfolio Company (1) (20) Business Description Type of Investment(2) (3) (15) InvestmentDate (22)Shares/UnitsTotalRate ReferenceRate andSpread (25) PIKRate(19) MaturityDate Principal(4) Cost (4) Fair Value(18) Secured Debt (9) 11/3/2023 11.35% SF+6.00% 3/1/2028 1,467 1,438 1,467 Common Stock 3/1/2022 200,000 200 390 5,199 5,469 Winter Services LLC (10) Provider of Snow Removal and IceManagement Services Secured Debt (9) (35)11/19/2021 12.64% SF+7.00% 11/19/2026 2,778 2,745 2,778 Secured Debt (9) 11/19/2021 12.66% SF+7.00% 11/19/2026 2,583 2,528 2,583 Secured Debt (9) 11/19/2021 12.66% SF+7.00% 11/19/2026 11,625 11,479 11,625 16,752 16,986 World Micro Holdings, LLC Supply Chain Management Secured Debt 12/12/2022 13.00% 12/12/2027 1,627 1,601 1,601 Preferred Equity (8) 12/12/2022 530 530 530 2,131 2,131 Xenon Arc, Inc. (10) Tech-enabled Distribution Services toChemicals and Food IngredientsPrimary Producers Secured Debt (9) (37)12/17/2021 SF+5.25% 12/17/2026 — (5) — Secured Debt (9) 12/17/2021 11.22% SF+5.75% 12/17/2027 1,188 1,163 1,188 Secured Debt (9) 12/17/2021 11.25% SF+5.75% 12/17/2027 2,352 2,321 2,352 3,479 3,540 YS Garments, LLC (11) Designer and Provider of BrandedActivewear Secured Debt (9) 8/22/2018 13.00% SF+7.50% 8/9/2026 5,584 5,485 5,110 Zips Car Wash, LLC (10) Express Car Wash Operator Secured Debt (9) (33)2/11/2022 12.71% SF+7.25% 3/1/2024 2,356 2,352 2,234 Secured Debt (9) (33)2/11/2022 12.71% SF+7.25% 3/1/2024 591 589 555 2,941 2,789 Subtotal Non-Control/Non-Affiliate Investments (120.2% ofnet assets at fair value) $ 763,781 $ 747,972 Total Portfolio Investments,December 31, 2023 (175.6% ofnet assets at fair value) $ 1,038,318 $ 1,092,895 Money market funds (includedin cash and cash equivalents)(16) Fidelity Government PortfolioClass III Fund (38) $ 3,188 $ 3,188 First American TreasuryObligations Fund Class Z (39) 17,656 17,656 Total money market funds $ 20,844 $ 20,844 ___________________________________________________ (1) All investments are Lower Middle Market portfolio investments, unless otherwise noted. See Note C — Fair Value Hierarchy for Investments — Portfolio Composition for a description of Lower Middle Market portfolio investments. All of the Company’s investments, unless otherwise noted, are encumbered as security for one of the Company’s Credit Facilities. (2) Debt investments are income producing, unless otherwise noted by footnote (14), as described below. Equity and warrants are non-income producing, unless otherwise noted by footnote (8), as described below. 105
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Table of contents MSC INCOME FUND, INC. Consolidated Schedule of Investments (Continued) December 31, 2023 (dollars in thousands) (3) See Note C — Fair Value Hierarchy for Investments — Portfolio Composition and Schedule 12-14 for a summary of geographic location of portfolio companies. (4) Principal is net of repayments. Cost is net of repayments and accumulated unearned income. Negative cost is the result of the capitalized discount being greater than the principal amount outstanding on the loan. (5) Control investments are defined by the 1940 Act as investments in which more than 25% of the voting securities are owned or where the ability to nominate greater than 50% of the board representation is maintained. (6) Affiliate investments are defined by the 1940 Act as investments in which between 5% and 25% (inclusive) of the voting securities are owned and the investments are not classified as Control investments. (7) Non-Control/Non-Affiliate investments are defined by the 1940 Act as investments that are neither Control investments nor Affiliate investments. (8) Income producing through dividends or distributions. (9) Index based floating interest rate is subject to contractual minimum interest rate. As noted in this schedule, 95% of these floating rate loans (based on the par amount) contain LIBOR or SOFR floors which range between 0.75% and 2.00%, with a weighted- average floor of 1.17%. (10) Private Loan portfolio investment. See Note C — Fair Value Hierarchy for Investments — Portfolio Composition for a description of Private Loan portfolio investments. (11) Middle Market portfolio investment. See Note C — Fair Value Hierarchy for Investments — Portfolio Composition for a description of Middle Market portfolio investments. (12) Other Portfolio investment. See Note C — Fair Value Hierarchy for Investments — Portfolio Composition for a description of Other Portfolio investments. (13) Investment is not a qualifying asset as defined under Section 55(a) of the 1940 Act. Qualifying assets must represent at least 70% of total assets at the time of acquisition of any additional non-qualifying assets. (14) Non-accrual and non-income producing debt investment. (15) All of the Company’s portfolio investments are generally subject to restrictions on resale as “restricted securities.” (16) Money market fund interests included in cash and cash equivalents. (17) Maturity date is under on-going negotiations with the portfolio company and other lenders, if applicable. (18) Investment fair value was determined using significant unobservable inputs, unless otherwise noted. See Note C — Fair Value Hierarchy for Investments—Portfolio Composition for further discussion. Negative fair value is the result of the capitalized discount on the loan or the unfunded commitment being valued below par. (19) Investments may have a portion, or all, of their income received from PIK interest or dividends. PIK interest income and cumulative dividend income represent income not paid currently in cash. The difference between the Total Rate and PIK Rate represents the cash rate as of December 31, 2023. (20) All portfolio company headquarters are based in the United States, unless otherwise noted. (21) Portfolio company headquarters are located outside of the United States. (22) Investment date represents the date of initial investment in the security position. (23) Shares/Units represent ownership in a related Real Estate or HoldCo entity. (24) Investment is not unitized. Presentation is made in percent of fully diluted ownership unless otherwise indicated. (25) A majority of the variable rate loans in the Company’s Investment Portfolio bear interest at a rate that may be determined by reference to either LIBOR (“L”), SOFR (“SF”) or an alternate base rate (commonly based on the Federal Funds Rate or the Prime rate (“P”)), which typically resets every one, three, or six months at the borrower’s option. SOFR based contracts may include a credit spread adjustment (the “Adjustment”) that is charged in addition to the stated spread. The Adjustment is applied when the SOFR rate, plus the Adjustment, exceeds the stated floor rate, as applicable. As of December 31, 2023, SOFR based contracts in the portfolio had Adjustments ranging from 0.10% to 0.43%. (26) As of December 31, 2023, borrowings under the loan facility bear interest at SOFR+7.00% (Floor 1.00%). Each new draw or funding on the facility has a different floating rate reset date. The rate presented represents a weighted-average rate for borrowings under the facility, as of December 31, 2023. 106
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Table of contents MSC INCOME FUND, INC. Consolidated Schedule of Investments (Continued) December 31, 2023 (dollars in thousands) (27) Warrants are presented in equivalent shares/units with a strike price of $0.01 per share/unit. (28) As of December 31, 2023, borrowings under the loan facility bore interest at SOFR+10.00%. RLOC facility permits the borrower to make an interest rate election regarding the base rate on each draw under the facility. The rate presented represents a weighted- average rate for borrowings under the facility, as of December 31, 2023. (29) As of December 31, 2023, borrowings under the loan facility bore interest at SOFR+7.00% (Floor 1.50%). RLOC facility permits the borrower to make an interest rate election regarding the base rate on each draw under the facility. The rate presented represents a weighted-average rate for borrowings under the facility, as of December 31, 2023. (30) As of December 31, 2023, borrowings under the loan facility bore interest at SOFR+8.00% (Floor 1.00%). RLOC facility permits the borrower to make an interest rate election regarding the base rate on each draw under the facility. The rate presented represents a weighted-average rate for borrowings under the facility, as of December 31, 2023. (31) As of December 31, 2023, borrowings under the loan facility bore interest at SOFR+8.00% (Floor 2.00%). RLOC facility permits the borrower to make an interest rate election regarding the base rate on each draw under the facility. The rate presented represents a weighted-average rate for borrowings under the facility, as of December 31, 2023. (32) As of December 31, 2023, borrowings under the loan facility bore interest at SOFR+6.75% (Floor 1.00%). RLOC facility permits the borrower to make an interest rate election regarding the base rate on each draw under the facility. The rate presented represents a weighted-average rate for borrowings under the facility, as of December 31, 2023. (33) As of December 31, 2023, borrowings under the loan facility bore interest at SOFR+7.25% (Floor 1.00%). Each new draw or funding on the facility has a different floating rate reset date. The rate presented represents a weighted-average rate for borrowings under the facility, as of December 31, 2023. (34) As of December 31, 2023, borrowings under the loan facility bore interest at SOFR+6.50% (Floor 2.00%). RLOC facility permits the borrower to make an interest rate election regarding the base rate on each draw under the facility. The rate presented represents a weighted-average rate for borrowings under the facility, as of December 31, 2023. (35) As of December 31, 2023, borrowings under the loan facility bore interest at SOFR+7.00% (Floor 1.00%). RLOC facility permits the borrower to make an interest rate election regarding the base rate on each draw under the facility. The rate presented represents a weighted-average rate for borrowings under the facility, as of December 31, 2023. (36) Index based floating interest rate is subject to contractual maximum base rate of 3.00%. (37) The position is unfunded and no interest income is being earned as of December 31, 2023. The position may earn a nominal unused facility fee on committed amounts. (38) Effective yield as of December 31, 2023 was approximately 5.25% on the Fidelity Government Portfolio Class III Fund. (39) Effective yield as of December 31, 2023 was approximately 5.23% on the First American Treasury Obligations Fund Class Z. (40) Warrants are presented in equivalent shares/units with a strike price of $1.00 per share/unit. (41) As of December 31, 2023, borrowings under the loan facility bore interest at SOFR+6.00% (Floor 1.00%). RLOC facility permits the borrower to make an interest rate election regarding the base rate on each draw under the facility. The rate presented represents a weighted-average rate for borrowings under the facility, as of December 31, 2023. (42) As of December 31, 2023, borrowings under the loan facility bore interest at SOFR+6.00% (Floor 0.75%). Each new draw or funding on the facility has a different floating rate reset date. The rate presented represents a weighted-average rate for borrowings under the facility, as of December 31, 2023. (43) As of December 31, 2023, borrowings under the loan facility bore interest at SOFR+5.75% (Floor 1.00%). Each new draw or funding on the facility has a different floating rate reset date. The rate presented represents a weighted-average rate for borrowings under the facility, as of December 31, 2023. (44) As of December 31, 2023, borrowings under the loan facility bore interest at SOFR+7.00% (Floor 2.00%). RLOC facility permits the borrower to make an interest rate election regarding the base rate on each draw under the facility. The rate presented represents a weighted-average rate for borrowings under the facility, as of December 31, 2023. 107
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Table of contents MSC INCOME FUND, INC. Consolidated Schedule of Investments (Continued) December 31, 2023 (dollars in thousands) (45) As of December 31, 2023, borrowings under the loan facility bore interest at SOFR+7.25% (Floor 1.00%). RLOC facility permits the borrower to make an interest rate election regarding the base rate on each draw under the facility. The rate presented represents a weighted-average rate for borrowings under the facility, as of December 31, 2023. 108
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Table of contents MSC INCOME FUND, INC. Notes to the Consolidated Financial Statements NOTE A—ORGANIZATION AND BASIS OF PRESENTATION 1. Organization MSC Income Fund, Inc. (“MSIF” or, together with its consolidated subsidiaries, “MSC Income” or the “Company”) is a principal investment firm primarily focused on providing debt capital to private (“Private Loan”) companies owned by or in the process of being acquired by a private equity fund (its “Private Loan investment strategy”). MSC Income’s portfolio investments are typically made to support leveraged buyouts, recapitalizations, growth financings, refinancings and acquisitions of companies that operate in diverse industry sectors. MSC Income seeks to partner with private equity fund sponsors in its Private Loan investment strategy and primarily invests in secured debt investments of Private Loan companies generally headquartered in the United States. MSC Income also maintains a portfolio of customized long-term debt and equity investments in lower middle market (“LMM”) companies (its “LMM investment portfolio”), and through those investments MSC Income has partnered with entrepreneurs, business owners and management teams in co-investments with Main Street Capital Corporation (“Main Street”), a New York Stock Exchange (“NYSE”) listed BDC, utilizing the customized “one-stop” debt and equity financing solution provided in Main Street’s LMM investment strategy (the “LMM investment strategy”). Through the LMM investment strategy, MSC Income primarily invested in secured debt investments, equity investments, warrants and other securities of LMM companies typically based in the United States. Effective upon the MSC Income Listing (as defined below) on January 29, 2025, MSC Income changed its investment strategy for investments in new portfolio companies to be solely focused on its Private Loan investment strategy, rather than its historical focus primarily on its Private Loan investment strategy and secondarily on the LMM investment strategy (as further discussed below). MSC Income also maintains a legacy portfolio of investments in larger middle market (“Middle Market”) companies (its “Middle Market investment portfolio”) and a limited portfolio of other portfolio (“Other Portfolio”) investments. MSC Income’s Middle Market investments are generally debt investments in companies owned by a private equity fund that were originally issued through a syndication financing process. MSC Income has generally stopped making new Middle Market investments and expects the size of its Middle Market investment portfolio to continue to decline in future periods as its existing Middle Market investments are repaid or sold. MSC Income’s Other Portfolio investments primarily consist of investments that are not consistent with the typical profiles for its Private Loan, LMM or Middle Market portfolio investments, including investments in unaffiliated investment companies and private funds managed by third parties. Similar to its Middle Market investments, MSC Income has generally stopped making new Other Portfolio investments and expects the size of its Other Portfolio to continue to decline in future periods as its existing Other Portfolio investments are repaid or sold. The “Investment Portfolio,” as used herein, refers to all of MSC Income’s investments in Private Loan portfolio companies, investments in LMM portfolio companies, investments in Middle Market portfolio companies and Other Portfolio investments. MSIF was formed in November 2011 to operate as an externally managed business development company (“BDC”) under the Investment Company Act of 1940, as amended (the “1940 Act”). MSIF has elected to be treated for U.S. federal income tax purposes as a regulated investment company (“RIC”) under Subchapter M of the Internal Revenue Code of 1986, as amended (the “Code”). As a result, MSIF generally does not pay corporate-level U.S. federal income taxes on any net ordinary taxable income or capital gains that it distributes to its stockholders. On October 28, 2020, MSC Income’s stockholders approved the appointment of MSC Adviser I, LLC (the “Adviser”), which is wholly-owned by Main Street, as MSC Income’s investment adviser and administrator under an Investment Advisory and Administrative Services Agreement dated October 30, 2020 (the “Prior Investment Advisory Agreement”). On January 29, 2025, in connection with the MSC Income Listing (as defined below), MSC Income entered into an Amended and Restated Investment Advisory and Administrative Services Agreement (the “Advisory Agreement”) with the Adviser. The Advisory Agreement was approved by the affirmative vote of the holders of a majority of MSC Income’s outstanding voting securities, as defined in the 1940 Act, at a special meeting of MSC Income’s stockholders held on December 11, 2024 (the “2025 Special Meeting”), to become effective upon the MSC Income Listing. In such role, the Adviser has the responsibility to manage the business of MSC Income, including the responsibility to identify, evaluate, 109
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Table of contents MSC INCOME FUND, INC. Notes to the Consolidated Financial Statements (Continued) negotiate and structure prospective investments, make investment and portfolio management decisions, monitor MSC Income’s Investment Portfolio and provide ongoing administrative services. On January 30, 2025, MSC Income closed a follow-on public offering of 5,500,000 shares of its common stock, at the public offering price of $15.53 per share, in connection with which MSC Income’s shares of common stock were listed and began trading on the NYSE under the ticker symbol “MSIF” on January 29, 2025 (the “MSC Income Listing”). In addition, on February 3, 2025, MSC Income issued and sold 825,000 additional shares of its common stock, at the public offering price of $15.53 per share, pursuant to the underwriters’ full exercise of their overallotment option. Net of underwriting discounts and commissions and offering expenses, MSC Income received net cash proceeds of approximately $91 million in connection with the follow-on public equity offering. MSIF has certain direct and indirect wholly-owned subsidiaries that have elected to be taxable entities (the “Taxable Subsidiaries”). The primary purpose of the Taxable Subsidiaries is to permit MSIF to hold equity investments in portfolio companies which are “pass-through” entities for tax purposes. MSIF also has certain direct and indirect wholly-owned subsidiaries formed for financing purposes (the “Structured Subsidiaries”). Unless otherwise noted or the context otherwise indicates, the terms “we,” “us,” “our,” the “Company” and “MSC Income” refer to MSIF and its consolidated subsidiaries, which include the Taxable Subsidiaries and the Structured Subsidiaries. 2. Basis of Presentation MSC Income’s consolidated financial statements are prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”). The Company is an investment company following accounting and reporting guidance in Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 946, Financial Services—Investment Companies (“ASC 946”). For each of the periods presented herein, MSC Income’s consolidated financial statements include the accounts of MSIF and its consolidated subsidiaries. MSC Income’s results of operations and cash flows for the years ended December 31, 2024, 2023 and 2022 and financial position as of December 31, 2024 and 2023, are presented on a consolidated basis. The effects of all intercompany transactions between MSIF and its consolidated subsidiaries have been eliminated in consolidation. Principles of Consolidation Under ASC 946, MSC Income is precluded from consolidating other entities in which MSC Income has equity investments, including those in which it has a controlling interest, unless the other entity is another investment company. An exception to this general principle in ASC 946 occurs if MSC Income holds a controlling interest in an operating company that provides all or substantially all of its services directly to MSC Income. Accordingly, as noted above, MSC Income’s consolidated financial statements include the financial position and operating results for the Taxable Subsidiaries and the Structured Subsidiaries. MSC Income has determined that none of its portfolio investments qualify for this exception. Therefore, MSC Income’s Investment Portfolio is carried on the Consolidated Balance Sheets at fair value, as discussed further in Note B.1. — Summary of Significant Accounting Policies — Valuation of the Investment Portfolio, with any adjustments to fair value recognized as “Net Unrealized Appreciation (Depreciation)” until the investment is realized, usually upon exit, resulting in any gain or loss being recognized as a “Net Realized Gain (Loss),” in both cases on the Consolidated Statements of Operations. Portfolio Investment Classification MSC Income classifies its Investment Portfolio in accordance with the requirements of the 1940 Act. Under the 1940 Act, (a) “Control Investments” are defined as investments in which MSC Income owns more than 25% of the voting securities or has rights to maintain greater than 50% of the board representation, (b) “Affiliate Investments” are defined as investments in which MSC Income owns between 5% and 25% (inclusive) of the voting securities and does not have rights to maintain greater than 50% of the board representation and (c) “Non-Control/Non-Affiliate Investments” are defined as investments that are neither Control Investments nor Affiliate Investments. For purposes of determining the classification of its Investment Portfolio, MSC Income has excluded consideration of any voting securities or board appointment rights held by Main Street or any other advisory client of the Adviser. 110
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Table of contents MSC INCOME FUND, INC. Notes to the Consolidated Financial Statements (Continued) 3. Reverse Stock Split On December 16, 2024, in advance of the MSC Income Listing, the Company effectuated a 2-for-1 reverse stock split of its outstanding common stock pursuant to approval from its Board of Directors (the “Reverse Stock Split”). As a result of the Reverse Stock Split, every two shares of the Company’s issued and outstanding common stock were converted into one share of issued and outstanding common stock, without any change in the par value or shares authorized. All share, per share, common stock and additional paid-in capital amounts presented in these consolidated financial statements and notes to the consolidated financial statements prior to December 16, 2024 have been retrospectively adjusted to give effect to the Reverse Stock Split. A summary of the Company’s weighted average number of shares of common stock outstanding and earnings per share after adjusting for the Reverse Stock Split as of December 31, 2023 and December 31, 2022 is as follows: Year Ended December 31, 2023 2022 Weighted average number of shares of common stock outstanding (as reported) 80,269,002 79,993,040 Weighted average number of shares of common stock outstanding (as adjusted) 40,134,501 39,996,520 Net increase in net assets per share resulting from operations (as reported) $ 0.82 $ 0.57 Net increase in net assets per share resulting from operations (as adjusted) $ 1.65 $ 1.14 NOTE B—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 1. Valuation of the Investment Portfolio MSC Income accounts for its Investment Portfolio at fair value. As a result, MSC Income follows the provisions of ASC 820, Fair Value Measurements and Disclosures (“ASC 820”). ASC 820 defines fair value, establishes a framework for measuring fair value, establishes a fair value hierarchy based on the quality of inputs used to measure fair value and enhances disclosure requirements for fair value measurements. ASC 820 requires MSC Income to assume that the portfolio investment is to be sold in the principal market to independent market participants, which may be a hypothetical market. Market participants are defined as buyers and sellers in the principal market that are independent, knowledgeable and willing and able to transact. MSC Income’s portfolio strategy calls for it to invest primarily in debt securities issued by Private Loan companies and illiquid debt and equity securities issued by LMM companies. However, the Company has changed its investment strategy with respect to new platform investments to be solely focused on the Private Loan investment strategy. As a result, the size of the LMM investment portfolio is expected to decrease over time as existing LMM investments are repaid or sold in the ordinary course of business. MSC Income also maintains a legacy portfolio of investments in Middle Market companies and a limited portfolio of Other Portfolio investments which are also expected to decrease over time as MSC Income is generally no longer making new Middle Market investments or Other Portfolio investments. MSC Income’s portfolio investments may be subject to restrictions on resale. Private Loan investments may include investments which have no established market or have established markets that are not active, while LMM investments and Other Portfolio investments generally have no established trading market. Middle Market portfolio investments generally have established markets that are not active. MSC Income determines in good faith the fair value of its Investment Portfolio pursuant to a valuation policy in accordance with ASC 820, with such valuation process approved by its Board of Directors and in accordance with the 1940 Act. MSC Income’s valuation policies and processes are intended to provide a consistent basis for determining the fair value of MSC Income’s Investment Portfolio. For Private Loan and Middle Market portfolio investments in debt securities for which it has determined that third-party quotes or other independent pricing are not available or appropriate, MSC Income generally estimates the fair value based on the assumptions that it believes hypothetical market participants would use to value the investment in a current hypothetical sale using the yield-to-maturity model (“Yield-to-Maturity”) valuation method. For LMM portfolio investments, MSC Income generally reviews external events, including private mergers, sales and acquisitions involving comparable companies, and includes these events in the valuation process by using an enterprise value waterfall methodology (“Waterfall”) for its LMM equity investments and an income approach using a Yield-to- Maturity valuation method for its LMM debt investments. For Middle Market portfolio investments in debt securities for which it has 111
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Table of contents MSC INCOME FUND, INC. Notes to the Consolidated Financial Statements (Continued) determined that third-party quotes or other independent prices are available, MSC Income primarily uses quoted prices in the valuation process. MSC Income determines the appropriateness of the use of third-party broker quotes, if any, in determining fair value based on its understanding of the level of actual transactions used by the broker to develop the quote and whether the quote was an indicative price or binding offer, the depth and consistency of broker quotes and the correlation of changes in broker quotes with underlying performance of the portfolio company and other market indices. For its Other Portfolio equity investments, MSC Income generally calculates the fair value of the investment primarily based on the net asset value (“NAV”) of the fund and adjusts the fair value for other factors deemed relevant that would affect the fair value of the investment. All of the valuation approaches for MSC Income’s portfolio investments estimate the value of the investment as if MSC Income were to sell, or exit, the investment as of the measurement date. These valuation approaches consider the value associated with MSC Income’s ability to control the capital structure of the portfolio company, as well as the timing of a potential exit. For valuation purposes, “control” portfolio investments are composed of debt and equity securities in companies for which MSC Income has a controlling interest in the equity ownership of the portfolio company or the ability to nominate a majority of the portfolio company’s board of directors. For valuation purposes, “non-control” portfolio investments are generally composed of debt and equity securities in companies for which MSC Income does not have a controlling interest in the equity ownership of the portfolio company or the ability to nominate a majority of the portfolio company’s board of directors. Under the Waterfall valuation method, MSC Income estimates the enterprise value of a portfolio company using a combination of market and income approaches or other appropriate valuation methods, such as considering recent transactions in the equity securities of the portfolio company or third-party valuations of the portfolio company, and then performs a Waterfall calculation by allocating the enterprise value over the portfolio company’s securities in order of their preference relative to one another. The enterprise value is the fair value at which an enterprise could be sold in a transaction between two willing parties, other than through a forced or liquidation sale. Typically, privately held companies are bought and sold based on multiples of earnings before interest, taxes, depreciation and amortization (“EBITDA”), cash flows, net income, revenues, or in limited cases, book value. There is no single methodology for estimating enterprise value. For any one portfolio company, enterprise value is generally described as a range of values from which a single estimate of enterprise value is derived. In estimating the enterprise value of a portfolio company, MSC Income analyzes various factors including the portfolio company’s historical and projected financial results. Due to SEC deadlines for MSC Income’s quarterly and annual financial reporting, the operating results of a portfolio company used in the current period valuation are generally the results from the period ended three months prior to such valuation date and may include unaudited, projected, budgeted or pro forma financial information and may require adjustments for non-recurring items or to normalize the operating results that may require significant judgment in determining. In addition, projecting future financial results requires significant judgment regarding future growth assumptions. In evaluating the operating results, MSC Income also analyzes the impact of exposure to litigation, loss of customers or other contingencies. After determining the appropriate enterprise value, MSC Income allocates the enterprise value to investments in order of the legal priority of the various components of the portfolio company’s capital structure. In applying the Waterfall valuation method, MSC Income assumes the loans are paid-off at the principal amount in a change in control transaction and are not assumed by the buyer, which MSC Income believes is consistent with its past transaction history and standard industry practices. Under the Yield-to-Maturity valuation method, MSC Income also uses the income approach to determine the fair value of debt securities based on projections of the discounted future free cash flows that the debt security will likely generate, including analyzing the discounted cash flows of interest and principal amounts for the debt security, as set forth in the associated loan agreements, as well as the financial position and credit risk of the portfolio company. MSC Income’s estimate of the expected repayment date of its debt securities is generally the maturity date of the instrument, as MSC Income generally intends to hold its loans and debt securities to maturity. The Yield- to-Maturity analysis also considers changes in leverage levels, credit quality, portfolio company performance, changes in market-based interest rates and other factors. MSC Income will generally use the value determined by the Yield-to-Maturity analysis as the fair value for that security; however, because of MSC Income’s general intent to hold its loans to maturity, the fair value will not exceed the principal amount of the debt security valued using the Yield-to-Maturity valuation method. A change in the assumptions that MSC Income uses to estimate the fair value of its debt securities using the Yield-to-Maturity valuation method could have a material impact on the determination of fair value. If there is deterioration in credit quality or if a debt security is in workout status, MSC Income may consider other factors in determining the fair value of the debt security, including the value attributable to the debt security from the enterprise value of the portfolio company or the proceeds that would most likely be received in a liquidation analysis. 112
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Table of contents MSC INCOME FUND, INC. Notes to the Consolidated Financial Statements (Continued) Under the NAV valuation method, for an investment in an investment fund that does not have a readily determinable fair value, MSC Income measures the fair value of the investment predominately based on the NAV of the investment fund as of the measurement date and adjusts the investment’s fair value for factors known to MSC Income that would affect that fund’s NAV, including, but not limited to, fair values for individual investments held by the fund if MSC Income holds the same investment or for a publicly traded investment. In addition, in determining the fair value of the investment, MSC Income considers whether adjustments to the NAV are necessary in certain circumstances, based on the analysis of any restrictions on redemption of MSC Income’s investment as of the measurement date, recent actual sales or redemptions of interests in the investment fund, and expected future cash flows available to equity holders, including the rate of return on those cash flows compared to an implied market return on equity required by market participants, or other uncertainties surrounding MSC Income’s ability to realize the full NAV of its interests in the investment fund. Pursuant to its internal valuation process and the requirements under the 1940 Act, MSC Income performs valuation procedures on each of its portfolio investments quarterly. In addition to its internal valuation process, in arriving at estimates of fair value for its investments in its Private Loan portfolio companies, MSC Income, among other things, consults with a nationally recognized independent financial advisory services firm (the “Financial Advisory Firm”). The Financial Advisory Firm analyzes and provides observations and recommendations and an assurance certification regarding MSC Income’s determinations of the fair value of its Private Loan portfolio company investments. The Financial Advisory Firm is generally consulted relative to MSC Income’s investments in each Private Loan portfolio company at least once every calendar year, and for MSC Income’s investments in new Private Loan portfolio companies, at least once in the twelve-month period subsequent to the initial investment. In certain instances, MSC Income may determine that it is not cost- effective, and as a result is not in its stockholders’ best interest, to consult with the Financial Advisory Firm on its investments in one or more Private Loan portfolio companies. Such instances include, but are not limited to, situations where the fair value of MSC Income’s investment in a Private Loan portfolio company is determined to be insignificant relative to the total Investment Portfolio. MSC Income consulted with and received an assurance certification from the Financial Advisory Firm in arriving at its determination of fair value for its investments in a total of 63 and 55 Private Loan portfolio companies during the years ended December 31, 2024 and 2023, respectively, representing 85% and 79% of the total Private Loan portfolio at fair value as of December 31, 2024 and 2023, respectively. Excluding its investments in Private Loan portfolio companies that, as of December 31, 2024 and 2023, as applicable, had not been in the Investment Portfolio for at least twelve months subsequent to the initial investment and its investments in Private Loan portfolio companies that were not reviewed because the investment is valued based upon third-party quotes or other independent pricing, 96% and 90% of the Private Loan portfolio at fair value was reviewed and certified by the Financial Advisory Firm during the years ended December 31, 2024 and 2023, respectively. For valuation purposes, all of MSC Income’s Private Loan portfolio investments are non-control investments. For Private Loan portfolio investments for which it has determined that third-party quotes or other independent pricing are not available or appropriate, MSC Income generally estimates the fair value based on the assumptions that it believes hypothetical market participants would use to value such Private Loan debt investments in a current hypothetical sale using the Yield-to-Maturity valuation method and such Private Loan equity investments in a current hypothetical sale using the Waterfall valuation method. In addition to its internal valuation process, in arriving at estimates of fair value for its investments in its LMM portfolio companies, MSC Income, among other things, consults with the Financial Advisory Firm. The Financial Advisory Firm analyzes and provides observations, recommendations and an assurance certification regarding MSC Income’s determinations of the fair value of its LMM portfolio company investments. The Financial Advisory Firm is generally consulted relative to MSC Income’s investments in each LMM portfolio company at least once every calendar year, and for MSC Income’s investments in new LMM portfolio companies, at least once in the twelve-month period subsequent to the initial investment. In certain instances, MSC Income may determine that it is not cost- effective, and as a result is not in its stockholders’ best interest, to consult with the Financial Advisory Firm on its investments in one or more LMM portfolio companies. Such instances include, but are not limited to, situations where the fair value of MSC Income’s investment in a LMM portfolio company is determined to be insignificant relative to the total Investment Portfolio. MSC Income consulted with and received an assurance certification from the Financial Advisory Firm in arriving at its determination of fair value for its investments in a total of 48 and 46 LMM portfolio companies during the years ended December 31, 2024 and 2023, respectively, representing 92% and 95% of the total LMM portfolio at fair value as of December 31, 2024 and 2023, respectively. Excluding its investments in LMM portfolio companies that, as of December 31, 2024 and 2023, as applicable, had not been in the Investment Portfolio for at least twelve months subsequent to the initial investment or whose primary purpose is to own real estate for which a third-party appraisal is obtained on at least an annual basis, over 113
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Table of contents MSC INCOME FUND, INC. Notes to the Consolidated Financial Statements (Continued) 99% of the LMM portfolio at fair value was reviewed and certified by the Financial Advisory Firm for each of the years ended December 31, 2024 and 2023. For valuation purposes, all of MSC Income’s Middle Market portfolio investments are non-control investments. To the extent sufficient observable inputs are available to determine fair value, MSC Income uses observable inputs to determine the fair value of these investments through obtaining third-party quotes or other independent pricing. For Middle Market portfolio investments for which it has determined that third-party quotes or other independent pricing are not available or appropriate, MSC Income generally estimates the fair value based on the assumptions that it believes hypothetical market participants would use to value such Middle Market debt investments in a current hypothetical sale using the Yield-to-Maturity valuation method and such Middle Market equity investments in a current hypothetical sale using the Waterfall valuation method. MSC Income generally consults on a limited basis with the Financial Advisory Firm in connection with determining the fair value of its Middle Market portfolio investments due to the nature of these investments. The vast majority (93% and 97% as of December 31, 2024 and 2023, respectively) of the Middle Market portfolio investments (i) are valued using third-party quotes or other independent pricing services or (ii) MSC Income has consulted with and received an assurance certification from the Financial Advisory Firm within the last twelve months. For valuation purposes, all of MSC Income’s Other Portfolio investments are non-control investments. MSC Income’s Other Portfolio investments comprised 2.0% and 2.3% of MSC Income’s Investment Portfolio at fair value as of December 31, 2024 and 2023, respectively. Similar to the LMM investment portfolio, market quotations for Other Portfolio equity investments are generally not readily available. For its Other Portfolio equity investments, MSC Income generally determines the fair value of these investments using the NAV valuation method. Due to the inherent uncertainty in the valuation process, MSC Income’s determination of fair value for its Investment Portfolio may differ materially from the values that would have been determined had a ready market for the securities existed. In addition, changes in the market environment, portfolio company performance and other events that may occur over the lives of the investments may cause the gains or losses ultimately realized on these investments to be materially different than the valuations currently assigned. MSC Income determines the fair value of each individual investment and records changes in fair value as unrealized appreciation or depreciation. MSC Income uses an internally developed portfolio investment rating system in connection with its investment oversight, portfolio management and analysis and investment valuation procedures for its Private Loan, LMM and Middle Market portfolio companies. This system takes into account both quantitative and qualitative factors of each Private Loan, LMM and Middle Market portfolio company. Rule 2a-5 under the 1940 Act permits a BDC’s board of directors to designate its executive officers or investment adviser as a valuation designee to determine the fair value for its investment portfolio, subject to the active oversight of the board. MSC Income’s Board of Directors has approved policies and procedures pursuant to Rule 2a-5 (the “Valuation Procedures”) and has designated the Adviser, led by a group of Main Street’s and the Adviser’s executive officers, to serve as the Board of Directors’ valuation designee. MSC Income believes its Investment Portfolio as of December 31, 2024 and 2023 approximates fair value as of those dates based on the markets in which it operates and other conditions in existence on those reporting dates. 2. Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenue and expenses during the period. Actual results may differ from these estimates under different conditions or assumptions. Additionally, as explained in Note B.1. — Summary of Significant Accounting Policies — Valuation of the Investment Portfolio, the consolidated financial statements include investments in the Investment Portfolio whose values have been estimated by MSC Income pursuant to valuation policies and procedures approved and overseen by MSC Income’s Board of Directors, in the absence of readily ascertainable market values. Because of the inherent uncertainty of the Investment Portfolio valuations, those estimated values may differ materially from the values that would have been determined had a ready market for the securities existed. Macroeconomic factors, including pandemics, risk of recession, inflation, supply chain constraints or disruptions, geopolitical disruptions and changing market index interest rates, and the related effect on the U.S. and global economies, have impacted, and may continue to impact, the businesses and operating results of certain of MSC Income’s portfolio 114
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Table of contents MSC INCOME FUND, INC. Notes to the Consolidated Financial Statements (Continued) companies. As a result of these and other current effects of macroeconomic factors, as well as the uncertainty regarding the extent and duration of their impact, the valuation of MSC Income’s Investment Portfolio has and may continue to experience increased volatility. 3. Cash and Cash Equivalents Cash and cash equivalents consist of cash and highly liquid investments with an original maturity of three months or less at the date of purchase. Cash and cash equivalents are carried at cost, which approximates fair value. As of December 31, 2024 and 2023, the Company had $14.4 million and $20.8 million, respectively, of cash equivalents invested in AAA-rated money market funds pending investment in the Company’s primary investment strategies. These highly liquid investments are included in the Consolidated Schedule of Investments. As of December 31, 2024 and 2023, cash balances totaling $13.5 million and $9.0 million, respectively, exceeded Federal Deposit Insurance Corporation insurance protection levels, subjecting the Company to risk related to the uninsured balance. 4. Interest, Dividend and Fee Income MSC Income records interest and dividend income on the accrual basis to the extent amounts are expected to be collected. Dividend income is recorded when dividends are declared by the portfolio company or at such other time that an obligation exists for the portfolio company to make a distribution. MSC Income evaluates accrued interest and dividend income periodically for collectability. When a loan or debt security becomes 90 days or more past due, and if MSC Income otherwise does not expect the debtor to be able to service its debt obligation, MSC Income will generally place the loan or debt security on non-accrual status and cease recognizing interest income on that loan or debt security until the borrower has demonstrated the ability and intent to pay contractual amounts due. If a loan or debt security’s status significantly improves regarding the debtor’s ability to service the debt obligation, or if a loan or debt security is sold or written off, MSC Income removes it from non-accrual status. As of December 31, 2024, investments on non-accrual status comprised 1.5% of MSC Income’s total Investment Portfolio at fair value and 5.6% at cost. As of December 31, 2023, investments on non-accrual status comprised 1.1% of MSC Income’s total Investment Portfolio at fair value and 4.0% at cost. MSC Income holds certain debt and preferred equity instruments in its Investment Portfolio that contain PIK interest and cumulative dividend provisions. The PIK interest, computed at the contractual rate specified in each debt agreement, is periodically added to the principal balance of the debt and is recorded as interest income. Thus, the actual collection of this interest may be deferred until the time of debt principal repayment. Cumulative dividends are recorded as dividend income, and any dividends in arrears are added to the balance of the preferred equity investment. The actual collection of these dividends in arrears may be deferred until such time as the preferred equity is redeemed or sold. To maintain RIC tax treatment (as discussed in Note B.7. — Summary of Significant Accounting Policies — Income Taxes below), these non-cash sources of income may need to be paid out to stockholders in the form of distributions, even though MSC Income may not have collected the PIK interest and cumulative dividends in cash. MSC Income stops accruing PIK interest and cumulative dividends and writes off any accrued and uncollected interest and dividends in arrears when it determines that such PIK interest and dividends in arrears are no longer collectible. For the years ended December 31, 2024, 2023 and 2022 (i) 6.2%, 3.8% and 2.5%, respectively, of MSC Income’s total investment income was attributable to PIK interest income not paid currently in cash and (ii) 0.1%, 0.1% and 0.6%, respectively, of MSC Income’s total investment income was attributable to cumulative dividend income not paid currently in cash. MSC Income may periodically provide services, including structuring and advisory services, to its portfolio companies or other third parties. For services that are separately identifiable and evidence exists to substantiate fair value, fee income is recognized as earned, which is generally when the investment or other applicable transaction closes. Fees received in connection with debt financing transactions for services that do not meet these criteria are treated as debt origination fees and are generally deferred and accreted into income over the life of the financing. 115
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Table of contents MSC INCOME FUND, INC. Notes to the Consolidated Financial Statements (Continued) A presentation of total investment income MSC Income received from its Investment Portfolio in each of the periods presented is as follows: Year EndedDecember 31, 2024 2023 2022 (dollars in thousands) Interest, fee and dividend income: Interest income $ 117,816 $ 116,976 $ 90,811 Dividend income 11,696 11,255 9,442 Fee income 5,316 3,155 3,512 Total investment income $ 134,828 $ 131,386 $ 103,765 5. Deferred Financing Costs Deferred financing costs include commitment fees and other direct costs incurred in connection with arranging MSC Income’s borrowings. Deferred financing costs incurred in connection with MSC Income’s multi-year revolving Credit Facilities (as defined in Note D — Debt) have been capitalized as an asset. Deferred financing costs incurred in connection with the Series A Notes (as defined in Note D — Debt) are reflected as a direct deduction from the principal amount outstanding. 6. Unearned Income — Debt Origination Fees and Original Issue Discount and Discounts / Premiums to Par Value MSC Income capitalizes debt origination fees received in connection with financings and reflects such fees as unearned income netted against the applicable debt investments. The unearned income from the fees is accreted into income over the life of the financing. In connection with its portfolio debt investments, MSC Income sometimes receives nominal cost warrants or warrants with an exercise price below the fair value of the underlying equity (together, “nominal cost equity”) that are valued as part of the negotiation process with the particular portfolio company. When MSC Income receives nominal cost equity, it allocates its cost basis in its investment between its debt security and its nominal cost equity at the time of origination based on amounts negotiated with the particular portfolio company. The allocated amounts are based upon the fair value of the nominal cost equity, which is then used to determine the allocation of cost to the debt security. Any discount recorded on a debt investment resulting from this allocation is reflected as unearned income, which is netted against the applicable debt investment, and accreted into interest income over the life of the debt investment. The actual collection of this interest is deferred until the time of debt principal repayment. MSC Income may also purchase debt securities at a discount or at a premium to the par value of the debt security. In the case of a purchase at a discount, MSC Income records the investment at the par value of the debt security net of the discount, and the discount is accreted into interest income over the life of the debt investment. In the case of a purchase at a premium, MSC Income records the investment at the par value of the debt security plus the premium, and the premium is amortized as a reduction to interest income over the life of the debt investment. To maintain RIC tax treatment (as discussed in Note B.7. — Summary of Significant Accounting Policies — Income Taxes below), these non-cash sources of income may need to be paid out to stockholders in the form of distributions, even though MSC Income may not have collected the interest income. For the years ended December 31, 2024, 2023 and 2022, 2.8%, 2.5% and 2.5%, respectively, of MSC Income’s total investment income was attributable to interest income from the accretion of discounts associated with debt investments, net of any premium amortization. 7. Income Taxes MSIF has elected to be treated for U.S. federal income tax purposes as a RIC. MSIF’s taxable income includes the taxable income generated by MSIF and certain of its subsidiaries, including the Structured Subsidiaries, which are treated as disregarded entities for tax purposes. As a RIC, MSIF generally will not pay corporate-level U.S. federal income taxes on any net ordinary taxable income or capital gains that MSIF distributes to its stockholders. MSIF must generally 116
