Exhibit 10.1
EXECUTION COPY
$150,000,000
PROSPECT CAPITAL CORPORATION
6.25% Senior Convertible Notes due 2015
PURCHASE AGREEMENT
December 16, 2010
Barclays Capital Inc.,
As Representative of the several
  Initial Purchasers named in Schedule I attached hereto,
c/o Barclays Capital Inc.
745 Seventh Avenue
New York, New York 10019
Ladies and Gentlemen:
     Prospect Capital Corporation, a corporation organized under the laws of
Maryland (the “Company”), Prospect Capital Management, LLC, a Delaware limited
liability company registered as an investment adviser (the “Adviser”) and
Prospect Administration, LLC, a Delaware limited liability company (the
“Administrator”), confirm their agreement (this “Agreement”) with you as
follows:
     The Company proposes, upon the terms and conditions set forth in this
agreement (this “Agreement”), to issue and sell to you, as the initial
purchasers (the “Initial Purchasers”), $150,000,000 in aggregate principal
amount of its 6.25% Senior Convertible Note due 2015] (the “Securities”). The
Securities will (i) have terms and provisions that are summarized in the Pricing
Disclosure Package (as defined below) and Offering Memorandum (as defined below)
and (ii) are to be issued pursuant to an Indenture (the “Indenture”) to be
entered into between the Company and American Stock Transfer & Trust Company,
LLC, as trustee (the “Trustee”). The Securities will be convertible into shares
of the Company’s common stock (par value $0.001 per share) (the “Underlying
Securities”). This is to confirm the agreement concerning the purchase of the
Securities from the Company by the Initial Purchasers.
     The Company has entered into an investment advisory and management
agreement, dated as of June 24, 2004, as renewed on June 15, 2010 by the Board
(the “Investment Advisory Agreement”), with the Adviser under the Investment
Advisers Act of 1940 (the “Advisers Act”). The Company has entered into an
administration agreement, dated as of June 24, 2004, as renewed on June 15, 2010
by the Board (the “Administration Agreement”), with the Administrator.

 

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     1. Purchase and Resale of the Securities. The Securities will be offered
and sold to the Initial Purchasers without registration under the Securities Act
of 1933, as amended, and the rules and regulations of the Commission (as defined
below) thereunder (the “Securities Act”), in reliance on an exemption pursuant
to Section 4(2) under the Securities Act. The Company has prepared a preliminary
offering memorandum, dated December 14, 2010 (the “Preliminary Offering
Memorandum”), a pricing term sheet substantially in the form attached hereto as
Schedule II (the “Pricing Term Sheet”) setting forth the terms of the Securities
omitted from the Preliminary Offering Memorandum and an offering memorandum,
dated December 16, 2010 (the “Offering Memorandum”), setting forth information
regarding the Company and the Securities (as defined herein). The Preliminary
Offering Memorandum, as supplemented and amended as of the Applicable Time (as
defined below), together with the Pricing Term Sheet and any of the documents
listed on Schedule III hereto are collectively referred to as the “Pricing
Disclosure Package.” The Company hereby confirms that it has authorized the use
of the Preliminary Offering Memorandum, the Pricing Disclosure Package and the
Offering Memorandum in connection with the offering and resale of the Securities
by the Initial Purchasers. “Applicable Time” means 9:30a.m. (New York City time)
on the date of this Agreement.
     Any reference to the Preliminary Offering Memorandum, the Pricing
Disclosure Package or the Offering Memorandum shall be deemed to refer to and
include the Company’s most recent Annual Report on Form 10-K and all subsequent
documents filed with the United States Securities and Exchange Commission (the
“Commission”) pursuant to Section 13(a) or 15(d) of the United States Securities
Exchange Act of 1934, as amended, and the rules and regulations of the
Commission thereunder (the “Exchange Act”), on or prior to the date of the
Preliminary Offering Memorandum, the Pricing Disclosure Package or the Offering
Memorandum, as the case may be. Any reference to the Preliminary Offering
Memorandum, Pricing Disclosure Package or the Offering Memorandum, as the case
may be, as amended or supplemented, as of any specified date, shall be deemed to
include (i) any documents filed with the Commission pursuant to Section 13(a) or
15(d) of the Exchange Act after the date of the Preliminary Offering Memorandum,
Pricing Disclosure Package or the Offering Memorandum, as the case may be, and
prior to such specified date. All documents filed under the Exchange Act and so
deemed to be included in the Preliminary Offering Memorandum, Pricing Disclosure
Package or the Offering Memorandum, as the case may be, or any amendment or
supplement thereto are hereinafter called the “Exchange Act Reports.” The
Exchange Act Reports, when they were or are filed with the Commission, conformed
or will conform in all material respects to the applicable requirements of the
Exchange Act and the applicable rules and regulations of the Commission
thereunder.
     It is understood and acknowledged that upon original issuance thereof, and
until such time as the same is no longer required under the applicable
requirements of the Securities Act, the Securities (and all securities issued in
exchange therefor or in substitution thereof) shall bear the following legend
(along with such other legends as the Initial Purchasers and their counsel deem
necessary):
THE SECURITIES AND THE UNDERLYING SECURITIES, IF ANY, ISSUABLE UPON CONVERSION
OF THIS NOTE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE “SECURITIES ACT”), OR

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ANY STATE SECURITIES LAWS. NEITHER THIS SECURITY NOR ANY INTEREST OR
PARTICIPATION HEREIN OR THEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED,
PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION
OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, AND NOT SUBJECT TO, REGISTRATION.
BY ITS ACQUISITION HEREOF OR OF A BENEFICIAL INTEREST HEREIN, THE ACQUIRER:

  1.   REPRESENTS THAT IT AND ANY ACCOUNT FOR WHICH IT IS ACTING IS A “QUALIFIED
INSTITUTIONAL BUYER” (WITHIN THE MEANING OF RULE 144A UNDER THE SECURITIES ACT)
AND THAT IT EXERCISES SOLE INVESTMENT DISCRETION WITH RESPECT TO EACH SUCH
ACCOUNT, AND

  2.   AGREES FOR THE BENEFIT OF PROSPECT CAPITAL CORPORATION (THE “COMPANY”)
THAT IT WILL NOT OFFER, SELL, ASSIGN, TRANSFER, PLEDGE, ENCUMBER OR OTHERWISE
DISPOSE OF THIS SECURITY OR ANY BENEFICIAL INTEREST HEREIN PRIOR TO THE DATE
THAT IS THE LATER OF (X) ONE YEAR AFTER THE LAST ORIGINAL ISSUE DATE HEREOF OR
SUCH SHORTER PERIOD OF TIME AS PERMITTED BY RULE 144 UNDER THE SECURITIES ACT OR
ANY SUCCESSOR PROVISION THEREUNDER, AND (Y) SUCH LATER DATE, IF ANY, AS MAY BE
REQUIRED BY APPLICABLE LAW, EXCEPT: (A) TO THE COMPANY OR ANY OF ITS
SUBSIDIARIES, OR (B) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BECOME
EFFECTIVE UNDER THE SECURITIES ACT, OR (C) TO A QUALIFIED INSTITUTIONAL BUYER IN
COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT, OR (D) PURSUANT TO AN
EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT OR ANY
OTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES
ACT.

PRIOR TO THE REGISTRATION OF ANY TRANSFER IN ACCORDANCE WITH CLAUSE (2)(D)
ABOVE, THE COMPANY, AND THE TRANSFER AGENT, IN THE CASE OF ANY COMMON STOCK
ISSUED UPON THE CONVERSION OF THE NOTES, AND THE TRUSTEE RESERVE THE RIGHT TO
REQUIRE THE DELIVERY OF SUCH LEGAL OPINIONS, CERTIFICATIONS OR OTHER EVIDENCE AS
MAY REASONABLY BE REQUIRED IN ORDER TO DETERMINE THAT THE PROPOSED TRANSFER IS
BEING MADE IN COMPLIANCE WITH THE SECURITIES ACT AND APPLICABLE STATE SECURITIES
LAWS. NO REPRESENTATION IS MADE AS TO THE AVAILABILITY OF ANY EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT.
NO AFFILIATE (AS DEFINED IN RULE 144 UNDER THE SECURITIES ACT) OF THE COMPANY OR
PERSON THAT HAS BEEN AN AFFILIATE (AS DEFINED IN

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RULE 144 UNDER THE SECURITIES ACT) OF THE COMPANY DURING THE THREE IMMEDIATELY
PRECEDING MONTHS MAY PURCHASE OR OTHERWISE ACQUIRE THIS NOTE OR A BENEFICIAL
INTEREST HEREIN.
     You have advised the Company that you will make offers (the “Exempt
Resales”) of the Securities purchased by you hereunder on the terms set forth in
each of the Pricing Disclosure Package and the Offering Memorandum, as amended
or supplemented, solely to persons (the “Eligible Purchasers”) whom you
reasonably believe to be “qualified institutional buyers” as defined in Rule
144A under the Securities Act (“QIBs”). You will offer the Securities to
Eligible Purchasers initially at a price equal to 100% of the principal amount
thereof plus accrued interest, if any. Such price may be changed at any time
without notice.
     2. Representations, Warranties and Agreements of the Company. The Company
represents, warrants and agrees, and the Adviser and the Administrator, jointly
and severally, represent, warrant and agree, as follows:
          (a) Rule 144A Eligibility. When the Securities are issued and
delivered pursuant to this Agreement, the Securities will not be of the same
class (within the meaning of Rule 144A under the Securities Act) as securities
of the Company that are listed on a United States national securities exchange
registered under Section 6 of the Exchange Act or that are quoted in a United
States automated inter-dealer quotation system. For so long as any of the
Securities are “restricted securities” within the meaning of Rule 144(a)(3)
under the Securities Act, the Company will, during any period in which it is not
subject to and in compliance with Section 13 or 15(d) of the Exchange Act,
provide to each holder of such restricted securities and to each prospective
purchaser (as designated by such holder) of such restricted securities, upon the
request of such holder or prospective purchaser, any information required to be
provided by Rule 144A(d)(4) under the Securities Act.
          (b) No Registration Required; No General Solicitation. Subject to the
accuracy of the representations and warranties of the Initial Purchasers and the
compliance by the Initial Purchasers with the procedures set forth in
Section 4(b), it is not necessary, in connection with the issuance and sale of
the Securities to the Initial Purchasers and Exempt Resales of the Securities by
the Initial Purchasers in the manner contemplated by this Agreement, the Pricing
Disclosure Package and the Offering Memorandum, to register the Securities under
the Securities Act or to qualify the Indenture under the Trust Indenture Act. No
form of general solicitation or general advertising within the meaning of
Regulation D (including, but not limited to, advertisements, articles, notices
or other communications published in any newspaper, magazine or similar medium
or broadcast over television or radio, or any seminar or meeting whose attendees
have been invited by any general solicitation or general advertising) was used
by the Company, any of its affiliates or any other person acting on its or their
behalf (other than you or any of your affiliates or any other person acting on
your behalf, as to whom the Company makes no representation) in connection with
the offer and sale of the Securities.
          (c) Accurate Disclosure. The Pricing Disclosure Package did not, as of
the Applicable Time, contain an untrue statement of a material fact or omit to
state a material fact

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necessary in order to make the statements made therein, in the light of the
circumstances under which they were made, not misleading; provided that no
representation or warranty is made as to information contained in or omitted
from the Pricing Disclosure Package in reliance upon and in conformity with
written information furnished to the Company through the Representative by or on
behalf of any Initial Purchaser specifically for inclusion therein, which
information is specified in Section 9(e). The Offering Memorandum will not, as
of its date and as of the Closing Date, contain an untrue statement of a
material fact or omit to state a material fact necessary in order to make the
statements made therein, in the light of the circumstances under which they were
made, not misleading; provided that no representation or warranty is made as to
information contained in or omitted from the Offering Memorandum in reliance
upon and in conformity with written information furnished to the Company through
the Representative by or on behalf of any Initial Purchaser specifically for
inclusion therein, which information is specified in Section 9(e).
          (d) Free Writing Offering Document. The Company has not made any offer
to sell or solicitation of an offer to buy the Securities that would constitute
(i) a “free writing prospectus” (as defined in Rule 405 under the Securities
Act) or (ii) an “advertisement” or “other sales material” (as contemplated by
Rule 482 of the Securities Act), in each case if the offering of the Securities
was made pursuant to a registered offering under the Securities Act (a “Free
Writing Offering Document”) without the prior consent of the Representative; any
such Free Writing Offering Document the use of which has been previously
consented to by the Initial Purchasers is set forth substantially in form and
substance as attached hereto on Schedule III.
          (e) Exchange Act Reports. The Exchange Act Reports, when filed with
the Commission, (i) complied in all material respects with the requirements of
the Exchange Act and (ii) did not contain an untrue statement of material fact
or omit to state a material fact necessary in order to make the statements made
therein, in the light of the circumstances under which they were made, not
misleading.
          (f) No Integration. Neither the Company, any of its affiliates nor any
other person acting on its or their behalf has sold or issued any securities
that would be integrated with the offering of the Securities contemplated by
this Agreement pursuant to the Securities Act or the interpretations thereof by
the Commission. The Company will take reasonable precautions designed to insure
that any offer or sale, direct or indirect, in the United States or to any U.S.
person (as defined in Rule 902 under the Securities Act), of any Securities or
any substantially similar security issued by the Company is made under
restrictions and other circumstances reasonably designed not to affect the
status of the offer and sale of the Securities in the United States and to U.S.
persons contemplated by this Agreement as transactions exempt from the
registration provisions of the Securities Act, including any sales pursuant to
Rule 144A under the Securities Act.
          (g) Use of Offering Memorandum. The Preliminary Offering Memorandum,
the Pricing Disclosure Package and the Offering Memorandum have been prepared by
the Company for use by the Initial Purchasers in connection with the Exempt
Resales. No order or decree preventing the use of the Preliminary Offering
Memorandum, the Pricing Disclosure Package or the Offering Memorandum, or any
order asserting that the transactions contemplated by this Agreement are subject
to the registration requirements of the Securities Act has been

