AB 2020 Form 10-K

The Adviser’s liability is limited under the Advisory Agreement and the Fund has agreed to indemnify the Adviser against certain liabilities, which may lead the Adviser to act in a riskier manner on the Fund’s behalf than it would when acting for its own account. Under the Advisory Agreement, the Adviser has not assumed any responsibility to the Fund other than to render the services called for under that agreement. It is not responsible for any action of the Board in following or declining to follow the Adviser’s advice or recommendations. Under the Advisory Agreement, the Adviser and its professionals and any person controlling or controlled by the Adviser are not liable to the Fund, any subsidiary of the Fund, the Fund’s directors, the Fund’s stockholders or any subsidiary’s stockholders or partners for acts or omissions performed in accordance with and pursuant to the Advisory Agreement, except those resulting from acts constituting gross negligence, willful misfeasance, bad faith or reckless disregard of the duties that the Adviser owes to the Fund under the Advisory Agreement. In addition, as part of the Advisory Agreement, the Fund has agreed to indemnify the Adviser and its professionals from and against any claims or liabilities, including reasonable legal fees and other expenses reasonably incurred, arising out of or in connection with the Fund’s business and operations or any action taken or omitted on the Fund’s behalf pursuant to authority granted by the Advisory Agreement, except where attributable to gross negligence, willful misfeasance, bad faith or reckless disregard of such person’s duties under the Advisory Agreement. The Adviser may not be able to achieve the same or similar returns as those achieved by Mr. Humphries and the other members of the Adviser’s core investment team while they were employed at prior positions. Although in the past Mr. Humphries and the other members of the Adviser’s core investment team have held senior positions at a number of investment firms, their achievements are not necessarily indicative of future results that will be achieved by the Adviser. The Fund cannot assure you that it will be able to achieve the results realized by prior vehicles managed by Mr. Humphries and the other members of the Adviser’s core investment team. Investors may default on Capital Calls. Capital Calls will be issued by the Fund from time to time at the discretion of the Adviser based upon the Adviser’s assessment of the needs and opportunities of the Fund. To satisfy such Capital Calls, investors are required to maintain their Capital Commitments in cash or other assets that can be readily converted to cash, within accounts under the control of AB or its affiliates. If such cash or other assets were not in such accounts and an investor fails to pay when due installments of its Capital Commitment to the Fund, and the Capital Commitments made by non-defaulting investors and borrowings by the Fund are inadequate to cover the defaulted Capital Commitment, the Fund may be unable to pay its obligations when due. As a result, the Fund may be subjected to significant penalties that could materially adversely affect the returns of the investor (including non-defaulting investors). Any failure on the Fund’s part to maintain its status as a BDC would reduce its operating flexibility. The Fund has elected to be regulated as a BDC under the 1940 Act. The 1940 Act imposes numerous constraints on the operations of BDCs. For example, BDCs are required to invest at least 70% of their gross assets in specified types of securities, primarily in private companies or thinly-traded U.S. public companies, cash, cash equivalents, U.S. government securities and other high-quality debt investments that mature in one year or less. Furthermore, any failure to comply with the requirements imposed on BDCs by the 1940 Act could cause the SEC to bring an enforcement action against the Fund and/or expose the Fund to claims of private litigants. In addition, upon approval of a majority of the Fund’s stockholders, the Fund may elect to withdraw its status as a BDC. If the Fund decides to withdraw its election, or if the Fund otherwise fails to qualify, or maintain its qualification, as a BDC, the Fund will be subject to substantially greater regulation under the 1940 Act as a closed-end investment company. Compliance with such regulations would significantly decrease the Fund’s operating flexibility, and could significantly increase its costs of doing business. Regulations governing the Fund’s operation as a BDC affect its ability to raise additional capital and the way in which it does so. As a BDC, the necessity of raising additional capital may expose the Fund to risks, including the typical risks associated with leverage. The Fund may issue debt securities or preferred stock and/or borrow money from banks or other financial institutions, referred to collectively as “senior securities,” up to the maximum amount permitted by the 1940 Act. Under the provisions of the 1940 Act, the Fund will be permitted, as a BDC, to issue senior securities in amounts such that its asset coverage ratio (as defined in the 1940 Act), equals at least 150% of gross assets less all liabilities and indebtedness not represented by senior securities, immediately after each issuance of senior securities. If the value of the Fund’s assets declines, it may be unable to satisfy this test. If that happens, the Fund may be required to sell a portion of its investments and, depending on the nature of its leverage, repay a portion of its indebtedness at a 37