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Table of contents MSC INCOME FUND, INC. Notes to the Consolidated Financial Statements (Continued) distribute at least 90% of its “investment company taxable income” (which is generally its net ordinary taxable income and realized net short-term capital gains in excess of realized net long-term capital losses) and 90% of its tax-exempt income to maintain its RIC status (pass-through tax treatment for amounts distributed). As part of maintaining RIC status, undistributed taxable income (subject to a 4% non-deductible U.S. federal excise tax) pertaining to a given fiscal year may be distributed up to twelve months subsequent to the end of that fiscal year, provided such dividends are declared on or prior to the later of (i) the filing of the U.S. federal income tax return for the applicable fiscal year or (ii) the fifteenth day of the ninth month following the close of the year in which such taxable income was generated. The Taxable Subsidiaries primarily hold certain equity investments for MSC Income. The Taxable Subsidiaries permit MSC Income to hold equity investments in portfolio companies which are “pass-through” entities for tax purposes and to continue to comply with the “source-of-income” requirements contained in the RIC tax provisions of the Code. The Taxable Subsidiaries are consolidated with MSC Income for U.S. GAAP financial reporting purposes, and the portfolio investments held by the Taxable Subsidiaries are included in MSC Income’s consolidated financial statements as portfolio investments and recorded at fair value. The Taxable Subsidiaries are not consolidated with MSIF for income tax purposes and may generate income tax expense, or benefit, and tax assets and liabilities, as a result of their ownership of certain portfolio investments. The taxable income, or loss, of the Taxable Subsidiaries may differ from their book income, or loss, due to temporary book and tax timing differences and permanent differences. The Taxable Subsidiaries are each taxed at corporate income tax rates based on their taxable income. The income tax expense, or benefit, if any, and the related tax assets and liabilities, of the Taxable Subsidiaries are reflected in MSC Income’s consolidated financial statements. The Taxable Subsidiaries use the liability method in accounting for income taxes. Deferred tax assets and liabilities are recorded for temporary differences between the tax basis of assets and liabilities and their reported amounts in the consolidated financial statements, using statutory tax rates in effect for the year in which the temporary differences are expected to reverse. A valuation allowance is provided, if necessary, against deferred tax assets when it is more likely than not that some portion or all of the deferred tax asset will not be realized. MSC Income’s net assets as included on the Consolidated Balance Sheets and Consolidated Statements of Changes in Net Assets include an adjustment to classification as a result of permanent book-to-tax differences, which include differences in the book and tax treatment of income and expenses. Taxable income generally differs from net income for financial reporting purposes due to temporary and permanent differences in the recognition of income and expenses. Taxable income generally excludes net unrealized appreciation or depreciation, as investment gains or losses are not included in taxable income until they are realized. 8. Net Realized Gains or Losses and Net Unrealized Appreciation or Depreciation Realized gains or losses are measured by the difference between the net proceeds from the sale or redemption of an investment or a financial instrument and the cost basis of the investment or financial instrument, without regard to unrealized appreciation or depreciation previously recognized, and includes investments written-off during the period net of recoveries and realized gains or losses from in-kind redemptions. Net unrealized appreciation or depreciation reflects the net change in the fair value of the Investment Portfolio and financial instruments and the reclassification of any prior period unrealized appreciation or depreciation on exited investments and financial instruments to realized gains or losses. 9. Fair Value of Financial Instruments Fair value estimates are made at discrete points in time based on relevant information. These estimates may be subjective in nature and involve uncertainties and matters of significant judgment and, therefore, cannot be determined with precision. MSC Income believes that the carrying amounts of its financial instruments, consisting of cash and cash equivalents, receivables, payables and other liabilities approximate the fair values of such items due to the short-term nature of these instruments. MSC Income’s debt instruments, including all revolving and term debt, are accounted for on a historical cost basis as applicable under U.S. GAAP. As also required under U.S. GAAP, MSC Income discloses the estimated fair value of its debt obligations in Note D — Debt. To estimate the fair value of MSC Income’s Series A Notes as disclosed in Note D — Debt, MSC Income uses the Yield-to-Maturity valuation method based on projections of the discounted future free cash flows that the debt security will likely generate, including both the discounted cash flows of the associated interest and principal amounts for the debt security. The inputs used to value MSC Income’s debt instruments for purposes of the fair value estimate disclosures in Note D — Debt are considered to be Level 2 according to the ASC 820 fair value hierarchy. 117
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Table of contents MSC INCOME FUND, INC. Notes to the Consolidated Financial Statements (Continued) 10. Earnings Per Share Net increase in net assets resulting from operations per share and net investment income per share are computed utilizing the weighted-average number of shares of common stock outstanding for the period. 11. Segments MSC Income operates as a single segment with a principal investment objective to maximize total return primarily by generating current income from debt investments and, to a lesser extent, by generating current income and capital appreciation from equity and equity-related investments. The Adviser’s Investment Committee and the Company’s Chief Executive Officer collectively perform the function that allocates resources and assesses performance, and thus together, serve as the Company’s chief operating decision maker (the “CODM”). Among other metrics, the CODM uses net investment income as a primary GAAP profit or loss metric used in making operating decisions, which can be found on the Consolidated Statement of Operations along with significant expenses. The measure of segment assets is reported on the Consolidated Balance Sheets as total assets. 12. Recently Issued or Adopted Accounting Standards In November 2022, the FASB issued ASU 2022-06, Reference rate reform (Topic 848) — Deferral of the Sunset Date of Topic 848, which deferred the sunset date of Topic 848 from December 31, 2022 to December 31, 2024 after which entities will no longer be permitted to apply the relief in Topic 848. The Company utilized the optional expedients and exceptions provided by ASU 2020-04 and extended by ASU 2022-06 during the year ended December 31, 2023, the effect of which was not material to the consolidated financial statements and the notes thereto. For the current year, the Company no longer utilizes the optional expedients provided by ASU 2020-04, as LIBOR is no longer referenced in any of its contracts. ASU 2022-06 did not have a material impact on the consolidated financial statements and the notes thereto. In November 2023, the FASB issued ASU 2023-07, Segment Reporting - Improvements to Reportable Segment Disclosures. The amendments in this update require incremental disclosures related to a public entity’s reportable segments. ASU 2023-07 is effective for years beginning after December 15, 2023 and interim periods in fiscal years beginning after December 15, 2024. See Note B.11 - Summary of Significant Accounting Policies - Segments for the incremental disclosures. In December 2023, the FASB issued ASU 2023-09, Improvements to Income Tax Disclosures. The amendments in this update require more disaggregated information on income taxes paid. ASU 2023-09 is effective for years beginning after December 15, 2024, and early adoption is permitted. The Company is currently assessing the impact of the new guidance, but it does not expect ASU 2023-09 to have a material impact on the consolidated financial statements and the notes thereto. From time to time, new accounting pronouncements are issued by the FASB or other standards-setting bodies that are adopted by the Company as of the specified effective date. The Company believes that the impact of recently issued standards and any that are not yet effective will not have a material impact on its consolidated financial statements upon adoption. NOTE C — FAIR VALUE HIERARCHY FOR INVESTMENTS—PORTFOLIO COMPOSITION ASC 820 defines fair value, establishes a framework for measuring fair value, establishes a fair value hierarchy based on the quality of inputs used to measure fair value, and enhances disclosure requirements for fair value measurements. MSC Income accounts for its investments at fair value. Fair Value Hierarchy In accordance with ASC 820, MSC Income has categorized its investments based on the priority of the inputs to the valuation technique into a three-level fair value hierarchy. The fair value hierarchy gives the highest priority to quoted prices in active markets for identical investments (Level 1) and the lowest priority to unobservable inputs (Level 3). 118
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Table of contents MSC INCOME FUND, INC. Notes to the Consolidated Financial Statements (Continued) Investments recorded on MSC Income’s Consolidated Balance Sheets are categorized based on the inputs to the valuation techniques as follows: Level 1 — Investments whose values are based on unadjusted quoted prices for identical assets in an active market that MSC Income has the ability to access (examples include investments in active exchange-traded equity securities and investments in most U.S. government and agency securities). Level 2 — Investments whose values are based on quoted prices in markets that are not active or model inputs that are observable either directly or indirectly for substantially the full term of the investment. Level 2 inputs include the following: • Quoted prices for similar assets in active markets (for example, investments in restricted stock); • Quoted prices for identical or similar assets in non-active markets (for example, investments in thinly traded public companies); • Pricing models whose inputs are observable for substantially the full term of the investment (for example, market interest rate indices); and • Pricing models whose inputs are derived principally from, or corroborated by, observable market data through correlation or other means for substantially the full term of the investment. Level 3 — Investments whose values are based on prices or valuation techniques that require inputs that are both unobservable and significant to the overall fair value measurement (for example, investments in illiquid securities issued by privately held companies). These inputs reflect management’s own assumptions about the assumptions a market participant would use in pricing the investment. As required by ASC 820, when the inputs used to measure fair value fall within different levels of the hierarchy, the level within which the fair value measurement is categorized is based on the lowest level input that is significant to the fair value measurement in its entirety. For example, a Level 3 fair value measurement may include inputs that are observable (Levels 1 and 2) and unobservable (Level 3). Therefore, unrealized appreciation and depreciation related to such investments categorized within the Level 3 tables below may include changes in fair value that are attributable to both observable inputs (Levels 1 and 2) and unobservable inputs (Level 3). As of December 31, 2024 and 2023, MSC Income’s Private Loan portfolio investments primarily consisted of investments in secured debt investments. The fair value determination for these investments consisted of a combination of observable inputs in non-active markets for which sufficient observable inputs were not available to determine the fair value of these investments and unobservable inputs. As a result, all of MSC Income’s Private Loan portfolio investments were categorized as Level 3 as of December 31, 2024 and 2023. As of December 31, 2024 and 2023, all of MSC Income’s LMM portfolio investments consisted of illiquid securities issued by privately held companies and the fair value determination for these investments primarily consisted of unobservable inputs. As a result, all of MSC Income’s LMM portfolio investments were categorized as Level 3 as of December 31, 2024 and 2023. As of December 31, 2024 and 2023, MSC Income’s Middle Market portfolio investments consisted primarily of investments in secured and unsecured debt investments and independently rated debt investments. The fair value determination for these investments consisted of a combination of observable inputs in non-active markets for which sufficient observable inputs were not available to determine the fair value of these investments and unobservable inputs. As a result, all of MSC Income’s Middle Market portfolio investments were categorized as Level 3 as of December 31, 2024 and 2023. As of December 31, 2024 and 2023, MSC Income’s Other Portfolio investments consisted of illiquid securities issued by privately held entities and the fair value determination for these investments primarily consisted of unobservable inputs. As a result, all of MSC Income’s Other Portfolio investments were categorized as Level 3 as of December 31, 2024 and 2023. 119
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Table of contents MSC INCOME FUND, INC. Notes to the Consolidated Financial Statements (Continued) As of December 31, 2024 and 2023, all money market funds included in cash and cash equivalents were valued using Level 1 inputs. The fair value determination of each portfolio investment categorized as Level 3 required one or more of the following unobservable inputs: • Financial information obtained from each portfolio company, including unaudited statements of operations and balance sheets for the most recent period available as compared to budgeted numbers; • Current and projected financial condition of the portfolio company; • Current and projected ability of the portfolio company to service its debt obligations; • Type and amount of collateral, if any, underlying the investment; • Current financial ratios (e.g., fixed charge coverage ratio, interest coverage ratio and net debt/EBITDA ratio) applicable to the investment; • Current liquidity of the investment and related financial ratios (e.g., current ratio and quick ratio); • Pending debt or capital restructuring of the portfolio company; • Projected operating results of the portfolio company; • Current information regarding any offers to purchase the investment; • Current ability of the portfolio company to raise any additional financing as needed; • Changes in the economic environment which may have a material impact on the operating results of the portfolio company; • Internal occurrences that may have an impact (both positive and negative) on the operating performance of the portfolio company; • Qualitative assessment of key management; • Contractual rights, obligations or restrictions associated with the investment; and • Other factors deemed relevant. The use of significant unobservable inputs creates uncertainty in the measurement of fair value as of the reporting date. The significant unobservable inputs used in the fair value measurement of MSC Income’s LMM equity securities, which are generally valued through an average of the discounted cash flow technique and the market comparable/enterprise value technique (unless one of these approaches is determined to not be appropriate), are (i) EBITDA multiples and (ii) the weighted-average cost of capital (“WACC”). Significant increases (decreases) in EBITDA multiple inputs in isolation would result in a significantly higher (lower) fair value measurement, and significant increases (decreases) in WACC inputs in isolation would result in a significantly lower (higher) fair value measurement. The significant unobservable inputs used in the fair value measurement of MSC Income’s Private Loan, LMM and Middle Market debt securities are (i) risk adjusted discount rates used in the Yield-to-Maturity valuation technique (see Note B.1. — Summary of Significant Accounting Policies — Valuation of the Investment Portfolio) and (ii) the percentage of expected principal recovery. Significant increases (decreases) in any of these discount rates in isolation would result in a significantly lower (higher) fair value measurement. Significant increases (decreases) in any of these expected principal recovery percentages in isolation would result in a significantly higher (lower) fair value measurement. However, due to the nature of certain investments, fair value measurements may be based on other criteria, such as third-party appraisals of collateral and fair values as determined by independent third parties, which are not presented in the tables below. 120
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Table of contents MSC INCOME FUND, INC. Notes to the Consolidated Financial Statements (Continued) The following tables provide a summary of the significant unobservable inputs used to fair value MSC Income’s Level 3 portfolio investments as of December 31, 2024 and 2023: Type ofInvestment Fair Value as ofDecember 31, 2024(in thousands) Valuation Technique SignificantUnobservable Inputs Range (3) Weighted-Average(3)(4) Median (3) Equity investments $ 281,831 Discounted cash flow WACC 11.5% - 22.5% 14.8 % 15.1 % Market comparable /Enterprise value EBITDA multiple (1) 4.9x - 9.0x (2) 6.6x 6.5x Debt investments $ 862,813 Discounted cash flow Risk adjusted discountfactor (5) 8.5% - 18.0% (2) 13.2 % 12.1 % Expected principalrecovery percentage 0.3% - 100.0% 99.7 % 100.0 % Debt investments $ 32,863 Market approach Third-party quote 21.0 - 99.4 82.9 84.5 Total Level 3investments $ 1,177,507 _____________________________ (1) EBITDA may include proforma adjustments and/or other addbacks based on specific circumstances related to each investment. (2) Range excludes outliers that are greater than one standard deviation from the mean. Including these outliers, the range for EBITDA multiple is 2.0x - 17.0x and the range for risk adjusted discount factor is 6.8% - 38.3%. (3) Does not include investments for which the valuation technique does not include the use of the applicable fair value input. (4) Weighted-average is calculated for each significant unobservable input based on the applicable security’s fair value. (5) Discount rate includes the effect of the standard SOFR base rate, as applicable. Type ofInvestment Fair Value as ofDecember 31, 2023(in thousands) Valuation Technique SignificantUnobservable Inputs Range (3) Weighted-Average(3)(4) Median (3) Equity investments $ 254,770 Discounted cash flow WACC 10.9% - 22.5% 14.4 % 15.5 % Market comparable /Enterprise value EBITDA multiple (1) 4.9x - 9.2x (2) 7.3x 6.5x Debt investments $ 777,003 Discounted cash flow Risk adjusted discountfactor (5) 9.8% - 16.8% (2) 13.1 % 12.8 % Expected principalrecovery percentage 0.6% - 100.0% 99.6 % 100.0 % Debt investments $ 61,122 Market approach Third-party quote 4.5 - 99.2 85.0 89.5 Total Level 3investments $ 1,092,895 _____________________________ (1) EBITDA may include proforma adjustments and/or other addbacks based on specific circumstances related to each investment. (2) Range excludes outliers that are greater than one standard deviation from the mean. Including these outliers, the range for EBITDA multiple is 2.0x - 15.7x and the range for risk adjusted discount factor is 8.0% - 27.3%. (3) Does not include investments for which the valuation technique does not include the use of the applicable fair value input. (4) Weighted-average is calculated for each significant unobservable input based on the applicable security’s fair value. (5) Discount rate includes the effect of the standard SOFR base rate, as applicable. 121
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Table of contents MSC INCOME FUND, INC. Notes to the Consolidated Financial Statements (Continued) The following tables provide a summary of changes in fair value of MSC Income’s Level 3 portfolio investments for the years ended December 31, 2024 and 2023 (amounts in thousands): Type ofInvestment Fair Valueas ofDecember 31,2023 TransfersIntoLevel 3Hierarchy Redemptions/Repayments NewInvestments NetChangesfromUnrealizedto Realized NetUnrealizedAppreciation(Depreciation) Other (1) Fair Valueas ofDecember 31,2024 Debt $ 838,125 $ — $ (223,664) $ 320,696 $ 7,867 $ (25,216) $ (22,132) $ 895,676 Equity 254,029 — (16,571) 18,838 (24,918) 24,043 22,132 277,553 Equity Warrant 741 — — 1,128 (90) 2,499 — 4,278 $ 1,092,895 $ — $ (240,235) $ 340,662 $ (17,141) $ 1,326 $ — $ 1,177,507 _____________________________ (1) Includes the impact of non-cash conversions. These transactions represent non-cash investing activities. See additional cash flow information in the Consolidated Statements of Cash Flows. Type ofInvestment Fair Valueas ofDecember 31,2022 TransfersIntoLevel 3Hierarchy Redemptions/Repayments NewInvestments NetChangesfromUnrealizedto Realized NetUnrealizedAppreciation(Depreciation) Other (1) Fair Valueas ofDecember 31,2023 Debt $ 852,282 $ — $ (253,517) $ 230,663 $ 33,078 $ (5,467) $ (18,914) $ 838,125 Equity 214,687 — (15,329) 16,377 923 17,352 20,019 254,029 Equity Warrant 1,174 — (284) 523 284 149 (1,105) 741 $ 1,068,143 $ — $ (269,130) $ 247,563 $ 34,285 $ 12,034 $ — $ 1,092,895 _____________________________ (1) Includes the impact of non-cash conversions. These transactions represent non-cash investing activities. See additional cash flow information in the Consolidated Statements of Cash Flows. As of December 31, 2024 and 2023, MSC Income’s investments at fair value were categorized as follows in the fair value hierarchy for ASC 820 purposes: Fair Value Measurements (in thousands) As of December 31, 2024 Fair Value Quoted Prices inActive Markets forIdentical Assets(Level 1) Significant OtherObservable Inputs(Level 2) SignificantUnobservableInputs(Level 3) Private Loan portfolio investments $ 677,878 $ — $ — $ 677,878 LMM portfolio investments 436,150 — — 436,150 Middle Market portfolio investments 39,402 — — 39,402 Other Portfolio investments 24,077 — — 24,077 Total investments $ 1,177,507 $ — $ — $ 1,177,507 122
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Table of contents MSC INCOME FUND, INC. Notes to the Consolidated Financial Statements (Continued) Fair Value Measurements (in thousands) As of December 31, 2023 Fair Value Quoted Prices inActive Markets forIdentical Assets(Level 1) Significant OtherObservable Inputs(Level 2) SignificantUnobservableInputs(Level 3) Private Loan portfolio investments $ 595,326 $ — $ — $ 595,326 LMM portfolio investments 386,956 — — 386,956 Middle Market portfolio investments 85,990 — — 85,990 Other Portfolio investments 24,623 — — 24,623 Total investments $ 1,092,895 $ — $ — $ 1,092,895 Investment Portfolio Composition MSC Income’s principal investment objective is to maximize its portfolio’s total return, primarily by generating current income from its debt investments and, to a lesser extent, by generating current income and capital appreciation from its equity and equity-related investments, including warrants, convertible securities and other rights to acquire equity securities in a portfolio company. MSC Income seeks to achieve its investment objective primarily by providing debt capital to companies in its Private Loan investment strategy and secondarily through its LMM investment portfolio. MSC Income’s Private Loan investment strategy is focused on investments in secured debt in privately held companies that generally have annual revenues between $25 million and $500 million, and its Private Loan investments generally range in size from $1 million to $30 million. MSC Income’s Private Loan investments primarily consist of debt securities that have primarily been originated directly by the Adviser or, to a lesser extent, through the Adviser’s strategic relationships with other investment funds on a collaborative basis through investments that are often referred to in the debt markets as “club deals” because of the small lender group size. In both cases, MSC Income’s Private Loan investments are typically made in a company owned by or in the process of being acquired by a private equity fund. MSC Income’s Private Loan portfolio debt investments are generally secured by a first priority lien on the assets of the portfolio company and typically have a term of between three and seven years from the original investment date. MSC Income may have the option to co-invest with Main Street and the private equity fund in the equity securities of its Private Loan portfolio companies. MSC Income maintains a LMM investment portfolio with investments in secured debt and equity investments in privately held, LMM companies based in the United States. MSC Income’s LMM portfolio companies generally have annual revenues between $10 million and $150 million, and its LMM investments generally range in size from $1 million to $30 million. The LMM debt investments are typically secured by a first priority lien on the assets of the portfolio company, can include either fixed or floating interest rates and generally have a term of between five and seven years from the original investment date. MSC Income typically makes direct equity investments and/or receives nominally priced equity warrants in connection with a LMM portfolio company debt investment. In connection with the MSC Income Listing, the Company’s Board of Directors and the Adviser decided to change the Company’s investment strategy with respect to new platform investments to be solely focused on the Private Loan investment strategy. As a result, the size of the Company’s LMM investment portfolio is expected to decrease over time as existing LMM investments are repaid or sold in the ordinary course of business. The Company does, however, plan to continue executing follow on investments in its existing LMM portfolio companies going forward in accordance with its existing SEC order for co-investment exemptive relief. MSC Income also maintains a legacy portfolio of investments in Middle Market companies. MSC Income’s Middle Market investments are generally debt investments in companies owned by a private equity fund that were originally issued through a syndication financing process. MSC Income has generally stopped making new Middle Market investments and expects the size of its Middle Market investment portfolio to continue to decline in future periods as its existing Middle Market investments are repaid or sold. MSC Income’s Middle Market debt investments generally range in size from $1 million to $20 million, are generally secured by a first priority lien on the assets of the portfolio company and typically have an expected duration of between three and seven years from the original investment date. 123
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Table of contents MSC INCOME FUND, INC. Notes to the Consolidated Financial Statements (Continued) MSC Income’s Other Portfolio investments primarily consist of investments that are not consistent with the typical profiles for its Private Loan, LMM or Middle Market portfolio investments, including investments which may be managed by third parties. In the Other Portfolio, MSC Income may incur indirect fees and expenses in connection with investments managed by third parties, such as investments in other investment companies or private funds. For Other Portfolio investments, MSC Income generally receives distributions related to the assets held by the portfolio company. Those assets are typically expected to be realized over a five to ten-year period. Similar to its Middle Market investments, the Company has generally stopped making new Other Portfolio investments and expects its Other Portfolio to continue to decline in future periods as existing Other Portfolio investments are repaid or sold. Based upon MSC Income’s liquidity and capital structure management activities, MSC Income’s Investment Portfolio may also periodically include short-term portfolio investments that are atypical of MSC Income’s Private Loan, LMM and Middle Market portfolio investments in that they are intended to be a short-term deployment of capital. Those assets are typically expected to be realized in one year or less. These short-term portfolio investments are not expected to be a significant portion of the overall Investment Portfolio. Investment income, consisting of interest, dividends and fees, can fluctuate dramatically due to various factors, including the level of new investment activity, repayments of debt investments or sales of equity interests. Investment income in any given year could also be highly concentrated among several portfolio companies. For the years ended December 31, 2024, 2023 and 2022, MSC Income did not record investment income from any single portfolio company in excess of 10% of total investment income. The following tables provide a summary of MSC Income’s investments in the Private Loan, LMM and Middle Market portfolios as of December 31, 2024 and 2023 (this information excludes Other Portfolio investments, which are discussed further below). As of December 31, 2024 Private Loan LMM (a) Middle Market (dollars in millions) Number of portfolio companies 84 57 10 Fair value $ 677.9 $ 436.1 $ 39.4 Cost $ 697.5 $ 357.1 $ 66.3 Debt investments as a % of portfolio (at cost) 93.9 % 67.8 % 87.8 % Equity investments as a % of portfolio (at cost) 6.1 % 32.2 % 12.2 % % of debt investments at cost secured by first priority lien 99.9 % 99.9 % 99.9 % Weighted-average annual effective yield (b) 12.0 % 13.0 % 14.1 % Average EBITDA (c) $ 28.6 $ 10.8 $ 38.2 _____________________________ (a) As of December 31, 2024, MSC Income had equity ownership in all of its LMM portfolio companies, and the average fully diluted equity ownership in those portfolio companies was 9%. (b) The weighted-average annual effective yields were computed using the effective interest rates for all debt investments as of December 31, 2024, including amortization of deferred debt origination fees and accretion of original issue discount but excluding fees payable upon repayment of the debt instruments and any debt investments on non-accrual status, and are weighted based upon the principal amount of each applicable debt investment as of December 31, 2024. The weighted-average annual effective yield on MSC Income’s debt portfolio as of December 31, 2024, including debt investments on non-accrual status, was 11.4% for its Private Loan portfolio, 12.2% for its LMM portfolio and 9.0% for its Middle Market portfolio. The weighted-average annual effective yield is not reflective of what an investor in shares of MSC Income’s common stock will realize on its investment because it does not reflect MSC Income’s utilization of debt capital in its capital structure, MSC Income’s expenses or any sales load paid by an investor. (c) The average EBITDA is calculated using a weighted-average for the Private Loan and Middle Market portfolios and a simple average for the LMM portfolio. These calculations exclude certain portfolio companies, including two Private Loan portfolio companies, three LMM portfolio companies and one Middle Market portfolio company, as EBITDA is 124
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Table of contents MSC INCOME FUND, INC. Notes to the Consolidated Financial Statements (Continued) not a meaningful valuation metric for MSC Income’s investments in these portfolio companies, and those portfolio companies whose primary purpose is to own real estate and those portfolio companies whose primary operations have ceased and only residual value remains. As of December 31, 2023 Private Loan LMM (a) Middle Market (dollars in millions) Number of portfolio companies 78 50 16 Fair value $ 595.3 $ 387.0 $ 86.0 Cost $ 586.4 $ 315.7 $ 114.7 Debt investments as a % of portfolio (at cost) 94.1 % 70.2 % 93.1 % Equity investments as a % of portfolio (at cost) 5.9 % 29.8 % 6.9 % % of debt investments at cost secured by first priority lien 100.0 % 99.9 % 100.0 % Weighted-average annual effective yield (b) 13.1 % 13.0 % 13.0 % Average EBITDA (c) $ 30.5 $ 8.8 $ 74.2 _____________________________ (a) As of December 31, 2023, MSC Income had equity ownership in all of its LMM portfolio companies, and the average fully diluted equity ownership in those portfolio companies was 9%. (b) The weighted-average annual effective yields were computed using the effective interest rates for all debt investments as of December 31, 2023, including amortization of deferred debt origination fees and accretion of original issue discount but excluding fees payable upon repayment of the debt instruments and any debt investments on non-accrual status, and are weighted based upon the principal amount of each applicable debt investment as of December 31, 2023. The weighted-average annual effective yield on MSC Income’s debt portfolio as of December 31, 2023, including debt investments on non-accrual status, was 12.6% for its Private Loan portfolio, 13.0% for its LMM portfolio and 9.9% for its Middle Market portfolio. The weighted-average annual effective yield is not reflective of what an investor in shares of MSC Income’s common stock will realize on its investment because it does not reflect MSC Income’s utilization of debt capital in its capital structure, MSC Income’s expenses or any sales load paid by an investor. (c) The average EBITDA is calculated using a weighted-average for the Private Loan and Middle Market portfolios and a simple average for the LMM portfolio. These calculations exclude certain portfolio companies, including one Private Loan portfolio company, as EBITDA is not a meaningful valuation metric for MSC Income’s investment in this portfolio company, and those portfolio companies whose primary purpose is to own real estate. For the years ended December 31, 2024 and 2023, MSC Income achieved a total return on investments of 12.4% and 13.6%, respectively. Total return on investments is calculated using the interest, dividend and fee income, as well as the realized and unrealized change in fair value of the Investment Portfolio for the specified period. MSC Income’s total return on investments is not reflective of what an investor in shares of MSC Income’s common stock will realize on its investment because it does not reflect MSC Income’s utilization of debt capital in its capital structure, MSC Income’s expenses or any sales load paid by an investor. As of December 31, 2024, MSC Income had Other Portfolio investments in six entities, spread across four investment managers, collectively totaling $24.1 million in fair value and $17.9 million in cost basis, which comprised 2.0% and 1.6% of MSC Income’s Investment Portfolio at fair value and cost, respectively. As of December 31, 2023, MSC Income had Other Portfolio investments in six entities, spread across four investment managers, collectively totaling $24.6 million in fair value and $21.5 million in cost basis, which comprised 2.3% and 2.1% of MSC Income’s Investment Portfolio at fair value and cost, respectively. The following tables summarize the composition of MSC Income’s total combined Private Loan, LMM and Middle Market portfolio investments at cost and fair value by type of investment as a percentage of the total combined 125
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Table of contents MSC INCOME FUND, INC. Notes to the Consolidated Financial Statements (Continued) Private Loan, LMM and Middle Market portfolio investments, as of December 31, 2024 and 2023 (this information excludes Other Portfolio investments, which are discussed above). Cost: December 31, 2024 December 31, 2023 First lien debt 85.2 % 86.5 % Equity 14.5 13.3 Equity warrants 0.3 0.2 Other — — 100.0 % 100.0 % Fair Value: December 31, 2024 December 31, 2023 First lien debt 77.6 % 78.4 % Equity 22.0 21.5 Equity warrants 0.4 0.1 Other — — 100.0 % 100.0 % The following tables summarize the composition of MSC Income’s total combined Private Loan, LMM and Middle Market portfolio investments by geographic region of the United States and other countries at cost and fair value as a percentage of the total combined Private Loan, LMM and Middle Market portfolio investments, as of December 31, 2024 and 2023 (this information excludes Other Portfolio investments). The geographic composition is determined by the location of the corporate headquarters of the portfolio company. Cost: December 31, 2024 December 31, 2023 Northeast 22.4 % 21.9 % Midwest 21.5 17.6 West 18.7 17.0 Southwest 18.2 23.8 Southeast 17.0 17.8 Canada 1.2 0.8 Other Non-United States 1.0 1.1 100.0 % 100.0 % Fair Value: December 31, 2024 December 31, 2023 Midwest 22.7 % 18.3 % Northeast 22.6 21.6 Southwest 20.4 26.8 West 18.4 16.4 Southeast 13.8 15.0 Canada 1.1 0.8 Other Non-United States 1.0 1.1 100.0 % 100.0 % 126
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Table of contents MSC INCOME FUND, INC. Notes to the Consolidated Financial Statements (Continued) MSC Income’s Private Loan, LMM and Middle Market portfolio investments are in companies conducting business in a variety of industries. The following tables summarize the composition of MSC Income’s total combined Private Loan, LMM and Middle Market portfolio investments by industry at cost and fair value as of December 31, 2024 and 2023 (this information excludes Other Portfolio investments). Cost: December 31, 2024 December 31, 2023 Machinery 7.8 % 6.0 % Commercial Services & Supplies 7.6 8.5 Internet Software & Services 7.2 8.8 Professional Services 6.1 5.7 Diversified Consumer Services 5.2 5.4 Electrical Equipment 4.6 2.2 IT Services 4.6 5.2 Containers & Packaging 4.5 4.3 Distributors 4.3 4.4 Health Care Providers & Services 4.2 6.5 Leisure Equipment & Products 3.5 3.7 Computers & Peripherals 3.0 2.9 Communications Equipment 2.9 2.7 Hotels, Restaurants & Leisure 2.8 2.1 Textiles, Apparel & Luxury Goods 2.8 3.1 Diversified Financial Services 2.3 2.1 Building Products 2.2 2.1 Construction & Engineering 2.1 2.5 Specialty Retail 2.0 2.7 Aerospace & Defense 1.7 2.6 Auto Components 1.7 0.8 Household Products 1.7 2.0 Energy Equipment & Services 1.6 0.5 Food & Staples Retailing 1.6 1.5 Internet & Catalog Retail 1.6 1.6 Software 1.6 1.4 Marine 1.5 — Trading Companies & Distributors 1.3 — Media 1.2 2.5 Health Care Equipment & Supplies 1.1 1.3 Other (1) 3.7 4.9 100.0 % 100.0 % _____________________________ (1) Includes various industries with each industry individually less than 1.0% of the total combined Private Loan, LMM and Middle Market portfolio investments at each date. 127
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Table of contents MSC INCOME FUND, INC. Notes to the Consolidated Financial Statements (Continued) Fair Value: December 31, 2024 December 31, 2023 Machinery 9.1 % 7.4 % Commercial Services & Supplies 6.6 7.3 Internet Software & Services 6.3 7.3 Professional Services 6.1 5.5 Diversified Consumer Services 6.0 6.5 Computers & Peripherals 5.1 4.6 Containers & Packaging 4.8 4.6 Electrical Equipment 4.7 2.3 IT Services 4.5 5.0 Distributors 4.3 4.6 Health Care Providers & Services 3.8 6.0 Construction & Engineering 3.0 3.1 Leisure Equipment & Products 2.9 3.3 Textiles, Apparel & Luxury Goods 2.6 2.9 Building Products 2.3 1.9 Diversified Financial Services 2.3 2.0 Specialty Retail 2.2 2.7 Software 2.1 1.7 Hotels, Restaurants & Leisure 2.0 1.6 Household Products 1.8 1.9 Aerospace & Defense 1.7 2.5 Auto Components 1.7 0.8 Media 1.5 2.6 Air Freight & Logistics 1.4 1.6 Communications Equipment 1.4 1.1 Internet & Catalog Retail 1.4 1.5 Marine 1.4 — Energy Equipment & Services 1.3 0.3 Food & Staples Retailing 1.3 1.2 Trading Companies & Distributors 1.3 — Construction Materials — 2.2 Other (1) 3.1 4.0 100.0 % 100.0 % _____________________________ (1) Includes various industries with each industry individually less than 1.0% of the total combined Private Loan, LMM and Middle Market portfolio investments at each date. As of December 31, 2024 and 2023, MSC Income had no portfolio investment that was greater than 10% of the Investment Portfolio at fair value. Unconsolidated Significant Subsidiaries In accordance with Rules 3-09 and 4-08(g) of Regulation S-X, MSC Income must determine which of its unconsolidated controlled portfolio companies, if any, are considered “significant subsidiaries.” In evaluating its unconsolidated controlled portfolio companies in accordance with Regulation S-X, there are two tests that MSC Income must utilize to determine if any of MSC Income’s Control Investments (as defined in Note A — Organization and Basis of Presentation, including those unconsolidated portfolio companies defined as Control Investments in which MSC Income 128
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Table of contents MSC INCOME FUND, INC. Notes to the Consolidated Financial Statements (Continued) does not own greater than 50% of the voting securities nor have rights to maintain greater than 50% of the board representation) are considered significant subsidiaries: the investment test and the income test. The investment test is generally measured by dividing MSC Income’s investment in the Control Investment by the value of MSC Income’s total investments. The income test is generally measured by dividing the absolute value of the combined sum of total investment income, net realized gain (loss) and net unrealized appreciation (depreciation) from the relevant Control Investment for the period being tested by the absolute value of MSC Income’s change in net assets resulting from operations for the same period. Rules 3-09 and 4-08(g) of Regulation S-X require MSC Income to include (1) separate audited financial statements of an unconsolidated majority-owned subsidiary (Control Investments in which MSC Income owns greater than 50% of the voting securities) in an annual report and (2) summarized financial information of a Control Investment in a quarterly report, respectively, if certain thresholds of the investment or income tests are exceeded and the unconsolidated portfolio company qualifies as a significant subsidiary. As of December 31, 2024, 2023 and 2022, MSC Income had no single investment that qualified as a significant subsidiary under either the investment or income tests. NOTE D — DEBT Summary of MSC Income’s debt as of December 31, 2024 is as follows: OutstandingBalance Unamortized DebtIssuanceCosts Recorded Value Estimated FairValue (dollars in thousands) SPV Facility $ 266,688 $ — $ 266,688 $ 266,688 Corporate Facility 149,000 — 149,000 149,000 Series A Notes 150,000 (547) 149,453 141,892 Total Debt $ 565,688 $ (547) $ 565,141 $ 557,580 _____________________________ (1) The unamortized debt issuance costs for the Credit Facilities are reflected as Deferred financing costs on the Consolidated Balance Sheets, while the deferred debt issuance costs related to the Series A Notes are reflected as a contra-liability to the Series A Notes on the Consolidated Balance Sheets. (2) Estimated fair value for outstanding debt is shown as if MSC Income had adopted the fair value option under ASC 825. See discussion of the methods used to estimate the fair value of MSC Income’s debt in Note B.9. — Summary of Significant Accounting Policies — Fair Value of Financial Instruments. Summary of MSC Income’s debt as of December 31, 2023 is as follows: OutstandingBalance Unamortized DebtIssuance Costs Recorded Value Estimated FairValue (dollars in thousands) SPV Facility $ 203,688 $ — $ 203,688 $ 203,688 Corporate Facility 132,000 — 132,000 132,000 Series A Notes 150,000 (845) 149,155 141,531 Total Debt $ 485,688 $ (845) $ 484,843 $ 477,219 _____________________________ (1) The unamortized debt issuance costs for the Credit Facilities are reflected as Deferred financing costs on the Consolidated Balance Sheets, while the deferred debt issuance costs related to the Series A Notes are reflected as a contra-liability to the Series A Notes on the Consolidated Balance Sheets. (1) (2) (1) (2) 129
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Table of contents MSC INCOME FUND, INC. Notes to the Consolidated Financial Statements (Continued) (2) Estimated fair value for outstanding debt is shown as if MSC Income had adopted the fair value option under ASC 825. See discussion of the methods used to estimate the fair value of MSC Income’s debt in Note B.9. — Summary of Significant Accounting Policies — Fair Value of Financial Instruments. Summarized interest expense for the years ended December 31, 2024, 2023 and 2022 is as follows: Year Ended December 31, 2024 2023 2022 (dollars in thousands) SPV Facility $ 23,082 $ 22,184 $ 13,856 Corporate Facility 9,595 7,916 4,400 Series A Notes 6,358 6,358 6,167 Total Interest Expense $ 39,035 $ 36,458 $ 24,423 _____________________________ A summary of MSC Income’s average amount of total borrowings outstanding and overall weighted-average effective interest rate including amortization of debt issuance costs, original issuance discounts and premiums and fees on unused lender commitments are as follows: Year Ended December 31, 2024 2023 2022 (dollars in millions) Weighted-average borrowings outstanding $ 518.8 $ 486.2 $ 495.3 Weighted-average effective interest rate 7.5 % 7.5 % 4.9 % SPV Facility MSC Income, through MSIF Funding, LLC (“MSIF Funding”), a wholly-owned Structured Subsidiary that primarily holds debt investments, is party to a senior secured revolving credit facility dated February 3, 2021 (as amended, the “SPV Facility”) with JPMorgan Chase Bank, National Association (“JPM”), as administrative agent, and U.S. Bank, N.A., as collateral agent and collateral administrator, JPM and other financial institutions as lenders and MSIF as portfolio manager. In August 2023, the SPV facility was amended to extend the revolving period expiration date from February 3, 2024 to February 3, 2027 and the maturity date from February 3, 2025 to February 3, 2028. Additionally, total commitments were reduced from $325.0 million to $300.0 million. Advances under the SPV Facility bear interest at a per annum rate equal to the three month SOFR in effect, plus the applicable margin of 3.00%. MSIF Funding also pays a commitment fee of 0.75% per annum on the average daily unused amount of the financing commitments until February 2, 2027. As of December 31, 2024, the SPV Facility included total commitments of $300.0 million and an accordion feature, with the right to request an increase of total commitments and borrowing availability up to $450.0 million. The SPV Facility is secured by a collateral loan on the assets of MSIF Funding. In connection with the SPV Facility, MSIF Funding has made customary representations and warranties and is required to comply with various covenants, reporting requirements and other customary requirements for similar credit facilities. Our borrowing ability is limited to leverage and borrowing base restrictions imposed by the SPV Facility and the 1940 Act. As of December 31, 2024, the interest rate for borrowings on the SPV Facility was 7.58%. The average interest rate for borrowings under the SPV Facility was 8.14% and 8.09% per annum for the years ended December 31, 2024 and 2023, respectively. As of December 31, 2024, MSIF Funding was in compliance with all financial covenants of the SPV Facility. Corporate Facility MSC Income is a party to a senior secured revolving credit agreement dated March 6, 2017 (as amended, the “Corporate Facility” and, together with the SPV Facility, the “Credit Facilities”) with EverBank, as administrative agent, and with EverBank and other financial institutions as lenders. On November 8, 2024, the Company entered into an amendment to the Corporate Facility to, among other things: (i) extend the revolving period from September 2025 to 130
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Table of contents MSC INCOME FUND, INC. Notes to the Consolidated Financial Statements (Continued) November 2028, (ii) extend the final maturity date from March 2026 to May 2029 and (iii) reduce the interest rate, subject to MSC Income’s election, to (a) SOFR plus 2.05% or (b) the base rate plus 1.05%. As of December 31, 2024, the Corporate Facility included (i) total commitments of $165.0 million, (ii) an accordion feature with the right to request an increase in commitments under the facility from new and existing lenders on the same terms and conditions as the existing commitments up to $200.0 million of total commitments and (iii) a revolving period and maturity date of November 8, 2028 and May 8, 2029, respectively, with two one-year extension options subject to lender approval. Subsequent to December 31, 2024, the Corporate Facility was amended to increase the total commitments from $165.0 million to $245.0 million (see Note K — Subsequent Events). Borrowings under the Corporate Facility bear interest, subject to MSC Income’s election, on a per annum basis at a rate equal to (i) SOFR plus 2.05% or (ii) the base rate plus 1.05%. The base rate is defined as the higher of (a) the Prime rate, (b) the Federal Funds Rate (as defined in the credit agreement) plus 0.5% or (c) SOFR plus 1.0%. Additionally, MSC Income pays an annual unused commitment fee of 0.25% per annum on the unused lender commitments if more than 50% or more of the lender commitments are being used and an annual unused commitment fee of 0.375% per annum on the unused lender commitments if less than 50% of the lender commitments are being used. Borrowings under the Corporate Facility are secured by a first lien on all of the assets of MSIF and its subsidiaries, excluding the assets of Structured Subsidiaries or immaterial subsidiaries, as well as all of the assets, and a pledge of equity ownership interests, of any future subsidiaries of MSIF (other than Structured Subsidiaries or immaterial subsidiaries). In connection with the Corporate Facility, MSIF has made customary representations and warranties and is required to comply with various covenants, reporting requirements and other customary requirements for similar credit facilities. Our borrowing ability is limited to leverage and borrowing base restrictions imposed by the Corporate Facility and the 1940 Act. As of December 31, 2024, the interest rate for borrowings on the Corporate Facility was 6.60%. The average interest rate for borrowings under the Corporate Facility was 7.60% and 7.54% per annum for the years ended December 31, 2024 and 2023, respectively. As of December 31, 2024, MSC Income was in compliance with all financial covenants of the Corporate Facility. Series A Notes Pursuant to a Master Note Purchase Agreement dated October 21, 2021 (the “Note Purchase Agreement”), MSC Income issued $77.5 million of 4.04% Series A Senior Notes due 2026 (the “Series A Notes”) upon entering into the Note Purchase Agreement and an additional $72.5 million on January 21, 2022. The Series A Notes bear a fixed interest rate of 4.04% per year and will mature on October 30, 2026, unless redeemed, purchased or prepaid prior to such date by the Company in accordance with their terms. Interest on the Series A Notes is due semiannually on April 30 and October 30 of each year. The Series A Notes may be redeemed in whole or in part at any time or from time to time at MSC Income’s option at par plus accrued interest to the prepayment date and, if applicable, a make-whole premium. In addition, MSC Income is obligated to offer to prepay the Series A Notes at par plus accrued and unpaid interest up to, but excluding, the date of prepayment, if certain change in control events occur. In the event that a Below Investment Grade Event (as defined in the Note Purchase Agreement) occurs, the Series A Notes will bear interest at a fixed rate of 5.04% per year from the date of the occurrence of the Below Investment Grade Event to and until the date on which the Below Investment Grade Event ends. The Series A Notes are general unsecured obligations of MSIF that rank pari passu with all outstanding and future unsecured unsubordinated indebtedness issued by MSIF. The Note Purchase Agreement also contains customary events of default with customary cure and notice periods, including, without limitation, nonpayment, incorrect representation in any material respect, breach of covenant, cross-default under other indebtedness of MSIF or subsidiary guarantors subject to a cure pass-through, certain judgments and orders and certain events of bankruptcy. As of December 31, 2024, MSC Income was in compliance with all financial covenants of the Note Purchase Agreement. 131
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Table of contents MSC INCOME FUND, INC. Notes to the Consolidated Financial Statements (Continued) A summary of our significant contractual payment obligations for the repayment of outstanding borrowings as of December 31, 2024 is as follows. 2025 2026 2027 2028 2029 Thereafter Total (dollars in thousands) SPV Facility $ — $ — $ — $ 266,688 $ — $ — $ 266,688 Series A Notes — 150,000 — — — — 150,000 Corporate Facility — — — — 149,000 — 149,000 Total $ — $ 150,000 $ — $ 266,688 $ 149,000 $ — $ 565,688 _____________________________ (1) As of December 31, 2024, $33.3 million remained available to borrow under the SPV Facility. (2) As of December 31, 2024, $16.0 million remained available to borrow under the Corporate Facility. (1) (2) 132
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Table of contents MSC INCOME FUND, INC. Notes to the Consolidated Financial Statements (Continued) NOTE E — FINANCIAL HIGHLIGHTS The following is a schedule of financial highlights of MSC Income for the years ended December 31, 2024, 2023, 2022, 2021, 2020, 2019, 2018, 2017, 2016 and 2015: Year Ended December 31, Per Share Data: 2024 2023 2022 2021 2020 NAV as of the beginning of the period $ 15.54 $ 15.22 $ 15.36 $ 14.56 $ 15.54 Net investment income (1)(6) 1.43 1.44 1.32 1.34 1.18 Net realized gain (loss) (1)(2) 0.39 (0.85) (0.10) (0.07) (1.32) Net unrealized appreciation (depreciation) (1)(2) (0.38) 1.16 (0.04) 0.62 (0.08) Income tax provision (1)(2)(6) (0.03) (0.10) (0.04) (0.05) (0.03) Net increase (decrease) in net assets resulting fromoperations (1) 1.41 1.65 1.14 1.84 (0.25) Dividends paid from net investment income (1.10) (1.40) (1.29) (1.05) (0.70) Distributions paid from capital gains (0.35) — — — — Distributions paid or accrued (3) (1.45) (1.40) (1.29) (1.05) (0.70) Accretive effect of stock repurchases (repurchasingshares below NAV) (4) 0.01 0.06 — — — Other (5)(6) 0.02 0.01 0.01 0.01 (0.03) NAV as of the end of the period $ 15.53 $ 15.54 $ 15.22 $ 15.36 $ 14.56 Shares outstanding as of the end of the period 40,240,358 40,054,433 40,053,000 39,913,303 39,804,152 Year Ended December 31, Per Share Data: 2019 2018 2017 2016 2015 NAV as of the beginning of the period $ 15.92 $ 16.29 $ 16.29 $ 15.76 $ 16.80 Net investment income (1)(6) 1.42 1.48 1.46 1.40 1.50 Net realized loss (1)(2) (0.47) (0.46) (0.06) (0.58) (0.22) Net unrealized appreciation (depreciation) (1)(2) 0.08 — (0.04) 1.12 (1.56) Income tax provision (1)(2)(6) (0.02) — — — — Net increase (decrease) in net assets resulting fromoperations (1) 1.01 1.02 1.36 1.94 (0.28) Dividends paid from net investment income (1.35) (1.40) (1.40) (1.40) (1.40) Distributions paid from capital gains (0.05) — — — — Distributions paid or accrued (3) (1.40) (1.40) (1.40) (1.40) (1.40) Accretive effect of stock repurchases (repurchasingshares below NAV) (4) — — — — — Other (5)(6) 0.01 0.01 0.04 (0.01) 0.64 NAV as of the end of the period $ 15.54 $ 15.92 $ 16.29 $ 16.29 $ 15.76 Shares outstanding as of the end of the period 39,231,689 39,292,412 39,755,866 36,691,486 31,191,022 _____________________________ (1) Based on weighted-average number of common shares outstanding for the period. (2) Net realized gains or losses, net unrealized appreciation or depreciation and income tax provision or benefit can fluctuate significantly from period to period. (3) Represents stockholder distributions paid or accrued for the period. (4) Shares repurchased in connection with Dutch auction tender offers. See Note G — Share Repurchases for additional information. 133