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issued, and no proceeding for that purpose has commenced or is pending or, to
the knowledge of the Company, is contemplated.
          (h) Independent Accountant. BDO USA, LLP, which has expressed its
opinion with respect to certain of the financial statements (which term as used
in this Agreement includes the related notes thereto) and supporting schedules
filed with the Commission and included in the Pricing Disclosure Package and
Offering Memorandum, is an independent registered public accounting firm as
required by the Securities Act and Exchange Act.
          (i) Preparation of the Financial Statements. The financial statements
(together with the related schedules and notes) filed with the Commission and
included in the Pricing Disclosure Package and Offering Memorandum present
fairly the consolidated financial position of the Company as of and at the dates
indicated and the results of its operations and cash flows for the periods
specified. Such financial statements have been prepared in conformity with
accounting principles generally accepted in the United States (“GAAP”) applied
on a consistent basis throughout the periods involved, except as may be
expressly stated in the related notes thereto. The consolidated selected
financial data included in the Pricing Disclosure Package and Offering
Memorandum presents fairly in all material respects the information shown
therein and has been compiled on a basis consistent with the consolidated
financial statements included or incorporated by reference in the Pricing
Disclosure Package and Offering Memorandum. All disclosures contained in the
Pricing Disclosure Package and the Offering Memorandum regarding “non-GAAP
financial measures” (as such term is defined by the rules and regulations of the
Commission) comply in all material respects with Regulation G under the Exchange
Act and Item 10 of Regulation S-K of the Securities Act, to the extent
applicable.
          (j) Internal Control Over Financial Reporting. The Company maintains a
system of internal control over financial reporting sufficient to provide
reasonable assurances that financial reporting is reliable and financial
statements for external purposes are prepared in accordance with GAAP and
includes policies and procedures that (i) pertain to the maintenance of records
that, in reasonable detail, accurately and fairly reflect the transactions and
dispositions of the assets of the Company; (ii) provide reasonable assurance
that transactions are recorded as necessary to permit preparation of financial
statements in accordance with GAAP, and that receipts and expenditures of the
Company are being made only in accordance with the authorizations of management
and directors of the Company; and (iii) provide reasonable assurance regarding
prevention or timely detection of unauthorized acquisition, use or disposition
of the Company’s assets that could have a material effect on the financial
statements.
          (k) Disclosure Controls. The Company has established and maintains
disclosure controls and procedures (as such term is defined in Rule 13a-15 and
15d-15 under the Exchange Act); such disclosure controls and procedures are
designed to ensure that material information relating to the Company, including
material information pertaining to the Company’s operations and assets managed
by the Adviser, is made known to the Company’s Chief Executive Officer and Chief
Financial Officer by others within the Company and the Adviser, and such
disclosure controls and procedures are effective to perform the functions for
which they were established.

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          (l) No Material Adverse Change. Except as otherwise disclosed in the
Pricing Disclosure Package and/or the Offering Memorandum, subsequent to the
respective dates as of which information is given in the Pricing Disclosure
Package and/or the Offering Memorandum: (i) there has been no material adverse
change, or any development that could reasonably be expected to result in a
material adverse change, in the condition, financial or otherwise, or in the
earnings, net asset value, prospects, business or operations, whether or not
arising from transactions in the ordinary course of business, of the Company and
its subsidiaries, considered as one entity or a material adverse effect on the
performance by the Company of the performance of this Agreement, the Indenture,
the Securities or the consummation of any of the transactions contemplated
hereby or thereby (any such change or effect, where the context so requires is
called a “Material Adverse Change” or a “Material Adverse Effect”); (ii) the
Company and its subsidiaries, considered as one entity, have not incurred any
material liability or obligation, indirect, direct or contingent, not in the
ordinary course of business or entered into any material transaction or
agreement not in the ordinary course of business; and (iii) except for regular
periodic dividends on the Common Stock, there has been no dividend or
distribution of any kind declared, paid or made by the Company or, except for
dividends paid to the Company or other subsidiaries, any of its subsidiaries on
any class of capital stock or, except for any repurchases under the Company’s
share repurchase program which repurchases shall be made in compliance with
applicable law, repurchase or redemption by the Company or any of its
subsidiaries of any class of capital stock.
          (m) Good Standing of the Company and its Subsidiaries. The Company and
each subsidiary that is a corporation have been duly incorporated and are
validly existing as corporations in good standing under the laws of the
jurisdiction of their incorporation and have the corporate power and authority
to own, lease and operate their properties and to conduct their business as
described in the Pricing Disclosure Package and Offering Memorandum and, in the
case of the Company, to enter into and perform its obligations under this
Agreement. Each of the Company and each subsidiary that is a corporation is duly
qualified as a foreign corporation to transact business and is in good standing
in each jurisdiction in which such qualification is required, whether by reason
of the ownership or leasing of property or the conduct of business, except for
such jurisdictions where the failure to so qualify or to be in good standing
would not, individually or in the aggregate, result in a Material Adverse Change
or a Material Adverse Effect. All of the issued and outstanding capital stock of
each subsidiary that is a corporation has been duly authorized and validly
issued, is fully paid and non-assessable and is owned by the Company, directly
or through subsidiaries, free and clear of any security interest, mortgage,
pledge, lien, encumbrance or claim.
          (n) Subsidiaries of the Company. The Company does not own, directly or
indirectly, any shares of stock or any other equity or long-term debt securities
of any corporation or other entity other than (i) 100% of the equity interests
in Prospect Capital Funding, LLC and Patriot Capital Funding LLC I and
(ii) those corporations or other entities described in the Pricing Disclosure
Package and Offering Memorandum under the caption “Portfolio Companies” (each a
“Portfolio Company” and collectively, the “Portfolio Companies”). Except as
otherwise disclosed in the Pricing Disclosure Package and Offering Memorandum,
the Company does not control (as such term is defined in Section 2(a)(9) of the
Investment Company Act of 1940, as amended, and the rules and regulations of the
Commission thereunder (the “Investment Company Act”)) any of the Portfolio
Companies. Except as otherwise disclosed in the Pricing

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Disclosure Package and Offering Memorandum, the Company is not required, in
accordance with Article 6 of Regulation S-X under the Securities Act, to
consolidate the financial statements of any corporation, association or other
entity with the Company’s financial statements other than Prospect Capital
Funding, LLC.
          (o) Portfolio Companies. The Company has duly authorized, executed and
delivered any agreements pursuant to which it made the investments described in
the Pricing Disclosure Package and Offering Memorandum under the caption
“Portfolio Companies” (each a “Portfolio Company Agreement”). To the Company’s
knowledge, except as otherwise disclosed in the Pricing Disclosure Package and
Offering Memorandum, each Portfolio Company is current, in all material
respects, with all its obligations under the applicable Portfolio Company
Agreements, no event of default (or a default which with the giving of notice or
the passage of time would become an event of default) has occurred under such
agreements, except to the extent that any such failure to be current in its
obligations and any such default would not reasonably be expected to result in a
Material Adverse Change or a Material Adverse Effect.
          (p) BDC Election; Regulated Investment Company. The Company has
elected to be regulated as a business development company under the Investment
Company Act and has filed with the Commission, pursuant to Section 54(a) of the
Investment Company Act, a duly completed and executed Form N-54A (the “Company
BDC Election”); the Company has not filed with the Commission any notice of
withdrawal of the BDC Election pursuant to Section 54(c) of the Investment
Company Act; the Company’s BDC Election remains in full force and effect, and,
to the Company’s knowledge, no order of suspension or revocation of such
election under the Investment Company Act has been issued or proceedings
therefore initiated or threatened by the Commission. The operations of the
Company are in compliance in all material respects with the provisions of the
Investment Company Act applicable to business development companies and the
rules and regulations of the Commission applicable to business development
companies.
          (q) Authorization and Description of Securities. The authorized,
issued and outstanding capital stock of the Company is as set forth in the
Pricing Disclosure Package and Offering Memorandum, in each case, of the date
thereof under the caption “Capitalization” and “Selected Condensed Financial
Data.” The Securities and the Underlying Securities conform in all material
respects to the description thereof contained in the Pricing Disclosure Package
and Offering Memorandum. All issued and outstanding shares of common stock of
the Company have been duly authorized and validly issued and are fully paid and
non-assessable, and have been offered and sold or exchanged by the Company in
compliance with all applicable laws (including, without limitation, federal and
state securities laws) in all material respects. None of the outstanding shares
of common stock of the Company was issued in violation of the preemptive or
other similar rights of any security holder of the Company. No shares of
preferred stock of the Company have been designated, offered, sold or issued and
none of such shares of preferred stock are currently outstanding.
          (r) Securities. The Company has all requisite corporate power and
authority to execute, issue, sell and perform its obligations under the
Securities. The Securities have been duly authorized by the Company and, when
duly executed by the Company in accordance with the terms of the Indenture,
assuming due authentication of the Securities by the Trustee, upon

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delivery to the Initial Purchasers against payment therefor in accordance with
the terms hereof, will be validly issued and delivered and will constitute valid
and binding obligations of the Company entitled to the benefits of the
Indenture, enforceable against the Company in accordance with their terms,
except as such enforceability may be limited by bankruptcy, fraudulent
conveyance, insolvency, reorganization, moratorium, and other laws relating to
or affecting creditors’ rights generally and by general equitable principles
(regardless of whether such enforceability is considered in a proceeding in
equity or at law).
          (s) Indenture. The Company has all requisite corporate power and
authority to execute, deliver and perform its obligations under the Indenture.
The Indenture has been duly and validly authorized by the Company, and upon its
execution and delivery and, assuming due authorization, execution and delivery
by the Trustee, will constitute the valid and binding agreement of the Company,
enforceable against the Company in accordance with its terms, except as such
enforceability may be limited by bankruptcy, fraudulent conveyance, insolvency,
reorganization, moratorium, and other laws relating to or affecting creditors’
rights generally and by general equitable principles (regardless of whether such
enforceability is considered in a proceeding in equity or at law); no
qualification of the Indenture under the Trust Indenture Act of 1939 (the “1939
Act”) is required in connection with the offer and sale of the Securities
contemplated hereby or in connection with the Exempt Resales. The Indenture will
conform in all material respects to the description thereof in each of the
Pricing Disclosure Package and the Offering Memorandum.
          (t) Underlying Securities. The Company has all the requisite corporate
power and authority to issue the Underlying Securities issuable upon conversion
of the Securities. The Underlying Securities have been duly and validly
authorized by the Company and, when issued upon conversion of the Securities in
accordance with the terms of the Securities, will be validly issued, fully paid
and non-assessable, and the issuance of the Underlying Securities will not be
subject to any preemptive or similar rights.
          (u) Disclosure. The statements set forth in each of the Pricing
Disclosure Package and the Offering Memorandum under the caption “Description of
the Notes,” insofar as they purport to constitute a summary of the terms of the
Securities and under the captions “Material U.S. Federal Income Tax
Considerations,” and “Certain Relationships and Transactions,” insofar as they
purport to describe the provisions of the laws and documents referred to
therein, are accurate in all material respects.
          (v) Non-Contravention of Existing Instruments; No Further
Authorizations or Approvals Required. Neither the Company nor any subsidiary is
in violation of or default under its (i) charter, articles or certificate of
incorporation, by-laws, or similar organizational documents; (ii) under any
indenture, mortgage, loan or credit agreement, note, contract, franchise, lease
or other instrument, including any Portfolio Company Agreement, the Investment
Advisory Agreement and the Administration Agreement, to which the Company or any
of its subsidiaries is a party or bound or to which any of the property or
assets of the Company or any of its subsidiaries is subject; or (iii) any
statute, law, rule, regulation, judgment, order or decree of any court,
regulatory body, administrative agency, governmental body, arbitrator or other
authority having jurisdiction over the Company or such subsidiary or any of its
properties, as applicable, except for such violations or defaults as would not,
individually or in