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Table of contents MSC INCOME FUND, INC. Notes to the Consolidated Financial Statements (Continued) (5) Includes the impact of the different share amounts as a result of calculating certain per share data based on the weighted-average basic shares outstanding during the period and certain per share data based on the shares outstanding as of a period end or transaction date. (6) Reclassifications have been made to certain prior year per share data. The 2020 “Other” and 2019 “Net investment income” per share amounts have been adjusted to reflect the income tax provision effect separately rather than as a component of these values. Year Ended December 31, 2024 2023 2022 2021 2020 (dollars in thousands) NAV as of the end of the period $ 624,903 $ 622,307 $ 609,665 $ 613,170 $ 579,624 Average NAV $ 621,478 $ 613,525 $ 611,214 $ 593,440 $ 557,382 Average outstanding debt $ 524,380 $ 487,271 $ 494,957 $ 321,973 $ 386,084 Ratios to average NAV: Ratio of total expenses, including income taxexpense, to average NAV(1)(2)(4) 12.65 % 12.63 % 8.60 % 6.51 % 7.38 % Ratio of operating expenses to average NAV(2)(4) 12.47 % 12.02 % 8.33 % 6.20 % 7.16 % Ratio of operating expenses, excluding interestexpense, to average NAV(2)(4) 6.19 % 6.07 % 4.33 % 3.76 % 4.07 % Ratio of operating expenses, excluding interestexpense and incentive fees, to average NAV(2)(4) 4.18 % 4.02 % 3.98 % 3.66 % 4.07 % Ratio of net investment income to average NAV(4) 9.22 % 9.40 % 8.65 % 8.99 % 8.40 % Portfolio turnover ratio 22.69 % 21.82 % 18.92 % 35.39 % 8.93 % Total return based on change in NAV(3)(4) 9.77 % 10.86 % 7.43 % 12.71 % (1.80)% Year Ended December 31, 2019 2018 2017 2016 2015 (dollars in thousands) NAV as of the end of the period $ 609,305 $ 625,366 $ 647,789 $ 597,833 $ 491,652 Average NAV $ 622,708 $ 642,625 $ 629,775 $ 535,175 $ 400,045 Average outstanding debt $ 474,000 $ 482,200 $ 427,200 $ 396,000 $ 304,973 Ratios to average NAV: Ratio of total expenses, including income taxexpense, to average NAV(1)(2)(4) 9.11 % 9.11 % 7.88 % 7.56 % 8.27 % Ratio of operating expenses to average NAV(2)(4) 9.11 % 8.95 % 7.78 % 7.50 % 8.24 % Ratio of operating expenses, excluding interestexpense, to average NAV(2)(4) 4.86 % 5.09 % 4.87 % 4.69 % 5.45 % Ratio of operating expenses, excluding interestexpense and incentive fees, to average NAV(2)(4) 4.22 % 4.57 % 4.61 % 4.68 % 4.91 % Ratio of net investment income to average NAV(4) 8.84 % 9.16 % 9.01 % 8.91 % 9.01 % Portfolio turnover ratio 33.30 % 45.06 % 50.66 % 39.01 % 24.23 % Total return based on change in NAV(3)(4) 6.41 % 6.26 % 8.59 % 12.31 % 2.14 % _____________________________ (1) Total expenses are the sum of operating expenses and net income tax provision or benefit. Net income tax provision or benefit includes the accrual of net deferred tax provision or benefit relating to the net unrealized appreciation or depreciation on portfolio investments held in Taxable Subsidiaries and due to the change in the loss carryforwards, which are non-cash in nature and may vary significantly from period to period. MSC Income is required to include net 134
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Table of contents MSC INCOME FUND, INC. Notes to the Consolidated Financial Statements (Continued) deferred tax provision or benefit in calculating its total expenses even though these net deferred taxes are not currently payable or receivable. (2) Unless otherwise noted, operating expenses include interest, management fees, incentive fees and general and administrative expenses. (3) Total return is calculated based on the change in NAV per share and stockholder distributions declared per share during the reporting period, divided by the NAV per share at the beginning of the period. The total return does not reflect the sales load from the sale of MSC Income’s common stock. (4) Net of expense waivers of $9.5 million, $8.3 million, $4.5 million, $4.3 million, $3.6 million, $3.1 million, $6.0 million, $4.6 million, $4.0 million and $4.6 million in 2024, 2023, 2022, 2021, 2020, 2019, 2018, 2017, 2016 and 2015, respectively. Excluding these expense waivers, the expense and income ratios are as follows: Year Ended December 31, 2024 2023 2022 2021 2020 Ratio of total expenses, including income tax expense, toaverage NAV(1)(2) 14.21 % 13.98 % 9.33 % 7.24 % 8.11 % Ratio of operating expenses to average NAV(2) 14.03 % 13.37 % 9.06 % 6.92 % 7.89 % Ratio of operating expenses, excluding interest expense,to average NAV(2) 7.73 % 7.43 % 5.07 % 4.49 % 4.80 % Ratio of operating expenses, excluding interest expenseand incentive fees, to average NAV(2) 5.72 % 5.38 % 4.72 % 4.39 % 4.80 % Ratio of net investment income to average NAV 7.73 % 8.05 % 7.90 % 8.26 % 7.67 % Year Ended December 31, 2019 2018 2017 2016 2015 Ratio of total expenses, including income tax expense, toaverage NAV(1)(2) 9.84 % 9.13 % 7.89 % 7.57 % 8.29 % Ratio of operating expenses to average NAV(2) 9.84 % 8.97 % 7.79 % 7.51 % 8.26 % Ratio of operating expenses, excluding interest expense,to average NAV(2) 5.58 % 5.10 % 4.88 % 4.69 % 5.46 % Ratio of operating expenses, excluding interest expenseand incentive fees, to average NAV(2) 4.95 % 4.58 % 4.61 % 4.69 % 4.93 % Ratio of net investment income to average NAV 8.11 % 8.25 % 8.28 % 8.48 % 7.98 % _____________________________ See footnotes (1) and (2) immediately prior to this table. NOTE F — DIVIDENDS, DISTRIBUTIONS AND TAXABLE INCOME MSC Income currently pays regular quarterly dividends to its stockholders and expects in the future to periodically pay supplemental quarterly dividends to its stockholders. Future dividends, if any, will be determined by its Board of Directors on a quarterly basis. MSC Income paid or accrued dividends to its common stockholders of $58.2 million, or $1.450 per share, during the year ended December 31, 2024, compared to $56.1 million, or $1.40 per share, during the year ended December 31, 2023. For tax purposes, the 2024 dividends, which included the effects of dividends on an accrual basis, totaled $58.2 million, or $1.450 per share, and were comprised of (i) ordinary income totaling $0.945 per share, (ii) long-term capital gain totaling $0.351 per share and (iii) qualified dividend income totaling $0.154 per share. As of December 31, 2024, MSC Income estimates that it has generated undistributed taxable income of $20.3 million, or $0.51 per share, that will be carried forward toward distributions to be paid in 2025. MSIF has elected to be treated for U.S. federal income tax purposes as a RIC. MSIF’s taxable income includes the taxable income generated by MSIF and certain of its subsidiaries, including the Structured Subsidiaries, which are treated as disregarded entities for tax purposes. As a RIC, MSIF generally will not pay corporate-level U.S. federal income taxes on any net ordinary taxable income or capital gains that MSIF distributes to its stockholders. MSIF must generally 135
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Table of contents MSC INCOME FUND, INC. Notes to the Consolidated Financial Statements (Continued) distribute at least 90% of its “investment company taxable income” (which is generally its net ordinary taxable income and realized net short-term capital gains in excess of realized net long-term capital losses) and 90% of its tax-exempt income to maintain its RIC status (pass-through tax treatment for amounts distributed). As part of maintaining RIC status, undistributed taxable income (subject to a 4% non-deductible U.S. federal excise tax) pertaining to a given fiscal year may be distributed up to twelve months subsequent to the end of that fiscal year, provided such dividends are declared on or prior to the later of (i) filing of the U.S. federal income tax return for the applicable fiscal year or (ii) the fifteenth day of the ninth month following the close of the year in which such taxable income was generated. The determination of the tax attributes for MSC Income’s distributions is made annually, based upon its taxable income for the full year and distributions paid for the full year. Therefore, a determination made on an interim basis may not be representative of the actual tax attributes of distributions for a full year. Ordinary dividend distributions from a RIC do not qualify for the 20% maximum tax rate (plus a 3.8% Medicare surtax, if applicable) on dividend income from domestic corporations and qualified foreign corporations, except to the extent that the RIC received the income in the form of qualifying dividends from domestic corporations and qualified foreign corporations. The tax attributes for distributions will generally include both ordinary income and qualified dividends, but may also include either one or both of capital gains and return of capital. The tax character of distributions paid for the years ended December 31, 2024, 2023 and 2022 was as follows: Year Ended December 31, 2024 2023 2022 (dollars in thousands) Ordinary income $ 37,924 $ 47,756 $ 61,854 Qualified dividends 6,173 8,301 1,727 Distributions of long-term capital gains 14,114 — — Distributions on tax basis $ 58,211 $ 56,057 $ 63,581 As of December 31, 2024, 2023 and 2022, the components of distributable earnings on a tax basis, or “Undistributed ordinary income,” differ from the amount of “Total overdistributed earnings” reflected in the Consolidated Balance Sheets by temporary book or tax differences as shown in the table below. Year Ended December 31, 2024 2023 2022 (dollars in thousands) Undistributed ordinary income (1) $ 20,348 $ 14,745 $ 20,674 Unrealized appreciation (depreciation), net of tax 25,223 42,341 (482) Cumulative book/ tax differences on realized gain/ loss, including capital losscarryforward (38,572) (43,438) (20,346) Accumulated net impact of Taxable Subsidiaries (2) (67,544) (75,468) (71,474) Other temporary differences (3) (4,172) (2,089) (2,952) Components of Total overdistributed earnings $ (64,717) $ (63,909) $ (74,580) _____________________________ (1) Undistributed ordinary income is comprised of the following: Year Ended December 31, 2024 2023 2022 (dollars in thousands) Taxable income earned prior to period end and carried forward for distribution nextperiod $ 34,835 $ 28,764 $ 33,491 Dividend payable as of period end and paid in the following period (14,487) (14,019) (12,817) Undistributed ordinary income $ 20,348 $ 14,745 $ 20,674 136
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Table of contents MSC INCOME FUND, INC. Notes to the Consolidated Financial Statements (Continued) (2) Accumulated net impact of earnings, intercompany dividends and book/tax differences of the Taxable Subsidiaries (3) Book income and tax income differences, including dividends, debt origination, structuring fees and changes in estimates Listed below is a reconciliation of “Net increase in net assets resulting from operations” to taxable income and to total distributions declared to common stockholders for the years ended December 31, 2024, 2023 and 2022. Year Ended December 31, 2024 2023 2022 (estimated, dollars in thousands) Net increase in net assets resulting from operations $ 56,553 $ 66,209 $ 45,588 Net unrealized (appreciation) depreciation 15,439 (46,319) 1,702 Income tax provision 1,106 3,769 1,643 Pre-tax book (income) loss not consolidated for tax purposes (9,622) 4,241 (9,748) Book income and tax income differences, including debt origination, structuring fees, dividends, realized gains and changes in estimates 339 22,228 9,820 Estimated taxable income (1) 63,815 50,128 49,005 Taxable income earned in prior year and carried forward for distribution incurrent year 14,745 20,674 23,276 Taxable income earned prior to period end and carried forward for distributionnext period (34,835) (28,764) (33,491) Dividend payable as of period end and paid in the following period 14,487 14,019 12,817 Total distributions accrued or paid to common stockholders $ 58,212 $ 56,057 $ 51,607 _____________________________ (1) MSIF’s taxable income for each period is an estimate and will not be finally determined until MSIF files its tax return for each year. Therefore, the final taxable income, and the taxable income earned in each period and carried forward for distribution in the following period, may be different than this estimate. The Taxable Subsidiaries primarily hold certain equity investments for MSC Income. The Taxable Subsidiaries permit MSC Income to hold equity investments in portfolio companies which are “pass-through” entities for tax purposes and to continue to comply with the “source-of-income” requirements contained in the RIC tax provisions of the Code. The Taxable Subsidiaries are consolidated with MSIF for U.S. GAAP financial reporting purposes, and the portfolio investments held by the Taxable Subsidiaries are included in MSC Income’s consolidated financial statements as portfolio investments and recorded at fair value. The Taxable Subsidiaries are not consolidated with MSIF for income tax purposes and may generate income tax expense, or benefit, and tax assets and liabilities, as a result of their ownership of certain portfolio investments. The taxable income, or loss, of the Taxable Subsidiaries may differ from their book income, or loss, due to temporary book and tax timing differences and permanent differences. The Taxable Subsidiaries are each taxed at corporate income tax rates based on their taxable income. The income tax expense, or benefit, if any, and the related tax assets and liabilities, of the Taxable Subsidiaries are reflected in MSC Income’s consolidated financial statements. The income tax provision for MSC Income is generally composed of (i) deferred tax expense (benefit), which is primarily the result of the net activity relating to the portfolio investments held in the Taxable Subsidiaries, including changes in loss carryforwards, changes in net unrealized appreciation or depreciation and other temporary book tax differences, and (ii) current tax expense, which is primarily the result of current U.S. federal income and state taxes and excise taxes on MSC Income’s estimated undistributed taxable income. The income tax expense, or benefit, and the related tax assets and liabilities generated by the Taxable Subsidiaries, if any, are reflected in MSC Income’s Consolidated Statements of Operations. MSC Income’s provision for income taxes was comprised of the following for the years ended December 31, 2024, 2023 and 2022: 137
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Table of contents MSC INCOME FUND, INC. Notes to the Consolidated Financial Statements (Continued) Year Ended December 31, 2024 2023 2022 (dollars in thousands) Current tax expense: Federal $ 3,543 $ 13 $ 33 State 595 340 495 Excise 851 519 753 Total current tax expense 4,989 872 1,281 Deferred tax expense (benefit): Federal (3,068) 3,450 351 State (815) (553) 11 Total deferred tax expense (benefit) (3,883) 2,897 362 Total income tax provision $ 1,106 $ 3,769 $ 1,643 MSIF operates in a manner to maintain its RIC status and to eliminate corporate-level U.S. federal income tax (other than the 4% excise tax) by distributing sufficient investment company taxable income and long-term capital gains. As a result, MSIF will have an effective tax rate equal to 0% before the excise tax and income taxes incurred by the Taxable Subsidiaries. As such, a reconciliation of the differences between MSC Income’s reported income tax expense and its tax expense at the federal statutory rate of 21% is not meaningful. As of December 31, 2024, the cost of investments for U.S. federal income tax purposes was $1,185.0 million, with such investments having an estimated net unrealized appreciation of $55.3 million, composed of gross unrealized appreciation of $182.9 million and gross unrealized depreciation of $127.6 million. As of December 31, 2023, the cost basis of investments for tax purposes was $1,035.0 million, with such investments having an estimated net unrealized appreciation of $57.9 million, composed of gross unrealized appreciation of $154.3 million and gross unrealized depreciation of $96.4 million. The following table sets forth the significant components of net deferred tax assets and liabilities as of December 31, 2024 and 2023: Year EndedDecember 31, 2024 2023 (dollars in thousands) Deferred tax assets: Net operating loss carryforwards $ 32 $ 671 Interest expense carryforwards 4,514 3,258 General business and foreign tax credit carryforwards 9 329 Capital loss carryforwards 5,499 6,041 Total deferred tax assets 10,054 10,299 Deferred tax liabilities: Net basis differences in portfolio investments 4,324 (1,484) Net unrealized appreciation of portfolio investments (13,753) (12,074) Total deferred tax liabilities (9,429) (13,558) Total deferred tax assets (liabilities), net $ 625 $ (3,259) The net deferred tax asset as of December 31, 2024 was $0.6 million and the net deferred tax liability as of December 31, 2023 was $3.3 million, with the change primarily related to changes in net unrealized appreciation or 138
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Table of contents MSC INCOME FUND, INC. Notes to the Consolidated Financial Statements (Continued) depreciation, changes in loss carryforwards and other temporary book-tax differences relating to portfolio investments held by the Taxable Subsidiaries. Management believes that the realization of the deferred tax assets is more likely than not based on expectations as to future taxable income and scheduled reversals of temporary differences. Accordingly, MSC Income did not record a valuation allowance related to its deferred tax assets as of December 31, 2024 and 2023. As of December 31, 2024, for U.S. federal income tax purposes, the Taxable Subsidiaries did not have any net operating loss carryforwards. The Taxable Subsidiaries have net capital loss carryforwards from prior years which, if unused, will expire in various taxable years 2025 through 2029. Additionally, the Taxable Subsidiaries have interest expense limitation carryforwards which have an indefinite carryforward period. NOTE G — SHARE REPURCHASES Prior to the MSC Income Listing, MSC Income maintained a quarterly share repurchase program. Under the terms of the quarterly share repurchase program, MSC Income made quarterly offers to purchase shares at the NAV per share on the repurchase date. The amount of shares of MSC Income’s common stock to be repurchased during any calendar quarter could be equal to the lesser of (i) the number of shares of common stock MSC Income could repurchase with a portion of the proceeds it received from the issuance of common stock under MSC Income’s dividend reinvestment plan as then in effect or (ii) 2.5% of the weighted-average number of shares of common stock outstanding in the prior four calendar quarters. Repurchase offers were limited to the number of shares of common stock that MSC Income could repurchase with 90% of the cash retained as a result of issuances of common stock under its then effective dividend reinvestment plan. At the discretion of the Board of Directors, MSC Income could also use cash on hand, cash available from borrowings and cash from the sale of investments as of the end of the applicable period to repurchase shares. MSC Income’s Board of Directors could amend, suspend or terminate the share repurchase program upon 30 days’ notice. On November 13, 2024, the Board of Directors, including each director who is not an “interested person,” as such term is defined in Section 2(a)(19) of the 1940 Act, of the Company or the Adviser, unanimously approved suspending the quarterly share repurchase program in anticipation of the MSC Income Listing, and the quarterly share repurchase program ultimately terminated upon the MSC Income Listing. In connection with the MSC Income Listing, the Company entered into a new open-market share repurchase plan. See Note K — Subsequent Events for additional details. In addition to its quarterly share repurchase program, beginning in the second quarter of 2023, MSC Income began periodically offering to complete modified Dutch auction tender offers (“Dutch Auction Tenders”), pursuant to which MSC Income offered to purchase up to a specified amount of shares of its common stock at the lowest clearing purchase price elected by participating stockholders within a specified range that allowed MSC Income to purchase the maximum amount offered. In such Dutch Auction Tenders all shares purchased are purchased at the clearing purchase price. SEC rules permit MSC Income to increase the number of shares accepted for purchase in any Dutch Auction Tender by up to 2% of MSC Income’s outstanding shares without amending the offer. On February 5, 2024, MSC Income commenced a modified “Dutch Auction” tender offer (the “February 2024 Dutch Auction Tender Offer”) pursuant to the Offer to Purchase, dated February 5, 2024, which expired on March 4, 2024. Pursuant to the February 2024 Dutch Auction Tender Offer, MSC Income repurchased 178,572 shares on March 8, 2024 at a price of $14.00 per share for an aggregate cost of $2.5 million, excluding fees and expenses related to the February 2024 Dutch Auction Tender Offer. On May 17, 2024, MSC Income commenced a modified “Dutch Auction” tender offer (the “May 2024 Dutch Auction Tender Offer”) pursuant to the Offer to Purchase, dated May 17, 2024, which expired on June 20, 2024. Pursuant to the May 2024 Dutch Auction Tender Offer, MSC Income repurchased 166,667 shares on June 25, 2024 at a price of $12.00 per share for an aggregate cost of $2.0 million, excluding fees and expenses related to the May 2024 Dutch Auction Tender Offer. On August 13, 2024, the Board of Directors, including each director who is not an “interested person,” as such term is defined in Section 2(a)(19) of the 1940 Act, of the Company or the Adviser, unanimously approved suspending the Dutch Auction Tenders in anticipation of the MSC Income Listing. For the years ended December 31, 2024 and 2023, MSC Income funded $16.2 million and $16.6 million, respectively, for shares of its common stock tendered for repurchase under the quarterly share repurchase program. For the 139
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Table of contents MSC INCOME FUND, INC. Notes to the Consolidated Financial Statements (Continued) years ended December 31, 2024 and 2023, MSC Income funded $4.5 million and $7.8 million, respectively, for shares of its common stock tendered for repurchase through its Dutch auction tender offers. Since the reinstatement of its quarterly share repurchase program in March 2021, after briefly suspending it during the COVID-19 pandemic, through the termination of the program on November 13, 2024 as discussed above, MSC Income funded the repurchase of $58.9 million in shares of common stock under the share repurchase program. MSC Income also purchased $12.3 million in shares of common stock through its various Dutch auction tender offers completed from June 2023 through August 13, 2024. Repurchases of MSC Income’s common stock pursuant to its quarterly share repurchase program and modified Dutch auction tender offers for the years ended December 31, 2024, 2023 and 2022 are shown in the table below. Period Total number of sharespurchased Average price paid pershare Total number of sharespurchased as part ofpublicly announcedplans or programs Approximate dollarvalue of shares thatmay yet bepurchased under theplans or programs January 1 through March 31, 2022 244,516 $ 15.50 244,516 N/A April 1 through June 30, 2022 268,032 15.54 268,032 N/A July 1 through September 30, 2022 263,754 15.28 263,754 N/A October 1 through December 31, 2022 261,155 15.32 261,155 N/A January 1 through March 31, 2023 259,744 15.34 259,744 N/A April 1 through June 30, 2023 (1) 482,784 13.17 482,784 N/A July 1 through September 30, 2023 (2) 489,290 14.24 489,290 N/A October 1 through December 31, 2023 (3) 479,464 14.23 479,464 N/A January 1 through March 31, 2024 (4) 437,658 14.81 437,658 N/A April 1 through June 30, 2024 (5) 435,190 13.78 435,190 N/A July 1 through September 30, 2024 257,499 15.66 257,499 N/A October 1 through December 31, 2024 256,421 15.48 256,421 N/A Total 4,135,507 4,135,507 _____________________________ (1) Includes 203,452 shares repurchased under the Dutch auction tender offer pursuant to the to the tender offer statement and Offer to Purchase filed with the SEC on May 15, 2023 at a price of $11.00 per share for an aggregate cost of $2.2 million. (2) Includes 216,460 shares repurchased under the Dutch auction tender offer pursuant to the to the tender offer statement and Offer to Purchase filed with the SEC on June 14, 2023 at a price of $13.00 per share for an aggregate cost of $2.8 million. (3) Includes 213,922 shares repurchased under the Dutch auction tender offer pursuant to the to the tender offer statement and Offer to Purchase filed with the SEC on November 15, 2023 at a price of $13.00 per share for an aggregate cost of $2.8 million. (4) Includes 178,572 shares repurchased under the Dutch auction tender offer pursuant to the to the tender offer statement and Offer to Purchase filed with the SEC on February 5, 2024 at a price of $14.00 per share for an aggregate cost of $2.5 million. (5) Includes 166,667 shares repurchased under the Dutch auction tender offer pursuant to the to the tender offer statement and Offer to Purchase filed with the SEC on May 17, 2024 at a price of $12.00 per share for an aggregate cost $2.0 million. 140
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Table of contents MSC INCOME FUND, INC. Notes to the Consolidated Financial Statements (Continued) NOTE H — DIVIDEND REINVESTMENT PLAN During the years ended December 31, 2024 and 2023, MSC Income’s dividend reinvestment plan (the “Prior DRIP”) provided for the reinvestment of dividends on behalf of its stockholders. As a result, if MSC Income declared a cash dividend, its stockholders who had “opted in” to the Prior DRIP would have had their cash dividend automatically reinvested into additional shares of MSC Income common stock. The number of shares of common stock to be issued to a stockholder under the Prior DRIP was determined by dividing the total dollar amount of the distribution payable to such stockholder by a price per share of common stock determined by MSC Income’s Board of Directors or a committee thereof, in its sole discretion, that was (i) not less than the NAV per share of common stock determined in good faith by the Board of Directors or a committee thereof, in its sole discretion, within 48 hours prior to the payment of the distribution and (ii) not more than 2.5% greater than the NAV per share as of such date. Effective as of the date of the Company’s Board of Directors’ first declaration of a dividend or distribution on the Company’s common stock following the MSC Income Listing, the Company has adopted an “opt out” dividend reinvestment plan (the “New DRIP” and, together with the Prior DRIP, the “DRIP”). The New DRIP provides for the reinvestment of dividends on behalf of the Company’s registered stockholders who hold their shares with the Company’s transfer agent and registrar, or certain brokerage firms that have elected to participate in the New DRIP, unless a stockholder has elected to receive dividends in cash. As a result, if the Company declares a cash dividend, its registered stockholders (or stockholders holding shares through participating brokerage firms) who have not properly “opted out” of the New DRIP will have their cash dividend automatically reinvested into additional shares of the Company’s common stock. For the avoidance of doubt, stockholders of the Company who did not elect to “opt in” to the New DRIP in effect prior to the effective date of the “opt out” New DRIP will be deemed to have made an election to “opt out” of our New DRIP as of the effective date of the “opt out” New DRIP and to continue to receive cash in connection with any cash dividend declared by the Company. The share requirements of the New DRIP may be satisfied through the issuance of new shares of common stock or through open market purchases of common stock by the DRIP plan administrator. Newly issued shares will be valued based upon the final closing price of the Company’s common stock reported on the NYSE on the trading day immediately preceding the dividend payment date for each dividend. Shares purchased in the open market to satisfy the New DRIP requirements will be valued based upon the average price of the applicable shares purchased by the DRIP plan administrator, before any associated brokerage or other costs. Our DRIP is administered by our transfer agent. Summarized DRIP information for the years ended December 31, 2024, 2023 and 2022 is as follows: Year Ended December 31, 2024 2023 2022 (dollars in thousands) DRIP participation $ 17,983 $ 18,417 $ 17,750 Shares issued for DRIP 1,132,714 1,172,623 1,129,806 NOTE I — COMMITMENTS AND CONTINGENCIES As of December 31, 2024, MSC Income had the following outstanding commitments (in thousands): Investments with equity capital commitments that have not yet funded: Amount HPEP 3, L.P. 1,308 Brightwood Capital Fund III, LP 22 Total Equity Commitments (1) $ 1,330 Investments with commitments to fund revolving loans that have not been fully drawn or term loans with additional commitments not yet funded: Computer Data Source, LLC $ 6,250 GradeEight Corp. (Winzer) 4,706 141
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Table of contents MSC INCOME FUND, INC. Notes to the Consolidated Financial Statements (Continued) CQ Fluency, LLC 4,500 Mako Steel, LP 4,057 Insight Borrower Corporation (Industrial Physics) 3,888 ZRG Partners, LLC 3,632 HEADLANDS OP-CO LLC 3,600 Mills Fleet Farm Group, LLC 2,140 JDC Power Services, LLC 2,105 BP Loenbro Holdings Inc. 2,055 Bluestem Brands, Inc. 1,985 Ansira Partners II, LLC 1,951 SI East, LLC (Stavig) 1,750 American Health Staffing Group, Inc. 1,667 IG Parent Corporation (Infogain) 1,667 Creative Foam Corporation 1,562 Burning Glass Intermediate Holding Company, Inc. 1,549 ArborWorks, LLC 1,428 Winter Services LLC 1,417 Titan Meter Midco Corp. 1,384 Power System Solutions 1,330 Hornblower Sub, LLC 1,218 Bettercloud, Inc. 1,216 Jackmont Hospitality, Inc. 1,212 TEC Services, LLC 1,167 NexRev LLC 1,000 SPAU Holdings, LLC 1,000 Sales Performance International, LLC 889 VVS Holdco LLC 800 Cody Pools, Inc. 786 NinjaTrader, LLC 750 Mini Melts of America, LLC 750 Gamber-Johnson Holdings, LLC 738 Imaging Business Machines, L.L.C. 692 Centre Technologies Holdings, LLC 600 IG Investor, LLC (Ira Green) 600 South Coast Terminals Holdings, LLC 589 Bond Brand Loyalty ULC 540 Obra Capital, Inc. 521 Coregistics Buyer LLC (Belvika) 513 AVEX Aviation Holdings, LLC 512 Wall Street Prep, Inc. 500 Island Pump and Tank, LLC 456 RA Outdoors (Aspira) LLC 449 Microbe Formulas, LLC 434 Colonial Electric Company LLC 400 Pinnacle TopCo, LLC 400 CenterPeak Holdings, LLC (Johnson Downie) 400 142
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Table of contents MSC INCOME FUND, INC. Notes to the Consolidated Financial Statements (Continued) The Affiliati Network, LLC 400 Trantech Radiator Topco, LLC 400 Chamberlin Holding LLC 400 Escalent, Inc. 349 Clad-Rex Steel, LLC 300 Roof Opco (Apple Roof), LLC 292 Garyline, LLC 210 MetalForming AcquireCo, LLC 205 Career Team Holdings, LLC 200 Mystic Logistics Holdings, LLC 200 ASK (Analytical Systems Keco Holdings, LLC) 200 Orttech Holdings, LLC 200 ATS Operating, LLC 200 Batjer TopCo, LLC 180 PTL US Bidco, Inc 177 Elgin AcquireCo, LLC 123 Channel Partners Intermediateco, LLC 105 GRT Rubber Technologies LLC 100 Gulf Publishing Holdings, LLC 100 AAC Holdings, Inc. 43 Inspire Aesthetics Management, LLC 43 Invincible Boat Company, LLC. 42 Total Loan Commitments $ 78,224 Total Commitments $ 79,554 _____________________________ (1) This table excludes commitments related to one additional Other Portfolio investment for which the investment period has expired and remaining commitments may only be drawn to pay fund expenses or for follow on investments in existing portfolio companies. The Company does not expect any material future capital to be called on its commitment to this investment to pay fund expenses, and based on representations from the fund manager, the Company does not expect any further capital will be called on its commitment for follow on investments. As a result, the Company has excluded those commitments from this table. MSC Income will fund its unfunded commitments from the same sources it uses to fund its investment commitments that are funded at the time they are made (which are typically through existing cash and cash equivalents and borrowings under the Credit Facilities). MSC Income follows a process to manage its liquidity and ensure that it has available capital to fund its unfunded commitments as necessary. MSC Income had no unrealized appreciation or depreciation on the outstanding unfunded commitments as of December 31, 2024. MSC Income may, from time to time, be involved in litigation arising out of its operations in the normal course of business or otherwise. Furthermore, third parties may try to impose liability on MSC Income in connection with the activities of its portfolio companies. While the outcome of any current legal proceedings cannot at this time be predicted with certainty, MSC Income does not expect any current matters will materially affect its financial condition or results of operations; however, there can be no assurance whether any pending legal proceedings will have a material adverse effect on MSC Income’s financial condition or results of operations in any future reporting period. 143
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Table of contents MSC INCOME FUND, INC. Notes to the Consolidated Financial Statements (Continued) NOTE J — RELATED PARTY TRANSACTIONS 1. Advisory Agreements and Conditional Expense Reimbursement Waivers On October 30, 2020, MSC Income entered into the Prior Investment Advisory Agreement with the Adviser. On January 29, 2025, in connection with the MSC Income Listing, MSC Income entered into the Advisory Agreement with the Adviser. The Advisory Agreement was approved by the affirmative vote of the holders of a majority of MSC Income’s outstanding voting securities, as defined in the 1940 Act, at the 2025 Special Meeting, to become effective upon the MSC Income Listing. The Advisory Agreement is effective for an initial two-year term commencing upon the date of the MSC Income Listing on January 29, 2025. As such, only the Prior Investment Advisory Agreement discussed below was applicable for the periods presented in these financial statements (see Note K — Subsequent Events for additional details). Prior Investment Advisory Agreement Pursuant to the Prior Investment Advisory Agreement, MSC Income pays the Adviser a base management fee and incentive fees as compensation for the services described above. The base management fee is calculated at an annual rate of 1.75% of MSC Income’s average gross assets. The term “gross assets” means total assets of MSC Income as disclosed on MSC Income’s Consolidated Balance Sheets. “Average gross assets” are calculated based on MSC Income’s gross assets at the end of the two most recently completed calendar quarters. The base management fee is payable quarterly in arrears. The base management fee is expensed as incurred. The incentive fee under the Prior Investment Advisory Agreement consists of two parts. The first part, referred to as the subordinated incentive fee on income, is calculated and payable quarterly in arrears based on Pre-Incentive Fee Net Investment Income (as defined below) for the immediately preceding quarter. The subordinated incentive fee on income is equal to 20.0% of MSC Income’s Pre- Incentive Fee Net Investment Income for the immediately preceding quarter, expressed as a quarterly rate of return on adjusted capital at the beginning of the most recently completed calendar quarter, exceeding 1.875% (or 7.5% annualized), subject to a “catch up” feature (as described below). For this purpose, Pre-Incentive Fee Net Investment Income means interest income, dividend income and any other income (including any other fees such as commitment, origination, structuring, diligence and consulting fees or other fees that MSC Income receives from portfolio companies) accrued during the calendar quarter, minus MSC Income’s operating expenses for the quarter (including the management fee, expenses payable under any proposed administration agreement and any interest expense and dividends paid on any issued and outstanding preferred stock, but excluding taxes and 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 and PIK interest and zero coupon securities), accrued income that MSC Income 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. For purposes of this fee, adjusted capital means cumulative gross proceeds generated from sales of MSC Income’s common stock (including proceeds from MSC Income’s DRIP) reduced for non-liquidating distributions, other than distributions of profits, paid to MSC Income’s stockholders and amounts paid for share repurchases pursuant to MSC Income’s share repurchase program. The subordinated incentive fee on income is expensed in the quarter in which it is incurred. The calculation of the subordinated incentive fee on income for each quarter is as follows: • No subordinated incentive fee on income shall be payable to the Adviser in any calendar quarter in which MSC Income’s Pre-Incentive Fee Net Investment Income does not exceed the hurdle rate of 1.875% (or 7.5% annualized) on adjusted capital; • 100% of MSC Income’s Pre-Incentive Fee Net Investment Income, if any, that exceeds the hurdle rate but is less than or equal to 2.34375% in any calendar quarter (9.375% annualized) shall be payable to the Adviser. This portion of the subordinated incentive fee on income is referred to as the “catch up” and is intended to provide the Adviser with an incentive fee of 20.0% on all of MSC Income’s Pre-Incentive Fee Net Investment Income as if the hurdle rate did not apply when the Pre-Incentive Fee Net Investment Income exceeds 2.34375% (9.375% annualized) in any calendar quarter; and • For any quarter in which MSC Income’s Pre-Incentive Fee Net Investment Income exceeds 2.34375% (9.375% annualized), the subordinated incentive fee on income shall equal 20.0% of the amount of MSC Income’s Pre-Incentive Fee Net Investment Income, as the hurdle rate and catch-up will have been achieved. 144
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Table of contents MSC INCOME FUND, INC. Notes to the Consolidated Financial Statements (Continued) The second part of the incentive fee, referred to as the incentive fee on capital gains, is an incentive fee on realized capital gains earned from the portfolio of MSC Income and is determined and payable in arrears as of the end of each calendar year (or upon termination of the Prior Investment Advisory Agreement). This fee equals 20.0% of MSC Income’s incentive fee capital gains, which equals MSC Income’s realized capital gains on a cumulative basis from inception, calculated as of the end of each calendar year, computed net of all realized capital losses and unrealized capital depreciation on a cumulative basis, less the aggregate amount of any previously paid capital gain incentive fees. At the end of each reporting period, MSC Income estimates the incentive fee on capital gains and accrues the fee based on a hypothetical liquidation of its portfolio. Therefore, the accrual includes both net realized gains and net unrealized gains (the net unrealized difference between the fair value and the par value of its portfolio), if any. The incentive fee accrued pertaining to the unrealized gain is neither earned nor payable to the Adviser until such time it is realized. For the years ended December 31, 2024, 2023 and 2022, MSC Income incurred base management fees of $20.9 million, $19.8 million and $19.8 million, respectively. For the years ended December 31, 2024, 2023 and 2022, MSC Income incurred subordinated incentive fees on income of $12.5 million, $12.6 million and $2.1 million, respectively. For the years ended December 31, 2024, 2023 and 2022, MSC Income did not incur any capital gains incentive fees. Pursuant to the Prior Investment Advisory Agreement, MSC Income is required to pay or reimburse the Adviser for administrative services expenses, which include all costs and expenses related to MSC Income’s day-to-day administration and management not related to advisory services, whether such administrative services were performed by a third-party service provider or the Adviser or its affiliates (to the extent performed by the Adviser or its affiliates, the “Internal Administrative Services”). Internal Administrative Services include, but are not limited to, the cost of an Adviser’s personnel performing accounting and compliance functions and other administrative services on behalf of MSC Income. On January 1, 2022, the Adviser assumed responsibility of certain administrative services that were previously provided for MSC Income by a third-party sub-administrator. After December 31, 2021, the Adviser continued to waive reimbursement of all Internal Administrative Services expenses, except for the cost of the services previously provided by the sub-administrator. For the years ended December 31, 2024, 2023 and 2022, MSC Income incurred Internal Administrative Services Expenses of $10.1 million, $8.9 million and $5.1 million, respectively. For the years ended December 31, 2024, 2023 and 2022, the Adviser waived the reimbursements of Internal Administrative Services expenses of $9.5 million, $8.3 million and $4.5 million, respectively. Waived Internal Administrative Services expenses are permanently waived and are not subject to future reimbursement. Advisory Agreement (post MSC Income Listing) Effective on the date of the MSC Income Listing and pursuant to the Advisory Agreement, MSC Income will pay the Adviser a base management fee and incentive fees as compensation for investment management services under the Advisory Agreement. The base management fee is calculated at an annual rate of 1.5% of the Company’s average total assets (including cash and cash equivalents), payable quarterly in arrears, and will be calculated based on the average value of the Company’s total assets (including cash and cash equivalents) at the end of the two most recently completed calendar quarters. The determination of total assets will reflect changes in the fair value of portfolio investments reflecting both unrealized appreciation and unrealized depreciation. All or any part of base management fee not taken as to any quarter will be deferred without interest and may be taken in such other quarter as the Adviser shall determine, unless the Adviser expressly and in writing delivered to the Company permanently waives receipt of such base management fee, in which event the Company shall forever be relieved of the obligation to pay such base management fee for such quarter. The base management fee for any partial quarter will be appropriately pro-rated. Under the Advisory Agreement, the base management fee will be reduced to an annual rate of (i) 1.25% of the average value of the Company’s total assets (including cash and cash equivalents) commencing with the first full calendar quarter following the date on which the aggregate fair value of the Company’s investments in its LMM portfolio companies falls below 20% of the Company’s total investment portfolio at fair value, and (ii) 1.00% of the average value of the Company’s total assets (including cash and cash equivalents) commencing with the first full calendar quarter following the date on which the aggregate fair value of the Company’s investments in its LMM portfolio companies falls below 7.5% of the Company’s total investment portfolio at fair value. 145
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Table of contents MSC INCOME FUND, INC. Notes to the Consolidated Financial Statements (Continued) The incentive fee under Advisory Agreement consists of two parts: (1) a subordinated incentive fee on income, and (2) an incentive fee on capital gains. The incentive fee under the Advisory Agreement for any partial quarter will be appropriately pro-rated. The first part of the incentive fee under the Advisory Agreement, referred to as the subordinated incentive fee on income, will be calculated and payable quarterly in arrears based on the Company’s pre-incentive fee net investment income for the immediately preceding quarter. The payment of the subordinated incentive fee on income will be subject to pre-incentive fee net investment income for the previous quarter, expressed as a quarterly rate of return on net assets of the Company at the beginning of the most recently completed calendar quarter, exceeding 1.5% (6.0% annualized), subject to a “catch up” feature (as described below). For this purpose, pre-incentive fee net investment income means interest income, dividend income and any other income (including any other fees, such as commitment, origination, structuring, diligence and consulting fees or other fees that the Company receives from portfolio companies) accrued during the calendar quarter, minus the Company’s operating expenses for the quarter (including the base management fee, administrative services expenses, the expenses payable under any other administration or similar agreement and any interest expense and dividends paid on any issued and outstanding preferred stock and any income tax expense on the Company’s net investment income and any excise tax, but excluding any income tax expense or benefit on the Company’s realized capital gains, realized capital losses or unrealized capital appreciation or depreciation and 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 payment-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, or any income tax expense or benefit related to such items. The calculation of the subordinated incentive fee on income for each quarter is as follows: 1. No subordinated incentive fee on income will be 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% (or 6.0% annualized); 2. 50% of the Company’s pre-incentive fee net investment income, if any, that exceeds the hurdle rate but is less than or equal to 2.307692% in any calendar quarter (9.230769% annualized) will be payable to the Adviser. This portion of the subordinated incentive fee on income is referred to as the “catch up” and 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 the hurdle rate did not apply when the pre-incentive fee net investment income exceeds 2.307692% (9.230769% annualized) in any calendar quarter; and 3. For any quarter in which the Company’s pre-incentive fee net investment income exceeds 2.307692% (9.230769% annualized), the subordinated incentive fee on income will equal 17.5% of the amount of the Company’s pre-incentive fee net investment income, as the hurdle rate and catch-up will have been achieved. The second part of the incentive fee under the Advisory Agreement, referred to as the incentive fee on capital gains, is an incentive fee on realized capital gains earned on liquidated investments from the Company’s investment portfolio, net of any income tax expense associated with such realized capital gains, and will be determined and payable in arrears as of the end of each calendar year (or upon termination of the Advisory Agreement). This fee will equal (a) 17.5% of the Company’s incentive fee capital gains, which will equal the Company’s realized capital gains (net of any related income tax expense) on a cumulative basis from the date of the MSC Income Listing, calculated as of the end of each calendar year thereafter (or upon termination of the Advisory Agreement), computed net of (1) all realized capital losses on a cumulative basis (net of any related income tax benefit) from the date of the MSC Income Listing, and (2) unrealized capital depreciation (net of any related income tax benefit) on a cumulative basis from the date of the MSC Income Listing, less (b) the aggregate amount of any previously paid capital gain incentive fees from the date of the MSC Income Listing. For purposes of calculating each component of the Company’s incentive fee capital gains under the Advisory Agreement, (1) the cost basis for any investment held by the Company as of the date of the MSC Income Listing will be deemed to be the fair value for such investment as of the most recent quarter end immediately prior to the date of the MSC Income Listing and, with respect to any investment acquired by the Company subsequent to the date of the MSC Income Listing, the cost basis shall equal the cost basis of such investment as reflected in the Company’s financial statements and (2) the income tax expense or benefit associated with all investments will be measured from the most recent quarter end immediately prior to the date of the MSC Income Listing through the date of any such calculation. 146
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Table of contents MSC INCOME FUND, INC. Notes to the Consolidated Financial Statements (Continued) Under the Advisory Agreement, the waivers under the Prior Investment Advisory Agreement of Internal Administrative Services expenses, except for the cost of the services previously provided by the former sub-administrator, were memorialized as a quarterly cap on the Company’s obligation to reimburse the Adviser for “Internal Administrative Expenses.” MSC Income is not required to reimburse the Adviser for Internal Administrative Expenses in an amount that exceeds on a quarterly basis the product obtained by multiplying (x) the value of MSC Income’s total assets at the end of each calendar quarter by (y) the applicable “Annual Basis Point Rate” set forth in the below table: Total Assets Annual Basis Point Rate $0 - $500 million 6.0 Over $500 million - $1.25 billion 5.125 Greater than $1.25 billion 4.5 2. Offering Costs In accordance with MSC Income’s previous investment advisory agreement with the previous investment adviser (“HMS Adviser”), MSC Income reimbursed HMS Adviser for any offering costs that were paid on MSC Income’s behalf, which consisted of, among other costs, actual legal, accounting, bona fide out-of-pocket itemized and detailed due diligence costs, printing, filing fees, transfer agent costs, postage, escrow fees, advertising and sales literature and other costs incurred in connection with the offering of MSC Income’s common stock, including through MSC Income’s DRIP. HMS Adviser was responsible for the payment of offering costs to the extent they exceeded 1.5% of the aggregate gross stock offering proceeds. Pursuant to the transaction whereby the Adviser became the investment adviser to MSC Income, HMS Adviser agreed to permanently waive reimbursement of organizational and offering expenses except for $0.6 million which remained payable to HMS Adviser and would be reimbursed as part of future issuances of common stock by MSC Income. For the years ended December 31, 2023 and 2022, MSC Income reimbursed HMS Adviser $0.1 million and $0.3 million, respectively, in connection with stock issuances. MSC Income’s reimbursement obligation to HMS Adviser for organizational and offering expenses was fully repaid as of June 30, 2023. 3. Indemnification The Prior Investment Advisory Agreement and the Advisory Agreement provide that the Adviser, any sub-adviser and their respective officers, directors, managers, partners, shareholders, members (and their shareholders or members, including the owners of their shareholders or members), agents, employees, controlling persons and any other person or entity affiliated with or acting on behalf of the Adviser or any sub-adviser, as applicable (each an “Indemnified Party” and, collectively, the “Indemnified Parties”) will not be liable to us for any action taken or omitted to be taken by the Adviser or any sub-adviser in connection with the performance of any of their duties or obligations as an investment adviser of the Company (except to the extent specified in Section 36(b) of the 1940 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 that we will indemnify, defend and protect Indemnified Parties and hold them harmless from and against all losses, damages, liabilities, costs and expenses (including reasonable attorneys’ fees and amounts reasonably paid in settlement) incurred by the Indemnified Parties in connection with the performance of their duties as an investment adviser of the Company, to the extent such losses, damages, liabilities, costs and expenses are not fully reimbursed by insurance, and to the extent that such indemnification would not be inconsistent with the Maryland General Corporation Law, the 1940 Act, the Company’s charter and other applicable law if, among other things, (i) the Indemnified Party has determined, in good faith, that the course of conduct which caused the loss or liability was in the best interests of the Company, (ii) the Indemnified Party was acting on behalf of or performing services for the Company, (iii) such liability or loss was not the result of negligence, willful misfeasance, bad faith, or misconduct by the Indemnified Party and (iv) such indemnification or agreement to hold harmless is recoverable only out of the Company’s net assets and not from stockholders. 4. Co-Investment In the ordinary course of business, MSC Income enters into transactions with other parties that may be considered related party transactions. MSC Income has implemented certain policies and procedures, both written and unwritten, to ensure that it does not engage in any prohibited transactions with any persons affiliated with MSC Income. If such affiliations are found to exist, MSC Income seeks the Board of Directors and/or appropriate Board of Directors committee review and approval for such transactions and otherwise comply with, or seek, orders for exemptive relief from the SEC, as appropriate. 147
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Table of contents MSC INCOME FUND, INC. Notes to the Consolidated Financial Statements (Continued) MSC Income has received an exemptive order from the SEC permitting co-investments among MSC Income, Main Street and other advisory clients of the Adviser in certain negotiated transactions where co-investing would otherwise be prohibited under the 1940 Act. MSC Income has made co-investments, and in the future intends to continue to make co-investments with Main Street and other advisory clients of the Adviser, in accordance with the conditions of the order. The order requires, among other things, that the Adviser and Main Street consider whether each such investment opportunity is appropriate for MSC Income, Main Street and the other advisory clients of the Adviser, as applicable, and if it is appropriate, to propose an allocation of the investment opportunity between such parties. Because the Adviser is wholly-owned by Main Street and is not managing MSC Income’s investment activities as its sole activity, this may provide the Adviser an incentive to allocate opportunities to other participating advisory clients instead of MSC Income. However, both MSC Income and the Adviser have policies and procedures in place to manage this conflict, including approval of investment allocations and oversight of co-investments by the independent members of the Board of Directors. Additional information regarding the operation of the co-investment program is set forth in the order granting exemptive relief, which may be reviewed on the SEC’s website at www.sec.gov. In addition to the co-investment program described above, MSC Income also co-invests in syndicated deals and other transactions where price is the only negotiated point by MSC Income and its affiliates. 5. Other Related Party Transactions The following table summarizes MSC Income’s sale of shares of its common stock to Main Street during each of the years ended December 31, 2024, 2023 and 2022. Trade Date Shares Sold Price per Share Total Cost May 2, 2022 47,349 $ 15.84 $ 750,000 May 1, 2023 127,877 15.64 2,000,000 August 1, 2023 174,271 15.78 2,750,000 November 1, 2023 237,944 15.76 3,750,000 January 31, 2024 157,035 15.92 2,500,000 May 1, 2024 157,629 15.86 2,500,000 August 1, 2024 125,314 15.96 2,000,000 Total Shares Sold to Main Street 1,027,419 _____________________________ Each of these sales were at the same price at which the Company issued new shares in connection with reinvestments of MSC Income’s quarterly dividend pursuant to the Prior DRIP. Each issuance and sale was made pursuant to the exemption from registration under Section 4(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”), and were unanimously approved by the Board of Directors, including each director who is not an “interested person” as such term is defined in Section 2(a)(19) of the 1940 Act, of the Company or the Adviser. In September 2023, pursuant to a simultaneous combined Dutch auction tender offer by MSC Income Fund and Main Street (the “August Dutch auction tender offer”), Main Street purchased 57,693 shares of MSC Income common stock from MSC Income stockholders at the clearing price, or $13.00 per share, for an aggregate cost of $0.8 million. The August Dutch auction tender offer, including Main Street’s participation, was unanimously approved by the Board of Directors, including each director who is not an “interested person” as such term is defined in Section 2(a)(19) of the 1940 Act, of the Company or the Adviser. NOTE K — SUBSEQUENT EVENTS The Company’s management has evaluated subsequent events through the date of issuance of the consolidated financial statements, and identified the following to report: On January 30, 2025, MSC Income closed a follow-on public offering of 5,500,000 shares of its common stock, at the public offering price of $15.53 per share, in connection with which MSC Income’s shares of common stock were listed and began trading on the NYSE under the ticker symbol “MSIF” on January 29, 2025. In addition, on February 3, 2025, MSC Income issued and sold 825,000 additional shares of its common stock, at the public offering price of $15.53 per 148
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Table of contents MSC INCOME FUND, INC. Notes to the Consolidated Financial Statements (Continued) share, pursuant to the underwriters’ full exercise of their overallotment option. Net of underwriting discounts and commissions and offering expenses, MSC Income received net cash proceeds of approximately $91 million in connection with the follow-on public equity offering Following the MSC Income Listing, the Company entered into a share repurchase plan to repurchase up to $65.0 million in the aggregate of shares of the Company’s common stock in the open market for a twelve-month period beginning in March 2025, at times when the market price per share of the Company’s common stock is trading below the most recently reported NAV per share of the Company’s common stock by certain pre-determined levels (including any updates, corrections or adjustments publicly announced by the Company to any previously announced NAV per share). The repurchases of shares of the Company’s common stock pursuant to the share repurchase plan are intended to satisfy the conditions of Rule 10b5-1 and Rule 10b-18 under the Exchange Act and will otherwise be subject to applicable law, including Regulation M, which may prohibit purchases under certain circumstances. Main Street also entered into a share purchase plan to purchase up to $20.0 million in the aggregate of shares of the Company’s common stock in the open market with terms and conditions substantially similar to the Company’s share repurchase plan for shares of the Company’s common stock, and daily purchases under the two plans, if any, are expected to be split pro rata (or as close thereto as reasonably possible) between the Company and Main Street based on the respective plan sizes. On January 20, 2025, in connection with Main Street’s potential acquisition in excess of 3% of the Company’s outstanding common stock, as a result of any purchases pursuant to the share purchase plan for shares of the Company’s common stock or otherwise, the Company entered into a Fund of Funds Investment Agreement with Main Street (the “Main Street Fund of Funds Agreement”). The Main Street Fund of Funds Agreement provides for the acquisition of shares of the Company’s common stock by Main Street, and the Company’s sale of such shares to Main Street, in a manner consistent with the requirements of Rule 12d1-4 under the 1940 Act. Additionally, in connection with the MSC Income Listing, on January 29, 2025, the Company entered into the Advisory Agreement with the Adviser (see Note J — Related Party Transactions for additional details). On January 29, 2025, in connection with the MSC Income Listing, the Company amended and restated its Articles of Amendment and Restatement, as amended, by filing new Articles of Amendment and Restatement of the Company (the “New Articles”) with the State Department of Assessments and Taxation of the State of Maryland. The New Articles revised the Company’s charter to, among other things, (i) include a provision that limits the transferability of shares of its common stock outstanding at the time of the MSC Income Listing during the 365-day period following the MSC Income Listing, (ii) reflect an amendment to delete provisions regarding restrictions and requirements applicable to its dividend reinvestment plan, (iii) reflect an amendment to delete provisions prohibiting acquisitions of assets in exchange for shares of its common stock and restricting certain transactions between the Company and the Adviser and its affiliates and (iv) delete certain provisions required by, and remove references to, the NASAA Guidelines in order to conform certain provisions of the Company’s charter more closely to provisions in the charters of other BDCs whose securities are listed and publicly- traded on a national securities exchange. On February 27, 2025, the Company entered into an amendment to the Corporate Facility to, among other things: (i) increase the total commitments from $165.0 million to $245.0 million and (ii) increase the accordion feature from up to a total of $200.0 million to up to a total of $300.0 million. On March 6, 2025, the Board of Directors declared a regular quarterly dividend of $0.35 per share and a supplemental quarterly dividend of $0.01 per share, both payable on May 1, 2025 to stockholders of record as of March 31, 2025. 149
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Table of contents Schedule 12-14 MSC INCOME, INC. Consolidated Schedule of Investments In and Advances to Affiliates December 31, 2024 (dollars in thousands) Company TotalRate BaseRate SpreadPIKRate Type of Investment (1)(10)(11) Geography Amount ofRealizedGain/(Loss) Amount ofUnrealizedGain/(Loss) Amount ofInterest,Fees orDividendsCredited toIncome (2) December31,2023 FairValue (13) GrossAdditions (3) GrossReductions(4) December31,2024 FairValue (13) Control Investments BDB Holdings, LLC Preferred Equity (7) $ — $ (415) $ — $ — $ 13,025 $ 415 $ 12,610 Copper Trail Fund Investments LP Interests (CTMH,LP) (9) — — — 568 — 38 530 GRT Rubber Technologies LLC10.66% SF+6.00% Secured Debt (12) (8) — 2 167 1,182 368 — 1,550 12.66% SF+8.00% Secured Debt (8) — (50) 2,746 19,944 50 50 19,944 Member Units (8) — 710 113 21,890 710 — 22,600 Harris Preston Fund Investments LP Interests (2717 MH,L.P.) (8) 147 2,691 311 6,050 2,837 147 8,740 Volusion, LLC 10.00% Secured Debt (8) — — 91 900 — — 900 Preferred MemberUnits (8) — — 13 — — — — Preferred MemberUnits (8) — 1,895 — 3,110 1,895 2,001 3,004 Preferred MemberUnits (8) — — — — — — — Common Stock (8) — — — — — — — OtherAmounts related toinvestments transferred toor from other1940 Act classificationduring the period — — — — — — — Total Control Investments $ 147 $ 4,833 $ 3,441 $ 53,644 $ 18,885 $ 2,651 $ 69,878 Affiliate Investments Analytical Systems KecoHoldings, LLC Secured Debt (12) (8) $ — $ — $ 4 $ 54 $ — $ 54 $ — 13.75% Secured Debt (8) — — 175 1,020 79 87 1,012 Preferred MemberUnits (8) — — — — — — — Preferred MemberUnits (8) — 120 — 1,210 120 — 1,330 Warrants (8) — — — — — — — Barfly Ventures, LLC Member Units (5) — 573 — 1,380 573 — 1,953 Batjer TopCo, LLC 10.00% Secured Debt (12) (8) — (1) 5 — 51 1 50 10.00% Secured Debt (12) (8) — — 3 30 — — 30 10.00% Secured Debt (8) — (15) 124 1,175 5 15 1,165 Preferred Stock (8) — (110) 85 680 — 110 570 Brewer Crane Holdings, LLC14.66% SF+10.00% Secured Debt (9) — — 205 1,374 4 124 1,254 Preferred MemberUnits (9) — (230) 30 1,400 — 230 1,170 Centre Technologies Holdings,LLC SF+9.00% Secured Debt (12) (8) — — 3 — — — — 13.66% SF+9.00% Secured Debt (8) — 28 79 — 6,564 180 6,384 SF+10.00% Secured Debt (8) — — 725 — 919 919 — Secured Debt (8) — (29) 84 4,394 — 4,394 — Preferred MemberUnits (8) — 284 30 2,760 350 — 3,110 Chamberlin Holding LLC SF+6.00% Secured Debt (12) (8) — (22) 25 — 22 22 — 12.74% SF+8.00% Secured Debt (8) — (1) 530 3,905 1 1 3,905 Member Units (8) — 950 1,179 7,330 950 — 8,280 Member Units (8) — 173 23 715 174 1 888 Charps, LLC Preferred MemberUnits (5) — (20) 200 3,920 — 20 3,900 Clad-Rex Steel, LLC Secured Debt (12) (5) — — 1 — — — — 9.00% Secured Debt (5) — 46 219 2,103 37 450 1,690 150
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Table of contents Schedule 12-14 MSC INCOME FUND, INC. Consolidated Schedule of Investments In and Advances to Affiliates (Continued) December 31, 2024 (dollars in thousands) Company TotalRate BaseRate SpreadPIK RateType of Investment (1)(10)(11) Geography Amount ofRealizedGain/(Loss) Amount ofUnrealizedGain/(Loss) Amount ofInterest,Fees orDividendsCredited toIncome (2) December31,2023 FairValue (13) GrossAdditions (3) GrossReductions(4) December31,2024 FairValue (13) 10.00% Secured Debt (5) — 2 25 251 2 10 243 Member Units (5) — 1,450 173 1,300 1,450 — 2,750 Member Units (5) — (45) — 282 — 45 237 Cody Pools, Inc. Secured Debt (12) (8) — 1 8 — 236 236 — 12.50% Secured Debt (8) — (8) 873 7,111 7 520 6,598 Preferred MemberUnits (8) — (1,170) 407 18,120 — 1,170 16,950 Colonial Electric Company LLC Secured Debt (12) (6) — — 2 — — — — 12.00% Secured Debt (6) — 64 598 5,407 106 1,935 3,578 Preferred MemberUnits (6) — (360) 503 600 — 600 — Preferred MemberUnits (6) — 1,470 577 1,920 1,470 — 3,390 Compass Systems & Sales, LLC Secured Debt (5) — — 19 — 584 600 (16) 13.50% Secured Debt (5) — — 616 4,175 26 — 4,201 Preferred Equity (5) — (3) 60 1,863 — 3 1,860 Datacom, LLC 7.50% Secured Debt (8) — — 4 49 66 60 55 10.00% Secured Debt (8) — 43 114 844 64 30 878 Preferred MemberUnits (8) — 20 — 10 20 — 30 Digital Products Holdings LLC14.56% SF+10.00% Secured Debt (5) — (18) 532 3,673 14 582 3,105 Preferred MemberUnits (5) — — 50 2,459 — — 2,459 Direct Marketing Solutions, Inc. Secured Debt (9) — (2) 11 217 302 519 — 14.00% Secured Debt (9) — (14) 700 5,002 14 348 4,668 Preferred Stock (9) — (700) — 5,180 — 700 4,480 DMA Industries, LLC 12.00% Secured Debt (7) — — 9 — 138 — 138 12.00% Secured Debt (7) — (58) 555 4,700 19 558 4,161 Preferred Equity (7) — (434) — 1,920 — 434 1,486 15.00% 15.00% Preferred Equity (7) — — 43 — 810 — 810 Flame King Holdings, LLC Preferred Equity (9) — 2,010 1,229 6,970 2,010 — 8,980 Freeport Financial Funds LP Interests (FreeportFirst Lien Loan FundIII LP) (5) — 59 41 3,705 58 2,500 1,263 Gamber-Johnson Holdings, LLC SF+7.00% Secured Debt (12) (5) — — 2 — — — — 11.00% SF+7.00% Secured Debt (12) (5) — 115 181 — 18,282 — 18,282 SF+7.00% Secured Debt (5) — (184) 1,395 13,520 — 13,520 — Member Units (5) — 4,510 1,984 24,180 4,510 — 28,690 GFG Group, LLC 8.00% Secured Debt (5) — (17) 198 2,336 17 307 2,046 Preferred MemberUnits (5) — (230) 453 2,870 — 230 2,640 Gulf Publishing Holdings, LLC SF+9.50% Secured Debt (12) (8) — — — — — — — 12.50% 12.50% Secured Debt (8) — (173) 20 571 — 193 378 Preferred Equity (8) — (620) — 620 — 620 — Member Units (8) — — — — — — — HPEP 3, L.P. LP Interests (HPEP 3,L.P.) (12) (8) — 247 1 4,225 247 — 4,472 IG Investor, LLC 13.00% Secured Debt (12) (6) — — 33 (27) 406 — 379 13.00% Secured Debt (6) — — 1,259 9,069 64 440 8,693 Common Equity (6) — 460 — 3,600 460 — 4,060 Independent Pet PartnersIntermediate Holdings, LLC Common Equity (6) — 970 — 6,320 970 — 7,290 Integral Energy Services 12.35% SF+7.50% Secured Debt (8) — 390 2,138 16,232 475 1,835 14,872 151
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Table of contents Schedule 12-14 MSC INCOME FUND, INC. Consolidated Schedule of Investments In and Advances to Affiliates (Continued) December 31, 2024 (dollars in thousands) Company TotalRate BaseRate SpreadPIK RateType of Investment (1)(10)(11) Geography Amount ofRealizedGain/(Loss) Amount ofUnrealizedGain/(Loss) Amount ofInterest,Fees orDividendsCredited toIncome (2) December31,2023 FairValue (13) GrossAdditions (3) GrossReductions(4) December31,2024 FairValue (13) 10.00% 10.00% Preferred Equity (8) — 153 32 350 185 — 535 Common Stock (8) — 450 50 190 450 — 640 Kickhaefer ManufacturingCompany, LLC 11.50% Secured Debt (5) — — 543 4,933 8 1,200 3,741 9.00% Secured Debt (5) — — 88 951 42 11 982 Preferred Equity (5) — 640 — 2,420 640 — 3,060 Member Units (5) — (5) 31 683 — 5 678 MH Corbin Holding LLC Secured Debt (5) (960) 95 139 1,256 94 1,350 — Preferred MemberUnits (5) (1,100) 1,020 — 80 1,020 1,100 — Preferred MemberUnits (5) (1,500) 1,500 — — 1,500 1,500 — Mills Fleet Farm Group, LLC SF+7.00% Secured Debt (5) (5,022) 339 1,820 17,524 — 17,524 — Common Equity (5) — — — — 11,166 — 11,166 Mystic Logistics Holdings, LLC Secured Debt (12) (6) — — 1 — — — — 10.00% Secured Debt (6) — 4 147 1,436 — — 1,436 Common Stock (6) — (8) 950 6,598 — 8 6,590 Nello Industries Investco, LLC SF+6.50% Secured Debt (5) — — 248 — 5,388 5,400 (12) 13.50% Secured Debt (5) — — 538 — 6,619 — 6,619 Common Equity (5) — 860 234 — 3,890 — 3,890 NexRev LLC Secured Debt (12) (8) — — 30 — 844 844 — 9.00% Secured Debt (8) — 3 260 2,435 18 — 2,453 Preferred MemberUnits (8) — 1,380 244 1,590 1,380 — 2,970 NuStep, LLC 11.16% SF+6.50% Secured Debt (5) — — 110 899 1 — 900 12.00% Secured Debt (5) — — 566 4,606 4 — 4,610 Preferred MemberUnits (5) — 164 — 2,310 580 — 2,890 Preferred MemberUnits (5) — 29 — 1,290 210 — 1,500 Oneliance, LLC SF+10.00% Secured Debt (7) — 7 142 1,339 21 1,360 — Preferred Stock (7) — 358 3 282 358 — 640 Orttech Holdings, LLC SF+11.00% Secured Debt (12) (5) — (1) 1 — 1 1 — 15.66% SF+11.00% Secured Debt (5) — (23) 932 5,510 23 43 5,490 Preferred Stock (5) — (900) 112 4,260 — 900 3,360 Pinnacle TopCo, LLC Secured Debt (12) (8) — 8 5 105 10 115 — 13.00% Secured Debt (8) — 141 1,033 7,472 188 500 7,160 Preferred Equity (8) — 1,455 530 3,135 1,455 — 4,590 RA Outdoors LLC 11.74% SF+6.75% 11.74% Secured Debt (8) — (44) 65 745 519 49 1,215 11.74% SF+6.75% 11.74% Secured Debt (8) — (460) 685 12,089 850 229 12,710 Common Equity (8) — — — — — — — Robbins Bros. Jewelry, Inc. 10.00% Secured Debt (9) — — 1 (6) — 1 (7) 12.50% 10.00% Secured Debt (9) — (1,663) 123 3,421 — 1,804 1,617 Preferred Equity (9) — — — — — — — SI East, LLC 11.75% Secured Debt (12) (7) — — 88 375 750 375 750 Secured Debt (7) — (161) 947 18,179 — 18,179 — 12.79% Secured Debt (7) — 21 1,948 — 22,554 — 22,554 Preferred MemberUnits (7) — (1,840) 541 6,390 — 1,840 4,550 Student Resource Center, LLC 8.50% 8.50% Secured Debt (6) — (1,717) — 3,543 — 1,717 1,826 Preferred Equity (6) — — — — — — — 152
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Table of contents Schedule 12-14 MSC INCOME FUND, INC. Consolidated Schedule of Investments In and Advances to Affiliates (Continued) December 31, 2024 (dollars in thousands) Company TotalRate BaseRate SpreadPIK RateType of Investment (1)(10)(11) Geography Amount ofRealizedGain/(Loss) Amount ofUnrealizedGain/(Loss) Amount ofInterest,Fees orDividendsCredited toIncome (2) December31,2023 FairValue (13) GrossAdditions (3) GrossReductions(4) December31,2024 FairValue (13) 8.50% 8.50% Secured Debt (6) — — 5 — 227 — 227 Tedder Industries, LLC 12.00% 12.00% Secured Debt (9) — (15) 14 432 — 20 412 12.00% 12.00% Secured Debt (9) — (2,626) 115 3,565 — 2,664 901 Preferred MemberUnits (9) — — — — — — — Preferred MemberUnits (9) — — — — — — — Preferred MemberUnits (9) — — — — — — — Trantech Radiator Topco, LLC Secured Debt (12) (7) — (1) 1 — — 1 (1) 13.50% Secured Debt (7) — (6) 274 1,980 — 18 1,962 Common Stock (7) — (1,040) 29 3,180 — 1,040 2,140 Urgent DSO LLC 13.50% Secured Debt (5) — — 280 — 2,145 — 2,145 9.00% 9.00% Preferred Equity (5) — — 80 — 1,080 — 1,080 Victory Energy Operations, LLC Secured Debt (8) — — 1 — — 5 (5) 13.00% Secured Debt (8) — — 263 — 7,529 — 7,529 Preferred Equity (8) — — — — 4,198 554 3,644 VVS Holdco LLC SF+6.00% Secured Debt (12) (5) — — 4 — — — — 11.50% Secured Debt (5) — — 843 6,926 50 610 6,366 Preferred Equity (5) — — 100 3,060 — — 3,060 OtherAmounts related toinvestments transferred toor from other1940 Act classificationduring the period 5,022 153 (2,516) (36,978) — — — Total Affiliate investments $ (3,560) $ 7,791 $ 31,222 $ 291,279 $ 118,673 $ 95,570 $ 351,360 153
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Table of contents Schedule 12-14 MSC INCOME FUND, INC. Consolidated Schedule of Investments In and Advances to Affiliates (Continued) December 31, 2024 (dollars in thousands) ___________________________________________________ (1) The principal amount, the ownership detail for equity investments and if the investment is income producing is included in the Consolidated Schedule of Investments included in Item 8. Consolidated Financial Statements and Supplementary Data of this Annual Report on Form 10-K. (2) Represents the total amount of interest, fees and dividends credited to income for the portion of the period for which an investment was included in Control or Affiliate categories, respectively. For investments transferred between Control and Affiliate categories during the period, any income or investment balances related to the time period it was in the category other than the one shown at period end is included in “Amounts related to investments transferred to or from other 1940 Act classifications during the period.” (3) Gross additions include increases in the cost basis of investments resulting from new portfolio investments, follow-on investments and accrued PIK interest, and the exchange of one or more existing securities for one or more new securities. Gross additions also include net increases in unrealized appreciation or net decreases in net unrealized depreciation as well as the movement of an existing portfolio company into this category and out of a different category. (4) Gross reductions include decreases in the cost basis of investments resulting from principal repayments or sales and the exchange of one or more existing securities for one or more new securities. Gross reductions also include net increases in net unrealized depreciation or net decreases in unrealized appreciation as well as the movement of an existing portfolio company out of this category and into a different category. (5) Portfolio company located in the Midwest region as determined by location of the corporate headquarters. The fair value as of December 31, 2024 for affiliate investments located in this region was $136,828. This represented 21.9% of net assets as of December 31, 2024. (6) Portfolio company located in the Northeast region as determined by location of the corporate headquarters. The fair value as of December 31, 2024 for affiliate investments located in this region was $37,469. This represented 6.0% of net assets as of December 31, 2024. (7) Portfolio company located in the Southeast region as determined by location of the corporate headquarters. The fair value as of December 31, 2024 for affiliate investments located in this region was $39,190. This represented 6.3% of net assets as of December 31, 2024. (8) Portfolio company located in the Southwest region as determined by location of the corporate headquarters. The fair value as of December 31, 2024 for control investments located in this region was $56,738. This represented 9.1% of net assets as of December 31, 2024. The fair value as of December 31, 2024 for affiliate investments located in this region was $114,398. This represented 18.3% of net assets as of December 31, 2024. (9) Portfolio company located in the West region as determined by location of the corporate headquarters. The fair value as of December 31, 2024 for control investments located in this region was $530. This represented 0.1% of net assets as of December 31, 2024. The fair value as of December 31, 2024 for affiliate investments located in this region was $23,475. This represented 3.8% of net assets as of December 31, 2024. (10) All of the Company’s portfolio investments are generally subject to restrictions on resale as “restricted securities,” unless otherwise noted. (11) This schedule should be read in conjunction with the Consolidated Schedule of Investments and Notes to the Consolidated Financial Statements included in Item 8. Consolidated Financial Statements and Supplementary Data of this Annual Report on Form 10-K. Supplemental information can be located within the 154
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Table of contents Schedule 12-14 MSC INCOME FUND, INC. Consolidated Schedule of Investments In and Advances to Affiliates (Continued) December 31, 2024 (dollars in thousands) Consolidated Schedule of Investments including end of period interest rate, preferred dividend rate, maturity date, investments not paid currently in cash and investments whose value was determined using significant unobservable inputs. (12) Investment has an unfunded commitment as of December 31, 2024 (see Note I — Commitments and Contingencies included in Item 8. Consolidated Financial Statements and Supplementary Data of this Annual Report on Form 10-K). The fair value of the investment includes the impact of the fair value of any unfunded commitments. (13) Negative fair value is the result of the capitalized discount being greater than the principal amount outstanding on the loan. 155
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Table of contents Schedule 12-14 MSC INCOME FUND, INC. Consolidated Schedule of Investments In and Advances to Affiliates December 31, 2023 (dollars in thousands) Company TotalRate BaseRate Spread PIKRate Type ofInvestment(1)(10)(11) Geography Amount ofRealizedGain/(Loss) Amount ofUnrealizedGain/(Loss) Amount ofInterest,Fees orDividendsCredited toIncome(2) December31,2022 FairValue (13) GrossAdditions(3) GrossReductions(4) December31,2023 FairValue (13) Control Investments Copper Trail Fund Investments LP Interests(CTMH, LP) (9) $ — $ — $ 38 $ 588 $ — $ 20 $ 568 GRT Rubber Technologies LLC11.48% SF+ 6.00% Secured Debt (12) (8) — 3 88 330 852 — 1,182 13.48% SF+ 8.00% Secured Debt (8) — (50) 2,696 19,943 51 50 19,944 Member Units (8) — — 90 21,890 — — 21,890 Harris Preston FundInvestments LP Interests (2717MH, L.P.) (8) 2,223 (952) 142 7,552 2,796 4,298 6,050 Volusion, LLC 10.00% Secured Debt (8) — — 69 — 900 — 900 11.50% Secured Debt (8) (1,366) 780 71 6,392 — 6,392 — 8.00% UnsecuredConvertible Debt (8) (175) 175 — — 175 175 — Preferred MemberUnits (8) — — 1 — — — — Preferred MemberUnits (8) — (596) — — 4,906 1,796 3,110 Preferred MemberUnits (8) — — — — — — — Common Stock (8) — (1,104) — — 1,104 1,104 — Warrants (8) — 1,104 — — — — — OtherAmounts related toinvestments transferred toor from other1940 Act classificationduring the period 1,541 (649) (94) (6,392) 6,392 — — Total Control Investments $ 2,223 $ (1,289) $ 3,101 $ 50,303 $ 17,176 $ 13,835 $ 53,644 Affiliate Investments AFG Capital Group, LLC Preferred MemberUnits (8) $ 1,800 $ (2,050) $ — $ 2,350 $ 1,800 $ 4,150 $ — Analytical Systems KecoHoldings, LLC 15.38% SF+ 10.00% Secured Debt (12) (8) — — 4 (2) 56 — 54 15.38% SF+ 10.00% Secured Debt (8) — — 188 1,135 21 136 1,020 14.13% Preferred MemberUnits (8) — — — — — — — Preferred MemberUnits (8) — 330 — 880 330 — 1,210 Warrants (8) — — — — — — — ATX Networks Corp. L+ 7.50% Secured Debt (6) — (102) 856 6,368 545 6,913 — 10.00% Unsecured Debt (6) — (276) 1,135 2,614 1,135 3,749 — Common Stock (6) 3,178 (3,290) — 3,290 3,178 6,468 — Barfly Ventures, LLC Member Units (5) — 273 — 1,107 273 — 1,380 Batjer TopCo, LLC 10.00% Secured Debt (12) (8) — 1 — (1) 1 — — 10.00% Secured Debt (12) (8) — — 2 — 70 40 30 10.00% Secured Debt (8) — 15 129 1,205 21 51 1,175 Preferred Stock (8) — 225 76 455 225 — 680 Brewer Crane Holdings, LLC15.46% L+ 10.00% Secured Debt (9) — — 224 1,491 8 125 1,374 Preferred MemberUnits (9) — (370) 30 1,770 — 370 1,400 Centre Technologies Holdings,LLC SF+ 9.00% Secured Debt (12) (8) — — 3 — — — — 14.48% SF+ 9.00% Secured Debt (8) — 29 572 3,731 663 — 4,394 Preferred MemberUnits (8) — 590 30 2,170 590 — 2,760 Chamberlin Holding LLC SF+ 6.00% Secured Debt (12) (8) — 49 11 — — — — 13.49% SF+ 8.00% Secured Debt (8) — (4) 553 4,236 4 335 3,905 Member Units (8) — 1,599 1,045 5,728 1,602 — 7,330 156
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Table of contents Schedule 12-14 MSC INCOME FUND, INC. Consolidated Schedule of Investments In and Advances to Affiliates (Continued) December 31, 2023 (dollars in thousands) Company TotalRate BaseRate Spread PIKRate Type ofInvestment(1)(10)(11) Geography Amount ofRealizedGain/(Loss) Amount ofUnrealizedGain/(Loss) Amount ofInterest,Fees orDividendsCredited toIncome(2) December31,2022 FairValue (13) GrossAdditions(3) GrossReductions(4) December31,2023 FairValue (13) Member Units (8) — 37 23 678 38 1 715 Charps, LLC Preferred MemberUnits (5) — 590 366 3,330 590 — 3,920 Clad-Rex Steel, LLC 11.50% Secured Debt (12) (5) — — — — — — — 11.50% Secured Debt (5) — (37) 284 2,620 — 517 2,103 10.00% Secured Debt (5) — — 26 260 — 9 251 Member Units (5) — (760) 69 2,060 — 760 1,300 Member Units (5) — 55 — 152 130 — 282 Cody Pools, Inc. 12.50% Secured Debt (12) (8) — 2 1 — — — — 12.50% Secured Debt (8) — 22 562 — 7,872 761 7,111 L+ 10.50% Secured Debt (8) — (11) 26 273 14 287 — L+ 10.50% Secured Debt (8) — (96) 500 6,882 — 6,882 — Preferred MemberUnits (8) — 3,570 1,219 14,550 3,570 — 18,120 Colonial Electric CompanyLLC Secured Debt (6) — — 12 — 400 400 — 12.00% Secured Debt (6) — (41) 471 5,729 34 356 5,407 Preferred MemberUnits (6) — 360 — — 600 — 600 Preferred MemberUnits (6) — (370) — 2,290 — 370 1,920 Compass Systems & Sales,LLC 13.50% Secured Debt (5) — — — — — — — 13.50% Secured Debt (5) — — 69 — 4,175 — 4,175 Preferred Equity (5) — — — — 1,863 — 1,863 Datacom, LLC 7.50% Secured Debt (8) — — 4 25 89 65 49 10.00% Secured Debt (8) — (14) 107 865 22 43 844 Preferred MemberUnits (8) — (290) — 300 — 290 10 Digital Products Holdings LLC15.38% SF+ 10.00% Secured Debt (5) — (17) 586 3,878 — 205 3,673 Preferred MemberUnits (5) — — 50 2,459 — — 2,459 Direct Marketing Solutions,Inc. 14.00% Secured Debt (9) — (2) 13 — 227 10 217 14.00% Secured Debt (9) — (19) 730 5,352 19 369 5,002 Preferred Stock (9) — (380) 43 5,558 — 378 5,180 Flame King Holdings, LLC L+ 6.50% Secured Debt (9) — (15) 121 1,900 15 1,915 — L+ 9.00% Secured Debt (9) — (123) 478 5,300 123 5,423 — Preferred Equity (9) — 2,570 814 4,400 2,570 — 6,970 Freeport Financial Funds LP Interests(Freeport First LienLoan Fund III LP)(12) (5) — — 598 5,848 — 2,143 3,705 Gamber-Johnson Holdings,LLC SF+ 7.50% Secured Debt (12) (5) — — 2 — — — — 10.50% SF+ 7.50% Secured Debt (5) — (88) 1,727 16,020 88 2,588 13,520 Member Units (5) — 11,460 1,491 12,720 11,460 — 24,180 GFG Group, LLC 8.00% Secured Debt (5) — (25) 263 2,836 25 525 2,336 Preferred MemberUnits (5) — 1,080 200 1,790 1,080 — 2,870 Gulf Publishing Holdings, LLC SF+ 9.50% Secured Debt (12) (8) — — — — — — — 12.50% Secured Debt (8) — — 73 571 — — 571 Preferred Equity (8) — (330) — 950 — 330 620 Member Units (8) — — — — — — — 157
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Table of contents Schedule 12-14 MSC INCOME FUND, INC. Consolidated Schedule of Investments In and Advances to Affiliates (Continued) December 31, 2023 (dollars in thousands) Company TotalRate BaseRate Spread PIKRate Type ofInvestment(1)(10)(11) Geography Amount ofRealizedGain/(Loss) Amount ofUnrealizedGain/(Loss) Amount ofInterest,Fees orDividendsCredited toIncome(2) December31,2022 FairValue (13) GrossAdditions(3) GrossReductions(4) December31,2023 FairValue (13) HPEP 3, L.P. LP Interests (HPEP3, L.P.) (12) (8) — 156 4 4,331 403 509 4,225 IG Investor, LLC Secured Debt (12) (6) — — 5 — 173 200 (27) 13.00% Secured Debt (6) — — 692 — 9,179 110 9,069 Common Equity (6) — — — — 3,774 174 3,600 Independent Pet PartnersIntermediate Holdings, LLC Common Equity (6) — (220) — — 6,540 220 6,320 Integral Energy Services 13.16% SF+ 7.50% Secured Debt (8) — (787) 2,773 18,425 94 2,287 16,232 10.00% 10.00% Preferred Equity (8) — 85 — — 350 — 350 Common Stock (8) — (1,300) 50 1,490 — 1,300 190 Kickhaefer ManufacturingCompany, LLC 12.00% Secured Debt (5) — (18) 668 5,093 58 218 4,933 9.00% Secured Debt (5) — — 86 961 — 10 951 Preferred Equity (5) — 620 — 1,800 620 — 2,420 Member Units (5) — (30) 29 713 — 30 683 Market Force Information, LLC L+ 11.00% Secured Debt (9) (6,465) 6,060 — 403 6,060 6,463 — Member Units (9) (4,160) 4,160 — — 4,160 4,160 — MH Corbin Holding LLC13.00% Secured Debt (5) — 307 190 1,137 308 189 1,256 Preferred MemberUnits (5) — 80 — — 80 — 80 Preferred MemberUnits (5) — — — — — — — Mystic Logistics Holdings,LLC Secured Debt (12) (6) — — 1 — — — — 10.00% Secured Debt (6) — — 146 1,436 — — 1,436 Common Stock (6) — 890 1,131 5,708 890 — 6,598 NexRev LLC 10.00% Secured Debt (12) (8) — — — — — — — 10.00% Secured Debt (8) — 708 289 2,119 729 413 2,435 Preferred MemberUnits (8) — 1,310 166 280 1,310 — 1,590 NuStep, LLC 11.98% SF+ 6.50% Secured Debt (5) — (2) 120 1,100 1 202 899 12.00% Secured Debt (5) — — 564 4,603 3 — 4,606 Preferred MemberUnits (5) — 300 — 2,010 300 — 2,310 Preferred MemberUnits (5) — — — 1,290 — — 1,290 Oneliance, LLC 16.48% SF+ 11.00% Secured Debt (7) — (7) 231 1,380 6 47 1,339 Preferred Stock (7) — — — 264 18 — 282 Orttech Holdings, LLC SF+ 11.00% Secured Debt (12) (5) — 2 1 (2) 2 — — 16.48% SF+ 11.00% Secured Debt (5) — 58 955 5,814 86 390 5,510 Preferred Stock (5) — 1,320 274 2,940 1,320 — 4,260 Pinnacle TopCo, LLC 8.00% Secured Debt (12) (8) — — 1 — 105 — 105 13.00% Secured Debt (8) — — 34 — 7,472 — 7,472 Preferred Equity (8) — — — — 3,135 — 3,135 Robbins Bros. Jewelry, Inc. 12.50% Secured Debt (9) — — 4 (8) 2 — (6) 12.50% Secured Debt (9) — (323) 507 3,902 18 499 3,421 Preferred Equity (9) — (1,650) — 1,650 — 1,650 — SI East, LLC 11.25% Secured Debt (12) (7) — 6 28 — 625 250 375 12.47% Secured Debt (7) — 161 1,278 — 18,179 — 18,179 9.50% Secured Debt (7) — (134) 1,403 29,929 — 29,929 — Preferred MemberUnits (7) — 1,737 399 4,550 1,840 — 6,390 Student Resource Center, LLC 8.50% 8.50% Secured Debt (6) — (1,881) 364 5,063 244 1,764 3,543 158
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Table of contents Schedule 12-14 MSC INCOME FUND, INC. Consolidated Schedule of Investments In and Advances to Affiliates (Continued) December 31, 2023 (dollars in thousands) Company TotalRate BaseRate Spread PIKRate Type ofInvestment(1)(10)(11) Geography Amount ofRealizedGain/(Loss) Amount ofUnrealizedGain/(Loss) Amount ofInterest,Fees orDividendsCredited toIncome(2) December31,2022 FairValue (13) GrossAdditions(3) GrossReductions(4) December31,2023 FairValue (13) Preferred Equity (6) — — — — — — — Tedder Industries, LLC 12.00% Secured Debt (9) — (28) 56 460 — 28 432 12.00% Secured Debt (9) — (218) 466 3,780 3 218 3,565 Preferred MemberUnits (9) — (1,920) — 1,920 — 1,920 — Preferred MemberUnits (9) — (141) — — 124 124 — Preferred MemberUnits (9) — (165) — — 165 165 — Trantech Radiator Topco, LLC8.00% Secured Debt (12) (7) — (2) 3 — 2 2 — 12.00% Secured Debt (7) — (14) 255 1,980 14 14 1,980 Common Stock (7) — 1,230 29 1,950 1,230 — 3,180 VVS Holdco LLC SF+ 6.00% Secured Debt (12) (5) — — 10 (5) 5 — — 11.50% Secured Debt (5) — — 904 7,421 55 550 6,926 Preferred Equity (5) — (30) 54 2,990 100 30 3,060 OtherAmounts related toinvestments transferred toor from other1940 Act classificationduring the period (1,541) 649 (151) — — — — Total Affiliate investments $ (7,188) $ 25,116 $ 29,805 $ 277,000 $ 115,308 $ 101,029 $ 291,279 159
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Table of contents Schedule 12-14 MSC INCOME FUND, INC. Consolidated Schedule of Investments In and Advances to Affiliates (Continued) December 31, 2023 (dollars in thousands) ___________________________________________________ (1) The principal amount, the ownership detail for equity investments and if the investment is income producing is included in the Consolidated Schedule of Investments included in Item 8. Consolidated Financial Statements and Supplementary Data of this Annual Report on Form 10-K. (2) Represents the total amount of interest, fees and dividends credited to income for the portion of the period for which an investment was included in Control or Affiliate categories, respectively. For investments transferred between Control and Affiliate categories during the period, any income or investment balances related to the time period it was in the category other than the one shown at period end is included in “Amounts related to investments transferred to or from other 1940 Act classifications during the period.” (3) Gross additions include increases in the cost basis of investments resulting from new portfolio investments, follow-on investments and accrued PIK interest, and the exchange of one or more existing securities for one or more new securities. Gross additions also include net increases in unrealized appreciation or net decreases in net unrealized depreciation as well as the movement of an existing portfolio company into this category and out of a different category. (4) Gross reductions include decreases in the cost basis of investments resulting from principal repayments or sales and the exchange of one or more existing securities for one or more new securities. Gross reductions also include net increases in net unrealized depreciation or net decreases in unrealized appreciation as well as the movement of an existing portfolio company out of this category and into a different category. (5) Portfolio company located in the Midwest region as determined by location of the corporate headquarters. The fair value as of December 31, 2023 for affiliate investments located in this region was $107,201. This represented 17.2% of net assets as of December 31, 2023. (6) Portfolio company located in the Northeast region as determined by location of the corporate headquarters. The fair value as of December 31, 2023 for affiliate investments located in this region was $38,466. This represented 6.2% of net assets as of December 31, 2023. (7) Portfolio company located in the Southeast region as determined by location of the corporate headquarters. The fair value as of December 31, 2023 for affiliate investments located in this region was $31,725. This represented 5.1% of net assets as of December 31, 2023. (8) Portfolio company located in the Southwest region as determined by location of the corporate headquarters. The fair value as of December 31, 2023 for control investments located in this region was $53,076. This represented 8.5% of net assets as of December 31, 2023. The fair value as of December 31, 2023 for affiliate investments located in this region was $86,332. This represented 13.9% of net assets as of December 31, 2023. (9) Portfolio company located in the West region as determined by location of the corporate headquarters. The fair value as of December 31, 2023 for control investments located in this region was $568. This represented 0.1% of net assets as of December 31, 2023. The fair value as of December 31, 2023 for affiliate investments located in this region was $27,555. This represented 4.4% of net assets as of December 31, 2023. (10) All of the Company’s portfolio investments are generally subject to restrictions on resale as “restricted securities,” unless otherwise noted. (11) This schedule should be read in conjunction with the Consolidated Schedule of Investments and Notes to the Consolidated Financial Statements included in Item 8. Consolidated Financial Statements and Supplementary Data of this Annual Report on Form 10-K. Supplemental information can be located within the 160
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Table of contents Schedule 12-14 MSC INCOME FUND, INC. Consolidated Schedule of Investments In and Advances to Affiliates (Continued) December 31, 2023 (dollars in thousands) Consolidated Schedule of Investments including end of period interest rate, preferred dividend rate, maturity date, investments not paid currently in cash and investments whose value was determined using significant unobservable inputs. (12) Investment has an unfunded commitment as of December 31, 2023 (see Note I — Commitments and Contingencies included in Item 8. Consolidated Financial Statements and Supplementary Data of this Annual Report on Form 10-K). The fair value of the investment includes the impact of the fair value of any unfunded commitments. (13) Negative fair value is the result of the capitalized discount being greater than the principal amount outstanding on the loan. 161
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Table of contents Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure Not applicable. Item 9A. Controls and Procedures (a) Evaluation of Disclosure Controls and Procedures. As of the end of the period covered by this annual report on Form 10-K, we carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer, President, Chief Financial Officer, General Counsel and Chief Accounting Officer, of our disclosure controls and procedures (as defined in Rule 13a-15 of the Exchange Act). Based on that evaluation, our Chief Executive Officer, President, Chief Financial Officer, General Counsel and Chief Accounting Officer have concluded that our current disclosure controls and procedures are effective in timely alerting them of material information relating to us that is required to be disclosed in the reports we file or submit under the Exchange Act. (b) Management’s Report on Internal Control Over Financial Reporting. The Company’s management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rule 13a-15(f). Under the supervision and with the participation of management, including the Chief Executive Officer and Chief Financial Officer, the Company conducted an evaluation of the effectiveness of the Company’s internal control over financial reporting based on the criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on the Company’s evaluation under the framework in Internal Control — Integrated Framework, management concluded that the Company’s internal control over financial reporting was effective as of December 31, 2024. This annual report does not include an attestation report of the Company’s independent registered public accounting firm regarding internal control over financial reporting. We were not required to have, nor have we, engaged our independent registered public accounting firm to perform an audit of the Company’s internal control over financial reporting as of December 31, 2024 pursuant to the rules of the SEC that permit us to provide only management’s report in this Annual Report on Form 10-K. (c) Changes in Internal Control over Financial Reporting. There have been no changes in our internal control over financial reporting that occurred during the fiscal quarter ended December 31, 2024 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. Item 9B. Other Information Rule 10b5-1 Trading Plans During the fiscal quarter ended December 31, 2024, none of our directors or officers adopted or terminated any contract, instruction or written plans for the purchase or sale of our securities to satisfy the affirmative defense conditions of Exchange Act Rule 10b5-1(c) or any “non-Rule 10b5-1 trading arrangement.” Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections Not applicable. 162
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Table of contents PART III Item 10. Directors, Executive Officers and Corporate Governance Directors The following table sets forth certain information regarding our directors: Name and Principal Occupation(1) Age DirectorSince(2) Independent Directors Robert L. Kay 72 2020 Mr. Kay has been an independent director since October 2020 and Chair of the Nominating and Corporate Governance Committee since January 2025. Mr. Kay has more than 40 years of broad based banking, investments, private equity intermediary and private business management experience, including commercial loan and venture capital investment portfolio oversight. After spending the first 10 years of his career as a corporate lender with a major Texas bank holding company in Dallas, he returned to his hometown in Austin where he spent the next eight years in the venture investing arena. Beginning in 1990, Mr. Kay served as Chief Executive Officer and/or Chief Operating Officer of multiple start up, growth phase and turnaround operating company situations, including serving as Chief Operating Officer and Chief Financial Officer of DrillingInfo from 2006 until its sale in 2012. Mr. Kay has served as the managing member and Chief Executive Officer of Excelleration Partners, an early stage investment firm since 2012. Mr. Kay currently serves as Chief Executive Officer of HalFILE Systems Corporation, a software and data subscription business located in Kyle, Texas, as the Chairman of the Board and interim Chief Executive Officer of Myocardial Solutions, Inc., a healthcare technology company located in Raleigh, North Carolina, and as a Director of The Muny Conservancy, a non-profit organization located in Austin, Texas. Mr. Kay earned a B.B.A. in general business (accounting concentration) from the University of Texas. John O. Niemann, Jr. 68 2012 Mr. Niemann has been an independent director since 2012 and Lead Independent Director and Chair of the Compensation Committee since January 2025. He is the President and Chief Operating Officer of Arthur Andersen LLP and has been since 2003. He previously served as a Managing Director of Andersen Tax LLC from June 2013 until his retirement from this position in March 2023. He previously served on the administrative board of Arthur Andersen LLP and on the board of partners of Andersen Worldwide. He began his career at Arthur Andersen LLP in 1978 and has served in increasing responsibilities in senior management positions, since 1992. Mr. Niemann has served as a director and Chairman of the Audit Committee of Hines Global Income Trust since July 2014 and as the lead independent director since May 2019. He previously served as a director of Adams Resources & Energy, Inc. from May 2019 to February 2025 and as a director of Professional Asset Indemnity Limited, a non-public Bermuda captive insurance company, from October 2021 until it was voluntarily wound up in March 2024. Mr. Niemann has served on the board of directors of many Houston area non-profit organizations, including Catholic Endowment Foundation of Galveston-Houston, Strake Jesuit College Preparatory School (past chair of the board), The Regis School of the Sacred Heart (past chair of the board), The Houston Symphony, The University of St. Thomas, The Alley Theatre and Taping for the Blind, Inc. He graduated with a B.A. in Managerial Studies (magna cum laude) and a master’s degree in accounting from Rice University, received a J.D. (summa cum laude) from the South Texas College of Law and an LL.M. in taxation (summa cum laude) from the University of San Francisco School of Law. 163
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Table of contents Name and Principal Occupation(1) Age DirectorSince(2) Jeffrey B. Walker 64 2020 Mr. Walker has been an independent director and Chairman of the Audit Committee since October 2020. Mr. Walker retired in May 2020 after a successful 38 year career in public accounting with Arthur Andersen and, more recently, Deloitte Tax, LLP where he held several leadership roles including, most recently, Vice Chairman from 2014 until May 2020. Mr. Walker served as a member of Deloitte LLP’s board from 2011 until 2015 and also served as the Chief Development Officer of Deloitte Tax from 2013 until 2015. During Mr. Walker's tenure with Deloitte, he assisted and advised some of the world's leading private equity firms. Mr. Walker is a certified public accountant and a member of the AICPA and Texas State Board of CPAs and earned a B.B.A. in Accounting and Economics from the University of Mississippi. Interested Directors Mr. Hyzak is an interested person, as defined in the 1940 Act, due to his positions at MSC Income and our Adviser. Dwayne L. Hyzak 52 2018 Mr. Hyzak has been a member of our Board of Directors since June 2020 and has served as our Chief Executive Officer and Chairman since October 2020. Since 2018, Mr. Hyzak has also served as Main Street’s Chief Executive Officer and as a member of Main Street’s board of directors. Mr. Hyzak also serves as a member of Main Street’s management team’s executive and investment committees. Previously, he served as Main Street’s President (2015 until November 2018), Chief Operating Officer (2014 until November 2018), Chief Financial Officer (2011 until 2014) and Senior Managing Director since 2011 and also served in other senior executive positions at Main Street prior to 2011. Prior to its IPO in 2007, Mr. Hyzak served as a Senior Managing Director and other executive positions of several Main Street predecessor funds and entities, which are now subsidiaries of Main Street. Mr. Hyzak joined Main Street in 2002, becoming one of the founding members of the firm. Prior to joining Main Street, Mr. Hyzak was a Director of Acquisitions and Integration with Quanta Services, Inc. (NYSE: PWR), which provides specialty contracting services to the power, natural gas and telecommunications industries, where he was principally focused on the company’s mergers and acquisitions and corporate finance activities. Previously, Mr. Hyzak was a Manager with Arthur Andersen in its Transaction Advisory Services group. Mr. Hyzak currently serves on the board of directors of Child Advocates, a non-profit organization that trains and supports advocates to serve the interests of abused or neglected children in the greater Houston area. _____________________________ (1) The address of each director is c/o MSC Income Fund, Inc., 1300 Post Oak Boulevard, 8 Floor, Houston, Texas 77056. The age given for each of our directors is as of March 20, 2025. (2) Directors serve for a term until the next annual meeting of stockholders and until their successors are duly elected and qualified or until their earlier removal or resignation. th 164
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Table of contents Executive Officers Our officers serve at the discretion of our Board of Directors. The following persons serve as our officers and certain significant personnel in the following capacities: Name Age Position(s) Held Officer Since Dwayne L. Hyzak 52 Chairman of the Board and Chief Executive Officer 2020 David L. Magdol 54 President and Chief Investment Officer 2020 Cory E. Gilbert 52 Chief Financial Officer and Treasurer 2020 Jesse E. Morris 57 Executive Vice President, Chief Operating Officer and Senior Managing Director 2020 Jason B. Beauvais 49 Executive Vice President, General Counsel and Secretary 2020 Nicholas T. Meserve 45 Managing Director 2020 Ryan H. McHugh 48 Vice President, Chief Accounting Officer and Assistant Treasurer 2024 Kristin L. Rininger 44 Chief Compliance Officer and Deputy General Counsel 2024 _____________________________ (1) Member of our Adviser’s investment committee. The investment committee is responsible for all aspects of our investment processes, including approval of investments. Vincent D. Foster, Chairman of Main Street’s board of directors, also serves on our Adviser’s investment committee in his capacity as a non-employee committee member. (2) Executive officer and member of our management team’s executive committee. The address for each person in the table above is 1300 Post Oak Boulevard, 8th Floor, Houston, Texas 77056. The age given for each person is as of March 20, 2025. Each officer holds office until his successor is chosen and qualified or until his earlier death, removal or resignation. For more information on Mr. Hyzak, Chairman of our Board of Directors and Chief Executive Officer, see his biographical information above. David L. Magdol is our President and Chief Investment Officer and has served in these roles since 2020. Mr. Magdol also serves as the President and Chief Investment Officer of Main Street and as a member of Main Street’s management team’s executive and investment committees. He was promoted to the role of President of Main Street in November 2018 and has served as Chief Investment Officer of Main Street since 2011. Previously, he also served as Vice Chairman and Senior Managing Director and in other senior executive positions at Main Street. Prior to its IPO in 2007, Mr. Magdol served as a Senior Managing Director and other executive positions of several Main Street predecessor funds and entities, which are now subsidiaries of Main Street. Mr. Magdol joined Main Street in 2002, becoming one of the founding members of the firm. Prior to joining Main Street, Mr. Magdol was a Vice President in the investment banking group at Lazard Freres & Co. Previously, he managed a portfolio of private equity investments for the McMullen Group, a private investment firm/family office capitalized by Dr. John J. McMullen, the former owner of the New Jersey Devils and the Houston Astros. Mr. Magdol began his career in the structured finance services group of JP Morgan Chase. Cory E. Gilbert, a certified public accountant, is our Chief Financial Officer and Treasurer and has served in these roles since July 2024. Mr. Gilbert previously served as our Vice President and Chief Accounting Officer since 2020. He also serves as Main Street’s Chief Financial Officer - Asset Management Business and Assistant Treasurer. Prior to joining Main Street in 2019, Mr. Gilbert served as the Chief Financial Officer and Treasurer for OHA Investment Corporation, a publicly traded business development company externally managed by Oak Hill Advisors LP. Prior to joining Oak Hill Advisors LP, Mr. Gilbert worked at RED Capital Group, the commercial mortgage banking arm of ORIX USA, where he most recently served as their Chief Financial Officer. Prior to that, from September 2008 to August 2013, Mr. Gilbert served as a line of business controller of ORIX USA. Mr. Gilbert began his career at KPMG LLP and was a manager in KPMG’s financial services practice in the Dallas-Fort Worth area. Jesse E. Morris is our Executive Vice President and Chief Operating Officer. Mr. Morris also serves as the Executive Vice President and Chief Operating Officer of Main Street, serves as a member of Main Street’s management team’s executive committee and has held various management roles since joining Main Street in 2019. He has management responsibility over Main Street’s internal operations and is also a Senior Managing Director on Main Street’s lower middle market investment team where his responsibilities include managing a portfolio of lower middle market investments where he is an active board member and assists those companies with various strategic initiatives, capital raises and M&A (1)(2) (1)(2) (2) (2) 165
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Table of contents activity. Mr. Morris is also responsible for originating and executing new investments for the firm. Mr. Morris has served as our Executive Vice President and Chief Operating Officer since 2020 and previously served as our and Main Street’s Chief Financial Officer and Treasurer from 2021 until 2024. Prior to joining Main Street, Mr. Morris served in various roles of increasing responsibility with Quanta Services, Inc. (NYSE: PWR) from 2014 to 2019 including most recently as Executive Vice President – Finance and President – Infrastructure Solutions. In this position, he oversaw the accounting, treasury, tax and financial planning and analysis activities and led Quanta’s public-private partnership (P3) concession and private infrastructure investment activities. Prior to joining Quanta, Mr. Morris served in various financial and accounting positions of increasing responsibility with Sysco Corporation (NYSE: SYY) including as Vice President and Chief Financial Officer – Foodservice Operations and Vice President of Finance and Chief Financial Officer – Broadline Operations. Mr. Morris began his career as a certified public accountant and was an Experienced Manager with Arthur Andersen. Jason B. Beauvais is our Executive Vice President, General Counsel and Secretary and has served as General Counsel and Secretary since 2020 and as Executive Vice President since 2021. Mr. Beauvais previously served as our Chief Compliance Officer from 2020 until 2023 and from June 2024 through November 2024. Mr. Beauvais also serves the Executive Vice President, General Counsel and Secretary of Main Street, as a member of Main Street’s management team’s executive committee and has held various management roles since joining Main Street in 2008. He has management responsibility over Main Street’s legal, compliance, human resources and technology functions. Mr. Beauvais has served as General Counsel and Secretary since joining Main Street in 2008, as Chief Compliance Officer from 2012 to 2024 and as Executive Vice President since 2021. In addition, he is a member of the Board of Directors of the Houston Arboretum & Nature Center, a non-profit urban nature sanctuary. Prior to joining Main Street, Mr. Beauvais was an attorney with Occidental Petroleum Corporation (NYSE: OXY), an international oil and gas exploration and production company. Before that, Mr. Beauvais practiced corporate and securities law at Baker Botts L.L.P., where he primarily counseled companies in public issuances and private placements of debt and equity and handled a wide range of general corporate and securities matters as well as mergers and acquisitions. Nicholas T. Meserve is a Managing Director of the Company and has served in this role since 2020. Mr. Meserve has also served as a Managing Director on Main Street’s private credit investment team since joining Main Street in 2012. Mr. Meserve previously served on our Board of Directors from April 2016 until June 2020. Mr. Meserve’s responsibilities include managing a portfolio of private loan and middle market investments. He is also responsible for sourcing, originating and executing on new investments for the firm. Prior to joining Main Street in 2012, Mr. Meserve was at Highland Capital Management, LP, a large alternative credit manager, and certain of its affiliates, where he managed a portfolio of senior loans and high yield bonds across a diverse set of industries. Prior to Highland, he was a Director at Pyxis Capital, LP and a Credit Analyst at JP Morgan Chase & Co. Ryan H. McHugh, a certified public accountant, is our Vice President and Chief Accounting Officer and has served in these roles since August 2024. He also serves as Main Street's Vice President and Chief Accounting Officer and has served in these roles since August 2024. Mr. McHugh previously served as our Vice President of Finance since May 2024. Prior to joining Main Street, Mr. McHugh spent eight years with Academy Sports + Outdoors (NASDAQ: ASO) (“Academy”) where he worked in several leadership roles including Vice President and Corporate Controller. Prior to joining Academy, Mr. McHugh held various accounting and leadership roles at Glori Energy (NASDAQ: GLRI) and Stewart Title Company (NYSE: STC). Mr. McHugh started his career at Grant Thornton in the assurance practice. Mr. McHugh graduated from the University of Texas at Austin with a B.A. in Economics and holds a Master's degree in Accounting from the University of Texas at San Antonio. Kristin L. Rininger is our Chief Compliance Officer and Deputy General Counsel and has served in these roles since November 2024. She has also served as Chief Compliance Officer and Deputy General Counsel of Main Street since November 2024. Prior to joining Main Street, Ms. Rininger was a Senior Director at ACA Group from June to August 2024 after spending four years as a Director and BDC Team Lead at Optima Partners, a leading financial industry regulatory and compliance consulting firm. She previously spent six years as a corporate and securities attorney at the law firm of Eversheds Sutherland, primarily handling legal, regulatory and compliance matters for BDC clients. Code of Ethics We and our Adviser have each adopted a code of ethics pursuant to Rule 17j-1 under the 1940 Act that establishes procedures for personal investments and restricts certain personal securities transactions. Personnel subject to the code may invest in securities for their personal investment accounts, including securities that may be purchased or held by us, so long as such investments are made in accordance with the code’s requirements. The code of ethics is available on the EDGAR Database on the SEC’s website at http://www.sec.gov. 166