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the aggregate, have a Material Adverse Effect. The Company’s execution, delivery
and performance of this Agreement, the Indenture, the issuance and sale of the
Securities (including the issuance of the Underlying Securities upon conversion
thereof) and consummation of the transactions contemplated hereby and thereby
and by the Pricing Disclosure Package and Offering Memorandum (i) have been duly
authorized by all necessary corporate action, have been effected in accordance
with the Investment Company Act and will not result in any violation of the
provisions of the charter, articles or certificate of incorporation or by-laws
of the Company or similar organizational documents of any subsidiary, (ii) will
not conflict with or constitute a breach of, or default under, or result in the
creation or imposition of any lien, charge or encumbrance upon any property or
assets of the Company or any of its subsidiaries pursuant to, or require the
consent of any other party to, any existing instrument, except for such
conflicts, breaches, defaults, liens, charges or encumbrances as would not,
individually or in the aggregate, result in a Material Adverse Effect and
(iii) will not result in any violation of any law, administrative regulation or
administrative or court decree applicable to the Company or any subsidiary. No
consent, approval, authorization or other order of, or registration or filing
with, any court or other governmental or regulatory authority or agency, is
required for the Company’s execution, delivery and performance of this
Agreement, the Indenture, the issuance and sale of the Securities (including the
issuance of the Underlying Securities upon conversion thereof) or consummation
of the transactions contemplated hereby and thereby and by the Pricing
Disclosure Package and the Offering Memorandum, except such consents, approvals,
authorizations, orders, filings, registrations or qualifications as may be
required under state securities or Blue Sky laws, the NASDAQ Global Select
Market or any Form D with the Commission in connection with the purchase and
distribution of the Securities by the Initial Purchasers.
          (w) Intellectual Property Rights. The Company and its subsidiaries own
or possess sufficient trademarks, trade names, patent rights, copyrights, domain
names, licenses, approvals, trade secrets and other similar rights
(collectively, “Intellectual Property Rights”) reasonably necessary to conduct
their businesses as described in the Pricing Disclosure Package and the Offering
Memorandum; and the expected expiration of any of such Intellectual Property
Rights would not result in a Material Adverse Effect. Neither the Company nor
any of its subsidiaries has received any notice of infringement or conflict with
asserted Intellectual Property Rights of others, which infringement or conflict,
if the subject of an unfavorable decision, would result in a Material Adverse
Effect. To the Company’s knowledge, none of the technology employed by the
Company has been obtained or is being used by the Company in violation of any
contractual obligation binding on the Company or any of its officers, directors
or employees or otherwise in violation of the rights of any persons.
          (x) Compliance with Environmental Law. To the knowledge of the
Company, the Advisor and the Administrator, the Company, its subsidiaries and
each controlled Portfolio Company (i) are in compliance with any and all
applicable foreign, federal, state and local laws and regulations relating to
the protection of human health and safety, the environment or hazardous or toxic
substances or wastes, pollutants or contaminants (“Environmental Laws”);
(ii) have received all permits, licenses or other approvals required of them
under applicable Environmental Laws to conduct their respective businesses; and
(iii) are in compliance with all terms and conditions of any such permit,
license or approval, except where such noncompliance with Environmental Laws,
failure to receive required permits, licenses or other approvals or

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failure to comply with the terms and conditions of such permits, licenses or
approvals would not, singly or in the aggregate, have a Material Adverse Effect.
          (y) All Necessary Permits, etc. The Company and each subsidiary
possess such valid and current certificates, authorizations or permits issued by
the appropriate state, federal or foreign regulatory agencies or bodies
necessary to conduct their respective businesses, except where the failure to
possess such certificates, authorizations or permits would not result in a
Material Adverse Effect and the Company has not received any notice of
proceedings relating to the revocation or modification of, or non-compliance
with, any such certificate, authorization or permit which, singly or in the
aggregate, if the subject of an unfavorable decision, ruling or finding, could
result in a Material Adverse Effect.
          (z) Investment Advisory Agreement. (i) The terms of the Investment
Advisory Agreement, including compensation terms, comply in all material
respects with all applicable provisions of the Investment Company Act and the
Advisers Act and (ii) the approvals by the board of directors and the initial
stockholder of the Company of the Investment Advisory Agreement have been made
in accordance with the requirements of Section 15 of the Investment Company Act
applicable to companies that have elected to be regulated as business
development companies under the Investment Company Act.
          (aa) Absence of Proceedings. There is no action, suit, proceeding,
inquiry or investigation before or brought by any court or governmental agency
or body, domestic or foreign, now pending, or, to the knowledge of the Company,
threatened, against the Company, which is required to be disclosed in the
Pricing Disclosure Package and/or the Offering Memorandum (other than as
disclosed therein), or which might reasonably be expected to result in a
Material Adverse Effect, or which might reasonably be expected to materially and
adversely affect the consummation of the transactions contemplated in this
Agreement, the Indenture, the Securities or the performance by the Company of
its obligations hereunder and thereunder. The aggregate of all pending legal or
governmental proceedings to which the Company is a party or of which any of its
property or assets is the subject which are not described in the Pricing
Disclosure Package or the Offering Memorandum, including ordinary routine
litigation incidental to the business, could not reasonably be expected to
result in a Material Adverse Effect.
          (bb) Subchapter M. During the past fiscal year, the Company has been
organized and operated, and is currently organized and operates, in compliance
in all material respects with the requirements to be taxed as a regulated
investment company under Subchapter M of the Internal Revenue Code of 1986, as
amended (“Subchapter M of the Code” and the “Code,” respectively). The Company
intends to direct the investment of the proceeds of the offering described in
the Pricing Disclosure Package and Offering Memorandum in such a manner as to
comply with the requirements of Subchapter M of the Code.
          (cc) Tax Law Compliance. The Company and its subsidiaries have filed
all necessary federal, state and foreign income and franchise tax returns and
have paid all taxes required to be paid by any of them and, if due and payable,
any related or similar assessment, fine or penalty levied against any of them,
except for any taxes, assessments or penalties as may be contested in good faith
and by appropriate proceedings. The Company has made adequate

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charges, accruals and reserves in the applicable financial statements referred
to in the Pricing Disclosure Package and Offering Memorandum in respect of all
federal, state and foreign income and franchise taxes for all periods as to
which the tax liability of the Company or any of its subsidiaries has not been
finally determined. The Company is not aware of any tax deficiency that has been
or might be asserted or threatened against the Company or any subsidiary that
could result in a Material Adverse Effect.
          (dd) Distribution of Offering Materials. The Company has not
distributed and will not distribute any offering material in connection with the
offering and sale of the Securities other than the Pricing Disclosure Package,
Offering Memorandum, any Free Writing Offering Document or other materials, if
any, permitted by the Securities Act or the Investment Company Act.
          (ee) Registration Rights. Except as otherwise described in the Pricing
Disclosure Package and Offering Memorandum, there are no persons with
registration rights or other similar rights to have any securities registered by
the Company under the Securities Act.
          (ff) Nasdaq Global Select Market. The Company’s shares of common stock
are registered pursuant to Section 12(b) or 12(g) of the Exchange Act and are
listed for quotation on the Nasdaq Global Select Market (“NASDAQ”). The Company
has taken no action designed to, or likely to have the effect of, terminating
the registration of its common stock under the Exchange Act or delisting its
common stock from the NASDAQ, nor has the Company received any notification that
the Commission or the Financial Industry Regulatory Authority, Inc. (“FINRA”) is
contemplating terminating such registration or listing. The Company has
continued to satisfy, in all material respects, all requirements for listing its
common stock for trading on the NASDAQ.
          (gg) No Price Stabilization or Manipulation. The Company has not taken
and will not take, directly or indirectly, any action designed to or that might
be reasonably expected to cause or result in stabilization or manipulation of
the price of any security of the Company to facilitate the sale or resale of the
Securities or the Underlying Securities; provided, however, that the Initial
Purchasers acknowledge the Company may from time to time repurchase shares of
its common stock pursuant to its share repurchase program, which repurchases
shall be made in compliance with applicable law.
          (hh) Compliance with the Exchange Act and the Investment Company Act;
Reports Filed. The documents filed by the Company with the Commission under the
Exchange Act and the Investment Company Act, complied, and will comply in all
material respects, with the requirements of the Exchange Act and the Investment
Company Act, as applicable, and, with respect to the Exchange Act documents, as
of the date hereof, the Applicable Time, and as of the Closing Date, did not and
will not contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading. The Company has filed all reports required to be filed pursuant to,
the Investment Company Act and the Exchange Act except where the failure to file
such reports would not have a Material Adverse Effect.

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          (ii) Interested Persons. Except as disclosed in the Pricing Disclosure
Package and Offering Memorandum (i) no person is serving or acting as an
officer, director or investment adviser of the Company, except in accordance
with the provisions of the Investment Company Act and the Advisers Act, and
(ii) to the knowledge of the Company, no director of the Company is an
“interested person” (as defined in the Investment Company Act) of the Company or
an “affiliated person” (as defined in the Investment Company Act) of the Initial
Purchasers except as otherwise disclosed in the Pricing Disclosure Package and
Offering Memorandum.
          (jj) No Unlawful Contributions or Other Payments. Neither the Company
nor any of its subsidiaries nor, to the Company’s knowledge, any employee or
agent of the Company or any subsidiary, has made any contribution or other
payment to any official of, or candidate for, any federal, state or foreign
office in violation of any law or of the character required to be disclosed in
the Pricing Disclosure Package and the Offering Memorandum.
          (kk) No Outstanding Loans or Other Indebtedness. There are no
outstanding loans, advances (except normal advances for business expenses in the
ordinary course of business) or guarantees or indebtedness by the Company to or
for the benefit of any of the officers or directors of the Company or any of the
members of any of them, except as disclosed in the Pricing Disclosure Package
and Offering Memorandum.
          (ll) Compliance with Laws. The Company has not been advised, and has
no knowledge, that it and each of its subsidiaries are not conducting business
in compliance with all applicable laws, rules and regulations of the
jurisdictions in which it is conducting business, except where failure to be so
in compliance would not result, individually or in the aggregate, in a Material
Adverse Effect.
          (mm) Compliance with the Sarbanes-Oxley Act of 2002. The Company has
complied in all material respects with Sections 302 and 906 of the
Sarbanes-Oxley Act and has made the evaluations of the Company’s disclosure
controls and procedures required under Rule 13a-15 under the Exchange Act.
          (nn) Foreign Corrupt Practices Act. Neither the Company nor any of its
subsidiaries nor, to the knowledge of the Company, any director, officer, agent,
employee, affiliate or other person acting on behalf of the Company or any of
its subsidiaries is aware of or has taken any action, directly or indirectly,
that has resulted or would result in a violation by such persons of the Foreign
Corrupt Practices Act of 1977, as amended, and the rules and regulations
thereunder (collectively, the “FCPA”), including, without limitation, making use
of the mails or any means or instrumentality of interstate commerce corruptly in
furtherance of an offer, payment, promise to pay or authorization of the payment
of any money, or other property, gift, promise to give, or authorization of the
giving of anything of value to any “foreign official” (as such term is defined
in the FCPA) or any foreign political party or official thereof or any candidate
for foreign political office, in contravention of the FCPA.
          (oo) Money Laundering Laws. The operations of the Company and its
subsidiaries are and have been conducted at all times in compliance with
applicable financial recordkeeping and reporting requirements of the Currency
and Foreign Transactions Reporting Act of 1970, as amended, the applicable money
laundering statutes of all applicable jurisdictions,