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Table of contents In addition, our Code of Business Conduct and Ethics, which is applicable to all of officers, directors and personnel, requires that all officers, directors and personnel avoid any conflict, or the appearance of a conflict, between an individual’s personal interests and our interests. Our Code of Business Conduct and Ethics is available under the “Governance” tab on our website at www.mscincomefund.com/investors. We intend to disclose any substantive amendments to, or waivers from, this code of conduct within four business days of the waiver or amendment through a posting on our website. Insider Trading Policy The Company has adopted an Insider Trading Policy, which, among other things, governs the purchase, sale, and/or other disposition of the Company’s securities by the Company’s directors, officers and personnel, and which the Company believes is reasonably designed to promote compliance with insider trading laws, rules and regulations and applicable listing standards. Our insider trading policy prohibits all directors, officers and certain other personnel from, directly or indirectly, trading in the Company’s securities while in the possession of material nonpublic information related to the Company and from engaging in short sales and short-term or other speculative trading of our securities and any transactions that hedge or offset, or are designed to hedge or offset, any decrease in the market value of securities issued by us. Prohibited hedging activity includes market transactions in puts, calls and other derivatives and the purchase of prepaid variable forward contracts, equity swaps and collars. Pledging our securities in a margin account or as collateral for a loan is also prohibited under the policy except in limited circumstances that are pre-approved by our chief compliance officer. A copy of the Insider Trading Policy is filed as Exhibit 19.1 to this annual report on Form 10-K. Board of Directors and its Committees Mr. Hyzak serves as Chief Executive Officer, Chairman of our Board and a member of our Adviser’s investment committee. Our Board believes that Mr. Hyzak is currently best situated to serve as Chairman of our Board of Directors given his history with the Company and Main Street, his deep knowledge of the Company’s business and his extensive experience in managing private debt investments in middle market companies and private debt and equity investments in lower middle market companies. The Company’s independent directors bring experience, oversight and expertise from outside the Company and industry, while Mr. Hyzak brings Company-specific and industry-specific experience and expertise. Our Board believes that the current leadership structure with Mr. Hyzak serving as Chief Executive Officer and Chairman of our Board promotes strategy development and execution while facilitating effective, timely communication between management and our Board and is optimal for effective corporate governance. Effective upon the MSC Income Listing, our Board has designated John O. Niemann, Jr. as Lead Independent Director to preside over all executive sessions of independent directors. In the Lead Independent Director’s absence, the remaining independent directors may appoint a presiding director by majority vote. Our corporate governance practices include regular meetings of the independent directors in executive session without the presence of interested directors and management, the establishment of an audit committee, a nominating and corporate governance committee and, effective upon the MSC Income Listing, a compensation committee, each of which is comprised solely of independent directors, and the appointment of a Chief Compliance Officer, with whom the independent directors meet without the presence of interested directors and other members of management, for administering our compliance policies and procedures. The Lead Independent Director also has the responsibility of consulting with management on Board and committee meeting agendas, acting as a liaison between management and independent directors, including maintaining frequent contact with the Chairman and Chief Executive Officer and facilitating collaboration and communication between the independent directors and management. Our Board met eight times and acted by unanimous written consent 33 times during 2024. All incumbent directors attended at least 75% of the meetings of the Board and of the committees on which they served during 2024 and all then-serving directors attended the 2024 Annual Meeting of Stockholders in person. Our Board expects each director to make a diligent effort to attend all Board and committee meetings, as well as each annual meeting of stockholders. Our Board of Directors currently has, and appoints the members of, standing Audit, Nominating and Corporate Governance and Compensation Committees. Each of those committees is comprised entirely of independent directors and 167
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Table of contents has a written charter approved by our Board of Directors. The current members of the committees are identified in the following table. Board Committees Director Audit Nominating andCorporateGovernance CompensationCommittee Robert L. Kay þ Chair þ John O. Niemann, Jr. þ þ Chair Jeffrey B. Walker Chair þ þ Mr. Kay also serves as the Board’s liaison to our Adviser’s Conflicts Committee, described further below. Audit Committee. During the year ended December 31, 2024, the Audit Committee met four times. The Audit Committee is responsible for selecting, engaging and discharging our independent accountants, reviewing the plans, scope and results of the audit engagement with our independent accountants, approving professional services provided by our independent accountants (as well as the compensation for those services), reviewing the independence of our independent accountants and reviewing the adequacy of our internal control over financial reporting. In addition, the Audit Committee is responsible for assisting our Board of Directors with its oversight of our investment valuation policy and procedures and monitoring and overseeing the Company’s policy standards and guidelines for risk assessment and risk management, including with respect to information technology and cybersecurity policies, procedures and incidents. Our Board has determined that each of Messrs. Kay, Niemann and Walker is an “audit committee financial expert” as defined by the SEC. For more information on the backgrounds of these directors, see their biographical information above. Nominating and Corporate Governance Committee. During the year ended December 31, 2024, the Nominating and Corporate Governance Committee met four times. The Nominating and Corporate Governance Committee is responsible for determining criteria for service on our Board, identifying, researching and recommending to the Board director nominees for election by our stockholders, selecting nominees to fill vacancies on our Board or a committee of the Board, developing and recommending to our Board any amendments to our corporate governance principles and overseeing the self-assessment of our Board and its committees. The Nominating and Corporate Governance Committee also oversees the Company’s strategy, initiatives, policies and reporting related to Environmental, Social and Governance (ESG) activities. Compensation Committee. The Compensation Committee is newly formed, effective upon the MSC Income Listing, and did not meet during the year ended December 31, 2024. The Compensation Committee assists our Board in developing and evaluating the compensation of our non-management directors and evaluating succession planning with respect to the chief executive officer and other key executive positions. The Compensation Committee has the authority to engage the services of outside advisers, experts and others as it deems necessary to assist the committee in connection with its responsibilities. The actions of the Compensation Committee are generally reviewed and ratified by the entire Board. Our executive officers do not receive any direct compensation from us and, as a result, the Compensation Committee does not produce and/or review a report on executive compensation practices. Adviser Conflicts Committee. Our Adviser maintains a Conflicts Committee that reviews and approves specific matters that may involve conflicts of interest among Main Street and the advisory clients of our Adviser, including the Company. The Board has appointed Mr. Kay to represent the Company’s interest as liaison to our Adviser’s Conflicts Committee. Item 11. Executive Compensation Compensation Discussion and Analysis None of our executive officers receives direct compensation from us. The compensation of the principals and other investment professionals of our Adviser is paid by our Adviser or its affiliates. The compensation of our executive officers for administrative services provided to the Company is paid by our Adviser, but we reimburse our Adviser for, among other things, our allocable portion of the actual cost (without markup) of the persons performing the functions of chief financial officer and chief compliance officer and other personnel engaged to provide such administrative services (including, without limitation, direct compensation costs including the allocable portion of salaries, bonuses, benefits and other direct costs associated therewith) and related overhead costs, including rent, subject to the cap on the amount of internal administrative expenses payable by us relating to certain internal administrative services under the Advisory Agreement. To the extent that our Adviser outsources any of its functions as administrator, we will pay the fees associated 168
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Table of contents with such functions on a direct basis without profit to our Adviser. See “Certain Relationships and Related Transactions, and Director Independence” below for a discussion of fees and expenses payable to our Adviser. Director Compensation In 2024 our independent directors were entitled to an annual retainer of $120,000. Effective upon the MSC Income Listing, the annual retainer paid to our independent directors is $125,000, plus an additional $25,000 annual retainer for the Lead Independent Director. Non-employee directors do not receive fees based on meetings attended absent circumstances that require an exceptionally high number of meetings within an annual period. We do not pay compensation to our interested directors. Additionally, the Chairpersons of certain committees of our Board are entitled to the following annual retainer amounts: • $15,000 to the Chair of the Audit Committee; • $10,000 to the Chair of the Nominating and Corporate Governance Committee; and • $5,000 to the Chair of the Compensation Committee. During 2024 we also paid a $10,000 annual retainer to the member of our Board appointed to be the liaison to our Adviser’s Conflicts Committee and reimburse all of our directors for reasonable out-of-pocket expenses incurred in connection with their service on our Board. Effective upon the MSC Income Listing, however, the annual retainer is no longer paid to the member of our Board appointed to be the liaison to our Adviser’s Conflicts Committee. The following table sets forth the compensation that we paid during the year ended December 31, 2024 to our non-interested directors. Directors who are also employees of Main Street or any of its subsidiaries do not receive compensation for their services as directors. 2024 Director Compensation Name of Director Fees Earned orPaid in Cash All OtherCompensation TotalCompensation Interested Directors: Dwayne L. Hyzak $ — $ — $ — Independent Directors: Robert L. Kay 130,000 — 130,000 John O. Niemann, Jr. 130,000 — 130,000 Jeffrey B. Walker 135,000 — 135,000 _____________________________ (1) We did not award any portion of the fees earned by our directors in stock or options during the year ended December 31, 2024. We do not have a profit-sharing, compensation or retirement plan, and directors do not receive any pension or retirement benefits. (2) The amounts listed are for the fiscal year ending December 31, 2024. Grant of Certain Equity Awards Close in Time to the Release of Material Nonpublic Information The Company did not grant awards of stock options, stock appreciation rights or similar option-like instruments during the fiscal year ended December 31, 2024. Accordingly, there is nothing to report under Item 402(x) of Regulation S-K. Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters Ownership No person is deemed to control us, as such term is defined in the 1940 Act, through beneficial ownership of our common stock. The following table sets forth, as of March 19, 2025, information with respect to the beneficial ownership of our common stock by: • each person known to us to beneficially own more than 5% of the outstanding shares of our common stock; (1) (2) 169
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Table of contents • each of our directors and executive officers; and • all of our directors and executive officers as a group. Beneficial ownership is determined in accordance with the rules of the SEC and includes voting or investment power with respect to the securities. There is no common stock subject to options that are currently exercisable or exercisable within 60 days of March 19, 2025. Percentage of beneficial ownership is based on 46,849,531 shares of common stock outstanding as of March 19, 2025. Unless otherwise indicated, to our knowledge, each stockholder listed below has sole voting and investment power with respect to the shares beneficially owned by the stockholder and maintains an address c/o MSC Income Fund, Inc. at 1300 Post Oak Boulevard, 8th Floor, Houston, Texas 77056. Shares beneficially ownedas of March 19, 2025 Name and Address Number Percentage ofCurrentOwnership Interested Directors: Dwayne L. Hyzak 51,482 * Independent Directors: Robert L. Kay 10,600 * John O. Niemann, Jr. 26,911 * Jeffrey B. Walker 16,114 * Executive Officers (that are not directors): David L. Magdol 41,686 * Jesse E. Morris 10,000 — Jason B. Beauvais 29,593 * Cory E. Gilbert 2,000 — All executive officers and directors as a group (8 persons) 188,386 * _____________________________ * Amount represents less than 1.0%. The following table sets forth the dollar range of equity securities of the Company that were beneficially owned by each director as of March 19, 2025. Name and Address(1) Dollar Range ofEquity SecuritiesBeneficiallyOwned(2)(3)(4) Interested Directors: Dwayne L. Hyzak Over $100,000 Independent Directors: Robert L. Kay Over $100,000 John O. Niemann, Jr. Over $100,000 Jeffrey B. Walker Over $100,000 _____________________________ (1) The address of each director is c/o MSC Income Fund, Inc., 1300 Post Oak Boulevard, 8th Floor, Houston, Texas 77056. (2) Beneficial ownership has been determined in accordance with Rule 16a-1(a)(2) under the Exchange Act. (3) The dollar range of equity securities beneficially owned by our directors is based on our NAV per share of $15.53 as of December 31, 2024. 170
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Table of contents (4) The dollar range of equity securities beneficially owned is: None, $1 - $10,000, $10,001 - $50,000, $50,001 - $100,000, or over $100,000. Item 13. Certain Relationships and Related Transactions, and Director Independence We have procedures in place for the review, approval and monitoring of transactions involving us and certain persons related to us. As a BDC, the 1940 Act restricts us from participating in transactions with any persons affiliated with us, including our or our Adviser’s officers, directors and personnel and any person controlling or under common control with us or our Adviser, subject to certain exceptions. In addition, the Audit Committee reviews and considers related party transactions. In addition to the below, additional information responsive to this Item is disclosed in Note J — Related Party Transactions included Item 8. Consolidated Financial Statements and Supplementary Data of this Annual Report on Form 10-K and is incorporated herein by reference. Main Street Fund of Funds Agreement Under Section 12 of the 1940 Act, investment companies, including other BDCs such as Main Street, generally cannot acquire more than 3% of our total outstanding voting stock, among other limitations. In light of these restrictions, on January 20, 2025, in connection with Main Street’s potential acquisition in excess of 3% of our outstanding common stock, as a result of any purchases pursuant to the share purchase plan for shares of our common stock or otherwise, we entered into the Main Street Fund of Funds Agreement. The Main Street Fund of Funds Agreement provides for the acquisition of our shares of common stock by Main Street, and our sale of such shares to Main Street, in a manner consistent with the requirements of Rule 12d1-4 under the 1940 Act. Under the Main Street Fund of Funds Agreement, we and Main Street have agreed to hold each other harmless, indemnify and defend the other party, including each party’s respective principals, directors or trustees, officers, employees and agents, against and from any and all losses, costs, expenses or liabilities incurred by or claims or actions asserted against us or Main Street, as applicable, including any of our respective principals, directors or trustees, officers, employees and agents, to the extent such claims or actions result from: (i) a violation of any provision of the Main Street Fund of Funds Agreement by us or Main Street, as applicable, or (ii) a violation of the terms and conditions of Rule 12d1-4 under the 1940 Act, in each case by us or Main Street, as applicable, or our respective principals, directors or trustees, officers, employees, agents, or if applicable, advisers. Allocation of the Adviser’s Time We rely on the Adviser to manage our day-to-day activities and to implement our investment strategy. The Adviser and certain of its affiliates are presently, and plan in the future to continue to be, involved with activities which are unrelated to us. Additionally, except for certain restrictions on the Adviser set forth in the Advisory Agreement, the Adviser and its affiliates are not restricted from forming additional investment funds, from entering into other investment advisory relationships or from engaging in other business activities, even though such activities may be in competition with us and/or may involve substantial time and resources of the Adviser. As a result of these activities, the Adviser and certain of its affiliates and their personnel will have conflicts of interest in allocating their time between us and other activities in which they are or may become involved. Therefore, the Adviser, and certain of its affiliates and their personnel may experience conflicts of interest in allocating management time, services, and functions among us and any other business ventures in which they or any of their key personnel, as applicable, are or may become involved. This could result in actions that are more favorable to other affiliated entities than to us. However, the Adviser believes that it and its affiliates have sufficient personnel to discharge fully their responsibilities to all activities in which they are involved. Director Independence We are subject to the corporate governance rules of the NYSE requiring listed companies to have a board of directors with at least a majority of independent directors. The NYSE listing standards provide that a director of a BDC will be considered to be independent if he or she is not an “interested person” of such company, as defined in Section 2(a)(19) of the 1940 Act. The 1940 Act also requires that we, as a BDC, maintain a majority of independent directors on our Board. On an annual basis, each member of our Board is required to complete a questionnaire designed to provide information to assist our Board in determining whether the director is independent under the NYSE’s corporate governance rules, the applicable provisions of the Exchange Act and the 1940 Act. Based on these independence standards and the recommendation of the Nominating and Corporate Governance Committee, our Board has affirmatively determined that each of our directors, other than Mr. Hyzak, is independent under such standards. 171
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Table of contents Our Board considered certain portfolio investments and other transactions in which our independent directors may have had a direct or indirect interest, including the transactions, if any, described or cross-referenced in under “Certain Relationships and Related Party Transactions, and Director Independence,” in evaluating each director’s independence under the 1940 Act and NYSE standards, our Board determined that no such transaction would impact the ability of any director to exercise independent judgment or impair his or her independence. Item 14. Principal Accountant Fees and Services Our Board of Directors has ratified the decision of the Audit Committee to appoint Grant Thornton LLP (“Grant Thornton”) as our independent registered public accounting firm for the fiscal year ending December 31, 2025. For the fiscal years ended December 31, 2024 and 2023, MSC Income incurred the following fees for services provided by Grant Thornton, including expenses: Fiscal YearEndedDecember 31,2024 Fiscal YearEndedDecember 31,2023 Audit Fees $ 670,363 $ 482,300 Audit Related Fees — — Tax Fees — — All Other Fees — — Total Fees $ 670,363 $ 482,300 Audit Fees. Audit fees include fees for services that normally would be provided by the accountant in connection with statutory and regulatory filings or engagements and that generally only the independent accountant can provide. In addition to fees for the audit of our annual financial statements and the review of our quarterly financial statements in accordance with generally accepted auditing standards, this category contains fees for comfort letters, statutory audits, consents and assistance with and review of documents filed with the SEC. Audit Related Fees. Audit related fees are assurance related services that traditionally are performed by the independent accountant, such as attest services that are not required by statute or regulation. Tax Fees. Tax fees include corporate and subsidiary compliance and consulting. All Other Fees. Fees for other services would include fees for products and services other than the services reported above. During the fiscal years ended December 31, 2024 and 2023, Grant Thornton LLP did not bill any non-audit fees for services rendered to MSC Income or for services rendered to our Adviser or its parent company, Main Street. Pre-approval Policies and Procedures It is the policy of our Audit Committee to preapprove all audit, review or attest engagements and permissible non-audit services to be performed by our independent registered public accounting firm, subject to, and in compliance with, the de minimis exception for non-audit services described in Section 10A(i)(1)(B) of the Exchange Act and the applicable rules and regulations of the SEC. Our Audit Committee did not rely on the de minimis exception for any of the fees disclosed above. All services performed for us for the fiscal years ended December 31, 2024 and 2023 were pre-approved or ratified by our Audit Committee. 172
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Table of contents PART IV Item 15. Exhibits and Consolidated Financial Statement Schedules The following documents are filed or incorporated by reference as part of this Annual Report: a. Consolidated Financial Statements The following financial statements are set forth in Item 8: Report of Independent Registered Public Accounting Firm (PCAOB ID Number 248) 63 Audited Financial Statements Consolidated Balance Sheets as of December 31, 2024 and 2023 65 Consolidated Statements of Operations for the years ended December 31, 2024, 2023 and 2022 66 Consolidated Statements of Changes in Net Assets for the years ended December 31, 2024, 2023 and 2022 67 Consolidated Statements of Cash Flows for the years ended December 31, 2024, 2023 and 2022 68 Consolidated Schedules of Investments as of December 31, 2024 and 2023 69 Notes to the Consolidated Financial Statements 109 b. Consolidated Financial Statement Schedule Schedule of Investments in and Advances to Affiliates for the Years Ended December 31, 2024 and 2023 150 c. Exhibits The following exhibits are filed as part of this Form 10-K or hereby incorporated by reference to exhibits previously filed with the SEC: 3.1 Articles of Amendment and Restatement (filed as Exhibit 3.1 to the Registrant’s current report on Form 8-K, filed on February 4, 2025 (File No. 814-00939) and incorporated herein by reference). 3.2 Articles of Amendment to the Registrant’s Articles of Amendment and Restatement (filed as Exhibit 3.1 to the Registrant’s current report on Form 8-K/A, filed on February 6, 2025 (File No. 814-00939) and incorporated herein by reference). 3.3 Second Amended and Restated Bylaws.* 4.1 Amended and Restated Distribution Reinvestment Plan, effective as of November 1, 2017 (filed as Exhibit 4.1 to the Registrant’s current report on Form 8-K, filed on October 19, 2017 (File No. 814-00939) and incorporated herein by reference). 4.2 Second Amended and Restated Distribution Reinvestment Plan.* 4.3 Description of Securities.* 10.1 Investment Advisory and Administrative Services Agreement by and between the Registrant and MSC Adviser I, LLC (filed as Exhibit 10.1 to the Registrant’s current report on Form 8-K, filed on November 3, 2020 (File No. 814-00939) and incorporated herein by reference). 10.2 Amended and Restated Investment Advisory and Administrative Services Agreement, dated January 29, 2025, between MSCIncome Fund, Inc. and MSC Adviser I, LLC (filed as Exhibit 10.1 to the Registrant’s current report on Form 8-K, filed onFebruary 4, 2025 (File No. 814-00939) and incorporated herein by reference). 10.3 Form of Indemnification for Affiliated Directors and Officers (filed as Exhibit (k)(5) to Pre-Effective Amendment No. 3 to the Registrant’s Registration Statement on Form N-2, filed on May 31, 2012 (File No. 333-178548) and incorporated herein by reference). 10.4 Form of Indemnification for Independent Directors (filed as Exhibit (k)(6) to Pre-Effective Amendment No. 3 to the Registrant’s Registration Statement on Form N-2, filed on May 31, 2012 (File No. 333-178548) and incorporated herein by reference). 10.5 Second Amended and Restated Custody Agreement, dated May 29, 2014, by and among the Registrant, HMS Equity Holding, LLC and Amegy Bank National Association (Filed as Exhibit (j)(2) to the Registrant’s Pre-Effective Amendment No. 1 to the Registration Statement on Form N-2 filed with the SEC on July 17, 2015 (File No. 333-204659) and incorporated herein by reference). 173
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Table of contents 10.6 Amended and Restated Senior Secured Revolving Credit Agreement, dated as of March 6, 2017, by and among the Registrant, HMS Equity Holding, LLC, HMS Equity Holding II, Inc., the financial institutions party thereto and EverBank Commercial Finance, Inc. (filed as Exhibit 10.40 to the Registrant’s annual report on Form 10-K, filed on March 7, 2017 (File No. 814- 00939) and incorporated herein by reference). 10.7 First Amendment to the Credit Agreement, dated as of October 19, 2017, by and among the Registrant, HMS Equity Holding, LLC, HMS Equity Holding II, Inc., the financial institutions party thereto and EverBank Commercial Finance, Inc. (filed as Exhibit 10.1 to the Registrant’s current report on Form 8-K, filed on October 19, 2017 (File No. 814-00939) and incorporated herein by reference). 10.8 Second Amendment to Credit Agreement, dated as of March 5, 2020, by and among the Registrant, HMS Equity Holding, LLC, HMS Equity Holding II, Inc., HMS California Holdings GP LLC, HMS California Holdings, LP, the lenders party thereto and TIAA, FSB. (filed as Exhibit 10.1 to the Registrant’s current report on Form 8-K, filed on March 5, 2020 (File No. 814-00939) and incorporated herein by reference). 10.9 Fourth Amendment to Credit Agreement, dated as of January 27, 2021, by and among the Registrant, MSC Equity Holding, LLC, MSC Equity Holding II, Inc., MSC California Holdings GP LLC, MSC California Holdings LP, the lenders party thereto and TIAA, FSB (filed as Exhibit 10.1 to the Registrant’s current report on Form 8-K, filed on January 28, 2021 (File No. 814-00939) and incorporated herein by reference). 10.10 Fifth Amendment to Credit Agreement, dated as of July 27, 2021, by and among the Registrant, MSC Equity Holding, LLC, MSC Equity Holding II, Inc., MSC California Holdings GP LLC, MSC California Holdings LP, the lenders party thereto and TIAA, FSB (filed as Exhibit 10.1 to the Registrant’s current report on Form 8-K, filed on July 27, 2021 (File No. 814-00939) and incorporated herein by reference). 10.11 Sixth Amendment and Waiver to Credit Agreement, dated as of September 22, 2021, by and among the Registrant, the Guarantors party thereto, the lenders party thereto and TIAA, FSB (filed as Exhibit 10.1 to the Registrant’s current report on Form 8-K, filed on September 28, 2021 (File No. 814-00939) and incorporated herein by reference). 10.12 Seventh Amendment to Credit Agreement, dated as of April 27, 2023, by and among the Registrant, the Guarantors party thereto, the lenders party thereto and TIAA, FSB (filed as Exhibit 10.1 to the Registrant’s quarterly report on Form 10-Q, filed on May 12, 2023 (File No. 814-00939) and incorporated herein by reference). 10.13 Eighth Amendment to Credit Agreement, dated as of November 8, 2024, by and among the Registrant, the Guarantors party thereto, the lenders party thereto and EverBank (filed as Exhibit 10.1 to the Registrant’s current report on Form 8-K, filed on November 13, 2024 (File No. 814-00939) and incorporated herein by reference). 10.14 Ninth Amendment to Credit Agreement, dated as of February 27, 2025, by and among the Registrant, the Guarantors party thereto, the lenders party thereto and EverBank (filed as Exhibit 10.1 to the Registrant’s current report on Form 8-K, filed on March 4, 2025 (File No. 814-00939) and incorporated herein by reference). 10.15 Loan and Security Agreement, dated as of February 3, 2021, among MSIF Funding, LLC, as borrower, the Registrant, as portfolio manager, U.S. Bank, National Association, as collateral agent, securities intermediary, and collateral administrator, and JPMorgan Chase Bank, National Association, as administrative agent and lender (filed as Exhibit 10.1 to the Registrant’s current report on Form 8-K, filed on February 4, 2021 (File No. 814-00939) and incorporated herein by reference). 10.16 First Amendment to Loan and Security Agreement, dated June 2, 2023, by and among MSIF Funding, LLC, as borrower; MSC Income Fund, Inc., as portfolio manager; U.S. Bank Trust Company, National Association, as collateral agent and collateral administrator; U.S. Bank National Association, as securities intermediary; and JPMorgan Chase Bank, National Association, as administrative agent and lender (filed as Exhibit 10.1 to the Registrant’s current report on Form 8-K, filed on June 6, 2023 (File No. 814-00939) and incorporated herein by reference). 10.17 Second Amendment to Loan and Security Agreement, dated August 31, 2023, by and among MSIF Funding, LLC, as borrower; MSC Income Fund, Inc., as portfolio manager; U.S. Bank Trust Company, National Association, as collateral agent and collateral administrator; U.S. Bank National Association, as securities intermediary; and JPMorgan Chase Bank, National Association, as administrative agent and lender (filed as Exhibit 10.1 to the Registrant’s current report on Form 8-K (File No. 814-00939) and incorporated herein by reference). 174
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Table of contents 10.18 Master Note Purchase Agreement, dated as of October 22, 2021, by and among the Registrant and the Purchasers party thereto (filed as Exhibit 10.1 to the Registrant’s current report on Form 8-K, filed on October 22, 2021 (File No. 814-00939) and incorporated herein by reference). 19.1 Insider Trading Policy.* 21.1 List of Subsidiaries (filed as Exhibit 21.1 to the Registrant’s annual report on Form 10-K, filed on March 30, 2021 (File No. 814-00939) and incorporated herein by reference). 31.1 Certification of Chief Executive Officer of the Registrant, pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.* 31.2 Certification of Chief Financial Officer of the Registrant, pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.* 32.1 Certification of Chief Executive Officer of the Registrant, pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.** 32.2 Certification of Chief Financial Officer of the Registrant, pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.** 97.1 Clawback Policy.* 99.1 1940 Act Code of Ethics.* 99.2 Rule 12d1-4 Fund of Funds Investment Agreement, dated January 20, 2025, by and between Main Street Capital Corporationand MSC Income Fund, Inc. (Filed as Exhibit (k)(15) to the Registrant’s Pre-Effective Amendment No. 3 to the RegistrationStatement on Form N-2 filed with the SEC on January 21, 2025 (File No. 333-282501) and incorporated herein by reference). 101 The following financial information from our Annual Report on Form 10-K for the fiscal year 2024, filed with the SEC on March 20, 2025, formatted in Inline Extensible Business Reporting Language (iXBRL): (i) the Consolidated Balance Sheets as of December 31, 2024 and 2023, (ii) the Consolidated Statements of Operations for the years ended December 31, 2024, 2023 and 2022, (iii) the Consolidated Statements of Changes in Net Assets for the periods ended December 31, 2024, 2023 and 2022, (iv) the Consolidated Statements of Cash Flows for the years ended December 31, 2024, 2023 and 2022, (v) the Consolidated Schedule of Investments for the periods ended December 31, 2024 and 2023, (vi) the Notes to Consolidated Financial Statements and (vii) the Consolidated Schedule 12-14 for the years ended December 31, 2024 and 2023.* 104 Cover Page Interactive Data File (embedded within the Inline XBRL document).* * Filed herewith ** Furnished herewith * * * * * 175
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Table of contents SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. MSC INCOME FUND, INC. Date: March 20, 2025 By: /s/ DWAYNE L. HYZAK Dwayne L. Hyzak Chairman and 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 capacities and on the dates indicated. Signature Title Date /s/ DWAYNE L. HYZAK Chairman of the Board and Chief Executive Officer(principal executive officer) March 20, 2025 Dwayne L. Hyzak /s/ CORY E. GILBERT Chief Financial Officer(principal financial officer) March 20, 2025 Cory E. Gilbert /s/ RYAN H. MCHUGH Chief Accounting Officer(principal accounting officer) March 20, 2025 Ryan H. McHugh /s/ ROBERT L. KAY Director March 20, 2025 Robert L. Kay /s/ JOHN O. NIEMANN, JR. Director March 20, 2025 John O. Niemann, Jr. /s/ JEFFREY B. WALKER Director March 20, 2025 Jeffrey B. Walker 176
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Exhibit 3.3 MSC INCOME FUND, INC. SECOND AMENDED AND RESTATED BYLAWS ARTICLE IOFFICES Section 1. PRINCIPAL OFFICE. The principal office of the Corporation in the State of Maryland shallbe located at such place as the Board of Directors may designate. Section 2. ADDITIONAL OFFICES. The Corporation may have additional offices, including aprincipal executive office, at such places as the Board of Directors may from time to time determine or the businessof the Corporation may require. ARTICLE IIMEETINGS OF STOCKHOLDERS Section 1. PLACE. All meetings of stockholders shall be held at the principal executive office of theCorporation or at such other place as shall be set in accordance with these Bylaws and stated in the notice of themeeting. Section 2. ANNUAL MEETING. An annual meeting of stockholders for the election of directors andthe transaction of any business within the powers of the Corporation shall be held on the date and at the time andplace set by the Board of Directors. Section 3. SPECIAL MEETINGS. (a) General. The president, the chief executive officer, the chairman of the board or a majorityof the Board of Directors may call a special meeting of the stockholders. Any such special meeting ofstockholders shall be held on the date and at the time and place set by the president, the chief executiveofficer, the chairman of the board or the Board of Directors, whoever has called the meeting. Subject toSection 3(b) of this Article II, a special meeting of stockholders shall also be called by the secretary of theCorporation to act on any matter that may properly be considered at a meeting of stockholders upon thewritten request of stockholders entitled to cast not less than a majority of all the votes entitled to be cast onsuch matter at such meeting. (b) Stockholder Requested Special Meetings. (1) Any stockholder of record seeking to have stockholders request a specialmeeting shall, by sending written notice to the secretary (the “Record Date Request Notice”) byregistered mail, return receipt requested, request the Board of Directors to fix a record date todetermine the stockholders entitled to request a special meeting (the “Request Record Date”). TheRecord Date Request Notice shall set forth the purpose of the meeting and the matters proposed tobe acted on at it (which shall be only lawful matters), shall be signed by one or more stockholders ofrecord as of the date of signature (or their agents duly authorized in a writing accompanying theRecord Date Request Notice), shall bear the date of signature of each such stockholder (or suchagent) and shall set forth all information relating to each such stockholder and each matter proposedto be acted on at the meeting that would be required to be disclosed in connection with thesolicitation of proxies for the election of directors in an election contest (even if an election contestis not involved), or would otherwise be required in connection with such a solicitation, in each casepursuant to 32066226
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Regulation 14A (or any successor provision) under the Securities Exchange Act of 1934, asamended (the “Exchange Act”). Upon receiving the Record Date Request Notice, the Board ofDirectors may fix a Request Record Date. The Request Record Date shall not precede and shall notbe more than ten days after the close of business on the date on which the resolution fixing theRequest Record Date is adopted by the Board of Directors. If the Board of Directors, within ten daysafter the date on which a valid Record Date Request Notice is received, fails to adopt a resolutionfixing the Request Record Date and make a public announcement of such Request Record Date, theRequest Record Date shall be the close of business on the tenth day after the first date on which theRecord Date Request Notice is received by the secretary. (2) In order for any stockholder to request a special meeting to act on any matterthat may properly be considered at a meeting of stockholders, one or more written requests for aspecial meeting (collectively, the “Special Meeting Request”) signed by stockholders of record (ortheir agents duly authorized in a writing accompanying the request) as of the Request Record Dateentitled to cast not less than a majority of all of the votes entitled to be cast at such meeting (the“Special Meeting Percentage”) shall be delivered to the secretary. In addition, the Special MeetingRequest shall set forth the purpose of the meeting and the matters proposed to be acted on at it(which shall be limited to the matters set forth in the Record Date Request Notice received by thesecretary), shall bear the date of signature of each such stockholder (or such agent) signing theSpecial Meeting Request, shall set forth the name and address, as they appear in the Corporation’sbooks, of each stockholder signing such request (or on whose behalf the Special Meeting Request issigned) and the class, series and number of all shares of stock of the Corporation which are owned(beneficially or of record) by each such stockholder, and the nominee holder for, and number of,shares of stock of the Corporation owned beneficially but not of record, shall be sent to the secretaryby registered mail, return receipt requested, and shall be received by the secretary within 60 daysafter the Request Record Date. Any requesting stockholder (or agent duly authorized in writingaccompanying the revocation of the Special Meeting Request) may revoke his, her or its request fora special meeting at any time by written revocation delivered to the secretary. (3) The secretary shall inform the requesting stockholders of the reasonablyestimated cost of preparing and mailing the notice of meeting (including the Corporation’s proxymaterials). The secretary shall not be required to call a special meeting upon stockholder request andsuch meeting shall not be held unless, in addition to the documents required by subsection (b)(2) ofthis Section 3, the secretary receives payment of such reasonably estimated cost prior to the mailingof any notice of the meeting. (4) Except as provided in the next sentence, any special meeting shall be held atsuch place, date and time as may be designated by the chairman of the board, the chief executiveofficer, the president or the Board of Directors, whoever has called the meeting. In the case of anyspecial meeting called by the secretary upon the request of stockholders (a “Stockholder RequestedMeeting”), such meeting shall be held at such place, date and time as may be designated by theBoard of Directors; provided, however, that the date of any Stockholder Requested Meeting shall benot more than 90 days after the record date for such meeting (the “Meeting Record Date”); andprovided further that if the Board of Directors fails to designate, within ten days after the date that avalid Special Meeting Request is actually received by the secretary (the 2
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“Delivery Date”), a date and time for a Stockholder Requested Meeting, then such meeting shall beheld at 2:00 p.m. local time on the 90th day after the Meeting Record Date or, if such 90th day is nota Business Day (as defined below), on the first preceding Business Day; and provided further that inthe event that the Board of Directors fails to designate a place for a Stockholder Requested Meetingwithin ten days after the Delivery Date, then such meeting shall be held at the principal executiveoffice of the Corporation. In fixing a date for any special meeting, the chairman of the board, thechief executive officer, the president or the Board of Directors may consider such factors as he, sheor it deems relevant within the good faith exercise of business judgment, including, withoutlimitation, the nature of the matters to be considered, the facts and circumstances surrounding anyrequest for meeting and any plan of the Board of Directors to call an annual meeting or a specialmeeting. In the case of any Stockholder Requested Meeting, if the Board of Directors fails to fix aMeeting Record Date that is a date within 30 days after the Delivery Date, then the close of businesson the 30th day after the Delivery Date shall be the Meeting Record Date. The Board of Directorsmay revoke the notice for any Stockholder Request Meeting in the event that the requestingstockholders fail to comply with the provisions of subsection (b)(3) of this Section 3. (5) If written revocations of requests for the special meeting have been deliveredto the Secretary and the result is that stockholders of record (or their agents duly authorized inwriting), as of the Request Record Date, entitled to cast less than the Special Meeting Percentagehave delivered, and not revoked, requests for a special meeting to the secretary, the secretary shall:(i) if the notice of meeting has not already been delivered, refrain from delivering the notice of themeeting and send to all requesting stockholders who have not revoked such requests written noticeof any revocation of a request for the special meeting, or (ii) if the notice of meeting has beendelivered and if the secretary first sends to all requesting stockholders who have not revokedrequests for a special meeting written notice of any revocation of a request for the special meetingand written notice of the Corporation’s intention to revoke the notice of the meeting or for thechairman of the meeting to adjourn the meeting without action on the matter, the secretary may (A)revoke the notice of the meeting at any time before ten days before the commencement of themeeting or (B) the chairman of the meeting may call the meeting to order and adjourn the meetingwithout acting on the matter. Any request for a special meeting received after a revocation by thesecretary of a notice of a meeting shall be considered a request for a new special meeting. (6) The Board of Directors, the chairman of the board, the chief executive officeror the president may appoint independent inspectors of elections to act as the agent of theCorporation for the purpose of promptly performing a ministerial review of the validity of anypurported Special Meeting Request received by the secretary. For the purpose of permitting theinspectors to perform such review, no such purported request shall be deemed to have been deliveredto the secretary until the earlier of (i) five Business Days after receipt by the secretary of suchpurported request and (ii) such date as the independent inspectors certify to the Corporation that thevalid requests received by the secretary represent, as of the Request Record Date, stockholders ofrecord entitled to cast not less than the Special Meeting Percentage. Nothing contained in thissubsection (6) shall in any way be construed to suggest or imply that the Corporation or anystockholder shall not be entitled to contest the validity of any request, whether during or after suchfive Business Day period, or to take any 3
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other action (including, without limitation, the commencement, prosecution or defense of anylitigation with respect thereto, and the seeking of injunctive relief in such litigation). (7) For purposes of these Bylaws, “Business Day” shall mean any day other thana Saturday, a Sunday or other day on which banking institutions in the State of New York areauthorized or obligated by law or executive order to close. Section 4. NOTICE. Except as provided otherwise in Section 3 of this Article II, not less than ten normore than 90 days before each meeting of stockholders, the secretary shall give to each stockholder entitled to voteat such meeting and to each stockholder not entitled to vote who is entitled to notice of the meeting notice inwriting or by electronic transmission stating the time and place of the meeting and, in the case of a special meetingor as otherwise may be required by any statute, the purpose for which the meeting is called, by mail, by presentingit to such stockholder personally, by leaving it at the stockholder’s residence or usual place of business or by anyother means permitted by Maryland law. If mailed, such notice shall be deemed to be given when deposited in theUnited States mail addressed to the stockholder at the stockholder’s address as it appears on the records of theCorporation, with postage thereon prepaid. If transmitted electronically, such notice shall be deemed to be givenwhen transmitted to the stockholder by an electronic transmission to any address or number of the stockholder atwhich the stockholder receives electronic transmissions. The Corporation may give a single notice to allstockholders who share an address, which single notice shall be effective as to any stockholder at such address,unless such stockholder objects to receiving such single notice or revokes a prior consent to receiving such singlenotice. Failure to give notice of any meeting to one or more stockholders, or any irregularity in such notice, shallnot affect the validity of any meeting fixed in accordance with this Article II or the validity of any proceedings atany such meeting. Subject to Section 11(a) of this Article II, any business of the Corporation may be transacted at an annual meeting of stockholders without being specifically designated in the notice, except such business as is required by any statute to be stated in such notice. No business shall be transacted at a special meeting of stockholders except as specifically designated in the notice. The Corporation may postpone or cancel a meeting of stockholders by making a public announcement (as defined in Section 11(c)(3) of this Article II) of such postponement or cancellation prior to the meeting. Notice of the date, time and place to which the meeting is postponed shall be given not less than ten days prior to such date and otherwise in the manner set forth in this Section 4. Section 5. ORGANIZATION AND CONDUCT. Every meeting of stockholders shall be conducted byan individual appointed by the Board of Directors to be chairman of the meeting or, in the absence of suchappointment or appointed individual, by the chairman of the board or, in the case of a vacancy in the office orabsence of the chairman of the board, by one of the following officers present at the meeting in the following order:the vice chairman of the board, if there is one, the chief executive officer, the president, the vice presidents in theirorder of rank and seniority, the secretary or, in the absence of such officers, a chairman chosen by the stockholdersby the vote of a majority of the votes cast by stockholders present in person or by proxy. The secretary or, in thesecretary’s absence, an assistant secretary or, in the absence of both the secretary and assistant secretaries, anindividual appointed by the Board of Directors or, in the absence of such appointment, an individual appointed bythe chairman of the meeting shall act as secretary. In the event that the secretary presides at a meeting of thestockholders, an assistant secretary or, in the absence of all assistant secretaries, an individual appointed by the 4
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Board of Directors or the chairman of the meeting shall record the minutes of the meeting. The order of businessand all other matters of procedure at any meeting of stockholders shall be determined by the chairman of themeeting. The chairman of the meeting may prescribe such rules, regulations and procedures and take such actionas, in the discretion of the chairman and without any action by the stockholders, are appropriate for the properconduct of the meeting, including, without limitation, (a) restricting admission to the time set for thecommencement of the meeting; (b) limiting attendance at the meeting to stockholders of record of the Corporation,their duly authorized proxies and such other individuals as the chairman of the meeting may determine; (c) limitingparticipation at the meeting on any matter to stockholders of record of the Corporation entitled to vote on suchmatter, their duly authorized proxies and other such individuals as the chairman of the meeting may determine; (d)limiting the time allotted to questions or comments; (e) determining when and for how long the polls should beopened and when the polls should be closed; (f) maintaining order and security at the meeting; (g) removing anystockholder or any other individual who refuses to comply with meeting procedures, rules or guidelines as set forthby the chairman of the meeting; (h) concluding a meeting or recessing or adjourning the meeting to a later date andtime and at a place announced at the meeting; and (i) complying with any state and local laws and regulationsconcerning safety and security. Unless otherwise determined by the chairman of the meeting, meetings ofstockholders shall not be required to be held in accordance with the rules of parliamentary procedure. Section 6. QUORUM. At any meeting of stockholders, the presence in person or by proxy ofstockholders entitled to cast a majority of all the votes entitled to be cast at such meeting on any matter shallconstitute a quorum; but this section shall not affect any requirement under any statute or the charter of theCorporation (the “Charter”) for the vote necessary for the approval of any matter. If such quorum is not establishedat any meeting of the stockholders, the chairman of the meeting may adjourn the meeting sine die or from time totime to a date not more than 120 days after the original record date without notice other than announcement at themeeting. At such adjourned meeting at which a quorum shall be present, any business may be transacted whichmight have been transacted at the meeting as originally notified. The stockholders present either in person or by proxy, at a meeting which has been duly called and at which a quorum has been established, may continue to transact business until adjournment, notwithstanding the withdrawal from the meeting of enough stockholders to leave fewer than would be required to establish a quorum. Section 7. VOTING. A plurality of all the votes cast at a meeting of stockholders duly called and atwhich a quorum is present shall be sufficient to elect a director. Each share may be voted for as many individuals asthere are directors to be elected and for whose election the share is entitled to be voted. A majority of the votes castat a meeting of stockholders duly called and at which a quorum is present shall be sufficient to approve any othermatter which may properly come before the meeting, unless more than a majority of the votes cast is required bystatute or by the Charter. Unless otherwise provided by statute or by the Charter, each outstanding share, regardlessof class, shall be entitled to one vote on each matter submitted to a vote at a meeting of stockholders. Voting on anyquestion or in any election may be viva voce unless the chairman of the meeting shall order that voting be by ballotor otherwise. Section 8. PROXIES. A holder of record of shares of stock of the Corporation may cast votes in personor by proxy executed by the stockholder or by the stockholder’s duly authorized agent in any manner permitted bylaw. Such proxy or evidence of authorization of such proxy shall be filed with the secretary of the Corporationbefore or at the meeting. No proxy shall be valid more than eleven months after its date unless otherwise providedin the proxy. 5
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Section 9. VOTING OF STOCK BY CERTAIN HOLDERS. Stock of the Corporation registered in thename of a corporation, partnership, trust, limited liability company or other entity, if entitled to be voted, may bevoted by the president or a vice president, general partner, trustee or managing member thereof, as the case may be,or a proxy appointed by any of the foregoing individuals, unless some other person who has been appointed to votesuch stock pursuant to a bylaw or a resolution of the governing body of such corporation or other entity oragreement of the partners of a partnership presents a certified copy of such bylaw, resolution or agreement, inwhich case such person may vote such stock. Any trustee or other fiduciary may vote stock registered in the nameof such person in the capacity of trustee or fiduciary, either in person or by proxy. Shares of stock of the Corporation directly or indirectly owned by it shall not be voted at any meeting and shall not be counted in determining the total number of outstanding shares entitled to be voted at any given time, unless they are held by it in a fiduciary capacity, in which case they may be voted and shall be counted in determining the total number of outstanding shares at any given time. The Board of Directors may adopt by resolution a procedure by which a stockholder may certify in writing to the Corporation that any shares of stock registered in the name of the stockholder are held for the account of a specified person other than the stockholder. The resolution shall set forth the class of stockholders who may make the certification, the purpose for which the certification may be made, the form of certification and the information to be contained in it; if the certification is with respect to a record date, the time after the record date within which the certification must be received by the Corporation; and any other provisions with respect to the procedure which the Board of Directors considers necessary or desirable. On receipt by the Corporation of such certification, the person specified in the certification shall be regarded as, for the purposes set forth in the certification, the holder of record of the specified stock in place of the stockholder who makes the certification. Section 10. INSPECTORS. The Board of Directors or the chairman of the meeting may appoint, beforeor at the meeting, one or more inspectors for the meeting and any successor to the inspector. The inspectors, if any,shall (a) determine the number of shares of stock represented at the meeting, in person or by proxy, and the validityand effect of proxies, (b) receive and tabulate all votes, ballots or consents, (c) report such tabulation to thechairman of the meeting, (d) hear and determine all challenges and questions arising in connection with the right tovote, and (e) do such acts as are proper to fairly conduct the election or vote. Each such report shall be in writingand signed by the inspector or by a majority of them if there is more than one inspector acting at such meeting. Ifthere is more than one inspector, the report of a majority shall be the report of the inspectors. The report of theinspector or inspectors on the number of shares represented at the meeting and the results of the voting shall beprima facie evidence thereof. Section 11. ADVANCE NOTICE OF STOCKHOLDER NOMINEES FOR DIRECTOR AND OTHERSTOCKHOLDER PROPOSALS. (a) Annual Meetings of Stockholders. (1) Nominations of individuals for election to the Board of Directors and theproposal of other business to be considered by the stockholders may be made at an annual meetingof stockholders (i) pursuant to the 6
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Corporation’s notice of meeting, (ii) by or at the direction of the Board of Directors or (iii) by anystockholder of the Corporation who was a stockholder of record both at the time of giving of noticeby the stockholder as provided for in this Section 11(a) and at the time of the annual meeting, who isentitled to vote at the meeting in the election of each individual so nominated or on any such otherbusiness and who has complied with this Section 11(a). (2) For any nomination or other business to be properly brought before an annualmeeting by a stockholder pursuant to clause (iii) of paragraph (a)(1) of this Section 11, thestockholder must have given timely notice thereof in writing to the secretary of the Corporation andany such other business must otherwise be a proper matter for action by the stockholders. To betimely, a stockholder’s notice shall set forth all information required under this Section 11 and shallbe delivered to the secretary at the principal executive office of the Corporation not earlier than the150 day nor later than 5:00 p.m., Eastern Time, on the 120 day prior to the first anniversary of thedate of the proxy statement (as defined in Section 11(c)(3) of this Article II) for the preceding year’sannual meeting; provided, however, that in connection with the Corporation’s first annual meeting orin the event that the date of the annual meeting is advanced or delayed by more than 30 days fromthe first anniversary of the date of the preceding year’s annual meeting, notice by the stockholder tobe timely must be so delivered not earlier than the 150 day prior to the date of such annual meetingand not later than 5:00 p.m., Eastern Time, on the later of the 120 day prior to the date of suchannual meeting, as originally convened, or the tenth day following the day on which publicannouncement of the date of such meeting is first made. The public announcement of apostponement or adjournment of an annual meeting shall not commence a new time period for thegiving of a stockholder’s notice as described above. (3) Such stockholder’s notice shall set forth: (i) as to each individual whom the stockholder proposes to nominate for election orreelection as a director (each, a “Proposed Nominee”), all information relating to the Proposed Nomineethat would be required to be disclosed in connection with the solicitation of proxies for the election of theProposed Nominee as a director in an election contest (even if an election contest is not involved), or wouldotherwise be required in connection with such solicitation, in each case pursuant to Regulation 14A (or anysuccessor provision) under the Exchange Act and the rules thereunder; (ii) as to any other business that the stockholder proposes to bring before the meeting, adescription of such business, the stockholder’s reasons for proposing such business at the meeting and anymaterial interest in such business of such stockholder or any Stockholder Associated Person (as definedbelow), individually or in the aggregate, including any anticipated benefit to the stockholder or theStockholder Associated Person therefrom; (iii) as to the stockholder giving the notice, any Proposed Nominee and any StockholderAssociated Person, (A) the class, series and number of all shares of stock or other securities of theCorporation (collectively, the “Company Securities”), if any, which are owned (beneficially or ofrecord) by such stockholder, Proposed Nominee or Stockholder Associated Person, the date onwhich each such Company Security was acquired and the investment intent of such acquisition and th th th th 7
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(B) the nominee holder for, and number of, any Company Securities ownedbeneficially but not of record by such stockholder, Proposed Nominee or Stockholder AssociatedPerson; (iv) as to the stockholder giving the notice, any Stockholder Associated Person with aninterest or ownership referred to in clauses (ii) or (iii) of this paragraph (3) of this Section 11(a) and anyProposed Nominee, (A) the name and address of such stockholder, as they appear on the Corporation’sstock ledger, and the current name and business address, if different, of each such StockholderAssociated Person and any Proposed Nominee and (B) the investment strategy or objective, if any, of such stockholder and each suchStockholder Associated Person who is not an individual and a copy of the prospectus, offeringmemorandum or similar document, if any, provided to investors or potential investors in suchstockholder and each such Stockholder Associated Person; and (v) to the extent known by the stockholder giving the notice, the name and address ofany other stockholder supporting the nominee for election or reelection as a director or the proposal of otherbusiness on the date of such stockholder’s notice. (4) Such stockholder’s notice shall, with respect to any Proposed Nominee, beaccompanied by a certificate executed by the Proposed Nominee (i) certifying that such ProposedNominee (a) is not, and will not become a party to, any agreement, arrangement or understandingwith any person or entity other than the Corporation in connection with service or action as adirector that has not been disclosed to the Corporation and (b) will serve as a director of theCorporation if elected; and (ii) attaching a completed Proposed Nominee questionnaire (whichquestionnaire shall be provided by the Corporation, upon request, to the stockholder providing thenotice and shall include all information relating to the Proposed Nominee that would be required tobe disclosed in connection with the solicitation of proxies for the election of the Proposed Nomineeas a director in an election contest (even if an election contest is not involved), or would otherwisebe required in connection with such solicitation, in each case pursuant to Regulation 14A (or anysuccessor provision) under the Exchange Act and the rules thereunder, or would be requiredpursuant to the rules of any national securities exchange on which any securities of the Corporationare listed or over-the-counter market on which any securities of the Corporation are traded). (5) Notwithstanding anything in this subsection (a) of this Section 11 to thecontrary, in the event that the number of directors to be elected to the Board of Directors isincreased, and there is no public announcement of such action at least 130 days prior to the firstanniversary of the date of the proxy statement (as defined in Section 11(c)(3) of this Article II) forthe preceding year’s annual meeting, a stockholder’s notice required by this Section 11(a) shall alsobe considered timely, but only with respect to nominees for any new positions created by suchincrease, if it shall be delivered to the secretary at the principal executive office of the Corporationnot later than 5:00 p.m., Eastern Time, on the tenth day following the day on which such publicannouncement is first made by the Corporation. 8
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(6) For purposes of this Section 11, “Stockholder Associated Person” of anystockholder shall mean (i) any person acting in concert with such stockholder, (ii) any beneficialowner of shares of stock of the Corporation owned of record or beneficially by such stockholder(other than a stockholder that is a depositary) and (iii) any person that directly, or indirectly throughone or more intermediaries, controls, is controlled by or is under common control with suchstockholder or such Stockholder Associated Person. (b) Special Meetings of Stockholders. Only such business shall be conducted at a specialmeeting of stockholders as shall have been brought before the meeting pursuant to the Corporation’s noticeof meeting. Nominations of individuals for election to the Board of Directors may be made at a specialmeeting of stockholders at which directors are to be elected only (i) by or at the direction of the Board ofDirectors or (ii) provided that the special meeting has been called in accordance with Section 3 of thisArticle II for the purpose of electing directors, by any stockholder of the Corporation who is a stockholderof record both at the time of giving of notice provided for in this Section 11 and at the time of the specialmeeting, who is entitled to vote at the meeting in the election of each individual so nominated and who hascomplied with the notice procedures set forth in this Section 11. In the event the Corporation calls a specialmeeting of stockholders for the purpose of electing one or more individuals to the Board of Directors, anysuch stockholder may nominate an individual or individuals (as the case may be) for election as a director asspecified in the Corporation’s notice of meeting, if the stockholder’s notice, containing the informationrequired by paragraph (a)(3) of this Section 11, is delivered to the secretary at the principal executive officeof the Corporation not earlier than the 120 day prior to such special meeting and not later than 5:00 p.m.,Eastern Time on the later of the 90 day prior to such special meeting or the tenth day following the day onwhich public announcement is first made of the date of the special meeting and of the nominees proposedby the Board of Directors to be elected at such meeting. The public announcement of a postponement oradjournment of a special meeting shall not commence a new time period for the giving of a stockholder’snotice as described above. (c) General. (1) If information submitted pursuant to this Section 11 by any stockholderproposing a nominee for election as a director or any proposal for other business at a meeting ofstockholders shall be inaccurate in any material respect, such information may be deemed not tohave been provided in accordance with this Section 11. Any such stockholder shall notify theCorporation of any inaccuracy or change (within two business days of becoming aware of suchinaccuracy or change) in any such information. Upon written request by the secretary or the Boardof Directors, any such stockholder shall provide, within five business days of delivery of suchrequest (or such other period as may be specified in such request), (i) written verification,satisfactory, in the discretion of the Board of Directors or any authorized officer of the Corporation,to demonstrate the accuracy of any information submitted by the stockholder pursuant to thisSection 11 and (ii) a written update of any information (including, if requested by the Corporation,written confirmation by such stockholder that it continues to intend to bring such nomination orother business proposal before the meeting) submitted by the stockholder pursuant to this Section 11as of an earlier date. If a stockholder fails to provide such written verification or written updatewithin such period, the information as to which written verification or a written update wasrequested may be deemed not to have been provided in accordance with this Section 11. th th 9
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(2) Only such individuals who are nominated in accordance with this Section 11shall be eligible for election by stockholders as directors, and only such business shall be conductedat a meeting of stockholders as shall have been brought before the meeting in accordance with thisSection 11. The chairman of the meeting shall have the power to determine whether a nomination orany other business proposed to be brought before the meeting was made or proposed, as the casemay be, in accordance with this Section 11. (3) For purposes of this Section 11, “the date of the proxy statement” shall havethe same meaning as “the date of the company’s proxy statement released to shareholders” as usedin Rule 14a-8(e) promulgated under the Exchange Act, as interpreted by the Securities andExchange Commission from time to time. “Public announcement” shall mean disclosure (i) in apress release reported by the Dow Jones News Service, Associated Press, Business Wire, PRNewswire or other widely circulated news or wire service or (ii) in a document publicly filed by theCorporation with the Securities and Exchange Commission pursuant to the Exchange Act, theSecurities Act of 1933, as amended, or the Investment Company Act of 1940, as amended (the“Investment Company Act”). (4) Notwithstanding the foregoing provisions of this Section 11, a stockholdershall also comply with all applicable requirements of state law and of the Exchange Act and therules and regulations thereunder with respect to the matters set forth in this Section 11. Nothing inthis Section 11 shall be deemed to affect any right of a stockholder to request inclusion of a proposalin, or the right of the Corporation to omit a proposal from, the Corporation’s proxy statementpursuant to Rule 14a-8 (or any successor provision) under the Exchange Act. Nothing in this Section11 shall require disclosure of revocable proxies received by the stockholder or StockholderAssociated Person pursuant to a solicitation of proxies after the filing of an effective Schedule 14Aby such stockholder or Stockholder Associated Person under Section 14(a) of the Exchange Act. Section 12.[Reserved]. Section 13. CONTROL SHARE ACQUISITION ACT. Notwithstanding any other provision of theCharter or these Bylaws, Title 3, Subtitle 7 of the Maryland General Corporation Law, or any successor statute (the“MGCL”), shall not apply to any acquisition by any person of shares of stock of the Corporation. This section maybe repealed, in whole or in part, at any time, whether before or after an acquisition of control shares and, upon suchrepeal, may, to the extent provided by any successor bylaw, apply to any prior or subsequent control shareacquisition. ARTICLE IIIDIRECTORS Section 1. GENERAL POWERS. The business and affairs of the Corporation shall be managed underthe direction of its Board of Directors. Section 2. NUMBER, TENURE AND RESIGNATION. At any regular meeting or at any specialmeeting called for that purpose, a majority of the entire Board of Directors may establish, increase or decrease thenumber of directors, provided that the number thereof shall 10
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never be less than the minimum number required by the MGCL, nor more than 10, and further provided that thetenure of office of a director shall not be affected by any decrease in the number of directors. Notwithstanding theforegoing sentence, the number of directors that shall comprise the Board shall not be less than three, except for aperiod of up to 60 days after the death, removal or resignation of a director pending the election of such director’ssuccessor. Any director of the Corporation may resign at any time by delivering his or her resignation to the Boardof Directors, the chairman of the board or the secretary. Any resignation shall take effect immediately upon itsreceipt or at such later time specified in the resignation. The acceptance of a resignation shall not be necessary tomake it effective unless otherwise stated in the resignation. Section 3. ANNUAL AND REGULAR MEETINGS. An annual meeting of the Board of Directors shallbe held immediately after and at the same place as the annual meeting of stockholders, no notice other than thisBylaw being necessary. In the event such meeting is not so held, the meeting may be held at such time and place asshall be specified in a notice given as hereinafter provided for special meetings of the Board of Directors. TheBoard of Directors may provide, by resolution, the time and place for the holding of regular meetings of the Boardof Directors without other notice than such resolution. Section 4. SPECIAL MEETINGS. Special meetings of the Board of Directors may be called by or atthe request of the chairman of the board, the chief executive officer, the president or a majority of the directors thenin office. The person or persons authorized to call special meetings of the Board of Directors may fix any place asthe place for holding any special meeting of the Board of Directors called by them. The Board of Directors mayprovide, by resolution, the time and place for the holding of special meetings of the Board of Directors withoutother notice than such resolution. Section 5. NOTICE. Notice of any special meeting of the Board of Directors shall be deliveredpersonally or by telephone, electronic mail, facsimile transmission, courier or United States mail to each director athis or her business or residence address. Notice by personal delivery, telephone, electronic mail or facsimiletransmission shall be given at least 24 hours prior to the meeting. Notice by United States mail shall be given atleast three days prior to the meeting. Notice by courier shall be given at least two days prior to the meeting.Telephone notice shall be deemed to be given when the director or his or her agent is personally given such noticein a telephone call to which the director or his or her agent is a party. Electronic mail notice shall be deemed to begiven upon transmission of the message to the electronic mail address given to the Corporation by the director.Facsimile transmission notice shall be deemed to be given upon completion of the transmission of the message tothe number given to the Corporation by the director and receipt of a completed answer-back indicating receipt.Notice by United States mail shall be deemed to be given when deposited in the United States mail properlyaddressed, with postage thereon prepaid. Notice by courier shall be deemed to be given when deposited with ordelivered to a courier properly addressed. Neither the business to be transacted at, nor the purpose of, any annual,regular or special meeting of the Board of Directors need be stated in the notice, unless specifically required bystatute or these Bylaws. Section 6. QUORUM. A majority of the directors shall constitute a quorum for transaction of businessat any meeting of the Board of Directors, provided that, if less than a majority of such directors is present at suchmeeting, a majority of the directors present may adjourn the meeting from time to time without further notice, andprovided further that if, pursuant to applicable law, the Charter or these Bylaws, the vote of a majority or otherpercentage of a particular group of directors is required for action, a quorum must also include a majority or suchother percentage of such group. 11
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The directors present at a meeting which has been duly called and at which a quorum has been established may continue to transact business until adjournment, notwithstanding the withdrawal from the meeting of enough directors to leave fewer than required to establish a quorum. Section 7. VOTING. The action of a majority of the directors present at a meeting at which a quorum ispresent shall be the action of the Board of Directors, unless the concurrence of a greater proportion is required forsuch action by applicable law, the Charter or these Bylaws. If enough directors have withdrawn from a meeting toleave fewer than required to establish a quorum but the meeting is not adjourned, the action of the majority of thatnumber of directors necessary to constitute a quorum at such meeting shall be the action of the Board of Directors,unless the concurrence of a greater proportion is required for such action by applicable law, the Charter or theseBylaws. Section 8. ORGANIZATION. At each meeting of the Board of Directors, the chairman of the board or,in the absence of the chairman, the vice chairman of the board, if any, shall act as chairman of the meeting. In theabsence of both the chairman and vice chairman of the board, the chief executive officer or, in the absence of thechief executive officer, the president or, in the absence of the president, a director chosen by a majority of thedirectors present shall act as chairman of the meeting. The secretary or, in his or her absence, an assistant secretaryof the Corporation or, in the absence of the secretary and all assistant secretaries, an individual appointed by thechairman of the meeting shall act as secretary of the meeting. Section 9. TELEPHONE MEETINGS. Directors may participate in a meeting by means of aconference telephone or other communications equipment if all persons participating in the meeting can hear eachother at the same time; provided, however, that this Section 9 does not apply to any action of the directors pursuantto any provision of the Investment Company Act applicable to the Corporation that requires the vote of thedirectors to be cast in person at a meeting. Participation in a meeting by these means shall constitute presence inperson at the meeting. Section 10. CONSENT BY DIRECTORS WITHOUT A MEETING. Any action required or permitted tobe taken at any meeting of the Board of Directors may be taken without a meeting, if a consent in writing or byelectronic transmission to such action is given by each director and is filed with the minutes of proceedings of theBoard of Directors; provided, however, that this Section 10 does not apply to any action of the directors pursuant toany provision of the Investment Company Act applicable to the Corporation that requires the vote of the directorsto be cast in person at a meeting. Section 11. VACANCIES. If for any reason any or all of the directors cease to be directors, such eventshall not terminate the Corporation or affect these Bylaws or the powers of the remaining directors hereunder. Untilsuch time as the Corporation becomes subject to Section 3-804(c) of the MGCL, any vacancy on the Board ofDirectors for any cause other than an increase in the number of directors may be filled by a majority of theremaining directors, even if such majority is less than a quorum; any vacancy in the number of directors created byan increase in the number of directors may be filled by a majority vote of the entire Board of Directors; and anyindividual so elected as director shall serve until the next annual meeting of stockholders and until his or hersuccessor is elected and qualifies. At such time as the Corporation becomes subject to Section 3-804(c) of theMGCL and except as may be provided by the Board of Directors in setting the terms of any class or series ofpreferred stock, any vacancy on the Board of Directors may be filled only by a majority of the remaining directors,even if the remaining directors do not constitute a quorum, and any director elected to fill a 12
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vacancy shall serve for the remainder of the full term of the directorship in which the vacancy occurred and until asuccessor is elected and qualifies. Section 12. COMPENSATION. Directors shall not receive any stated salary for their services asdirectors but, by resolution of the Board of Directors, may receive compensation per year and/or per meeting and/orper visit to real property or other facilities owned or leased by the Corporation and for any service or activity theyperformed or engaged in as directors. Directors may be reimbursed for expenses of attendance, if any, at eachannual, regular or special meeting of the Board of Directors or of any committee thereof and for their expenses, ifany, in connection with each property visit and any other service or activity they perform or engage in as directors;but nothing herein contained shall be construed to preclude any directors from serving the Corporation in any othercapacity and receiving compensation therefor. Section 13. RELIANCE. Each director and officer of the Corporation shall, in the performance of his orher duties with respect to the Corporation, be entitled to rely on any information, opinion, report or statement,including any financial statement or other financial data, prepared or presented by an officer or employee of theCorporation whom the director or officer reasonably believes to be reliable and competent in the matters presented,by a lawyer, certified public accountant or other person, as to a matter which the director or officer reasonablybelieves to be within the person’s professional or expert competence, or, with respect to a director, by a committeeof the Board of Directors on which the director does not serve, as to a matter within its designated authority, if thedirector reasonably believes the committee to merit confidence. Section 14. CERTAIN RIGHTS OF DIRECTORS, OFFICERS, EMPLOYEES AND AGENTS. Adirector, officer, employee or agent shall have no responsibility to devote his or her full time to the affairs of theCorporation. Any director, officer, employee or agent, in his or her personal capacity or in a capacity as an affiliate,employee, or agent of any other person, or otherwise, may have business interests and engage in business activitiessimilar to, in addition to or in competition with those of or relating to the Corporation. Section 15. RATIFICATION. The Board of Directors or the stockholders may ratify and make bindingon the Corporation any action or inaction by the Corporation or its officers to the extent that the Board of Directorsor the stockholders could have originally authorized the matter. Moreover, any action or inaction questioned in anystockholders’ derivative proceeding or any other proceeding on the ground of lack of authority, defective orirregular execution, adverse interest of a director, officer or stockholder, non-disclosure, miscomputation, theapplication of improper principles or practices of accounting, or otherwise, may be ratified, before or afterjudgment, by the Board of Directors or by the stockholders, and if so ratified, shall have the same force and effectas if the questioned action or inaction had been originally duly authorized, and such ratification shall be bindingupon the Corporation and its stockholders and shall constitute a bar to any claim or execution of any judgment inrespect of such questioned action or inaction. Section 16. EMERGENCY PROVISIONS. Notwithstanding any other provision in the Charter or theseBylaws, this Section 16 shall apply during the existence of any catastrophe, or other similar emergency condition,as a result of which a quorum of the Board of Directors under Article III of these Bylaws cannot readily be obtained(an “Emergency”). During any Emergency, unless otherwise provided by the Board of Directors, (a) a meeting ofthe Board of Directors or a committee thereof may be called by any director or officer by any means feasible underthe circumstances; (b) notice of any meeting of the Board of Directors during such an Emergency may be givenless than 24 hours prior to the meeting to as many directors and by such means as may be feasible at the time,including publication, television or radio; and (c) the 13
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number of directors necessary to constitute a quorum shall be one-third of the entire Board of Directors. ARTICLE IVCOMMITTEES Section 1. NUMBER, TENURE AND QUALIFICATIONS. The Board of Directors may appoint fromamong its members one or more committees, composed of one or more directors, to serve at the pleasure of theBoard of Directors. Section 2. POWERS. The Board of Directors may delegate to committees appointed under Section 1 ofthis Article any of the powers of the Board of Directors, except as prohibited by law. Section 3. MEETINGS. Notice of committee meetings shall be given in the same manner as notice forspecial meetings of the Board of Directors. A majority of the members of the committee shall constitute a quorumfor the transaction of business at any meeting of the committee. The act of a majority of the committee memberspresent at a meeting shall be the act of such committee. The Board of Directors may designate a chairman of anycommittee, and such chairman or, in the absence of a chairman, any two members of any committee (if there are atleast two members of the committee) may fix the time and place of its meeting unless the Board shall otherwiseprovide. In the absence of any member of any such committee, the members thereof present at any meeting,whether or not they constitute a quorum, may appoint another director to act in the place of such absent member. Section 4. TELEPHONE MEETINGS. Members of a committee of the Board of Directors mayparticipate in a meeting by means of a conference telephone or other communications equipment if all personsparticipating in the meeting can hear each other at the same time; provided, however, that this Section 4 does notapply to any action of the committee pursuant to any provision of the Investment Company Act applicable to theCorporation that requires the vote of the committee to be cast in person at a meeting. Participation in a meeting bythese means shall constitute presence in person at the meeting. Section 5. CONSENT BY COMMITTEES WITHOUT A MEETING. Any action required or permittedto be taken at any meeting of a committee of the Board of Directors may be taken without a meeting, if a consent inwriting or by electronic transmission to such action is given by each member of the committee and is filed with theminutes of proceedings of such committee; provided, however, that this Section 5 does not apply to any action ofthe committee pursuant to any provision of the Investment Company Act applicable to the Corporation that requiresthe vote of the committee to be cast in person at a meeting. Section 6. VACANCIES. Subject to the provisions hereof, the Board of Directors shall have the powerat any time to change the membership of any committee, to fill any vacancy, to designate an alternate member toreplace any absent or disqualified member or to dissolve any such committee. ARTICLE VOFFICERS Section 1. GENERAL PROVISIONS. The officers of the Corporation shall include a president, asecretary and a treasurer and may include a chairman of the board, a vice chairman of the board, a chief executiveofficer, one or more vice presidents, a chief operating officer, a chief financial officer, one or more assistantsecretaries and one or more assistant treasurers. In addition, the Board of Directors may from time to time electsuch other officers with such 14
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powers and duties as it shall deem necessary or desirable. The officers of the Corporation shall be elected annuallyby the Board of Directors, except that the chief executive officer or president may from time to time appoint one ormore vice presidents, assistant secretaries and assistant treasurers or other officers. Each officer shall serve until hisor her successor is elected and qualifies or until his or her death, or his or her resignation or removal in the mannerhereinafter provided. Any two or more offices except president and vice president may be held by the same person.Election of an officer or agent shall not of itself create contract rights between the Corporation and such officer oragent. Section 2. REMOVAL AND RESIGNATION. Any officer or agent of the Corporation may be removed,with or without cause, by the Board of Directors if in its judgment the best interests of the Corporation would beserved thereby, but such removal shall be without prejudice to the contract rights, if any, of the person so removed.Any officer of the Corporation may resign at any time by delivering his or her resignation to the Board ofDirectors, the chairman of the board, the chief executive officer, the president or the secretary. Any resignationshall take effect immediately upon its receipt or at such later time specified in the resignation. The acceptance of aresignation shall not be necessary to make it effective unless otherwise stated in the resignation. Such resignationshall be without prejudice to the contract rights, if any, of the Corporation. Section 3. VACANCIES. A vacancy in any office may be filled by the Board of Directors for thebalance of the term. Section 4. CHAIRMAN OF THE BOARD. The Board of Directors may designate from among itsmembers a chairman of the board, who shall not, solely by reason of these Bylaws, be an officer of the Corporation.The Board of Directors may designate the chairman of the board as an executive or non-executive chairman. Thechairman of the board shall preside over the meetings of the Board of Directors. The chairman of the board shallperform such other duties as may be assigned to him or her by these Bylaws or the Board of Directors. Section 5. CHIEF EXECUTIVE OFFICER. The Board of Directors may designate a chief executiveofficer. In the absence of such designation, the chairman of the board shall be the chief executive officer of theCorporation. The chief executive officer shall have general responsibility for implementation of the policies of theCorporation, as determined by the Board of Directors, and for the management of the business and affairs of theCorporation. He or she may execute any deed, mortgage, bond, contract or other instrument, except in cases wherethe execution thereof shall be expressly delegated by the Board of Directors or by these Bylaws to some otherofficer or agent of the Corporation or shall be required by law to be otherwise executed; and in general shallperform all duties incident to the office of chief executive officer and such other duties as may be prescribed by theBoard of Directors from time to time. Section 6. CHIEF OPERATING OFFICER. The Board of Directors may designate a chief operatingofficer. The chief operating officer shall have the responsibilities and duties as determined by the Board ofDirectors or the chief executive officer. Section 7. CHIEF FINANCIAL OFFICER. The Board of Directors may designate a chief financialofficer. The chief financial officer shall have the responsibilities and duties as determined by the Board of Directorsor the chief executive officer. Section 8. PRESIDENT. In the absence of a chief executive officer, the president shall in generalsupervise and control all of the business and affairs of the Corporation. In the absence of a designation of a chiefoperating officer by the Board of Directors, the president shall be the chief operating officer. He or she may executeany deed, mortgage, bond, contract or other instrument, except in cases where the execution thereof shall beexpressly delegated by the Board 15
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of Directors or by these Bylaws to some other officer or agent of the Corporation or shall be required by law to beotherwise executed; and in general shall perform all duties incident to the office of president and such other dutiesas may be prescribed by the Board of Directors from time to time. Section 9. VICE PRESIDENTS. In the absence of the president or in the event of a vacancy in suchoffice, the vice president (or in the event there be more than one vice president, the vice presidents in the orderdesignated at the time of their election or, in the absence of any designation, then in the order of their election) shallperform the duties of the president and when so acting shall have all the powers of and be subject to all therestrictions upon the president; and shall perform such other duties as from time to time may be assigned to suchvice president by the chief executive officer, the president or the Board of Directors. The Board of Directors maydesignate one or more vice presidents as executive vice president, senior vice president, or vice president forparticular areas of responsibility. Section 10. SECRETARY. The secretary shall (a) keep the minutes of the proceedings of thestockholders, the Board of Directors and committees of the Board of Directors in one or more books provided forthat purpose; (b) see that all notices are duly given in accordance with the provisions of these Bylaws or as requiredby law; (c) be custodian of the corporate records and of the seal of the Corporation; (d) keep a register of the postoffice address of each stockholder which shall be furnished to the secretary by such stockholder; (e) have generalcharge of the stock transfer books of the Corporation; and (f) in general perform such other duties as from time totime may be assigned to him or her by the chief executive officer, the president or the Board of Directors. Section 11. TREASURER. The treasurer shall have the custody of the funds and securities of theCorporation, shall keep full and accurate accounts of receipts and disbursements in books belonging to theCorporation, shall deposit all moneys and other valuable effects in the name and to the credit of the Corporation insuch depositories as may be designated by the Board of Directors and in general shall perform such other duties asfrom time to time may be assigned to him or her by the chief executive officer, the president or the Board ofDirectors. In the absence of a designation of a chief financial officer by the Board of Directors, the treasurer shallbe the chief financial officer of the Corporation. The treasurer shall disburse the funds of the Corporation as may be ordered by the Board of Directors, taking proper vouchers for such disbursements, and shall render to the president and Board of Directors, at the regular meetings of the Board of Directors or whenever it may so require, an account of all his or her transactions as treasurer and of the financial condition of the Corporation. Section 12. ASSISTANT SECRETARIES AND ASSISTANT TREASURERS. The assistant secretariesand assistant treasurers, in general, shall perform such duties as shall be assigned to them by the secretary ortreasurer, respectively, or by the chief executive officer, the president or the Board of Directors. Section 13. COMPENSATION. The compensation of the officers shall be fixed from time to time by orunder the authority of the Board of Directors and no officer shall be prevented from receiving such compensationby reason of the fact that he or she is also a director. 16
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ARTICLE VICONTRACTS, CHECKS AND DEPOSITS Section 1. CONTRACTS. The Board of Directors may authorize any officer or agent to enter into anycontract or to execute and deliver any instrument in the name of and on behalf of the Corporation and suchauthority may be general or confined to specific instances. Any agreement, deed, mortgage, lease or otherdocument shall be valid and binding upon the Corporation when duly authorized or ratified by action of the Boardof Directors and executed by an authorized person. Section 2. CHECKS AND DRAFTS. All checks, drafts or other orders for the payment of money, notesor other evidences of indebtedness issued in the name of the Corporation shall be signed by such officer or agent ofthe Corporation in such manner as shall from time to time be determined by the Board of Directors. Section 3. DEPOSITS. All funds of the Corporation not otherwise employed shall be deposited orinvested from time to time to the credit of the Corporation as the Board of Directors, the chief executive officer, thepresident, the chief financial officer or any other officer designated by the Board of Directors may determine. ARTICLE VIISTOCK Section 1. CERTIFICATES. Except as may otherwise be provided by the Board of Directors,stockholders of the Corporation are not entitled to certificates representing the shares of stock held by them. In theevent that the Corporation issues shares of stock represented by certificates, such certificates shall be in such formas prescribed by the Board of Directors or a duly authorized officer, shall contain the statements and informationrequired by the MGCL and shall be signed by the officers of the Corporation in the manner permitted by theMGCL. In the event that the Corporation issues shares of stock without certificates, to the extent then required bythe MGCL, the Corporation shall provide to the record holders of such shares a written statement of theinformation required by the MGCL to be included on stock certificates. There shall be no differences in the rightsand obligations of stockholders based on whether or not their shares are represented by certificates. Section 2. TRANSFERS. All transfers of shares of stock shall be made on the books of the Corporation,by the holder of the shares, in person or by his or her attorney, in such manner as the Board of Directors or anyofficer of the Corporation may prescribe and, if such shares are certificated, upon surrender of certificates dulyendorsed. The issuance of a new certificate upon the transfer of certificated shares is subject to the determination ofthe Board of Directors that such shares shall no longer be represented by certificates. Upon the transfer of anyuncertificated shares, to the extent then required by the MGCL, the Corporation shall provide to the record holdersof such shares a written statement of the information required by the MGCL to be included on stock certificates. The Corporation shall be entitled to treat the holder of record of any share of stock as the holder in fact thereof and, accordingly, shall not be bound to recognize any equitable or other claim to or interest in such share or on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise expressly provided by the laws of the State of Maryland. Notwithstanding the foregoing, transfers of shares of any class or series of stock will be subject in all respects to the Charter and all of the terms and conditions contained therein. 17
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Section 3. REPLACEMENT CERTIFICATE. Any officer of the Corporation may direct a newcertificate or certificates to be issued in place of any certificate or certificates theretofore issued by the Corporationalleged to have been lost, destroyed, stolen or mutilated, upon the making of an affidavit of that fact by the personclaiming the certificate to be lost, destroyed, stolen or mutilated; provided, however, if such shares have ceased tobe certificated, no new certificate shall be issued unless requested in writing by such stockholder and the Board ofDirectors has determined that such certificates may be issued. Unless otherwise determined by an officer of theCorporation, the owner of such lost, destroyed, stolen or mutilated certificate or certificates, or his or her legalrepresentative, shall be required, as a condition precedent to the issuance of a new certificate or certificates, to givethe Corporation a bond in such sums as it may direct as indemnity against any claim that may be made against theCorporation. Section 4. FIXING OF RECORD DATE. The Board of Directors may set, in advance, a record date forthe purpose of determining stockholders entitled to notice of or to vote at any meeting of stockholders ordetermining stockholders entitled to receive payment of any dividend or the allotment of any other rights, or inorder to make a determination of stockholders for any other proper purpose. Such date, in any case, shall not beprior to the close of business on the day the record date is fixed and shall be not more than 90 days and, in the caseof a meeting of stockholders, not less than ten days, before the date on which the meeting or particular actionrequiring such determination of stockholders of record is to be held or taken. When a record date for the determination of stockholders entitled to notice of and to vote at any meeting of stockholders has been set as provided in this section, such record date shall continue to apply to the meeting if adjourned or postponed, except if the meeting is adjourned or postponed to a date more than 120 days after the record date originally fixed for the meeting, in which case a new record date for such meeting may be determined as set forth herein. Section 5. STOCK LEDGER. The Corporation shall maintain at its principal office or at the office of itscounsel, accountants or transfer agent, an original or duplicate stock ledger containing the name and address ofeach stockholder and the number of shares of each class held by such stockholder. Section 6. FRACTIONAL STOCK; ISSUANCE OF UNITS. The Board of Directors may authorize theCorporation to issue fractional stock or authorize the issuance of scrip, all on such terms and under such conditionsas it may determine. Notwithstanding any other provision of the Charter or these Bylaws, the Board of Directorsmay issue units consisting of different securities of the Corporation. Any security issued in a unit shall have thesame characteristics as any identical securities issued by the Corporation, except that the Board of Directors mayprovide that for a specified period securities of the Corporation issued in such unit may be transferred on the booksof the Corporation only in such unit. ARTICLE VIIIACCOUNTING YEAR The Board of Directors shall have the power, from time to time, to fix the fiscal year of the Corporation by a duly adopted resolution. ARTICLE IXDISTRIBUTIONS Section 1. AUTHORIZATION. Dividends and other distributions upon the stock of the Corporationmay be authorized by the Board of Directors and declared by the Corporation, 18
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subject to the provisions of law and the Charter. Dividends and other distributions may be paid in cash, property orstock of the Corporation, subject to the provisions of law and the Charter. Section 2. CONTINGENCIES. Before payment of any dividends or other distributions, there may beset aside out of any assets of the Corporation available for dividends or other distributions such sum or sums as theBoard of Directors may from time to time, in its absolute discretion, think proper as a reserve fund forcontingencies, for equalizing dividends, for repairing or maintaining any property of the Corporation or for suchother purpose as the Board of Directors shall determine, and the Board of Directors may modify or abolish anysuch reserve. ARTICLE XINVESTMENT POLICY Subject to the provisions of the Charter, the Board of Directors may from time to time adopt, amend, revise or terminate any policy or policies with respect to investments by the Corporation as it shall deem appropriate in its sole discretion. ARTICLE XISEAL Section 1. SEAL. The Board of Directors may authorize the adoption of a seal by the Corporation. Theseal shall contain the name of the Corporation and the year of its incorporation and the words “IncorporatedMaryland.” The Board of Directors may authorize one or more duplicate seals and provide for the custody thereof. Section 2. AFFIXING SEAL. Whenever the Corporation is permitted or required to affix its seal to adocument, it shall be sufficient to meet the requirements of any law, rule or regulation relating to a seal to place theword “(SEAL)” adjacent to the signature of the person authorized to execute the document on behalf of theCorporation. ARTICLE XIIWAIVER OF NOTICE Whenever any notice of a meeting is required to be given pursuant to the Charter or these Bylaws or pursuant to applicable law, a waiver thereof in writing or by electronic transmission, given by the person or persons entitled to such notice, whether before or after the time stated therein, shall be deemed equivalent to the giving of such notice. Neither the business to be transacted at nor the purpose of any meeting need be set forth in the waiver of notice of such meeting, unless specifically required by statute. The attendance of any person at any meeting shall constitute a waiver of notice of such meeting, except where such person attends a meeting for the express purpose of objecting to the transaction of any business on the ground that the meeting has not been lawfully called or convened. ARTICLE XIIIAMENDMENT OF BYLAWS The Board of Directors shall have the exclusive power to adopt, alter or repeal any provision of these Bylaws and to make new Bylaws. 19
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ARTICLE IIVEXCLUSIVE FORUM FOR CERTAIN LITIGATION Unless the Corporation consents in writing to the selection of an alternative forum, the Circuit Court for Baltimore City, Maryland, or, if that Court does not have jurisdiction, the United States District Court for the District of Maryland, Baltimore Division, shall be the sole and exclusive forum for (a) any derivative action or proceeding brought on behalf of the Corporation, (b) any action asserting a claim of breach of any duty owed by any director or officer or other employee of the Corporation to the Corporation or to the stockholders of the Corporation, (c) any action asserting a claim against the Corporation or any director or officer or other employee of the Corporation arising pursuant to any provision of the MGCL, the Charter or these Bylaws, or (d) any action asserting a claim against the Corporation or any director or officer or other employee of the Corporation that is governed by the internal affairs doctrine. Effective: January 29, 2025 20
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Exhibit 4.2 MSC INCOME FUND, INC. SECOND AMENDED AND RESTATED DISTRIBUTION REINVESTMENT PLAN MSC Income Fund, Inc., a Maryland corporation (the “Company”), has adopted the following Second Amended and Restated Distribution Reinvestment Plan (the “DRP”), effective as of March 6, 2025 (the “Effective Date”). 1. Distribution Reinvestment. As an agent for the registered holders (“Stockholders”) of the Company’s common stock, par value $0.001 per share (the “Common Stock”), who participate in the DRP, as set forth below (the “Participants”), the Company’s transfer agent, SS&C GIDS, Inc. (the “Plan Administrator”), will automatically reinvest cash dividends and distributions, including distributions paid with respect to any full or fractional shares of Common Stock acquired under the DRP (collectively, “Distributions”), on behalf of each such Participant in shares of the Common Stock, and no further action shall be required on such Participant’s part to receive a distribution in Common Stock. 2. Authorization. Subject to the discretion of the Company’s Board of Directors (the “Board”) and applicable legal restrictions, the Company may declare and pay Distributions on such date or dates as may be fixed from time to time by the Board to stockholders of record at the close of business on the record date established by the Board for the Distribution involved. To implement the DRP, the Company may use newly issued shares of its Common Stock or the Company may instruct the Plan Administrator to purchase shares of the Company’s Common Stock in the open market, in each case to the extent permitted under applicable law, whether shares of the Common Stock are trading at, above or below net asset value. If newly issued shares are used to implement the DRP, the number of shares to be delivered to a Participant shall be determined by dividing the total dollar amount of the Distribution payable to such Participant by the closing sales price per share of Common Stock reported on the New York Stock Exchange on the trading day immediately preceding the applicable Distribution payment date (or, if no sale is reported for such date, at the average of their reported bid and asked prices). If the shares of Common Stock are purchased in the open market by the Plan Administrator to implement the DRP, the number of shares to be delivered to a Participant shall be determined by dividing the total dollar amount of the Distribution payable to such Participant by the weighted average price paid per share for all the shares of Common Stock purchased by the Plan Administrator in connection with such purchases on the open market. Participants will not be charged any fees or commissions with respect to such purchases.