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the rules and regulations thereunder and any related or similar applicable
rules, regulations or guidelines, issued, administered or enforced by any
governmental agency (collectively, “Money Laundering Laws”) and no action, suit
or proceeding by or before any court or governmental agency, authority or body
or any arbitrator involving the Company or any of its Subsidiaries with respect
to the Money Laundering Laws is pending or, to the knowledge of the Company,
threatened.
          (pp) OFAC. Neither the Company nor any of its subsidiaries nor, to the
knowledge of the Company, any director, officer, agent, employee, affiliate or
person acting on behalf of the Company or any of its subsidiaries is currently
subject to any U.S. sanctions administered by the Office of Foreign Assets
Control of the U.S. Treasury Department (“OFAC”); and the Company will not
directly or indirectly use any of the proceeds received by the Company from the
sale of Securities or the Underlying Securities contemplated by this Agreement,
or lend, contribute or otherwise make available any such proceeds to any
subsidiary, joint venture partner or other person or entity, for the purpose of
financing the activities of any person currently subject to any U.S. sanctions
administered by OFAC.
     Any certificate signed by any officer of the Company and delivered to the
Initial Purchasers or to counsel for the Initial Purchasers shall be deemed a
representation and warranty by the Company, to the Initial Purchasers as to the
matters covered thereby.
     3. Representations and Warranties of the Adviser and the Administrator. The
Adviser and the Administrator, jointly and severally, represent, warrant and
agree as follows:
          (a) No Material Adverse Change in Business. Since the respective dates
as of which information is given in the Pricing Disclosure Package and the
Offering Memorandum, except as otherwise stated therein, there has been no
material adverse change in the financial condition, or in the earnings, business
affairs, operations or regulatory status of the Adviser or the Administrator or
any of their respective subsidiaries, whether or not arising in the ordinary
course of business, that would reasonably be expected to result in a Material
Adverse Effect, or would otherwise reasonably be expected to prevent the Adviser
or the Administrator from carrying out its obligations under the Investment
Advisory Agreement (an “Adviser Material Adverse Change” or an “Adviser Material
Adverse Effect,” where the context so requires) or the Administration Agreement
(an “Administrator Material Adverse Change” or an “Administrator Material
Adverse Effect,” where the context so requires).
          (b) Good Standing. Each of the Adviser and the Administrator (and each
of their subsidiaries) has been duly organized and is validly existing and in
good standing under the laws of the State of Delaware, with full power and
authority to own, lease and operate its properties and to conduct its business
as described in the Pricing Disclosure Package and the Offering Memorandum and
to enter into and perform its obligations under this Agreement; the Adviser has
full power and authority to execute and deliver and perform its obligations
under the Investment Advisory Agreement; the Administrator has full power and
authority to execute and deliver the Administration Agreement; and each of the
Adviser and the Administrator is duly qualified to do business as a foreign
entity and is in good standing in each jurisdiction where the ownership or
leasing of its properties or the conduct of its business requires such
qualification, except where the failure to qualify or be in good standing would
not otherwise reasonably be

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expected to result in an Adviser Material Adverse Effect or an Administrator
Material Adverse Effect, as applicable.
          (c) Registration Under Advisers Act. The Adviser is duly registered
with the Commission as an investment adviser under the Advisers Act and is not
prohibited by the Advisers Act or the Investment Company Act from acting under
the Investment Advisory Agreement for the Company as contemplated by the Pricing
Disclosure Package and the Offering Memorandum. There does not exist any
proceeding or, to the Adviser’s knowledge, any facts or circumstances the
existence of which could lead to any proceeding, which might adversely affect
the registration of the Adviser with the Commission.
          (d) Absence of Proceedings. There is no action, suit or proceeding or,
to the knowledge of the Adviser or the Administrator, inquiry or investigation
before or brought by any court or governmental agency or body, domestic or
foreign, now pending, or, to the knowledge of the Adviser or the Administrator,
threatened, against or affecting either the Adviser or the Administrator, which
is required to be disclosed in the Pricing Disclosure Package and the Offering
Memorandum (other than as disclosed therein), or which would reasonably be
expected to result in an Adviser Material Adverse Effect, or which would
reasonably be expected to materially and adversely affect the consummation of
the transactions contemplated in this Agreement, the Investment Advisory
Agreement or the Administration Agreement; the aggregate of all pending legal or
governmental proceedings to which the Adviser or the Administrator is a party or
of which any of its respective property or assets is the subject which are not
described in the Pricing Disclosure Package and the Offering Memorandum,
including ordinary routine litigation incidental to their business, would not
reasonably be expected to result in an Adviser Material Adverse Effect.
          (e) Absence of Defaults and Conflicts. Neither the Adviser nor the
Administrator is in violation of its certificate of formation or limited
liability company operating agreement or in default in the performance or
observance of any obligation, agreement, covenant or condition contained in any
contract, indenture, mortgage, deed of trust, loan or credit agreement, note,
lease or other agreement or instrument to which the Adviser or the Administrator
is a party or by which it or any of them may be bound, or to which any of the
property or assets of the Adviser or the Administrator is subject, or in
violation of any law, statute, rule, regulation, judgment, order or decree
except for such violations or defaults that would not reasonably be expected to
result in an Adviser Material Adverse Effect or an Administrator Material
Adverse Effect, as applicable; and the execution, delivery and performance of
this Agreement, the Investment Advisory Agreement, the Administration Agreement,
and the consummation of the transactions contemplated herein and therein and in
the Pricing Disclosure Package and the Offering Memorandum (including the
issuance and sale of the Securities and Underlying Securities and the use of the
proceeds from the sale of the Securities and Underlying Securities as described
in the Pricing Disclosure Package and the Offering Memorandum under the caption
“Use of Proceeds”) and compliance by the Adviser with its obligations hereunder
and under the Investment Advisory Agreement and by the Administrator with its
obligations hereunder and under the Administration Agreement do not and will
not, whether with or without the giving of notice or passage of time or both,
conflict with or constitute a breach of, or default under, or result in the
creation or imposition of any lien, charge or encumbrance upon any property or
assets of the Adviser or the Administrator pursuant to such

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Agreement except for such violations or defaults that would not reasonably be
expected to result in an Adviser Material Adverse Effect or an Administrator
Material Adverse Effect, as applicable, nor will such action result in any
violation of the provisions of the limited liability company operating agreement
of the Adviser or Administrator, respectively; nor will such action result in
any violation of any applicable law, statute, rule, regulation, judgment, order,
writ or decree of any government, government instrumentality or court, domestic
or foreign, having jurisdiction over the Adviser, the Administrator, or any of
their respective assets, properties or operations except for such violations
that would not reasonably be expected to result in an Adviser Material Adverse
Effect or an Administrator Material Adverse Effect, as applicable.
          (f) Authorization of Agreements. This Agreement has been duly
authorized, executed and delivered by the Adviser and the Administrator; the
Investment Advisory Agreement has been duly authorized, executed and delivered
by the Adviser; and the Administration Agreement has been duly authorized,
executed and delivered by the Administrator; the Investment Advisory Agreement
and the Administration Agreement constitute valid and legally binding agreements
of the Adviser and the Administrator, respectively, except as (i) the
enforceability thereof may be limited by bankruptcy, insolvency (including,
without limitation, all laws relating to fraudulent transfers) or similar laws
affecting creditors’ rights generally and (ii) rights to indemnification and
contribution may be limited to equitable principles of general applicability or
by state or federal securities laws or the policies underlying such law.
          (g) Absence of Further Requirements. No filing with, or authorization,
approval, consent, license, order, registration, qualification or decree of, any
court or governmental authority or agency is necessary or required for the
performance by the Adviser or the Administrator of its obligations hereunder, in
connection with the offering, issuance or sale of the Securities and Underlying
Securities hereunder or the consummation of the transactions contemplated by
this Agreement, the Investment Advisory Agreement, the Administration Agreement
or the Pricing Disclosure Package and the Offering Memorandum (including the use
of the proceeds from the sale of the Securities as described in the Pricing
Disclosure Package and the Offering Memorandum under the caption “Use of
Proceeds”), except (i) such as have been already obtained under the Securities
Act, the Investment Company Act and the 1939 Act, (ii) such as may be required
under state securities laws and (iii) the filing of the Notification of Election
under the Investment Company Act, which has been effected.
          (h) Description of the Adviser and the Administrator. The description
of the Adviser and the Administrator contained in the Pricing Disclosure Package
and the Offering Memorandum does not contain any untrue statement of a material
fact or omit to state a material fact necessary to make the statements therein,
in light of the circumstances in which they were made, not misleading.
          (i) Possession of Licenses and Permits. Each of the Adviser and the
Administrator possesses such valid and current certificates, authorizations or
permits issued by the appropriate federal, state, local or foreign regulatory
agencies or bodies necessary to conduct the business now operated by it
(collectively, “Governmental Licenses”), except where the failure so to possess
would not reasonably be expected to, singly or in the aggregate, result in an
Adviser Material Adverse Effect or an Administrator Material Adverse Effect, as
applicable;

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each of the Adviser and Administrator is in compliance with the terms and
conditions of all such Governmental Licenses, except where the failure so to
comply would not, singly or in the aggregate, result in an Adviser Material
Adverse Effect or an Administrator Material Adverse Effect, as applicable; all
of the Governmental Licenses are valid and in full force and effect, except when
the invalidity of such Governmental Licenses or the failure of such Governmental
Licenses to be in full force and effect would not, singly or in the aggregate,
result in an Adviser Material Adverse Effect or an Administrator Material
Adverse Effect, as applicable; and neither the Adviser nor the Administrator has
received any notice of proceedings relating to the revocation or modification of
any such Governmental Licenses which, singly or in the aggregate, if the subject
of an unfavorable decision, ruling or finding, would reasonably be expected to
result in an Adviser Material Adverse Effect or an Administrator Material
Adverse Effect, as applicable.
          (j) Employment Status. The Adviser is not aware that (i) any
executive, key employee or significant group of employees of the Company, if
any, the Adviser or the Administrator, as applicable, plans to terminate
employment with the Company, the Adviser or the Administrator or (ii) any such
executive or key employee is subject to any non-compete, nondisclosure,
confidentiality, employment, consulting or similar agreement that would be
violated by the present or proposed business activities of the Company or the
Adviser except where such termination or violation would not reasonably be
expected to have an Adviser Material Adverse Effect.
          Any certificate signed by any officer of the Adviser and delivered to
the Representative or counsel for the Initial Purchasers in connection with the
offering of the Securities shall be deemed a representation and warranty by the
Adviser, as to matters covered thereby, to each Initial Purchaser.
     4. Purchase of the Securities by the Initial Purchasers, Agreements to
Sell, Purchase and Resell. (a) The Company hereby agrees, on the basis of the
representations, warranties and agreements of the Initial Purchasers contained
herein and subject to all the terms and conditions set forth herein, to issue
and sell to the Initial Purchasers and, upon the basis of the representations,
warranties and agreements of the Company herein contained and subject to all the
terms and conditions set forth herein, each Initial Purchaser agrees, severally
and not jointly, to purchase from the Company, at a purchase price of 97% of the
principal amount thereof (the “Purchase Price”), the total principal amount of
Securities set forth opposite the name of such Initial Purchaser in Schedule I
hereto plus any additional principal amount of Securities which such Initial
Purchasers may become obligated to purchase pursuant to the provisions of
Section 10 hereof (subject to such adjustments to eliminate fractional
Securities as you may determine). The Company shall not be obligated to deliver
any of the securities to be delivered hereunder except upon payment for all of
the securities to be purchased as provided herein.
          (b) Each of the Initial Purchasers, severally and not jointly hereby
represents and warrants to the Company that it will offer the Securities for
sale upon the terms and conditions set forth in this Agreement and in the
Pricing Disclosure Package and Offering Memorandum. Each of the Initial
Purchasers hereby represents and warrants to, and agrees with, the Company, on
the basis of the representations, warranties and agreements of the Company, that
such Initial Purchaser:

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               (i) is a QIB and an “accredited investor” (as defined by Rule
501(a) of Regulation D) with such knowledge and experience in financial and
business matters as are necessary in order to evaluate the merits and risks of
an investment in the Securities;
               (ii) is purchasing the Securities pursuant to a private sale
exempt from registration under the Securities Act;
               (iii) will solicit offers to buy the Securities only from, and
will offer to sell and sell the Securities only to, Eligible Purchasers whom
each reasonably believes is a QIB in accordance with this Agreement and on the
terms contemplated by the Pricing Disclosure Package and Offering Memorandum and
will take reasonable steps to ensure that the purchasers of such Securities are
aware that such sale is being made in reliance on Rule 144A;
               (iv) including any person acting on its behalf will not offer or
sell the Securities, nor has it offered or sold the Securities by, or otherwise
engaged in, any form of general solicitation or general advertising (within the
meaning of Regulation D, including, but not limited to, advertisements,
articles, notices or other communications published in any newspaper, magazine,
or similar medium or broadcast over television or radio, or any seminar or
meeting whose attendees have been invited by any general solicitation or general
advertising)
               (v) it has only communicated or caused to be communicated and
will only communicate or cause to be communicated any invitation or inducement
to engage in investment activity (within the meaning of Section 21 of the
Financial Services and Markets Act 2000 (the “FSMA”)) received by it in
connection with the issue or sale of any Securities, in circumstances in which
Section 21(1) of the FSMA does not apply to the Company;
               (vi) it has complied and will comply with all applicable
provisions of the FSMA with respect to anything done by it in relation to the
Securities in, from or otherwise involving the United Kingdom; and
               (vii) in relation to each Member State of the European Economic
Area which has implemented the Prospectus Directive (each, a “Relevant Member
State”), it has not made and will not make an offer to the public of any
Securities which are the subject of the offering contemplated by this Agreement
in that Relevant Member State, except that it may make an offer to the public in
that Relevant Member State of any Securities at any time under the following
exemptions under the Prospectus Directive, if they have been implemented in that
Relevant Member State: (1) to legal entities which are authorized or regulated
to operate in the financial markets or, if not so authorized or regulated, whose
corporate purpose is solely to invest in securities; (2) to any legal entity
which has two or more of (a) an average of at least 250 employees during the
last financial year, (b) a total balance sheet of more than €43,000,000 and
(c) an annual turnover of more than €50,000,000, as shown in its last annual or
consolidated accounts; (3) to fewer than 100 natural or legal persons (other
than “qualified investors” as defined in the Prospectus Directive) subject to
obtaining the prior written consent of the Initial Purchaser for any such offer;
or (4) in any other circumstances falling within Article 3(2) of the Prospectus
Directive ; provided that no such offer of Securities shall result in a
requirement for the publication by the Transaction Entities or the Initial
Purchaser of a prospectus pursuant to Article 3 of the Prospectus Directive.

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     The Initial Purchasers have advised the Company that they will offer the
Securities to Eligible Purchasers at a price initially equal to 100% of the
principal amount thereof, plus accrued interest, if any, from the date of
issuance of the Securities. Such price may be changed by the Initial Purchasers
at any time without notice.
          (c) Such Initial Purchaser has not nor, prior to the later to occur of
(A) the Closing Date and (B) completion of the distribution of the Securities,
will not, use, authorize use of, refer to or distribute any material in
connection with the offering and sale of the Securities other than (i) the
Preliminary Offering Memorandum, the Pricing Disclosure Package, the Offering
Memorandum, (ii) any written communication that contains no “issuer information”
(as defined in Rule 433(h)(2) under the Act) that was not included (C) including
through incorporation by reference) in the Preliminary Offering Memorandum,
(iii) the Free Writing Offering Documents listed on Schedule III hereto,
(iv) any written communication prepared by such Initial Purchaser and approved
by the Company in writing, or (v) any written communication relating to or that
contains the terms of the Securities and/or other information that was included
(including through incorporation by reference) in the Preliminary Offering
Memorandum, the Pricing Disclosure Package or the Offering Memorandum.
          Each of the Initial Purchasers understands that the Company and, for
purposes of the opinions to be delivered to the Initial Purchasers pursuant to
Sections 8(c) and 8(d) hereof, counsel to the Company and counsel to the Initial
Purchasers, will rely upon the accuracy and truth of the foregoing
representations, warranties and agreements, and the Initial Purchasers hereby
consent to such reliance.
     5. Delivery of the Securities and Payment Therefor. Delivery to the Initial
Purchasers of and payment for the Securities shall be made at the office of
Skadden, Arps, Slate, Meagher & Flom LLP, Four Times Square, New York, New York,
at 9:00 A.M., New York City time, on December 21, 2010 (the “Closing Date”). The
place of closing for the Securities and the Closing Date may be varied by
agreement between the Initial Purchasers and the Company.
          The Securities will be delivered to the Initial Purchasers, or the
Trustee as custodian for The Depository Trust Company (“DTC”), against payment
by or on behalf of the Initial Purchasers of the purchase price therefor by wire
transfer in immediately available funds, by causing DTC to credit the applicable
Securities to the account of the Initial Purchasers at DTC. The Securities will
be evidenced by one or more global securities in definitive form (the “Global
Securities”) or by additional definitive securities, and will be registered, in
the case of the Global Securities, in the name of Cede & Co. as nominee of DTC,
and in the other cases, in such names and in such denominations as the Initial
Purchasers shall request prior to 9:30 A.M., New York City time, on the second
business day preceding the Closing Date or the Option Closing Date, as the case
may be. The Securities to be delivered to the Initial Purchasers shall be made
available to the Initial Purchasers in New York City for inspection and
packaging not later than 9:30 A.M., New York City time, on the business day next
preceding the Closing Date or the Option Closing Date, as the case may be.
     6. Agreements of the Company. The Company agrees with each of the Initial
Purchasers as follows:

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          (a) The Company will furnish to the Initial Purchasers, without
charge, within one business day of the date of the Offering Memorandum, such
number of copies of the Offering Memorandum (and any documents incorporated by
reference therein) as may then be amended or supplemented as they may reasonably
request.
          (b) The Company will not make any amendment or supplement to the
Pricing Disclosure Package or to the Offering Memorandum of which the Initial
Purchasers shall not previously have been advised or to which they shall
reasonably object after being so advised.
          (c) The Company consents to the use of the Pricing Disclosure Package
and the Offering Memorandum in accordance with the securities or Blue Sky laws
of the jurisdictions in which the Securities are offered by the Initial
Purchasers and by all dealers to whom Securities may be sold, in connection with
the offering and sale of the Securities.
          (d) If, at any time prior to completion of the distribution of the
Securities by the Initial Purchasers to Eligible Purchasers, any event occurs or
information becomes known that, in the judgment of the Company or in the opinion
of counsel for the Initial Purchasers, should be set forth in the Pricing
Disclosure Package or the Offering Memorandum so that the Pricing Disclosure
Package or the Offering Memorandum, as then amended or supplemented, does not
include any untrue statement of material fact or omit to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading, or if it is necessary
to supplement or amend the Pricing Disclosure Package or the Offering Memorandum
in order to comply with any law, the Company will (i) give the Representative
notice of such event and (ii) prepare an appropriate supplement or amendment
thereto, and will promptly furnish to the Initial Purchasers and dealers a
reasonable number of copies thereof, provided that the Company not use or
distribute any such amendment or supplement to which the Representative or
counsel for the Initial Purchasers shall reasonably object.
          (e) The Company will not make any offer to sell or solicitation of an
offer to buy the Securities that would constitute a Free Writing Offering
Document without the prior consent of the Representative, which consent shall
not be unreasonably withheld or delayed; if at any time following issuance of a
Free Writing Offering Document any event occurred or occurs as a result of which
such Free Writing Offering Document conflicts with the information in the
Preliminary Offering Memorandum, the Pricing Disclosure Package or the Offering
Memorandum or, when taken together with the information in the Preliminary
Offering Memorandum, the Pricing Disclosure Package or the Offering Memorandum,
includes an untrue statement of a material fact or omits to state any material
fact necessary in order to make the statements therein, in the light of the
circumstances then prevailing, not misleading, as promptly as practicable after
becoming aware thereof, the Company will give notice thereof to the Initial
Purchasers through the Representative and, if requested by the Representative,
will prepare and furnish without charge to each Initial Purchaser a Free Writing
Offering Document or other document which will correct such conflict, statement
or omission.
          (f) Promptly from time to time to take such action as the Initial
Purchasers may reasonably request to qualify the Securities for offering and
sale under the securities or Blue Sky laws of such jurisdictions as the Initial
Purchasers may request and to comply with such

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laws so as to permit the continuance of sales and dealings therein in such
jurisdictions for as long as may be necessary to complete the distribution of
the Securities; provided that in connection therewith the Company shall not be
required to (i) qualify as a foreign corporation in any jurisdiction in which it
would not otherwise be required to so qualify, (ii) file a general consent to
service of process in any such jurisdiction or (iii) subject itself to taxation
in any jurisdiction in which it would not otherwise be subject.
          (g) For a period commencing on the date hereof and ending on the 30th
day after the date of the Offering Memorandum, the Company agrees not to,
directly or indirectly, (1) offer, pledge, sell, or otherwise dispose of any
shares of common stock or any securities convertible into or exercisable or
exchangeable for common stock, (2) enter into any swap or other arrangement that
transfers to another, in whole or in part, any of the economic consequences of
ownership of the common stock, whether any such transaction described in clause
(1) or (2) above is to be settled by delivery of common stock securities of the
Company or other securities, in cash or otherwise, (3) make any demand for, or
exercise any right with respect to, the registration of any shares of common
stock or any security convertible into or exercisable or exchangeable for common
stock; or (4) publicly disclose the intention to do any of the contemplated
transactions in clause (1), (2) or (3), in each case without the prior written
consent of Barclays Capital Inc., on behalf of the Initial Purchasers. The
foregoing restrictions shall not apply to (i) the issuance and sale by the
Company of the Securities offered hereby, (ii) the issuance of the Underlying
Securities by the Company upon conversion of Securities, if applicable,
(iii) the grant of options or other equity-based awards for common stock
pursuant to employee benefit plans existing on the date hereof, and (iv) the
issuance by the Company of shares of common stock upon the exercise of an option
or warrant or the conversion of a security outstanding on the date hereof.
          (h) The Company will furnish to the holders of the Securities as soon
as practicable after the end of each fiscal year an annual report (including a
balance sheet and statements of income, stockholders’ equity and cash flows of
the Company and its consolidated subsidiaries certified by independent public
accountants) and, as soon as practicable after the end of each of the first
three quarters of each fiscal year (beginning with the fiscal quarter ending
after the date of the Offering Memorandum), will make available to its
securityholders consolidated summary financial information of the Company and
its subsidiaries for such quarter in reasonable detail; provided that so long as
the Company files periodic reports pursuant to Section 13 or 15(d) of the
Exchange Act for the foregoing periods, the Company shall be deemed to comply
with this Section 6(h).
          (i) For a period of twelve months following the date hereof, the
Company will furnish to the Initial Purchasers (i) as soon as available, a copy
of each report of the Company mailed to stockholders generally unless such
report is furnished to or filed with the Commission or any stock exchange on
which any class of securities of the Company is listed or regulatory body and
(ii) from time to time such other information concerning the business and
financial condition of the Company as the Initial Purchasers may reasonably
request.
          (j) The Company will apply the net proceeds from the sale of the
Securities to be sold by it hereunder substantially in accordance with the
description set forth in the Pricing Disclosure Package and the Offering
Memorandum under the caption “Use of Proceeds.”

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          (k) The Company and its affiliates will not take, directly or
indirectly, any action designed to or that has constituted or that reasonably
would be expected to cause or result in the stabilization or manipulation of the
price of any security of the Company in connection with the offering of the
Securities; provided that the Company may conduct repurchases of its securities
under its share repurchase program provided such repurchases are made in
accordance with applicable law.
          (l) Until the completion of the distribution of the Securities by the
Initial Purchasers, the Company will file all documents required to be filed
with the Commission pursuant to the Exchange Act and the Investment Company Act
within the time periods required by the Exchange Act and the Investment Company
Act. The Company will give the Representatives notice of its intention to make
any such filing from the Applicable Time to the Closing Date and will furnish
the Representatives with copies of any such documents a reasonable amount of
time prior to such proposed filing, as the case may be, and will not file or use
any such document to which the Representatives or counsel for the Initial
Purchasers shall reasonably object.
          (m) The Company will not, and will not permit any of its affiliates
(as defined in Rule 144 under the Securities Act) to, resell any of the
Securities that have been acquired by any of them, except for Securities
purchased by the Company or any of its affiliates and resold in a transaction
registered under the Securities Act.
          (n) The Company agrees not to sell, offer for sale or solicit offers
to buy or otherwise negotiate in respect of any security (as defined in the
Securities Act) that would be integrated with the sale of the Securities in a
manner that would require the registration under the Securities Act of the sale
to the Initial Purchasers or the Eligible Purchasers of the Securities.
          (o) The Company agrees to comply in all material respects with all the
terms and conditions of all agreements set forth in the representation letters
of the Company to DTC relating to the approval of the Securities by DTC for
“book entry” transfer.
          (p) The Company will use its best efforts to effect and maintain the
listing of its common stock issuable upon conversion of the Securities on the
Nasdaq Global Select Market.
          (q) The Company will not take any action or omit to take any action
(such as issuing any press release relating to the Securities without an
appropriate legend) which may result in the loss by any of the Initial
Purchasers of the ability to rely on any stabilization safe harbor provided by
the Financial Services Authority under the Financial Services and Markets Act of
2000.
          (r) The Company will do and perform all things required or necessary
to be done and performed under this Agreement by it prior to the Closing Date,
and to satisfy all conditions precedent to the Initial Purchasers’ obligations
hereunder to purchase the Securities.
     7. Expenses. Whether or not the transactions contemplated by this Agreement
are consummated or this Agreement becomes effective or is terminated, the
Company agrees, to pay all costs, expenses, fees and taxes incident to and in
connection with: (i) the preparation,