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3. Participation. Effective as of the Effective Date, participation in the DRP requires no action on the part of a Stockholder, and a Stockholder who wants to receive cash in connection with a Distribution must affirmatively “opt out” of the DRP. For the avoidance of doubt, Stockholders who, as of the Effective Date, did not elect to “opt in” to the Company’s distribution reinvestment plan in effect prior to the Effective Date shall be deemed to have made an election under this DRIP, as of the Effective Date, to receive Distributions in cash. Any Stockholder may elect to opt out of the DRP and receive Distributions in cash by notifying the Plan Administrator in writing (pursuant to the instructions in Section 6 hereof), so that such notice is received by the Plan Administrator no later than 10 days prior to the next Distribution date, after which the Stockholder’s election will be effective with respect the next Distribution payable. Otherwise, the election will be effective only with respect to any subsequent Distribution. 4. Purchase of Shares of Common Stock. Participants in the DRP may acquire fractional shares of Common Stock under the DRP so that 100% of the Distributions will be used to acquire shares of Common Stock. 5. Stock Certificates. The ownership of the shares of Common Stock purchased through the DRP will be in book-entry form only. 6. Change of Election by Stockholders. A Stockholder may change its election under the DRP at any time without penalty upon 10 days’ written notice to the Plan Administrator of such change. If the Plan Administrator receives a Stockholder’s properly executed change of election no later than 10 days prior to the next Distribution date, such election will be effective with respect the next Distribution payable. Otherwise, the election will be effective only with respect to any subsequent Distribution. Participants may send their written notice to the Plan Administrator at P.O. Box 219010, Kansas City, MO 64121-9010 (or 430 W. 7th St., Kansas City, MO 64105 for overnight delivery). 7. Taxation of Distributions. The reinvestment of Distributions in the DRP does not relieve Participants of any taxes which may be payable as a result of those Distributions and their reinvestment in shares of Common Stock pursuant to the terms of the DRP. 8. Amendment or Termination of DRP by the Company. The Company may amend, suspend or terminate the DRP for any reason in its sole discretion, and Participants will be notified of any material amendment, suspension or termination. 9. Voting Rights. Shares of Common Stock issued pursuant to the DRP will have the same voting rights as the shares of Common Stock issued pursuant to an offering of the
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Company. The Plan Administrator will forward to each Participant any Company-related proxy solicitation materials and each Company report or other communication to stockholders and will vote any shares held by it under the DRP in accordance with the instructions set forth on proxies returned by Participants to the Company. 10. Service Fee. Any service fee or expenses incurred by the Company in connection with the administration of the DRP will be paid for by the Company. 11. Liability of the Company. The Company shall not be liable for any act done in good faith, or for any good faith omission to act, including, without limitation, any claims or liability: (a) arising out of failure to terminate a Participant’s account upon such Participant’s death prior to receipt of notice in writing of such death; and (b) with respect to the time and the prices at which shares of Common Stock are purchased or sold for Participant’s account. 12. Governing Law. These terms and conditions shall be governed by the laws of the State of Texas.
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EXHIBIT 4.3 DESCRIPTION OF SECURITIES The following description is based on relevant portions of the Maryland General Corporation Law (the “MGCL”) and on the Articles of Amendment and Restatement (our “Charter”) and Second Amended and Restated Bylaws (our “Bylaws”) of MSC Income Fund, Inc. (“we,” “our,” or the “Company”). This summary is not necessarily complete, and we refer you to the MGCL and our Charter and Bylaws for a more detailed description of the provisions summarized below. Stock As of December 31, 2024, our authorized stock consisted of 500,000,000 shares of stock, par value $0.001 per share, of which 450,000,000 shares are classified as common stock and 50,000,000 shares are classified as preferred stock. No stock has been authorized for issuance under any equity compensation plans. Under Maryland law, our stockholders generally will not be personally liable for our debts or obligations. Common Stock Under the terms of our Charter, all shares of our common stock have equal rights as to voting and distributions and, when they are issued, will be duly authorized, validly issued, fully paid and nonassessable. Distributions may be paid to the holders of our common stock if, as and when authorized by our board of directors and declared by us out of funds legally available therefor. Shares of our common stock have no preemptive, exchange, conversion or redemption rights. Shares of our common stock are freely transferable, except where their transfer is restricted by federal and state securities laws, by contract or by our Charter, which limits the transferability of shares of our common stock that were outstanding prior to the listing of our shares of common stock on the New York Stock Exchange on January 29, 2025 for the 365-day period following such initial listing date. In the event of our liquidation, dissolution or winding up of the Company, each share of our common stock would be entitled to share ratably in all of our assets that are legally available for distribution after we pay all debts and other liabilities and subject to any preferential rights of holders of our preferred stock, if any preferred stock is outstanding at such time. Except as may otherwise be specified in our Charter, each share of our common stock is entitled to one vote on all matters submitted to a vote of stockholders, including the election of directors; provided, however, that the holders of common stock will have (i) exclusive voting rights on a charter amendment that would alter only the contract rights, as expressly set forth in our Charter and (ii) voting rights as set forth in Rule 18f-3(a)(2)-(3) promulgated under the Investment Company Act of 1940, as amended (the “1940 Act”). Except as provided with respect to any other class or series of stock, the holders of our common stock possess exclusive voting power. There is no cumulative voting in the election of directors, which means that holders of a majority of the outstanding shares of common stock are able to elect all of our directors, and holders of less than a majority of such shares are not able to elect any director. Preferred Stock Under the terms of our Charter, our board of directors is authorized to issue shares of preferred stock in one or more classes or series without stockholder approval. The board of directors has discretion to set the terms, preferences, conversion or other rights, voting powers, restrictions, limitations as to dividends or other distributions, qualifications and terms or conditions of redemption for each class or series of preferred stock. Every issuance of preferred stock will be required to comply with the requirements of the 1940 Act. The 1940 Act requires that (i)
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immediately after issuance and before any distribution is made with respect to our common stock and before any purchase of common stock is made, such preferred stock together with all other senior securities must not exceed an amount equal to 50% of our total assets after deducting the amount of such distribution or purchase price, as the case may be, and (ii) the holders of shares of preferred stock, if any are issued, must be entitled as a class to elect two directors at all times and to elect a majority of the directors if distributions on such preferred stock are in arrears by two years or more. Certain matters under the 1940 Act require the separate vote of the holders of any issued and outstanding preferred stock. Provisions of the Maryland General Corporation Law and Our Charter and Bylaws The MGCL and our Charter and Bylaws contain provisions that could make it more difficult for a potential acquirer to acquire us by means of a tender offer, proxy contest or otherwise. These provisions are expected to discourage certain coercive takeover practices and inadequate takeover bids and to encourage persons seeking to acquire control of us to negotiate first with the board of directors. We believe that the benefits of these provisions outweigh the potential disadvantages of discouraging any such acquisition proposals because the negotiation of such proposals may improve their terms. Under our Bylaws, the Circuit Court for Baltimore City, Maryland, or, if that Court does not have jurisdiction, the United States District Court for the District of Maryland, Baltimore Division, shall be the sole and exclusive forum for certain litigation. Election of Directors; Number of Directors; Vacancies; Removal As permitted by Maryland law, a plurality of all the votes cast at a meeting of stockholders duly called and at which a quorum is present will be required to elect a director. Our Charter provides that a majority of our board of directors must be independent directors except for a period of up to 60 days after the death, removal or resignation of an independent director pending the election of such independent director’s successor, and the 1940 Act requires that a majority of our board of directors be persons other than “interested persons” as defined in the 1940 Act. Our Charter provides that the number of directors will initially be four, which number may be increased or decreased by the board of directors in accordance with our Bylaws. The number of directors currently on our board of directors is four. Our Bylaws provide that a majority of our entire board of directors may at any time establish, increase or decrease the number of directors. However, the number of directors may never be less than three or more than ten, unless otherwise permitted by our Bylaws. Except as may be provided by the board of directors in setting the terms of any class or series of preferred stock, any and all vacancies on the board of directors may be filled only by the affirmative vote of a majority of the remaining directors in office, even if the remaining directors do not constitute a quorum, and any director elected to fill a vacancy will serve for the remainder of the full term of the directorship in which the vacancy occurred and until a successor is elected and qualifies, subject to any applicable requirements of the 1940 Act. Action by Stockholders The MGCL provides that stockholder action can be taken only at an annual or special meeting of stockholders or by unanimous consent in lieu of a meeting (unless the charter permits consent by the stockholders entitled to cast not less than the minimum number of votes that would be necessary to authorize or take the action at a meeting, which our Charter does not). These provisions, combined with the requirements of our Bylaws regarding the calling of a
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stockholder-requested special meeting of stockholders discussed below, may have the effect of delaying consideration of a stockholder proposal until the next annual meeting. Advance Notice Provisions for Stockholder Nominations and Stockholder Proposals Our Bylaws provide that, with respect to an annual meeting of stockholders, nominations of individuals for election to the board of directors and the proposal of other business to be considered by stockholders may be made only (i) pursuant to our notice of the meeting, (ii) by or at the direction of the board of directors or (iii) by a stockholder who is a stockholder of record both at the time of giving notice required by our Bylaws and at the time of the meeting, who is entitled to vote at the meeting in the election of each individual so nominated or on such other business and who has complied with the advance notice procedures of the Bylaws. With respect to special meetings of stockholders, only the business specified in our notice of the meeting may be brought before the meeting. Nominations of individuals for election to the board of directors at a special meeting may be made only (i) by or at the direction of the board of directors or (ii) provided that a meeting has been called in accordance with our Bylaws for the purpose of electing directors, by a stockholder who is a stockholder of record both at the time of giving notice required by our Bylaws and at the time of the meeting, who is entitled to vote at the meeting in the election of each individual so nominated and who has complied with the advance notice provisions of the Bylaws. The purpose of requiring stockholders to give us advance notice of nominations and other business is to afford our board of directors a meaningful opportunity to consider the qualifications of the proposed nominees and the advisability of any other proposed business and, to the extent deemed necessary or desirable by our board of directors, to inform stockholders and make recommendations about such qualifications or business, as well as to provide a more orderly procedure for conducting meetings of stockholders. Although our Bylaws do not give our board of directors any power to disapprove stockholder nominations for the election of directors or proposals recommending certain action, they may have the effect of precluding a contest for the election of directors or the consideration of stockholder proposals if proper procedures are not followed and of discouraging or deterring a third party from conducting a solicitation of proxies to elect its own slate of directors or to approve its own proposal without regard to whether consideration of such nominees or proposals might be harmful or beneficial to us and our stockholders. Calling of Special Meetings of Stockholders Our Bylaws provide that special meetings of stockholders may be called by our board of directors and certain of our officers. Additionally, our Bylaws provide that, subject to the satisfaction of certain procedural and informational requirements by the stockholders requesting the meeting, a special meeting of stockholders will be called by our Secretary to act on any matter that may properly be considered at a meeting of stockholders upon the written request of stockholders who are stockholders of record at the time of the request and are entitled to cast not less than a majority of all the votes entitled to be cast on such matter at such meeting. Approval of Extraordinary Corporate Action; Amendment of Charter and Bylaws Under Maryland law, a Maryland corporation generally cannot dissolve, amend its charter, merge, convert, sell all or substantially all of its assets, engage in a share exchange or engage in similar transactions outside the ordinary course of business, unless approved by the affirmative vote of stockholders entitled to cast at least two-thirds of the votes entitled to be cast on the matter. However, a Maryland corporation may provide in its charter for approval of these matters by a lesser percentage, but not less than a majority of all of the votes entitled to be cast on the matter.
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Under our Charter, provided that our directors then in office have approved and declared the action advisable and submitted such action to the stockholders, an amendment to our Charter that requires stockholder approval, a merger, a conversion or a sale of all or substantially all of our assets or a similar transaction outside the ordinary course of business, must generally be approved by the affirmative vote of stockholders entitled to cast at least a majority of all the votes entitled to be cast on the matter. Notwithstanding the foregoing, amendments to our Charter relating to the vote required for certain actions must be approved by the affirmative vote of stockholders entitled to cast at least two-thirds of all the votes entitled to be cast on the matter. Our Charter and Bylaws provide that the board of directors has the exclusive power to make, alter, amend or repeal any provision of our Bylaws. No Appraisal Rights Except with respect to appraisal rights arising in connection with the Control Share Acquisition Act under the MGCL (the “Control Share Act”) discussed below, as permitted by the MGCL, our stockholders are not entitled to exercise appraisal rights unless our board of directors determines that appraisal rights apply, with respect to all or any classes or series of stock, to one or more transactions occurring after the date of such determination in connection with which stockholders would otherwise be entitled to exercise appraisal rights. Control Share Acquisitions The MGCL provides that control shares of a Maryland corporation acquired in a control share acquisition (the acquisition of issued and outstanding control shares, subject to certain exceptions) have no voting rights except to the extent approved by a vote of two-thirds of the votes entitled to be cast on the matter, which we refer to as the Control Share Act. Shares owned by the acquiror, by officers or by employees who are directors of the corporation are excluded from shares entitled to vote on the matter. Control shares are voting shares of stock which, if aggregated with all other shares of stock owned by the acquirer or in respect of which the acquirer is able to exercise or direct the exercise of voting power (except solely by virtue of a revocable proxy), would entitle the acquirer to exercise voting power in electing directors within one of the following ranges of voting power: • one-tenth or more but less than one-third; • one-third or more but less than a majority; or • a majority or more of all voting power. The requisite stockholder approval must be obtained each time an acquirer crosses one of the thresholds of voting power set forth above. Control shares do not include shares the acquiring person is then entitled to vote as a result of having previously obtained stockholder approval. A person who has made or proposes to make a control share acquisition may compel the board of directors of the corporation to call a special meeting of stockholders to be held within 50 days of demand to consider the voting rights of the shares. The right to compel the calling of a special meeting is subject to the satisfaction of certain conditions. If no request for a meeting is made, the corporation may itself present the question at any stockholders meeting. If voting rights are not approved at the meeting or if the acquiring person does not deliver an acquiring person statement as required by the statute, then the corporation may redeem for fair value any or all of the control shares,
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except those for which voting rights have previously been approved. The right of the corporation to redeem control shares is subject to certain conditions and limitations, including compliance with the 1940 Act. If voting rights for control shares are approved at a stockholders meeting and the acquirer becomes entitled to vote a majority of the shares entitled to vote, all other stockholders may exercise appraisal rights. The Control Share Act does not apply (a) to shares acquired in a merger, consolidation or share exchange if the corporation is a party to the transaction or (b) to acquisitions approved or exempted by the charter or bylaws of the corporation. Our Bylaws contain a provision exempting from the Control Share Act any and all acquisitions by any person of our shares of stock. There can be no assurance that such provision will not be amended or eliminated at some time in the future. However, we will amend our Bylaws to be subject to the Control Share Act only if the board of directors determines that it would be in the best interests of our stockholders and if the Securities and Exchange Commission staff expressly approves that our being subject to the Control Share Act does not conflict with the 1940 Act. The Securities and Exchange Commission staff has issued informal guidance setting forth its position that certain provisions of the Control Share Act, if implemented, would violate Section 18(i) of the 1940 Act. Business Combinations Under Maryland law, “business combinations” between a Maryland corporation and an interested stockholder or an affiliate of an interested stockholder are prohibited for five years after the most recent date on which the interested stockholder becomes an interested stockholder, which we refer to as the “Business Combination Act.” These business combinations include a merger, consolidation, share exchange or, in circumstances specified in the statute, an asset transfer or issuance or reclassification of equity securities. An interested stockholder is defined as: • any person who beneficially owns, directly or indirectly, 10% or more of the voting power of the corporation’s outstanding voting stock; or • an affiliate or associate of the corporation who, at any time within the two-year period immediately prior to the date in question, was the beneficial owner of, directly or indirectly, 10% or more of the voting power of the then outstanding stock of the corporation. A person is not an interested stockholder under this statute if the board of directors approved in advance the transaction by which he otherwise would have become an interested stockholder. However, in approving a transaction, the board of directors may provide that its approval is subject to compliance, at or after the time of approval, with any terms and conditions determined by the board of directors. After the five-year prohibition, any business combination between the Maryland corporation and an interested stockholder generally must be recommended by the board of directors of the corporation and approved by the affirmative vote of at least: • 80% of the votes entitled to be cast by holders of outstanding shares of voting stock of the corporation; and • two-thirds of the votes entitled to be cast by holders of voting stock of the corporation other than shares held by the interested stockholder with whom or with whose affiliate the business combination is to be effected or held by an affiliate or associate of the interested stockholder.
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These super-majority vote requirements do not apply if the corporation’s common stockholders receive a minimum price, as defined under Maryland law, for their shares in the form of cash or other consideration in the same form as previously paid by the interested stockholder for its shares. The statute permits various exemptions from its provisions, including business combinations that are exempted by the board of directors prior to the time that the interested stockholder becomes an interested stockholder. Our board of directors has adopted a resolution exempting any business combination between us and any other person from the provisions of the Business Combination Act, provided that the business combination is first approved by the board of directors, including a majority of the directors who are not interested persons as defined in the 1940 Act. This resolution, however, may be altered or repealed in whole or in part at any time. If this resolution is repealed, or the board of directors does not otherwise approve a business combination, the statute may discourage others from trying to acquire control of us and increase the difficulty of consummating any offer. Additional Provisions of Maryland Law Maryland law provides that a Maryland corporation that is subject to the Exchange Act and has at least three independent directors can elect by resolution of the board of directors to be subject to some corporate governance provisions notwithstanding any provision in the corporation’s charter and bylaws. Under the applicable statute, a board of directors may classify itself without the vote of stockholders. Further, the board of directors may, by electing into applicable statutory provisions and notwithstanding any contrary provision in the charter or bylaws: • provide that a stockholder-requested special meeting of stockholders will be called only at the request of stockholders entitled to cast at least a majority of the votes entitled to be cast at the meeting; • reserve for itself the exclusive power to fix the number of directors; • provide that a director may be removed only by the vote of stockholders entitled to cast two-thirds of all the votes entitled to be cast generally in the election of directors; and • provide that all vacancies on the board of directors may be filled only by the affirmative vote of a majority of the remaining directors in office, even if the remaining directors do not constitute a quorum, and that any director elected to fill a vacancy will serve for the remainder of the full term of the directorship and until his or her successor is elected and qualifies. Pursuant to our Charter, we have elected to provide that all vacancies on the board of directors resulting from an increase in the size of the board of directors or the death, resignation or removal of a director may be filled only by the affirmative vote of a majority of the remaining directors, even if the remaining directors do not constitute a quorum and that any director elected to fill a vacancy will serve for the remainder of the full term of the directorship and until a successor is elected and qualifies. Such election is subject to applicable requirements of the 1940 Act and to the provisions of any class or series of preferred stock established by the board of directors.
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Exhibit 19.1 MAIN STREET CAPITAL CORPORATION MSC INCOME FUND, INC. AND MSC ADVISER I, LLC STATEMENT OF POLICY ON INSIDER TRADING Introduction It is illegal for any person, either personally or on behalf of others, to trade in securities while in possession of material, non-public information. It is also illegal to communicate, or “tip,” material, non-public information to others who might be expected to trade in securities while in possession of that information. These illegal activities are commonly referred to as “insider trading.” Potential penalties for insider trading violations include imprisonment for up to 20 years, civil fines of up to three times the profit gained or loss avoided by the trading, and criminal fines of up to $5 million. If the defendant in such a criminal action is an entity, a court may impose a fine of up to $25 million. In addition, a company whose director, officer or employee violates the insider trading prohibitions may be liable for a civil fine of up to the greater of $1 million or three times the profit gained or loss avoided as a result of the director, officer or employee’s insider trading violations. Moreover, a director, officer or employee’s failure to comply with this insider trading policy may subject such person to sanctions imposed by Main Street Capital Corporation, MSC Income Fund, Inc. or MSC Adviser I, LLC, as applicable, including dismissal for cause, whether or not such person’s failure to comply with this policy results in a violation of law. You are encouraged to ask questions and seek any follow-up information that you may require with respect to the matters set forth in this insider trading policy. Please direct your questions to the Main Street Capital Corporation, MSC Income Fund, Inc. or MSC Adviser I, LLC, as applicable, Chief Compliance Officer. A
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Statement of Policy This insider trading policy (the “Policy”) provides guidelines with respect to transactions in the securities of Main Street Capital Corporation and/or MSC Income Fund, Inc. (each, a “Company”) and the handling of confidential information about the respective Company and the companies with which the respective Company engages in transactions or does business. Each Company’s Board of Directors has adopted this Policy to promote compliance with U.S. federal, state and foreign securities laws that prohibit certain persons who are aware of material nonpublic information about a company from: (i) engaging in transactions in the securities of that company; or (ii) providing material nonpublic information to other persons who may trade on the basis of that information. This Policy applies to all officers of the Companies and their respective subsidiaries (including, with respect to Main Street Capital Corporation, MSC Adviser I, LLC) all members of each Company’s Board of Directors and all employees of the Companies and their respective subsidiaries (including, with respect to Main Street Capital Corporation, MSC Adviser I, LLC), as applicable. Each Company may also determine that other persons should be subject to this Policy, such as contractors or consultants who have access to material nonpublic information. This Policy also applies to family members, other members of a person’s household and entities controlled by a person covered by this Policy, as described below. This Policy applies to transactions in each Company’s securities (collectively referred to in this Policy as “Company Securities”), including each Company’s common stock, options to purchase common stock, or any other type of securities that a Company may issue, including (but not limited to) preferred stock, convertible debentures and warrants, as well as derivative securities that are not issued by a Company, such as exchange-traded put or call options or swaps relating to the applicable Company Securities. Transactions subject to this Policy include purchases, sales and bona fide gifts of Company Securities. Persons subject to this Policy have ethical and legal obligations to maintain the confidentiality of information about the applicable Company and to not engage in transactions in Company Securities while in possession of material nonpublic information. Persons subject to this policy must not engage in illegal trading and must avoid the appearance of improper trading. Each individual is responsible for making sure that he, she or they complies with this Policy, and that any family member, household member or entity whose transactions are subject to this Policy, as discussed below, also comply with this Policy. In all cases, the responsibility for determining whether an individual is in possession of material nonpublic information rests with that individual, and any action on the part of a Company, its Chief Compliance Officer or any other employee or director pursuant to this Policy (or otherwise) does not in any way constitute legal advice or insulate an individual from liability under applicable securities laws. You could be subject to severe legal penalties and disciplinary action by the applicable Company for any conduct prohibited by this Policy or applicable securities laws, as described below in more detail under the heading “Consequences of Violations.” What transactions/activities are prohibited? It is the policy of each Company that no director, officer or other employee of the relevant Company (or any other person designated by this Policy or by the relevant Company’s Chief Compliance Officer as subject to this Policy) who is aware of material nonpublic information relating to the applicable Company may, directly, or indirectly through family members or other persons or entities: 2
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1. Engage in transactions in the applicable Company Securities, except as otherwise specified in this Policy under the headings “Transactions Under Company Plans” and “Rule 10b5-1 Plans;” 2. Recommend that others engage in transactions in any Company Securities; 3. Disclose material nonpublic information to persons within a Company whose jobs do not require them to have that information, or outside of a Company to other persons, including, but not limited to, family, friends, business associates, investors and expert consulting firms, unless any such disclosure is made in accordance with the respective Company’s policies regarding the protection or authorized external disclosure of information regarding the Company; or 4. Assist anyone engaged in the above activities. In addition, it is the policy of each Company that no director, officer or other employee of the relevant Company (or any other person designated as subject to this Policy) who, in the course of working for or on behalf of a Company (or MSC Adviser I, LLC), learns of material nonpublic information about a company (1) with which either Company or MSC Adviser I, LLC does business, such as a Company’s and/or MSC Adviser I, LLC’s clients, vendors, customers and suppliers, or (2) that is involved in a potential transaction or business relationship with a Company or MSC Adviser I, LLC, may engage in transactions in that company’s securities until the information becomes public or is no longer material. It is also the policy of each Company that neither Company will engage in transactions in the relevant Company Securities while aware of material nonpublic information relating to such Company or Company Securities. There are no exceptions to this Policy, except as specifically noted herein. Transactions that may be necessary or justifiable for independent reasons (such as the need to raise money for an emergency expenditure) are not excepted from the Policy. The securities laws do not recognize such mitigating circumstances, and, in any event, even the appearance of an improper transaction must be avoided to preserve each Company’s and MSC Adviser I, LLC’s reputation for adhering to the highest standards of conduct. What information is material? All information that an investor might consider important in deciding whether to buy, sell, or hold securities is considered material. Information that is likely to affect the price of a company’s securities, whether it is positive or negative, is almost always material. There is no bright-line standard for assessing materiality; rather, materiality is based on an assessment of all of the facts and circumstances, and is often evaluated by enforcement authorities with the benefit of hindsight. While it is not possible to define all categories of material information, some examples of information that ordinarily would be regarded as material are: • financial or earnings results or expectations for the quarter or the year; • financial forecasts or changes to previously announced earnings guidance (or the decision to suspend earnings guidance); • changes in dividends or dividend policies, declaration of a stock split, or an offering of additional securities; 3
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• possible mergers, acquisitions, joint ventures and other purchases and sales of companies and investments in companies; • establishment of a repurchase program for Company Securities; • significant related-party transactions; • changes in customer relationships with significant customers; • obtaining or losing important contracts; • important product developments; • bank borrowings or other financing transactions out of the ordinary course; • major personnel changes; • pending or threatened significant litigation, or the resolution of such litigation; • materials, pending investments and disclosures concerning portfolio companies; • impending bankruptcy or the existence of severe liquidity problems at a Company or a significant portfolio company; • a significant cybersecurity incident, such as a data breach, or any other significant disruption in the company’s operations or loss, potential loss, breach or unauthorized access of its property or assets, whether at its facilities or through its information technology infrastructure; or • the imposition of an event-specific restriction on trading in Company Securities or the securities of another company or the extension or termination of such restriction. What is non-public information? Information is considered to be non-public unless it has been effectively disclosed to the public. In order to establish that the information has been disclosed to the public, it may be necessary to demonstrate that the information has been widely disseminated. Information generally would be considered widely disseminated if it has been disclosed through newswire services, a broadcast on widely-available radio or television programs, publication in a widely-available newspaper, magazine or news website, or public disclosure documents filed with the SEC that are available on the SEC’s website. By contrast, information would likely not be considered widely disseminated if it is available only to the Company’s employees, or if it is only available to a select group of analysts, brokers and institutional investors. Not only must the information have been publicly disclosed, but there must also have been adequate time for the investing public to digest the information. Although timing may vary depending upon the circumstances, a good rule of thumb is that information is considered non-public until after the second business day after public disclosure. Transactions by Family Members and Others. This Policy applies to your family members who reside with you (including a spouse, a child, a child away at college, stepchildren, grandchildren, parents, stepparents, grandparents, siblings and in-laws), anyone else who lives in your household, and any family members who do not live in your household but whose transactions in Company Securities are directed by you or are subject to your influence or control, such as parents or children who consult with you before they trade in Company Securities (collectively referred to as “Family Members”). You are responsible for the transactions of these other persons and therefore should make them aware of the need to confer with you before they trade in Company Securities, and you should treat all such transactions for the purposes of this Policy and applicable securities laws as if the transactions were for your own account. This Policy 4
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does not, however, apply to personal securities transactions of Family Members where the purchase or sale decision is made by a third party not controlled by, influenced by or related to you or your Family Members. Transactions by Entities that You Influence or Control. This Policy applies to any entities that you influence or control, including any corporations, partnerships or trusts (collectively referred to as “Controlled Entities”), and transactions by these Controlled Entities should be treated for the purposes of this Policy and applicable securities laws as if they were for your own account. Rule 10b5-1 Plans. Rule 10b5-1 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) provides a defense from insider trading liability under Rule 10b-5. In order to be eligible to rely on this defense, a person subject to this Policy must enter into a Rule 10b5-1 plan for transactions in Company Securities that meets certain conditions specified in the Rule (a “Rule 10b5-1 Plan”). If the plan meets the requirements of Rule 10b5-1, transactions in Company Securities may occur even when the person who has entered into the plan is aware of material nonpublic information. To comply with the Policy, a Rule 10b5-1 Plan must be approved by the relevant Company’s Chief Compliance Officer and meet the requirements of Rule 10b5-1. In general, a Rule 10b5-1 Plan must be entered into at a time when the person entering into the plan is not aware of material nonpublic information. Once the plan is adopted, the person must not exercise any influence over the amount of securities to be traded, the price at which they are to be traded or the date of the trade. The plan must either specify the amount, pricing and timing of transactions in advance or delegate discretion on these matters to an independent third party. The plan must include a cooling-off period before trading can commence that, for directors or officers, ends on the later of 90 days after the adoption of the Rule 10b5-1 plan or two business days following the disclosure of the relevant Company’s financial results in an SEC periodic report for the fiscal quarter in which the plan was adopted (but in any event, the required cooling-off period is subject to a maximum of 120 days after adoption of the plan), and for persons other than directors or officers, 30 days following the adoption or modification of a Rule 10b5-1 plan. A person may not enter into overlapping Rule 10b5-1 plans (subject to certain exceptions) and may only enter into one single-trade Rule 10b5-1 plan during any 12-month period (subject to certain exceptions). Directors and officers must include a representation in their Rule 10b5-1 plan certifying that: (i) they are not aware of any material nonpublic information; and (ii) they are adopting the plan in good faith and not as part of a plan or scheme to evade the prohibitions in Rule 10b-5. All persons entering into a Rule 10b5-1 plan must act in good faith with respect to that plan. Any Rule 10b5-1 Plan must be submitted for approval five days prior to the entry into the Rule 10b5-1 Plan. No further pre-approval of transactions conducted pursuant to the Rule 10b5-1 Plan will be required. Transactions Under Company Plans This Policy does not apply in the case of the following transactions, except as specifically noted: 5
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Stock Option Exercises. This Policy does not apply to the exercise of an employee stock option acquired pursuant to a Company’s plans, or to the exercise of a tax withholding right pursuant to which a person has elected to have a Company withhold shares subject to an option to satisfy tax withholding requirements. This Policy does apply, however, to any sale of stock as part of a broker-assisted cashless exercise of an option, or any other market sale for the purpose of generating the cash needed to pay the exercise price of an option. Restricted Stock Awards. This Policy does not apply to the vesting of restricted stock, or the exercise of a tax withholding right pursuant to which you elect to have a Company withhold shares of stock to satisfy tax withholding requirements upon the vesting of any restricted stock. The Policy does apply, however, to any market sale of restricted stock. Dividend Reinvestment and Direct Stock Purchase Plan. Main Street Capital Corporation’s Dividend Reinvestment and Direct Stock Purchase Plan (the “MAIN Plan”) includes a dividend reinvestment feature and a direct stock purchase feature. MSC Income Fund, Inc. also maintains a Distribution Reinvestment Plan (the “MSIF DRIP”). This Policy does not apply to (i) purchases of Main Street Capital Corporation’s securities under the dividend reinvestment feature of the MAIN Plan resulting from your reinvestment of dividends paid on Main Street Capital Corporation’s securities or (ii) purchases of MSC Income Fund, Inc.’s securities under the MSIF DRIP resulting from your reinvestment of dividends paid on MSC Income Fund, Inc.’s securities. This Policy does apply, however, to voluntary purchases of Company Securities resulting from additional contributions you choose to make to the MAIN Plan and/or the MSIF DRIP, as applicable, and to your election to participate in the respective dividend reinvestment plan or increase your level of participation in the dividend reinvestment plan. With respect to the direct stock purchase feature of the MAIN Plan, this Policy does not apply to automatic direct stock purchases of Main Street Capital Corporation’s securities resulting from your periodic contribution of money to the MAIN Plan pursuant to the election you made at the time of your enrollment in the MAIN Plan. The Policy does apply, however, to your election to participate in the MAIN Plan for any enrollment period, to voluntary purchases of Main Street Capital Corporation’s securities under the direct stock purchase feature of the MAIN Plan (and for each one-time purchase) or your increase or decrease in the level of participation. This Policy also applies to your sale of any Company Securities purchased pursuant to either the MAIN Plan or the MSIF DRIP. Additional Prohibited Transactions Each Company has determined that there is a heightened legal risk and/or the appearance of improper or inappropriate conduct if the persons subject to this Policy engage in certain types of transactions. It therefore is each Company’s policy that any persons covered by this Policy may not engage in any of the following transactions, or should otherwise consider the Companies’ preferences as described below: Short-Term Trading. Short-term trading of Company Securities may be distracting to the person and may unduly focus the person on a Company’s short-term stock market performance instead of the Company’s long-term business objectives. For these reasons, any director, officer or other employee of either Company or MSC Adviser I, LLC who purchases Company Securities in the open market may not sell any Company Securities of the same class during the six months following the purchase (or vice versa). 6
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Short Sales. Short sales of Company Securities (i.e., the sale of a security that the seller does not own) may evidence an expectation on the part of the seller that the securities will decline in value, and therefore have the potential to signal to the market that the seller lacks confidence in the relevant Company’s prospects. In addition, short sales may reduce a seller’s incentive to seek to improve the relevant Company’s performance. For these reasons, short sales of Company Securities are prohibited. In addition, Section 16(c) of the Exchange Act prohibits officers and directors from engaging in short sales. (Short sales arising from certain types of hedging transactions are governed by the paragraph below captioned “Hedging Transactions.”) Publicly Traded Options. Given the relatively short term of publicly-traded options, transactions in options may create the appearance that a director, officer or employee is trading based on material nonpublic information and focus a director’s, officer’s or other employee’s attention on short-term performance at the expense of the relevant Company’s long- term objectives. Accordingly, transactions in put options, call options or other derivative securities, on an exchange or in any other organized market, are prohibited by this Policy. (Option positions arising from certain types of hedging transactions are governed by the section below captioned “Hedging Transactions.”) Hedging Transactions. Certain forms of hedging or monetization transactions, such as the purchase of prepaid variable forward contracts, equity swaps, collars or exchange funds, may allow a director, officer or employee to lock in much of the value of his or her stock holdings, often in exchange for all or part of the potential for upside appreciation in the stock. These transactions allow the director, officer or employee to continue to own the covered securities, but without the full risks and rewards of ownership. When that occurs, the director, officer or employee may no longer have the same objectives as the relevant Company’s other stockholders. Therefore, the purchase of any such financial instruments related to Company Securities, or the engagement in any other transactions, whether directly or indirectly, that hedge or offset, or are designed to hedge or offset, any decrease in the market value of Company Securities, are prohibited by this Policy. Margin Accounts and Pledges. Securities pledged in a margin account may be sold by the broker without the customer’s consent if the customer fails to meet a margin call. Similarly, securities pledged (or hypothecated) as collateral for a loan may be sold in foreclosure if the borrower defaults on the loan. Because a margin sale or foreclosure sale may occur at a time when the pledgor is aware of material nonpublic information or otherwise is not permitted to trade in Company Securities, directors, officers and employees are prohibited from holding Company Securities in a margin account or otherwise pledging Company Securities as collateral for a loan. (Pledges of Company Securities arising from certain types of hedging transactions are governed by the paragraph above captioned “Hedging Transactions.”) An exception to this prohibition may be granted where a person wishes to pledge Company Securities in a margin account or as collateral for a loan and clearly demonstrates the financial capacity to repay the loan without resort to the pledged securities. Any person who wishes to pledge Company Securities in a margin account or as collateral for a loan must submit a request for approval to the relevant Company’s Chief Compliance Officer at least two weeks prior to the proposed execution of documents evidencing the proposed pledge. Standing and Limit Orders. Standing and limit orders (except standing and limit orders under approved Rule 10b5- 1 Plans, as described above) create heightened risks for insider trading violations similar to the use of margin accounts. There is no control over the timing of purchases 7
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or sales that result from standing instructions to a broker, and as a result the broker could execute a transaction when a director, officer or other employee is in possession of material nonpublic information. Each Company therefore discourages placing standing or limit orders on Company Securities. If a person subject to this Policy determines that they must use a standing order or limit order, the order should be limited to short duration and should otherwise comply with the restrictions and procedures outlined below under the heading “Additional Procedures.” Post-Termination Transactions. This Policy continues to apply to transactions in Company Securities even after termination of service to the Company. If an individual is in possession of material nonpublic information when his or her service terminates, that individual may not engage in transactions in Company Securities until that information has become public or is no longer material. Unauthorized Disclosure As discussed above, the disclosure of material, non-public information to others can lead to significant legal difficulties. Therefore, it is important that only specifically designated representatives of a Company discuss such Company with the news media, securities analysts, and investors. Inquiries of this type received by any employee should be referred to the relevant Company’s Chief Executive Officer, Chief Financial Officer, General Counsel or Chief Compliance Officer. Additional Procedures Each Company has established additional procedures in order to assist the relevant Company in the administration of this Policy, to facilitate compliance with laws prohibiting insider trading while in possession of material nonpublic information, and to avoid the appearance of any impropriety. These additional procedures are applicable only to those individuals described below. Pre-Clearance Procedures. To help prevent inadvertent violations of the federal securities laws and to avoid even the appearance of trading on inside information, directors and executive officers of either Company and any other persons designated by the relevant Company’s Chief Compliance Officer as being subject to these procedures, as well as the Family Members and Controlled Entities of such persons, may not engage in any transaction in Company Securities without first obtaining pre-clearance of the transaction from the relevant Chief Compliance Officer. A request for pre-clearance should be submitted to the relevant Company’s Chief Compliance Officer at least two days in advance of the proposed transaction if possible. The Chief Compliance Officer is under no obligation to approve a transaction submitted for pre-clearance, and may determine not to permit the transaction. If a person seeks pre-clearance and permission to engage in the transaction is denied, then he or she should refrain from initiating any transaction in Company Securities, and should not inform any other person of the restriction. When a request for pre-clearance is made, the requestor should carefully consider whether he or she may be aware of any material nonpublic information about the relevant Company, and should describe fully those circumstances to the relevant Chief Compliance Officer. The requestor should also indicate whether he or she has effected any non-exempt “opposite-way” transactions within the past six months, and should be prepared to report the proposed transaction on an appropriate Form 4 or Form 5, if applicable. The requestor should also 8