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printing, filing and distribution of the Preliminary Offering Memorandum, the
Pricing Disclosure Package and the Offering Memorandum (including, without
limitation, financial statements and exhibits) and all amendments and
supplements thereto (including the fees, disbursements and expenses of the
Company’s accountants and counsel, but not, however, legal fees and expenses of
the Initial Purchasers’ counsel incurred in connection therewith); (ii) the
preparation, printing (including, without limitation, word processing and
duplication costs) and delivery of this Agreement, the Indenture, all Blue Sky
memoranda and all other agreements, memoranda, correspondence and other
documents printed and delivered in connection therewith and with the Exempt
Resales (but not, however, legal fees and expenses of the Initial Purchasers’
counsel incurred in connection with any of the foregoing other than reasonable
fees of such counsel plus reasonable disbursements incurred in connection with
the preparation, printing and delivery of such Blue Sky memoranda); (iii) the
issuance and delivery by the Company of the Securities and any taxes payable in
connection therewith; (iv) the qualification of the Securities for offer and
sale under the securities or Blue Sky laws of the several jurisdictions as
provided in Section 6(f) (including, without limitation, the reasonable fees and
disbursements of the Initial Purchasers’ counsel relating to such registration
or qualification); (v) the preparation, printing and distribution of one or more
versions of the Offering Memorandum for distribution in Canada, often in the
form of a Canadian “wrapper” (including related fees and expenses of Canadian
counsel to the Initial Purchasers); (vi) the furnishing of such copies of the
Pricing Disclosure Package and the Offering Memorandum, and all amendments and
supplements thereto, as may be reasonably requested for use in connection with
the Exempt Resales; (vii) the preparation of certificates for the Securities
(including, without limitation, printing and engraving thereof); (viii) the
approval of the Securities by DTC for “book-entry” transfer (including fees and
expenses of counsel); (ix) the rating of the Securities; (x) the obligations of
the Trustee, any agent of the Trustee and the counsel for the Trustee in
connection with the Indenture and the Securities; (xi) the performance by the
Company of their other obligations under this Agreement; and (xii) all
reasonable travel expenses (including expenses related to chartered aircraft) of
each Initial Purchaser and the Company’s officers and employees and any other
reasonable expenses of each Initial Purchaser and the Company in connection with
attending or hosting meetings with prospective purchasers of the Securities, and
expenses associated with any electronic road show.
     8. Conditions to Initial Purchasers’ Obligations. The respective
obligations of the Initial Purchasers hereunder are subject to the accuracy,
when made and on and as of the Closing Date, of the representations and
warranties of the Company, the Adviser and the Administrator contained herein,
to the performance by the Company of its obligations hereunder, and to each of
the following additional terms and conditions:
          (a) The Initial Purchasers shall not have discovered and disclosed to
the Company on or prior to the Closing Date that the Pricing Disclosure Package
or the Offering Memorandum, or any amendment or supplement thereto, contains an
untrue statement of a fact which, in the opinion of Troutman Sanders LLP,
counsel to the Initial Purchasers, is material or omits to state a fact which,
in the opinion of such counsel, is material and is necessary to make the
statements therein not misleading.
          (b) All corporate proceedings and other legal matters incident to the
authorization, form and validity of this Agreement, the Securities, the
Indenture, the Pricing Disclosure Package and the Offering Memorandum, and all
other legal matters relating to this

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Agreement and the transactions contemplated hereby shall be reasonably
satisfactory in all material respects to counsel for the Initial Purchasers, and
the Company shall have furnished to such counsel all documents and information
that they may reasonably request to enable them to pass upon such matters.
          (c) Skadden, Arps, Slate, Meagher & Flom LLP shall have furnished to
the Initial Purchasers its written opinion, as counsel to the Company, addressed
to the Initial Purchasers and dated the Closing Date, substantially in the form
of Exhibit A hereto.
          (d) The Company’s general counsel shall have furnished to the Initial
Purchasers its written opinion, addressed to the Initial Purchasers and dated
the Closing Date, substantially in the form of Exhibit B hereto.
          (e) Venable LLP, shall have furnished to the Initial Purchasers its
written opinion, as Maryland counsel to the Company, addressed to the Initial
Purchasers and dated the Closing Date, substantially in the form of Exhibit C
hereto.
          (f) The Initial Purchasers shall have received from Troutman Sanders
LLP, counsel for the Initial Purchasers, such opinion or opinions, dated the
Closing Date, with respect to the issuance and sale of the Securities, the
Pricing Disclosure Package, the Offering Memorandum and other related matters as
the Initial Purchasers may reasonably require, and the Company shall have
furnished to such counsel such documents and information as they reasonably
request for the purpose of enabling them to pass upon such matters.
          (g) At the time of execution of this Agreement, the Initial Purchasers
shall have received from BDO USA, LLP a letter, in form and substance
satisfactory to the Initial Purchasers, addressed to the Initial Purchasers and
dated the date hereof (i) confirming that they are independent public
accountants within the meaning of the Securities Act and are in compliance with
the applicable requirements relating to the qualification of accountants under
Rule 2-01 of Regulation S-X of the Commission and (ii) stating, as of the date
hereof (or, with respect to matters involving changes or developments since the
respective dates as of which specified financial information is given in the
Pricing Disclosure Package, as of a date not more than three days prior to the
date hereof), the conclusions and findings of such firm with respect to the
financial information and (iii) covering such other matters as are ordinarily
covered by accountants’ “comfort letters” to underwriters in connection with
registered public offerings.
          (h) With respect to the letter of BDO USA, LLP referred to in the
preceding paragraph and delivered to the Initial Purchasers concurrently with
the execution of this Agreement (the “initial letter”), the Company shall have
furnished to the Initial Purchasers a letter (the “bring-down letter”) of such
accountants, addressed to the Initial Purchasers and dated the Closing Date (i)
confirming that they are independent public accountants within the meaning of
the Securities Act and are in compliance with the applicable requirements
relating to the qualification of accountants under Rule 2-01 of Regulation S-X
of the Commission, (ii) stating, as of the Closing Date (or, with respect to
matters involving changes or developments since the respective dates as of which
specified financial information is given in each of the Pricing Disclosure
Package or the Offering Memorandum, as of a date not more than three days prior
to the date of the Closing Date), the conclusions and findings of such firm with
respect to

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the financial information and other matters covered by the initial letter and
(iii) confirming in all material respects the conclusions and findings set forth
in the initial letter.
          (i) Except as described in the Pricing Disclosure Package, (i) neither
the Company nor any of its subsidiaries shall have sustained, since the date of
the latest audited financial statements included in the Pricing Disclosure
Package, any loss or interference with its business from fire, explosion, flood
or other calamity, whether or not covered by insurance, or from any labor
dispute or court or governmental action, order or decree or (ii) since such
date, there shall not have been any change in the capital stock or long-term
debt of the Company or any of its subsidiaries or any change, or any development
involving a prospective change, in or affecting the condition, financial or
otherwise, or in the earnings, net asset value, prospects, business or
operations, whether or not arising from transactions in the ordinary course of
business, of the Company and its subsidiaries, considered as one entity, the
effect of which, in any such case described in clause (i) or (ii), is,
individually or in the aggregate, in the judgment of the Representatives, so
material and adverse as to make it impracticable or inadvisable to proceed with
the offering or the delivery of the Securities being delivered on the Closing
Date on the terms and in the manner contemplated in the Offering Memorandum.
          (j) The Company and the Adviser shall have furnished or caused to be
furnished to the Initial Purchasers on the Closing Date certificates of officers
of the Company and the Adviser satisfactory to the Initial Purchasers as to such
matters as the Representative may reasonably request, including, without
limitation, a statement that:
     (i) The representations, warranties and agreements of the Company and the
Adviser in Section 2 and 3 are true and correct on and as of the Closing Date,
and the Company and the Adviser have complied with all its agreements contained
herein and satisfied all the conditions on its part to be performed or satisfied
hereunder at or prior to the Closing Date; and
     (ii) They have carefully examined the Pricing Disclosure Package and the
Offering Memorandum, and, in their opinion, (A) the Pricing Disclosure Package,
as of the Applicable Time and as of the Closing Date, and the Offering
Memorandum, as of its date and as of the Closing Date, did not and do not
contain any untrue statement of a material fact and did not and do not omit to
state a material fact necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading and (B) since the
date of the Pricing Disclosure Package and the Offering Memorandum, no event has
occurred which should have been set forth in a supplement or amendment to the
Pricing Disclosure Package of the Offering Memorandum.
          (k) The Company and the Trustee shall have executed and delivered the
Indenture, and the Initial Purchasers shall have received an original copy
thereof, duly executed by the Company and the Trustee.
          (l) As of the Closing Date, the common stock issuable upon conversion
of the Securities shall have been approved for listing on the Nasdaq Global
Select Market, subject only to official notice of issuance.

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          (m) The Representatives shall have received an agreement substantially
in the form of Exhibit D-1 hereto signed by the persons listed on Exhibit D-2
hereto.
          (n) Subsequent to the execution and delivery of this Agreement there
shall not have occurred any of the following: (i) trading in securities
generally on the New York Stock Exchange or the Nasdaq Global Select Market or
in the over-the-counter market, or trading in any securities of the Company on
any exchange or in the over-the-counter market, shall have been suspended or
materially limited or the settlement of such trading generally shall have been
materially disrupted or minimum prices shall have been established on any such
exchange or such market by the Commission, by such exchange or by any other
regulatory body or governmental authority having jurisdiction, (ii) a banking
moratorium shall have been declared by federal or state authorities, (iii) the
United States shall have become engaged in hostilities, there shall have been an
escalation in hostilities involving the United States or there shall have been a
declaration of a national emergency or war by the United States or (iv) there
shall have occurred such a material adverse change in general economic,
political or financial conditions, including, without limitation, as a result of
terrorist activities after the date hereof (or the effect of international
conditions on the financial markets in the United States shall be such), as to
make it, in the judgment of the Representative, impracticable or inadvisable to
proceed with the offering or delivery of the Securities being delivered on the
Closing Date on the terms and in the manner contemplated in the Offering
Memorandum or that, in the judgment of the Representative, would materially and
adversely affect the financial markets or the markets for the Securities and
other debt securities.
          All opinions, letters, evidence and certificates mentioned above or
elsewhere in this Agreement shall be deemed to be in compliance with the
provisions hereof only if they are in form and substance reasonably satisfactory
to counsel for the Initial Purchasers.
     9. Indemnification and Contribution.
          (a) The Company hereby agrees to indemnify and hold harmless each
Initial Purchaser, its directors, officers and employees and each person, if
any, who controls any Initial Purchaser within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act, from and against any loss,
claim, damage or liability, joint or several, or any action in respect thereof
(including, but not limited to, any loss, claim, damage, liability or action
relating to purchases and sales of the Securities), to which that Initial
Purchaser, director, officer, employee or controlling person may become subject,
under the Securities Act, the Exchange Act, the Investment Company Act or
otherwise, insofar as such loss, claim, damage, liability or action arises out
of, or is based upon, (i) any untrue statement or alleged untrue statement of a
material fact contained (A) in any Free Writing Offering Document, the
Preliminary Offering Memorandum, the Pricing Disclosure Package or the Offering
Memorandum or in any amendment or supplement thereto prepared by the Company, or
(B) in any materials or information provided to investors by, or with the
written approval of, the Company in connection with the marketing of the
offering of the Securities (“Marketing Materials”), including any roadshow or
investor presentations made to investors by the Company (whether in person or
electronically), or (ii) the omission or alleged omission to state in any Free
Writing Offering Document, the Preliminary Offering Memorandum, the Pricing
Disclosure Package or the Offering Memorandum, or in any amendment or supplement
thereto, or in any Blue Sky

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Application or in any Marketing Materials, any material fact necessary in order
to make the statements therein, in the light of the circumstances under which
they were made, not misleading, and shall reimburse each Initial Purchaser and
each such director, officer, employee or controlling person promptly upon demand
for any legal or other expenses reasonably incurred by that Initial Purchaser,
director, officer, employee or controlling person in connection with
investigating or defending or preparing to defend against any such loss, claim,
damage, liability or action as such expenses are incurred; provided, that the
Company shall not be liable in any such case to the extent that any such loss,
claim, damage, liability or action arises out of, or is based upon, any untrue
statement or alleged untrue statement or omission or alleged omission made in
any Preliminary Offering Memorandum, the Pricing Disclosure Package or Offering
Memorandum, or in any such amendment or supplement thereto, or in any Blue Sky
Application or in any Marketing Materials, in reliance upon and in conformity
with written information concerning such Initial Purchaser furnished to the
Company through the Representative by or on behalf of any Initial Purchaser
specifically for inclusion therein, which information consists solely of the
information specified in Section 9(e). The foregoing indemnity agreement is in
addition to any liability that the Company may otherwise have to any Initial
Purchaser or to any director, officer, employee or controlling person of that
Initial Purchaser. Any indemnification by the Company pursuant to this Agreement
shall be subject to the requirements and limitations of Section 17(i) of the
1940 Act.
          (b) Each Initial Purchaser, severally and not jointly, hereby agrees
to indemnify and hold harmless the Company, its officers and employees, each of
its directors, and each person, if any, who controls the Company within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act,
from and against any loss, claim, damage or liability, joint or several, or any
action in respect thereof, to which the Company or any such director, officer,
employee or controlling person may become subject, under the Securities Act, the
Exchange Act, the Investment Company Act or otherwise, insofar as such loss,
claim, damage, liability or action arises out of, or is based upon, (i) any
untrue statement or alleged untrue statement of a material fact contained (A) in
any Free Writing Offering Document, Preliminary Offering Memorandum, the Pricing
Disclosure Package or the Offering Memorandum or in any amendment or supplement
thereto or (B) in any Marketing Materials or (ii) the omission or alleged
omission to state in any Free Writing Offering Document, Preliminary Offering
Memorandum, the Pricing Disclosure Package or the Offering Memorandum, or in any
amendment or supplement thereto, or in any Blue Sky Application or in any
Marketing Materials any material fact necessary to make the statements therein
not misleading, but in each case only to the extent that the untrue statement or
alleged untrue statement or omission or alleged omission was made in reliance
upon and in conformity with written information concerning such Initial
Purchaser furnished to the Company through the Representative by or on behalf of
that Initial Purchaser specifically for inclusion therein, which information is
limited to the information set forth in Section 9(e). The foregoing indemnity
agreement is in addition to any liability that any Initial Purchaser may
otherwise have to the Company or any such director, officer, employee or
controlling person.
          (c) Promptly after receipt by an indemnified party under this
Section 9 of notice of any claim or the commencement of any action, the
indemnified party shall, if a claim in respect thereof is to be made against the
indemnifying party under this Section 9, notify the indemnifying party in
writing of the claim or the commencement of that action; provided, that

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the failure to notify the indemnifying party shall not relieve it from any
liability that it may have under this Section 9 except to the extent it has been
materially prejudiced by such failure and; provided, further, that the failure
to notify the indemnifying party shall not relieve it from any liability that it
may have to an indemnified party otherwise than under this Section 9. If any
such claim or action shall be brought against an indemnified party, and it shall
notify the indemnifying party thereof, the indemnifying party shall be entitled
to participate therein and, to the extent that it wishes, jointly with any other
similarly notified indemnifying party, to assume the defense thereof with
counsel reasonably satisfactory to the indemnified party. After notice from the
indemnifying party to the indemnified party of its election to assume the
defense of such claim or action, the indemnifying party shall not be liable to
the indemnified party under this Section 9 for any legal or other expenses
subsequently incurred by the indemnified party in connection with the defense
thereof other than reasonable costs of investigation; provided, that the Initial
Purchasers shall have the right to employ counsel to represent jointly the
Initial Purchasers and their respective directors, officers, employees and
controlling persons who may be subject to liability arising out of any claim in
respect of which indemnity may be sought by the Initial Purchasers against the
Company under this Section 9, if (i) the Company and the Initial Purchasers
shall have so mutually agreed; (ii) the Company has failed within a reasonable
time to retain counsel reasonably satisfactory to the Initial Purchasers;
(iii) the Initial Purchasers and their respective directors, officers, employees
and controlling persons shall have reasonably concluded, based on the advice of
counsel, that there may be legal defenses available to them that are different
from or in addition to those available to the Company; or (iv) the named parties
in any such proceeding (including any impleaded parties) include both the
Initial Purchasers or their respective directors, officers, employees or
controlling persons, on the one hand, and the Company, on the other hand, and
representation of both sets of parties by the same counsel would present a
material conflict due to actual or potential differing interests between them,
and in any such event the fees and expenses of such separate counsel shall be
paid by the Company. No indemnifying party shall (i) without the prior written
consent of the indemnified parties (which consent shall not be unreasonably
withheld), settle or compromise or consent to the entry of any judgment with
respect to any pending or threatened claim, action, suit or proceeding in
respect of which indemnification or contribution may be sought hereunder
(whether or not the indemnified parties are actual or potential parties to such
claim or action) unless such settlement, compromise or consent includes an
unconditional release of each indemnified party from all liability arising out
of such claim, action, suit or proceeding, or (ii) be liable for any settlement
of any such action effected without its written consent (which consent shall not
be unreasonably withheld), but if settled with the consent of the indemnifying
party or if there be a final judgment of the plaintiff in any such action, the
indemnifying party agrees to indemnify and hold harmless any indemnified party
from and against any loss or liability by reason of such settlement or judgment.
          (d) If the indemnification provided for in this Section 9 shall for
any reason be unavailable to or insufficient to hold harmless an indemnified
party under Section 9(a) or 9(b) in respect of any loss, claim, damage or
liability, or any action in respect thereof, referred to therein, then each
indemnifying party shall, in lieu of indemnifying such indemnified party,
contribute to the amount paid or payable by such indemnified party as a result
of such loss, claim, damage or liability, or action in respect thereof, (i) in
such proportion as shall be appropriate to reflect the relative benefits
received by the Company, on the one hand, and the Initial Purchasers, on the
other, from the offering of the Securities or (ii) if the allocation

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provided by clause (i) above is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits referred
to in clause (i) above but also the relative fault of the Company, on the one
hand, and the Initial Purchasers, on the other, with respect to the statements
or omissions that resulted in such loss, claim, damage or liability, or action
in respect thereof, as well as any other relevant equitable considerations. The
relative benefits received by the Company, on the one hand, and the Initial
Purchasers, on the other, with respect to such offering shall be deemed to be in
the same proportion as the total net proceeds from the offering of the
Securities purchased under this Agreement (before deducting expenses) received
by the Company, on the one hand, and the total underwriting discounts and
commissions received by the Initial Purchasers with respect to the Securities
purchased under this Agreement, on the other hand, bear to the total gross
proceeds from the offering of the Securities under this Agreement as set forth
on the cover page of the Offering Memorandum. The relative fault shall be
determined by reference to whether the untrue or alleged untrue statement of a
material fact or omission or alleged omission to state a material fact relates
to information supplied by the Company, or the Initial Purchasers, the intent of
the parties and their relative knowledge, access to information and opportunity
to correct or prevent such statement or omission. The Company and the Initial
Purchasers agree that it would not be just and equitable if contributions
pursuant to this Section 9(d) were to be determined by pro rata allocation (even
if the Initial Purchasers were treated as one entity for such purpose) or by any
other method of allocation that does not take into account the equitable
considerations referred to herein. The amount paid or payable by an indemnified
party as a result of the loss, claim, damage or liability, or action in respect
thereof, referred to above in this Section 9(d) shall be deemed to include, for
purposes of this Section 9(d), any legal or other expenses reasonably incurred
by such indemnified party in connection with investigating or defending any such
action or claim. Notwithstanding the provisions of this Section 9(d), no Initial
Purchaser shall be required to contribute any amount in excess of the amount by
which the net proceeds from the sale to Eligible Purchasers of the Securities
initially purchased by it exceeds the amount of any damages that such Initial
Purchaser has otherwise paid or become liable to pay by reason of any untrue or
alleged untrue statement or omission or alleged omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. The Initial Purchasers’ obligations
to contribute as provided in this Section 9(d) are several in proportion to
their respective underwriting obligations and not joint.
          (e) The Initial Purchasers severally confirm and the Company
acknowledges and agrees that the statements with respect to the offering of the
Securities by the Initial Purchasers set forth in the last paragraph on the
front cover of the Offering Memorandum and in the sixth paragraph of the section
entitled “Plan of Distribution” in the Pricing Disclosure Package and the
Offering Memorandum are correct and constitute the only information concerning
such Initial Purchasers furnished in writing to the Company by or on behalf of
the Initial Purchasers specifically for inclusion in the Preliminary Offering
Memorandum, the Pricing Disclosure Package and the Offering Memorandum or in any
amendment or supplement thereto.
     10. Defaulting Initial Purchasers. If on the Closing Date, or on an Option
Closing Date, as the case may be, any Initial Purchaser defaults in the
performance of its obligations under this Agreement, the remaining
non-defaulting Initial Purchasers shall be obligated to

29

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purchase the Securities that the defaulting Initial Purchaser agreed but failed
to purchase on the Closing Date or the Option Closing Date, as the case may be,
in the respective proportions that the principal amount of Securities set
opposite the name of each remaining non-defaulting Initial Purchaser in
Schedule I hereto bears to the total principal amount of Securities set opposite
the names of all the remaining non-defaulting Initial Purchasers in Schedule I
hereto; provided, that the remaining non-defaulting Initial Purchasers shall not
be obligated to purchase any of the Securities on the Closing Date or the Option
Closing Date, as the case may be, if the aggregate principal amount of
Securities that the defaulting Initial Purchaser or Initial Purchasers agreed
but failed to purchase on such date exceeds 10% of the aggregate principal
amount of Securities to be purchased on the Closing Date, or on the Option
Closing Date, as the case may be. If the foregoing maximums are exceeded, the
remaining non-defaulting Initial Purchasers, or those other Initial Purchasers
satisfactory to the Initial Purchasers who so agree, shall have the right, but
shall not be obligated, to purchase, in such proportion as may be agreed upon
among them, all the Securities to be purchased on the Closing Date, or on the
Option Closing Date, as the case may be.
          If other Initial Purchasers are obligated or agree to purchase the
Securities of a defaulting or withdrawing Initial Purchaser, either the
remaining Initial Purchasers or the Company may postpone the Closing Date for up
to five full business days in order to effect any changes that in the opinion of
counsel for the Company or counsel for the Initial Purchasers may be necessary
in the Pricing Disclosure Package, the Offering Memorandum or in any other
document or arrangement.
          If the remaining Initial Purchasers or other Initial Purchasers
satisfactory to the Initial Purchasers do not elect to purchase the Securities
that the defaulting Initial Purchaser or Initial Purchasers agreed but failed to
purchase on the Closing Date, this Agreement shall terminate without liability
on the part of any non-defaulting Initial Purchaser or the Company.
          As used in this Agreement, the term “Initial Purchaser” includes, for
all purposes of this Agreement unless the context requires otherwise, any party
not listed in Schedule I hereto that, pursuant to this Section 10, purchases
Securities that a defaulting Initial Purchaser agreed but failed to purchase.
          Nothing contained herein shall relieve a defaulting Initial Purchaser
of any liability it may have to the Company for damages caused by its default.
     11. Termination. The obligations of the Initial Purchasers hereunder may be
terminated by the Initial Purchasers by notice given to and received by the
Company prior to delivery of and payment for the Securities if, prior to that
time, any of the events described in Sections 8(i) or (o) shall have occurred or
if the Initial Purchasers shall decline to purchase the Securities for any
reason permitted under this Agreement.
     12. Reimbursement of Initial Purchasers’ Expenses. If (a) the Company fails
to tender the Securities for delivery to the Initial Purchasers or (b) the
Initial Purchasers shall decline to purchase the Securities for any reason
permitted under this Agreement, the Company shall reimburse the Initial
Purchasers for all reasonable out-of-pocket expenses (including reasonable fees
and disbursements of counsel) incurred by the Initial Purchasers in connection

30

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with this Agreement and the proposed purchase of the Securities, and upon demand
the Company shall pay the full amount thereof to the Initial Purchasers.
     13. Notices, etc. All statements, requests, notices and agreements
hereunder shall be in writing, and:
          (a) if to any Initial Purchaser, shall be delivered or sent by hand
delivery, mail, telex, overnight courier or facsimile transmission to Barclays
Capital Inc., 745 Seventh Avenue, New York, New York 10019, Attention: Syndicate
Registration (Fax: 646-834-8133) with a copy to Troutman Sanders LLP, Attention:
David M. Carter (Fax: (804) 698-5196), and with a copy, in the case of any
notice pursuant to Section 9(c), to the Director of Litigation, Office of the
General Counsel, Barclays Capital Inc., 745 Seventh Avenue, New York, New York
10019;
          (b) if to the Company, shall be delivered or sent by mail, telex,
overnight courier or facsimile transmission to Prospect Capital Corporation, 10
East 40th Street, New York, New York 10016, Attention: Joseph Ferraro (Fax:
(212) 448-9652), with a copy to Skadden, Arps, Slate, Meagher & Flom LLP, Four
Times Square, Attention: Richard T. Prins (Fax: (917) 777-2790);
provided, that any notice to an Initial Purchaser pursuant to Section 9(c) shall
be delivered or sent by hand delivery, mail, telex or facsimile transmission to
such Initial Purchaser at its address set forth in its acceptance telex to
Barclays Capital Inc., which address will be supplied to any other party hereto
by Barclays Capital Inc. upon request. Any such statements, requests, notices or
agreements shall take effect at the time of receipt thereof. The Company shall
be entitled to act and rely upon any request, consent, notice or agreement given
or made on behalf of the Initial Purchasers by Barclays Capital Inc.
     14. Persons Entitled to Benefit of Agreement. This Agreement shall inure to
the benefit of and be binding upon the Initial Purchasers, the Company, and
their respective successors. This Agreement and the terms and provisions hereof
are for the sole benefit of only those persons, except that the representations,
warranties, indemnities and agreements of the Company contained in this
Agreement shall also be deemed to be for the benefit of directors, officers and
employees of the Initial Purchasers and each person or persons, if any,
controlling any Initial Purchaser within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act. Nothing in this Agreement is
intended or shall be construed to give any person, other than the persons
referred to in this Section 14, any legal or equitable right, remedy or claim
under or in respect of this Agreement or any provision contained herein.
     15. Survival. The respective indemnities, representations, warranties and
agreements of the Company and the Initial Purchasers contained in this Agreement
or made by or on behalf on them, respectively, pursuant to this Agreement, shall
survive the delivery of and payment for the Securities and shall remain in full
force and effect, regardless of any investigation made by or on behalf of any of
them or any person controlling any of them.
     16. Definition of the Terms “Business Day,” “Affiliate” and “Subsidiary.”
For purposes of this Agreement, (a) “business day” means any day on which the
New York Stock