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be prepared to comply with SEC Rule 144 and file a Form 144, if necessary, at the time of any sale. Quarterly Blackout Periods. A Company’s announcement of its quarterly financial results almost always has the potential to have a material effect on the market for the relevant Company Securities. Therefore, you can anticipate that, to avoid even the appearance of trading while aware of material nonpublic information, persons who are or may be expected to be aware of a Company’s quarterly financial results generally will not be pre-cleared to trade in the relevant Company Securities during the period beginning after the close of business on the last day of such Company’s fiscal quarter and ending after the third full business day following the earlier of such Company’s issuance of its quarterly earnings release or analyst conference call. Directors and executive officers of either Company and any other persons designated by the relevant Company’s Chief Compliance Officer as subject to this restriction (including all employees of the Companies’ accounting departments), as well as their respective Family Members or Controlled Entities, are subject to the restrictions in this paragraph. Event-specific Blackout Periods. From time to time, an event may occur that is material to a Company and is known by only a few directors, officers and/or employees. So long as the event remains material and nonpublic, the persons designated by the relevant Company’s Chief Compliance Officer may not engage in transactions in Company Securities. The existence of an event-specific blackout will not be announced, other than to those who are aware of the event giving rise to the blackout. If, however, a person whose trades are subject to pre-clearance requests permission to trade in Company Securities during an event-specific blackout, the relevant Company’s Chief Compliance Officer will inform the requestor of the existence of a blackout period, without disclosing the reason for the blackout. Any person made aware of the existence of an event-specific blackout should not disclose the existence of the blackout to any other person. The failure of the Chief Compliance Officer to designate a person as being subject to an event-specific blackout will not relieve that person of the obligation not to trade while aware of material nonpublic information. Hardship Exceptions. A person who is subject to a quarterly earnings blackout period and who has an unexpected and urgent need to sell Company Securities in order to generate cash may, in appropriate circumstances, be permitted to sell such stock even during the blackout period. Hardship exceptions may be granted only by the relevant Company’s Chief Compliance Officer and must be requested at least two days in advance of the proposed trade. A hardship exception may be granted only if the Chief Compliance Officer concludes that the relevant Company’s earnings information for the applicable quarter does not constitute material nonpublic information and otherwise concludes that the person is not aware of material nonpublic information. Under no circumstance will a hardship exception be granted during an event-specific blackout period. Other Exceptions. The quarterly earnings blackout period trading restrictions and event-specific trading restrictions described above do not apply to those transactions to which this Policy does not apply, as described above under the heading “Transactions Under Company Plans.” Further, the requirement for pre-clearance, the quarterly trading restrictions and event- specific trading restrictions do not apply to transactions conducted pursuant to approved Rule 10b5-1 plans, described under the heading “Rule 10b5-1 Plans.” 9
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Consequences of Violations The purchase or sale of securities while aware of material nonpublic information, or the disclosure of material nonpublic information to others who then engage in transactions in Company Securities, is prohibited by the federal and state laws. Insider trading violations are pursued vigorously by the SEC, U.S. Attorneys and state enforcement authorities, as well as enforcement authorities in foreign jurisdictions. Punishment for insider trading violations is severe, and could include significant fines and imprisonment. While the regulatory authorities concentrate their efforts on the individuals who trade, or who tip inside information to others who trade, the federal securities laws also impose potential liability on companies and other “controlling persons” if they fail to take reasonable steps to prevent insider trading by company personnel. In addition, an individual’s failure to comply with this Policy may subject the individual to Company-imposed sanctions, including dismissal for cause, whether or not the employee’s failure to comply results in a violation of law. Needless to say, a violation of law, or even an SEC investigation that does not result in prosecution, can tarnish a person’s reputation and irreparably damage a career. Certification All persons subject to this Policy must certify their understanding of, and intent to comply with, this Policy. Questions about this Policy Compliance by all directors, officers and employees with this policy is of the utmost importance both for you and for each Company. If you have any questions about the application of this policy to any particular case, please immediately contact the relevant Company’s Chief Compliance Officer. v.2.2025 10
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Exhibit 31.1 CERTIFICATION PURSUANT TORULE 13a-14(a) and 15d-14(a) UNDER THE SECURITIES EXCHANGE ACT OF 1934,AS AMENDED I, Dwayne L. Hyzak, certify that: 1. I have reviewed this Annual Report on Form 10-K for the year ended December 31, 2024 of MSC Income Fund, Inc. (the “registrant”); 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, 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; (c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and (d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and 5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. Dated this March 20, 2025. By: /s/ DWAYNE L. HYZAK Dwayne L. Hyzak Chief Executive Officer
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Exhibit 31.2 CERTIFICATION PURSUANT TORULE 13a-14(a) and 15d-14(a) UNDER THE SECURITIES EXCHANGE ACT OF 1934,AS AMENDED I, Cory E. Gilbert, certify that: 1. I have reviewed this Annual Report on Form 10-K for the year ended December 31, 2024 of MSC Income Fund, Inc. (the “registrant”); 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, 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; (c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and (d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and 5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. Dated this March 20, 2025. By: /s/ CORY E. GILBERT Cory E. Gilbert Chief Financial Officer
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Exhibit 32.1 Certification of Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350) In connection with the accompanying Annual Report of MSC Income Fund, Inc. (the “Registrant”) on Form 10-K for the year ended December 31, 2024 (the “Report”), as filed with the Securities and Exchange Commission on the date hereof, I, Dwayne L. Hyzak, the Chief Executive Officer of the Registrant, hereby certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes- Oxley Act of 2002, that: (1) The Report fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934, as amended; and (2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant. /s/ DWAYNE L. HYZAK Name: Dwayne L. Hyzak Date: March 20, 2025
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Exhibit 32.2 Certification of Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350) In connection with the accompanying Annual Report of MSC Income Fund, Inc. (the “Registrant”) on Form 10-K for the year ended December 31, 2024 (the “Report”), as filed with the Securities and Exchange Commission on the date hereof, I, Cory E. Gilbert, the Chief Financial Officer of the Registrant, hereby certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that: (1) The Report fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934, as amended; and (2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant. /s/ CORY E. GILBERT Cory E. Gilbert Date: March 20, 2025
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Exhibit 97.1 MSC INCOME FUND, INC. CLAWBACK POLICY The Board of Directors (the “Board”) of MSC Income Fund, Inc. (the “Company”) has adopted this Clawback Policy (the “Policy”) to comply with Section 10D of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), Rule 10D- 1 promulgated under the Exchange Act (“Rule 10D-1”) and Section 303A.14 of the New York Stock Exchange Listed Company Manual (the “Listing Standards”). This Policy provides for the recovery of Incentive-Based Compensation (as defined below) received by Covered Executives (as defined below), if any, in the event of an Accounting Restatement (as defined below) and shall be interpreted to be consistent with, Section 10D of the Exchange Act, Rule 10D-1 and the Listing Standards. Rule 10D-1 and the Listing Standards require the Company to adopt this Policy regardless of whether Incentive- Based Compensation is paid or otherwise awarded by the Company to Covered Executives. 1. Administration Except as specifically set forth herein, this Policy shall be administered by the Board or, if designated by the Board, a committee thereof (the Board or such committee charged with administration of this Policy, the “Policy Administrator”). The Policy Administrator is authorized to interpret and construe this Policy and to make all determinations necessary, appropriate or advisable for the administration of this Policy. Any determinations made by the Policy Administrator shall be final and binding on all affected individuals and need not be uniform with respect to each individual covered by the Policy. In the administration of this Policy, the Policy Administrator is authorized and directed to consult with the full Board or such other committees of the Board, such as the Audit Committee, the Compensation Committee or such other committee as may be necessary or appropriate as to matters within the scope of such other committee’s responsibility and authority. Subject to any limitation of applicable law, the Policy Administrator may authorize and empower any officer or employee of the Company to take any and all actions necessary or appropriate to carry out the purpose and intent of this Policy (other than with respect to any recovery under this Policy involving such officer or employee). 2. Definitions As used in this Policy, the following definitions shall apply: • “Accounting Restatement” means an accounting restatement of the Company’s financial statements due to the Company’s material noncompliance with any financial reporting requirement under the securities laws, including any required accounting restatement to correct an error in previously issued financial statements that is material to the previously issued financial statements, or that would result in a material misstatement if the error were corrected in the current period or left uncorrected in the current period. • “Applicable Period” means the three completed fiscal years immediately preceding the date on which the Company is required to prepare an Accounting Restatement, as well as any transition period (that results from a change in the Company’s fiscal year) within or immediately following those three completed fiscal years (except that a transition period between the last day of the Company’s previous fiscal year- end and the first day of its new fiscal year that comprises a period of nine to twelve months shall be deemed to be a completed fiscal year). The “date on which the Company is required to prepare an Accounting Restatement” is the earlier to occur of (a) the date the Board, a committee of the Board, or the officer or officers of the Company authorized to take such action if action by the Board or a committee thereof is not required, concludes or reasonably should have concluded, that the Company is required to prepare an Accounting Restatement or (b) the date a court, regulator or 1
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other legally authorized body directs the Company to prepare an Accounting Restatement, in each case regardless of if or when the restated financial statements are filed. • “Covered Executives” means the Company’s current and former president, principal financial officer, principal accounting officer (or if there is no such accounting officer, the controller), any vice-president of the Company in charge of a principal business unit, division, or function (such as sales, administration, or finance), any other officer of the Company who performs a policy-making function, or any other person who performs similar policy-making functions for the Company and, at a minimum, any officer within the meaning of 17 C.F. R. 229.401(b). An executive officer of a subsidiary of the Company is deemed a Covered Executive if the executive officer performs policy making functions for the Company. “Policy-making function” for purposes of this definition is not intended to include policy-making functions that are not significant to the Company. The definition of Covered Executives shall be interpreted in accordance with the definition of “Executive Offer” set forth in Rule 10D-1 and the Listing Standards. For the avoidance of doubt, “Covered Executives” does not include the Company’s investment adviser (the “Adviser”) or any of the Adviser’s directors, partners, officers or employees, solely in their capacity as such. • “Erroneously Awarded Compensation” has the meaning set forth in Section 6 of this Policy. • A “Financial Reporting Measure” means any measure that is determined and presented in accordance with the accounting principles used in preparing the Company’s financial statements, and any measure that is derived wholly or in part from such measure. For the avoidance of doubt, Financial Reporting Measures include but are not limited to the following (and any measure derived from the following): Company stock price; total shareholder return (“TSR”); net asset value, net investment income; net income; net realized or unrealized gains; profitability; financial ratios; earnings before interest, taxes, depreciation and amortization; funds from operations and adjusted funds from operations; liquidity measures; return measures (e.g., return on investments, return on assets); earnings measures (e.g., earnings per share); and any of such financial reporting measures relative to a peer group, where the Company’s financial reporting measure is subject to an Accounting Restatement. A Financial Reporting Measure need not be presented within the Company’s financial statements or included in a filing with the Securities and Exchange Commission. • “Incentive-Based Compensation” means any compensation that is granted by the Company, or earned and/or vested based wholly or in part upon the attainment of a Financial Reporting Measure. For purposes of this Policy, Incentive-Based Compensation is deemed “received” in the Company’s fiscal period during which the Financial Reporting Measure specified in the Incentive-Based Compensation award is attained, even if the payment or grant of such Incentive-Based Compensation occurs after the end of that period. 3. Scope; Covered Executives; Incentive-Based Compensation This Policy applies to Incentive-Based Compensation received by a person (a) after beginning services as a Covered Executive; (b) if that person served as a Covered Executive at any time during the performance 2
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period for such Incentive-Based Compensation; (c) while the Company had a listed class of securities on a national securities exchange; and (d) during the Applicable Period. 4. Board Review This Policy will be presented to the Board for review and approval at such times as the Board in its discretion determines is necessary and appropriate. The Board may amend, modify, supplement, rescind or replace all or any portion of this Policy at any time and from time to time in its discretion, and shall amend this Policy as it deems necessary to comply with applicable law or any rules or standards adopted by a national securities exchange on which the Company’s securities are listed. 5. Required Recovery of Erroneously Awarded Compensation in the Event of an Accounting Restatement In the event that the Company is required to prepare an Accounting Restatement, the Company shall recover, on a reasonably prompt basis, the amount of any Erroneously Awarded Compensation received by any Covered Executive from the Company, as calculated pursuant to Section 6 of this Policy, during the Applicable Period. Recovery under this Policy with respect to a Covered Executive shall not require the finding of any misconduct by such Covered Executive or such Covered Executive being found responsible for the accounting error leading to an Accounting Restatement. 6. Erroneously Awarded Compensation: Amount Subject to Recovery The amount of Erroneously Awarded Compensation subject to recovery under this Policy, as determined by the Company, is the amount of Incentive-Based Compensation received by the Covered Executive that exceeds the amount of Incentive-Based Compensation that otherwise would have been received by the Covered Executive had it been determined based on the restated amounts. Erroneously Awarded Compensation shall be computed without regard to any taxes paid by the Covered Executive in respect of the Erroneously Awarded Compensation. With respect to any compensation plans or programs that take into account Incentive-Based Compensation, the amount of Erroneously Awarded Compensation subject to recovery hereunder includes, but is not limited to, the amount contributed to any notional account based on Erroneously Awarded Compensation and any earnings accrued to date on that notional amount. For Incentive-Based Compensation based on the Company’s stock price or TSR: (a) the Company shall determine the amount of Erroneously Awarded Compensation based on a reasonable estimate of the effect of the Accounting Restatement on the stock price or TSR upon which the Incentive-Based Compensation was received; and (b) the Company shall maintain documentation of the determination of that reasonable estimate and provide such documentation to the New York Stock Exchange (“NYSE”). 7. Method of Recovery The Company shall determine, in its sole discretion, the timing and method for promptly recovering Erroneously Awarded Compensation hereunder, which may include without limitation (a) seeking reimbursement of all or part of any cash or equity-based award, (b) cancelling prior cash or equity-based awards, whether vested or unvested or paid or unpaid, (c) cancelling or offsetting against any planned future cash or equity-based awards, (d) forfeiture of deferred compensation, subject to compliance with Section 409A of the Internal Revenue Code and the regulations promulgated thereunder and (e) any other method authorized by applicable law or contract. Subject to compliance with any applicable law, the Company may effect recovery under this Policy from any amount otherwise payable to the Covered Executive, including amounts payable to such individual under any otherwise applicable Company plan or program, including base salary, bonuses, other compensation and/or compensation previously deferred by the Covered Executive. The Company currently neither pays nor has any plans to pay or otherwise award Incentive-Based Compensation to Covered Executives. 1 1 3
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The Company is authorized and directed pursuant to this Policy to recover Erroneously Awarded Compensation on a reasonably prompt basis in compliance with this Policy unless the Compensation Committee of the Board has determined that such recovery would be impracticable solely for one of the following reasons, and subject to the following procedural and disclosure requirements: • The direct expense paid to a third party to assist in enforcing the Policy would exceed the amount to be recovered. Before concluding that it would be impracticable to recover any amount of Erroneously Awarded Compensation based on the expense of enforcement, the Company must make, or cause to be made, a reasonable attempt to recover such Erroneously Awarded Compensation, document such reasonable attempt(s) to recover and provide that documentation to the NYSE; • Recovery would violate home country law where that law was adopted prior to November 28, 2022. Before concluding that it would be impracticable to recover any amount of Erroneously Awarded Compensation based on violation of home country law, the Company must obtain an opinion of home country counsel, acceptable to the NYSE, that recovery would result in such a violation, and must provide such opinion to the NYSE; or • Recovery would likely cause an otherwise tax-qualified retirement plan, under which benefits are broadly available to employees of the Company, if any, to fail to meet the requirements of 26 U.S.C. 401(a)(13) or 26 U.S.C. 411(a) and regulations thereunder. 8. No Indemnification of Covered Executives Notwithstanding the terms of any indemnification or insurance policy or any contractual arrangement with any Covered Executive that may be interpreted to the contrary, the Company shall not indemnify any Covered Executives against losses caused by the recovery of any Erroneously Awarded Compensation. In addition, the Company is not permitted to pay or reimburse a Covered Executive for premiums on an insurance policy purchased by such Covered Executive to protect them from such recovery. Other than as expressly stated herein, this Policy does not otherwise limit a Covered Executive’s insurance coverage (including any insurance coverage acquired by the Company) or a Covered Executive’s right to indemnification from the Company. 9. Policy Administrator Indemnification Any directors and officers of the Company, and any other personnel who assist in the administration of this Policy, including, but not limited to employees of the Adviser and Main Street Capital Corporation, shall not be personally liable for any action, determination or interpretation made with respect to this Policy and shall be fully indemnified by the Company to the fullest extent under applicable law and Company policy with respect to any such action, determination or interpretation. The foregoing sentence shall not limit any other rights to indemnification of the members of the Board under applicable law or Company policy. 10. Effective Date; Retroactive Application This Policy shall be effective as of January 28, 2025 (the Effective Date). The terms of this Policy shall apply to any Incentive-Based Compensation that is received by Covered Executives from the Company on or after October 2, 2023, even if such Incentive-Based Compensation was approved, awarded or granted to Covered Executives prior to October 2, 2023. 11. Other Recovery Rights; Company Claims Any right of recovery under this Policy is in addition to, and not in lieu of, any other remedies or rights of recovery that may be available to the Company under applicable law or pursuant to the terms of any 4
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similar policy in any employment agreement, equity award agreement or similar agreement and any other legal remedies available to the Company. Nothing contained in this Policy limits any claims, damages or other legal remedies the Company or any of its affiliates may have against a Covered Executive arising out of, or resulting from, any actions or omissions by the Covered Executive. 12. Exhibit Filing Requirement A copy of this Policy and any amendments thereto shall be filed as an exhibit to the Company’s annual report on Form 10-K to the extent required by law. Adopted: December 20, 2024 (effective as of January 28, 2025) 5
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Exhibit 99.1 MAIN STREET CAPITAL CORPORATION MSC INCOME FUND, INC.MSC ADVISER I, LLC JOINT CODE OF ETHICS This Code of Ethics (the “Code”) has been adopted by the Board of Directors of each of Main Street Capital Corporation (“Main Street”) and MSC Income Fund, Inc. (“MSIF” and, together with Main Street, the “BDCs”) in accordance with Rule 17j-l(c) under the Investment Company Act of 1940, as amended (the “1940 Act”), and the May 9, 1994 Report of the Advisory Group on Personal Investing by the Investment Company Institute (the “Report”). Rule 17j-1 generally describes fraudulent or manipulative practices with respect to purchases or sales of securities held or to be acquired by business development companies if effected by access persons of such companies. In addition, this Code of Ethics shall serve as the code of ethics required to be adopted by Rule 204A-1 under the Investment Advisers Act of 1940 (the “Advisers Act”) and, to the extent applicable, by Rule 17j-1 under the 1940 Act in connection with the provision of investment advisory services by Main Street and its wholly owned subsidiary MSC Advisor I, LLC (“MSCA” and, together with the BDCs, the “Company”) to third parties (“Clients”). Rule 204A-1 requires every registered investment adviser to establish, maintain, and enforce a written investment adviser code of ethics that is applicable to its “supervised persons.” Section 202(a)(25) of the Advisers Act defines the term “supervised persons” to include all of the officers, directors, and employees of the investment adviser, or other person who provides investment advice on behalf of the investment adviser and is subject to the supervision and control of the investment adviser. As used herein, the term “employees” consists of all employees of Main Street and MSCA who, in the course of their business, act as an investment adviser as defined under the Advisers Act in providing investment advice to Clients and those employees that make, participate in or obtain non-public information regarding the portfolio management decisions relating to the investment advisory services. The purpose of this Code of Ethics is to reflect the following: (1) the duty at all times to place the interests of shareholders and Clients, as appropriate, of the Company first; (2) the requirement that all personal securities transactions be conducted consistent with the Code of Ethics and in such a manner as to avoid any actual or potential conflict of interest or any abuse of an individual’s position of trust and responsibility; and (3) the fundamental standard that business development company and investment advisory personnel, as appropriate, should not take inappropriate advantage of their positions. 1
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PART A. RULE 17j-1 OF THE 1940 ACT SECTION I: STATEMENT OF PURPOSE AND APPLICABILITY (A) Statement of Purpose It shall be a violation of the policy of the Company for any affiliated person of the Company, in connection with the purchase or sale, directly or indirectly, by such person of any security held or to be acquired by the Company, to: (1) employ any device, scheme or artifice to defraud the Company; (2) make to the Company any untrue statement of a material fact or omit to state to the Company a material fact necessary in order to make the statement made, in light of the circumstances under which it is made, not misleading; (3) engage in any act, practice, or course of business which operates or would operate as a fraud or deceit upon the Company; or (4) engage in any manipulative practice with respect to the Company. (B) Scope of the Code In order to prevent the Access Persons, as defined in Section II, paragraph (A) below, of the Company from engaging in any of these prohibited acts, practices or courses of business, the Board of Directors of the Company has adopted this Code. SECTION II: DEFINITIONS (A) Access Person. “Access Person” means any director, officer, or Advisory Person of the Company. (B) Advisory Person. “Advisory Person” of the Company means: (i) any employee of the Company or of any company in a control relationship to the Company, or any member of Main Street’s or MSCA’s investment committee, who, in connection with his or her regular functions or duties, makes, participates in, or obtains information regarding the purchase or sale of a Covered Security by the Company, or whose functions relate to the making of any recommendations with respect to such purchases or sales; and (ii) any natural person in a control relationship to the Company who obtains information concerning recommendations made to the Company with regard to the purchase or sale of Covered Security. 2
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(C) Beneficial Interest. “Beneficial Interest” includes any entity, person, trust, or account with respect to which an Access Person exercises investment discretion or provides investment advice. A beneficial interest shall be presumed to include all accounts in the name of or for the benefit of the Access Person, his or her spouse, dependent children, or any person living with him or her or to whom he or she contributes economic support. (D) Beneficial Ownership. “Beneficial Ownership” shall be determined in accordance with Rule 16a- 1(a)(2) under the Securities Exchange Act of 1934, except that the determination of direct or indirect Beneficial Ownership shall apply to all securities, and not just equity securities, that an Access Person has or acquires. Rule 16a-1(a)(2) provides that the term “beneficial owner” means any person who, directly or indirectly, through any contract, arrangement, understanding, relationship, or otherwise, has or shares a direct or indirect pecuniary interest in any equity security. Therefore, an Access Person may be deemed to have Beneficial Ownership of securities held by members of his or her immediate family sharing the same household, or by certain partnerships, trusts, corporations, or other arrangements. (E) Control. “Control” shall have the same meaning as that set forth in Section 2(a)(9) of the 1940 Act. (F) Covered Security. “Covered Security” means a security as defined in Section 2(a)(36) of the 1940 Act, except that it does not include (i) direct obligations of the Government of the United States; (ii) banker’s acceptances, bank certificates of deposit, commercial paper and high quality short-term debt instruments including repurchase agreements; and (iii) shares issued by registered open-end investment companies (i.e., mutual funds); however, exchange traded funds structured as unit investment trusts or open-end funds are considered “Covered Securities”. (G) Designated Officer. “Designated Officer” shall mean the officer of the Company designated by the Board of Directors from time to time to be responsible for management of compliance with this Code, who shall initially be the Chief Compliance Officer of the Company until such time as the Board of Directors shall appoint a successor. The Designated Officer may appoint a designee to carry out certain of his or her functions pursuant to this Code. (H) Disinterested Director. “Disinterested Director” means a director of the Company who is not an “interested person” of the Company within the meaning of Section 2(a)(19) of the 1940 Act. (I) Initial Public Offering. “Initial Public Offering” means an offering of securities registered under the Securities Act of 1933, as amended (the “Securities Act”), the issuer of which, immediately before the registration, was not subject to the 3
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reporting requirements of Sections 13 or 15(d) of the Securities Exchange Act of 1934. (J) Investment Personnel. “Investment Personnel” means: (i) any employee of the Company (or of any company in a control relationship to the Company), or any member of Main Street’s or MSCA’s investment committee, who, in connection with his or her regular functions or duties, makes or participates in making recommendations regarding the purchase or sale of securities by the Company; and (ii) any natural person who controls the Company and who obtains information concerning recommendations regarding the purchase or sale of securities by the Company. (K) Limited Offering. “Limited Offering” means an offering that is exempt from registration under the Securities Act pursuant to Section 4(2) or Section 4(6) or pursuant to Rule 504, Rule 505 or Rule 506 under the Securities Act. (L) Purchase or Sale of a Covered Security. “Purchase or Sale of a Covered Security” is broad and includes, among other things, the writing of an option to purchase or sell a covered security, or the use of a derivative product to take a position in a Covered Security. SECTION III: STANDARDS OF CONDUCT (A) General Standards (1) No Access Person shall engage, directly or indirectly, in any business transaction or arrangement for personal profit that is inconsistent with the best interests of the Company or its shareholders; nor shall he or she make use of any confidential information gained by reason of his or her employment by or affiliation with the Company or affiliates thereof in order to derive a personal profit for himself or herself or for any Beneficial Interest, in violation of the fiduciary duty owed to the Company or its shareholders. (2) Any Access Person recommending or authorizing the purchase or sale of a Covered Security by the Company shall, at the time of such recommendation or authorization, disclose any Beneficial Interest in, or Beneficial Ownership of, such Covered Security or the issuer thereof. (3) No Access Person shall dispense any information concerning securities holdings or securities transactions of the Company to anyone outside the Company, without obtaining prior written approval from the Designated Officer, or such person or persons as these individuals may designate to act on their behalf. Notwithstanding the preceding sentence, such Access 4
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Person may dispense such information without obtaining prior written approval: (a) when there is a public report containing the same information; (b) when such information is dispensed in accordance with compliance procedures established to prevent conflicts of interest between the Company and its affiliates; (c) when such information is reported to directors of the Company; or (d) in the ordinary course of his or her duties on behalf of the Company. (4) All personal securities transactions should be conducted consistent with this Code and in such a manner as to avoid actual or potential conflicts of interest, the appearance of a conflict of interest, or any abuse of an individual’s position of trust and responsibility within the Company. (B) Prohibited Transactions (1) General Prohibition. No Access Person shall purchase or sell, directly or indirectly, any Covered Security in which he or she has, or by reason of such transaction acquires, any direct or indirect Beneficial Ownership and which such Access Person knows or should have known at the time of such purchase or sale is being considered for purchase or sale by the Company, or is held in the portfolio of the Company unless such Access Person shall have obtained prior written approval for such purpose from the Designated Officer. (a) An Access Person who becomes aware that the Company is considering the purchase or sale of any Covered Security by any person (an issuer) must immediately notify the Designated Officer of any interest that such Access Person may have in any outstanding Covered Securities of that issuer. (b) An Access Person shall similarly notify the Designated Officer of any other interest or connection that such Access Person might have in or with such issuer. (c) Once an Access Person becomes aware that the Company is considering the purchase or sale of a Covered Security or that the Company holds a Covered Security in its portfolio, such Access Person may not engage, without prior approval of the Designated Officer, in any transaction in any Covered Securities of that issuer. 5
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(d) The foregoing notifications or permission may be provided verbally, but should be confirmed in writing as soon and with as much detail as possible. (2) Covered Securities, Initial Public Offerings and Limited Offerings. Investment Personnel of the Company must obtain approval from the Company before directly or indirectly trading any Covered Security or acquiring beneficial ownership in any securities in an Initial Public Offering or in a Limited Offering. For purposes of the pre-clearance requirements, transactions in digital assets and cryptocurrencies, such as Bitcoin and Ethereum, as well as other tokens or similar assets shall be treated as transactions in Covered Securities, thus requiring pre-clearance regardless of whether such assets are deemed to be “securities” for purposes of the federal securities laws. (3) Blackout Periods. No Investment Personnel shall execute a securities transaction in any security that the Company owns or is considering for purchase or sale. (4) Company Acquisition of Shares in Companies that Investment Personnel Hold Through Limited Offerings. Investment Personnel who have been authorized to acquire securities in a Limited Offering must disclose that investment to the Designated Officer when they are involved in the Company’s subsequent consideration of an investment in the issuer, and the Company’s decision to purchase such securities must be independently reviewed by Investment Personnel with no personal interest in that issuer. (5) Gifts and Entertainment. No Access Person may accept, directly or indirectly, any gift, favor, or service (any such item, a “Gift”) or entertainment or hospitality (any such item, “Business Entertainment”) from any person with whom he or she transacts or may transact business on behalf of the Company under circumstances when to do so would conflict with the Company’s best interests or would impair the ability of such person to be completely disinterested when required, in the course of business, to make judgments and/or recommendations on behalf of the Company. Access Persons shall not accept any Gift with an estimated value greater than $250 without the prior approval of the Designated Officer. For an item to be considered “Business Entertainment,” a representative of the vendor/host must be present at the event/meal and there must be an opportunity to discuss matters related to the Company or Client business; otherwise, the item should be considered a Gift. Access Persons shall not attend any Business Entertainment with an estimated value greater than 6
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$250 (including all costs incurred by the vender/host related to the event on behalf of the Access Person; e.g., costs for travel, tickets, meals, etc. on behalf of the Access Person and his or her family) without prior approval of the Designated Officer. Questions regarding these restrictions should be directed to the Designated Officer. (6) Service as Director. No Access Person shall serve on the board of directors of a portfolio company of the Company without prior written authorization of the Designated Officer based upon a determination that the board service would be consistent with the interests of the Company and its shareholders. SECTION IV: PROCEDURES TO IMPLEMENT CODE OF ETHICS The following reporting procedures have been established to assist Access Persons in avoiding a violation of this Code, and to assist the Company in preventing, detecting, and imposing sanctions for violations of this Code. Every Access Person must follow these procedures. Questions regarding these procedures should be directed to the Designated Officer. (A) Applicability All Access Persons are subject to the reporting requirements set forth in Section IV(B) except: (1) with respect to transactions effected for, and Covered Securities held in, any account over which the Access Person has no direct or indirect influence or control; (2) a Disinterested Director, who would be required to make a report solely by reason of being a director, need not make: (1) an initial holdings or an annual holdings report; and (2) a quarterly transaction report, unless the Disinterested Director knew or, in the ordinary course of fulfilling his or her official duties as a director, should have known that during the 15-day period immediately before or after such Disinterested Director’s transaction in a Covered Security, the Company purchased or sold the Covered Security, or the Company considered purchasing or selling the Covered Security; and (3) an Access Person need not make a quarterly transaction report if the report would duplicate information contained in broker trade confirmations or account statements received by the Company with respect to the Access Person in the time required by subsection (B)(2) of this Section IV, if all of the information required by subsection (B)(2) of this Section IV is 7
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contained in the broker trade confirmations or account statements, or in the records of the Company, as specified in subsection (B)(4) of this Section IV. (B) Report Types (1) Initial Holdings Report. An Access Person must file an initial report not later than 10 days after that person became an Access Person. The initial report must: (a) contain the title, number of shares and principal amount of each Covered Security in which the Access Person had any direct or indirect beneficial ownership when the person became an Access Person; (b) identify any broker, dealer or bank with whom the Access Person maintained an account in which any Covered Securities were held for the direct or indirect benefit of the Access Person as of the date the person became an Access Person; and (c) indicate the date that the report is filed with the Designated Person. A copy of a form of such report is attached hereto as Exhibit B. (2) Quarterly Transaction Report. An Access Person must file a quarterly transaction report not later than 30 days after the end of a calendar quarter. (a) With respect to any transaction made during the reporting quarter in a Covered Security in which such Access Person had any direct or indirect beneficial ownership, the quarterly transaction report must contain: (i) the transaction date, title, interest date and maturity date (if applicable), the number of shares and the principal amount of each Covered Security; (ii) the nature of the transaction (i.e., purchase, sale or any other type of acquisition or disposition); (iii) the price of the Covered Security at which the transaction was effected; (iv) the name of the broker, dealer or bank through which the transaction was effected; and (v) the date that the report is submitted by the Access Person. A copy of a form of such report is attached hereto as Exhibit C. (b) With respect to any account established by the Access Person in which any securities were held during the quarter for the direct or indirect benefit of the Access Person, the quarterly transaction report must contain: (i) the name of the broker, dealer or bank with whom the Access Person established the account; (ii) the date the account was established; and (iii) the date that the report is submitted by the Access Person. A copy of a form of such report is attached hereto as Exhibit E unless provided under C. (3) Annual Holdings Report. An Access Person must file an annual holdings report not later than 30 days after the end of a fiscal year. The annual 8
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report must contain the following information (which information must be current as of a date no more than 30 days before the report is submitted): (a) the title, number of shares, and principal amount of each Covered Security in which the Access Person had any direct or indirect beneficial ownership; (b) the name of any broker, dealer or bank in which any Covered Securities are held for the direct or indirect benefit of the Access Person; and (c) the date the report is submitted. A copy of a form of such report is attached hereto as Exhibit D. (4) Account Statements. In lieu of providing a quarterly transaction report, an Access Person may direct his or her broker to provide to the Designated Officer copies of periodic statements for all investment accounts in which they have Beneficial Ownership that provide the information required in quarterly transaction reports, as set forth above. (5) Company Reports. No less frequently than annually, the Company must furnish to the Board, and the Board must consider, a written report that: (a) describes any issues arising under the Code or procedures since the last report to the Board, including but not limited to, information about material violations of the code or procedures and sanctions imposed in response to the material violations; and (b) certifies that the Company has adopted procedures reasonably necessary to prevent Access Persons from violating the Code. (C) Disclaimer of Beneficial Ownership. Any report required under this Section IV may contain a statement that the report shall not be construed as an admission by the person submitting such duplicate confirmation or account statement or making such report that he or she has any direct or indirect beneficial ownership in the Covered Security to which the report relates. (D) Review of Reports. The reports required to be submitted under this Section IV shall be delivered to the Designated Officer. The Designated Officer shall review such reports to determine whether any transactions recorded therein constitute a violation of the Code. Before making any determination that a violation has been committed by any Access Person, such Access Person shall be given an opportunity to supply additional explanatory material. The Designated Officer shall maintain copies of the reports as required by Rule 17j-1(f). (E) Acknowledgment and Certification. Upon becoming an Access Person and annually thereafter, all Access Persons shall sign an acknowledgment and certification of their receipt of and intent to comply with this Code in the form attached hereto as Exhibit A and return it to the Designated Officer. Each Access Person must also certify annually that he or she has read and understands the 9
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Code and recognizes that he or she is subject to the Code. In addition, each access person must certify annually that he or she has complied with the requirements of the Code and that he or she has disclosed or reported all personal securities transactions required to be disclosed or reported pursuant to the requirements of the Code. (F) Records. The Company shall maintain records with respect to this Code in the manner and to the extent set forth below, which records may be maintained on microfilm or electronic storage media under the conditions described in Rule 31a-2(f) under the 1940 Act and shall be available for examination by representatives of the Securities and Exchange Commission (the “SEC”): (1) A copy of this Code and any other code of ethics of the Company that is, or at any time within the past five years has been, in effect shall be maintained in an easily accessible place; (2) A record of any violation of this Code and of any action taken as a result of such violation shall be maintained in an easily accessible place for a period of not less than five years following the end of the fiscal year in which the violation occurs; (3) A copy of each report made by an Access Person or duplicate account statement received pursuant to this Code, including any information provided in lieu of the reports under subsection (A)(3) of this Section IV shall be maintained for a period of not less than five years from the end of the fiscal year in which it is made or the information is provided, the first two years in an easily accessible place; (4) A record of all persons who are, or within the past five years have been, required to make reports pursuant to this Code, or who are or were responsible for reviewing these reports, shall be maintained in an easily accessible place; (5) A copy of each report required under subsection (B)(5) of this Section IV shall be maintained for at least five years after the end of the fiscal year in which it is made, the first two years in an easily accessible place; and (6) A record of any decision, and the reasons supporting the decision, to approve the direct or indirect acquisition by an Access Person of beneficial ownership in any securities in an Initial Public Offering or Limited Offering shall be maintained for at least five years after the end of the fiscal year in which the approval is granted. 10
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(G) Obligation to Report a Violation. Every Access Person who becomes aware of a violation of this Code by any person must report it to the Designated Officer, who shall report it to appropriate management personnel. The management personnel will take such disciplinary action that they consider appropriate under the circumstances. In the case of officers or other employees of the Company, such action may include removal from office. If the management personnel consider disciplinary action against any person, they will cause notice thereof to be given to that person and provide to that person the opportunity to be heard. The Board will be notified, in a timely manner, of remedial action taken with respect to violations of the Code. (H) Confidentiality. All reports of Covered Securities transactions, duplicate confirmations, account statements and other information filed with the Company or furnished to any person pursuant to this Code shall be treated as confidential, but are subject to review as provided herein and by representatives of the SEC or otherwise to comply with applicable law or the order of a court of competent jurisdiction. SECTION V: SANCTIONS Upon determination that a violation of this Code has occurred, appropriate management personnel of the Company may impose such sanctions as they deem appropriate, including, among other things, disgorgement of profits, a letter of censure or suspension or termination of the employment of the violator. All violations of this Code and any sanctions imposed with respect thereto shall be reported in a timely manner to the Board of Directors of the Company. PART B. RULE 204A-1 OF THE ADVISERS ACT/RULE 17j-1 OF THE 1940 ACT For purposes of Rule 204A-1 of the Advisers Act and, to the extent applicable, Rule 17j-1 of the 1940 Act, the provisions set forth in Part A to this Code of Ethics shall apply in connection with the Company’s provision of investment advisory services to Clients except that it shall be interpreted in a manner to protect the interests of Clients, including prohibiting supervised persons of the Company from: (i) employing any device, scheme or artifice to defraud the Client; (ii) making any untrue statement of a material fact to the Client or omitting to state a material fact necessary in order to make the statements made to the Client, in light of the circumstances under which they are made, not misleading; (iii) engaging in any act, practice or course of business conduct that operates or would operate as a fraud or deceit on the Client; and (iv) engaging in any manipulative practice with respect to the Client. Notwithstanding the foregoing, the administrative provisions, enforcement provisions, approval (including pre-approval) provisions and recordkeeping provisions (which shall be read to refer to Rule 204-2 under the Advisers Act for purposes of this Part B) set forth in Part A of this Code of Ethics shall continue to be the exclusive/sole province of the Company for purposes of Part B of this Code of Ethics. For example, the initial, annual and quarterly holding report 11
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obligations set forth in Part A of this Code of Ethics shall be furnished by supervised persons of the Company to the Company (and not to the Client) for purposes of Part B to this Code of Ethics. v.1.2025 12
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EXHIBIT A ACKNOWLEDGMENT AND CERTIFICATION I acknowledge receipt of the Code of Ethics of Main Street Capital Corporation, MSC Adviser I, LLC and MSC Income Fund, Inc.. I have read and understand such Code of Ethics and agree to be governed by it at all times. Further, if I have been subject to the Code of Ethics during the preceding year, I certify that I have complied with the requirements of the Code of Ethics and have disclosed or reported all personal securities transactions required to be disclosed or reported pursuant to the requirements of the Code of Ethics. ___________________________________ (Signature) ___________________________________ (Please print name) Date:__________________________ Date Received: Reviewed By: Date Note – the form shown above is for illustrative purposes and is representative of the certification provided by employees of the Company using the Company’s compliance portal, MyComplianceOffice, accessible to employees of the Company. The form itself is not typically used in practice, but it would be an acceptable, temporary alternative if the compliance portal was not accessible.
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EXHIBIT B INITIAL HOLDINGS REPORT Name ________________________ Date _______________________ NAME OF ISSUER NUMBER OF SHARES PRINCIPAL AMOUNT I certify that the foregoing is a complete and accurate list of all securities in which I have any Beneficial Ownership. ________________________________ Signature Date Received: Reviewed By: Date Note – the form shown above is for illustrative purposes and is representative of the report provided by employees of the Company using the Company’s compliance portal, MyComplianceOffice, accessible to employees of the Company. The form itself is not typically used in practice, but it would be an acceptable, temporary alternative if the compliance portal was not accessible.
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EXHIBIT C QUARTERLY TRANSACTION REPORT Name ______________________________ Period ______________________________ DATE NAME OF ISSUER NUMBER OF SHARES INTEREST DATE MATURITY DATE PRINCIPAL AMOUNT TYPE OF TRANSACTION NAME OF BROKER/ DEALER/ BANK I certify that the foregoing is a complete and accurate list of all transactions for the covered period in securities in which I have any Beneficial Ownership. ________________________________ Signature Date Received: Reviewed By: Date Note – the form shown above is for illustrative purposes and is representative of the report provided by employees of the Company using the Company’s compliance portal, MyComplianceOffice, accessible to employees of the Company. The form itself is not typically used in practice, but it would be an acceptable, temporary alternative if the compliance portal was not accessible.
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EXHIBIT D ANNUAL HOLDINGS REPORT Name ___________________________ Date _______________________ NAME OF ISSUERNUMBER OF SHARESPRINCIPAL AMOUNT NAME OF BROKER/DEALER/ BANK I certify that the foregoing is a complete and accurate list of all securities in which I have any Beneficial Ownership. ________________________________ Signature Date Received: Reviewed By: Date Note – the form shown above is for illustrative purposes and is representative of the report provided by employees of the Company using the Company’s compliance portal, MyComplianceOffice, accessible to employees of the Company. The form itself is not typically used in practice, but it would be an acceptable, temporary alternative if the compliance portal was not accessible.
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EXHIBIT E PERSONAL SECURITIES ACCOUNT INFORMATION Name ____________________________ Date _____________________ SECURITIES FIRM NAME AND ADDRESS ACCOUNT NUMBER ACCOUNT NAME(S) I certify that the foregoing is a complete and accurate list of all securities accounts in which I have any Beneficial Ownership. ________________________________ Signature Date Received: Reviewed By: Date Note – the form shown above is for illustrative purposes and is representative of the report provided by employees of the Company using the Company’s compliance portal, MyComplianceOffice, accessible to employees of the Company. The form itself is not typically used in practice, but it would be an acceptable, temporary alternative if the compliance portal was not accessible.