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Exchange, Inc. is open for trading and (b) “affiliate” and “subsidiary” have the
meanings set forth in Rule 405 under the Securities Act, unless otherwise
indicated.
     17. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of New York, without regard to its choice of law
provisions.
     18. No Fiduciary Duty. The Company acknowledges and agrees that in
connection with this offering, or any other services the Initial Purchasers may
be deemed to be providing hereunder, notwithstanding any preexisting
relationship, advisory or otherwise, between the parties or any oral
representations or assurances previously or subsequently made by the Initial
Purchasers: (i) no fiduciary or agency relationship between the Company, and any
other person, on the one hand, and the Initial Purchasers, on the other, exists;
(ii) the Initial Purchasers are not acting as advisors, expert or otherwise, to
the Company, including, without limitation, with respect to the determination of
the purchase price of the Securities, and such relationship between the Company,
and the Initial Purchasers is entirely and solely commercial, based on
arms-length negotiations; (iii) any duties and obligations that the Initial
Purchasers may have to the Company shall be limited to those duties and
obligations specifically stated herein; and (iv) the Initial Purchasers and
their respective affiliates may have interests that differ from those of the
Company. The Company hereby waives any claims that the Company may have against
the Initial Purchasers with respect to any breach of fiduciary duty in
connection with the Securities.
     19. Counterparts. This Agreement may be executed in one or more
counterparts and, if executed in more than one counterpart, the executed
counterparts shall each be deemed to be an original but all such counterparts
shall together constitute one and the same instrument.
     20. Headings. The headings herein are inserted for convenience of reference
only and are not intended to be part of, or to affect the meaning or
interpretation of, this Agreement.
[Signature page follows]

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          If the foregoing correctly sets forth the agreement between the
Company and the Initial Purchasers, please indicate your acceptance in the space
provided for that purpose below.

            Very truly yours,

Prospect Capital Corporation
      By           Name:           Title:           Prospect Capital Management,
LLC
      By           Name:           Title:           Prospect Administration, LLC
      By           Name:           Title:        

Accepted:
Barclays Capital Inc.,
For itself and as Representative
of the several Initial Purchasers named
in Schedule I hereto

              Name:         Title:        

33

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SCHEDULE I

              Principal       Amount of       Securities       to be   Initial
Purchasers   Purchased  
Barclays Capital Inc.
  $ 112,500,000  
RBC Capital Markets, LLC
  $ 30,000,000  
Keefe, Bruyette & Woods, Inc.
  $ 3,750,000  
Rabo Securities USA, Inc.
  $ 3,750,000  
 
     
Total
  $ 150,000,000  
 
     

I-1

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SCHEDULE II
Prospect Capital Corporation

PRICING TERM SHEET
DATED DECEMBER 16, 2010
Prospect Capital Corporation
$150,000,000
 
6.25% Senior Convertible Notes due 2015
 
The information in this pricing term sheet relates only to the offering of
Prospect Capital Corporation’s 6.25% senior convertible notes due 2015 and
should be read together with the preliminary offering memorandum dated
December 14, 2010 (the “Preliminary Offering Memorandum”) relating to such
offering and supersedes the information in the Preliminary Offering Memorandum
to the extent inconsistent with the information in the Preliminary Offering
Memorandum. In all other respects, this term sheet is qualified in its entirety
by reference to the Preliminary Offering Memorandum. Terms used herein but not
defined herein shall have the respective meanings set forth in the Preliminary
Offering Memorandum.
 

Issuer Prospect Capital Corporation (the “Company”)   Security 6.25% Senior
Convertible Notes due 2015 (the “Notes”)   Principal Amount Offered $150,000,000
  Net Proceeds $145,200,000, after deducting the fees and estimated expenses
payable by the Company   Maturity December 15, 2015, unless earlier converted or
repurchased   Annual Interest Rate 6.25%   Interest Payment Dates Interest will
accrue from the Settlement Date (defined below) and will be payable in cash in
arrears on June 15 and December 15 of each year, beginning on June 15, 2011.
Upon any conversion, holders will be entitled to a cash payment representing
accrued and unpaid interest to, but not including, the conversion date, unless
the Notes are converted after a record date for an interest payment but prior to
the corresponding interest payment date. Any such payment will be made on the
settlement date applicable to the relevant conversion.   Denomination $1,000 and
integral multiples thereof   Issue Price 100%, plus accrued interest, if any,
from December 21, 2010   The NASDAQ Global Select Market Symbol of the Company’s
Common Stock PSEC   NASDAQ Global Select Market Closing Price on December 15,
2010 $10.32   Conversion Premium Approximately 10%   Initial Conversion Price
Approximately $11.35 per share of the Company’s common stock, par value $0.001
per share (the “Common Stock”)   Initial Conversion Rate 88.0902 shares per
$1,000 principal amount of Notes   Limitation on Beneficial Ownership No holder
of Notes will be entitled to receive shares of Common Stock upon conversion to
the extent (but only to the extent) that such receipt would cause such
converting holder to become, directly or indirectly, a “beneficial owner”
(within the meaning of Section 13(d) of the Securities Exchange Act

II-1

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of 1934, as amended (the “Exchange Act”) and the rules and regulations
promulgated thereunder) of more than 5.0% of the shares of Common Stock
outstanding at such time (the “Limitation”). Any purported delivery of shares of
Common Stock upon conversion of Notes shall be void and have no effect to the
extent (but only to the extent) that such delivery would result in the
converting holder becoming the beneficial owner of more than 5.0% of the shares
of Common Stock outstanding at such time. If any delivery of shares of Common
Stock owed to a holder upon conversion of Notes is not made, in whole or in
part, as a result of this limitation, the Company’s obligation to make such
delivery shall not be extinguished, and the Company will deliver such shares as
promptly as practicable after any such converting holder gives notice to the
Company that such delivery would not result in such converting holder being the
beneficial owner of more than 5.0% of the shares of the Common Stock outstanding
at such time. The Limitation shall no longer apply following the effective date
of any Fundamental Change.   Call Protection Non-callable   Trade Date
December 16, 2010   Settlement Date On or about December 21, 2010   Conversion
Rate Cap 96.8992 per $1,000 principal amount of Notes, subject to adjustment in
the circumstances set forth in the Preliminary Offering Memorandum   Initial
Purchasers Barclays Capital Inc., RBC Capital Markets, LLC, Keefe, Bruyette &
Woods, Inc. and Rabo Securities USA, Inc.   Listing None   CUSIP 74348T AA0  
ISIN US74348TAA07   Adjustment to Conversion Rate upon a Non-Stock Change of
Control The number of additional shares by which the conversion rate will be
increased in the event of a “non-stock change of control” (as defined in the
Preliminary Offering Memorandum) will be determined by reference to the table
below (subject to the limitations described below), based on the date on which
the non-stock change of control occurs or becomes effective (the “effective
date”) and the price (the “stock price”) paid per share of Common Stock in the
non-stock change of control.

II-2

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Make-Whole Table:
 

                                                                               
                      Stock Price  
Effective Date
  $10.32     $11.00     $11.35     $12.00     $13.00     $14.00     $15.00    
$16.00     $17.00     $18.00     $19.00     $20.00    
December 21, 2010
    8.8090       8.8090       8.6033       7.7254       6.8087       5.8920    
  4.9753       4.0586       3.1419       2.2251       1.3084       0.3917  
December 15, 2011
    8.8090       8.8090       7.7666       6.9449       6.1150       5.2850    
  4.4550       3.6250       2.7950       1.9650       1.1350       0.3050  
December 15, 2012
    8.8090       8.4975       6.9700       6.2018       5.4544       4.7070    
  3.9596       3.2121       2.4647       1.7173       0.9699       0.2224  
December 15, 2013
    8.8090       7.7744       6.2524       5.5325       4.8594       4.1864    
  3.5133       2.8403       2.1672       1.4942       0.8211       0.1481  
December 15, 2014
    8.8090       6.6998       5.1422       4.4968       3.9389       3.3809    
  2.8229       2.2649       1.7069       1.1489       0.5910       0.0330  
December 15, 2015
    8.8090       2.8188       0.0000       0.0000       0.0000       0.0000    
  0.0000       0.0000       0.0000       0.0000       0.0000       0.0000  

 
The exact stock price and effective dates may not be set forth on the table, in
which case, if the stock price is:
 

  •  between two stock price amounts on the table or the effective date is
between two dates on the table, the number of additional shares will be
determined by straight-line interpolation between the number of additional
shares set forth for the higher and lower stock price amounts and the two dates,
as applicable, based on a 360-day year;     •  in excess of $20.00 per share
(subject to adjustment), no additional shares will be issued upon
conversion; and     •  less than $10.32 per share (subject to adjustment), no
additional shares will be issued upon conversion.

 
Notwithstanding the foregoing, in no event will the total number of shares of
Common Stock issuable upon conversion, as adjusted in the event of a non-stock
change of control, exceed the Conversion Rate Cap.
 
“References in “Description of the Notes — Change in the Conversion Rights upon
Certain Reclassifications, Business Combinations, Asset Sales and Corporate
Events” in the Preliminary Offering Memorandum to the “last reported sale price
of a share of common stock on the date of pricing of the Notes” mean $10.32, the
last reported sale price of a share of Common Stock on December 15, 2010.
 
Use of Proceeds:
 
The Company estimates that the net proceeds it receives from this offering will
be approximately $145,200,000, after deducting estimated offering expenses
payable by the Company of $300,000.
 
The Company intends to use the net proceeds from the offering initially to
maintain balance sheet liquidity, involving repayment of debt under its credit
facility, investments in high quality short-term debt instruments or a
combination thereof, and thereafter to make long-term investments in accordance
with its investment objectives. The Company anticipates that substantially all
of the net proceeds from this offering will be used for the above purposes
within six months, depending on the availability of appropriate investment
opportunities consistent with its investment objective and market conditions.
 
This material is confidential and is for your information only and is not
intended to be used by anyone other than you.
 
The Notes and the shares of common stock issuable upon conversion have not been
registered under the U.S. Securities Act of 1933, as amended (the “Securities
Act”) or the securities laws of any other jurisdiction. Unless they are
registered, the Notes and the shares of common stock issuable upon conversion
may be offered only in transactions that are exempt from registration under the
Securities Act or the securities laws of any other jurisdiction. Accordingly,
the Company is offering the Notes only to qualified institutional buyers. For
further details about eligible offerees and resale restrictions, see “Transfer
Restrictions; Notice to Investors” in the offering memorandum for the offering.

II-3

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This communication shall not constitute an offer to sell or the solicitation of
an offer to buy securities nor shall there be any sale of these securities in
any jurisdiction in which such solicitation or sale would be unlawful prior to
the registration or qualification of such securities under the laws of any such
jurisdiction.
 
A copy of the offering memorandum for the offering of the Notes may be obtained
by contacting: Barclays Capital Inc., 745 Seventh Avenue, New York, NY 10019,
Attention:  Syndicate Registration.
 
ANY DISCLAIMERS OR OTHER NOTICES THAT MAY APPEAR BELOW ARE NOT APPLICABLE TO
THIS COMMUNICATION AND SHOULD BE DISREGARDED. SUCH DISCLAIMERS OR OTHER NOTICES
WERE AUTOMATICALLY GENERATED AS A RESULT OF THIS COMMUNICATION BEING SENT VIA
BLOOMBERG OR ANOTHER EMAIL SYSTEM.

II-4

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SCHEDULE III

1.   Term sheet containing the terms of the securities, substantially in the
form of Schedule II

D-2-1