exv10w1






Exhibit 10.1




EXECUTION VERSION




$150,000,000




PROSPECT CAPITAL CORPORATION



5.5% Senior Convertible Notes due 2016



PURCHASE AGREEMENT



February 14, 2011




Goldman, Sachs & Co.,

As Representative of the several

  Initial Purchasers named in Schedule I attached hereto,

c/o Goldman, Sachs & Co.

200 West Street

New York, New York 10282




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, to issue and
sell to you, as the initial purchasers (the “Initial Purchasers”), $150,000,000 in aggregate
principal amount of its 5.5% Senior Convertible Notes due 2016 (the “Firm Securities”). The
Securities (as defined below) 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”). In addition, solely for
the purpose of covering over-allotments, the Company proposes to grant to the Initial Purchasers
the option to purchase from the Company up to an additional $22,500,000 in aggregate principal
amount of the Company’s 5.5% Senior Convertible Notes due 2016 (the “Additional Securities”). The
Firm Securities and the Additional Securities are hereinafter collectively sometimes referred to as
the “Securities.” 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 of Directors of the Company (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 of Directors of the Company (the “Administration Agreement”),
with the Administrator.



     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 February 14, 2011 (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 February 14, 2011 (the “Offering Memorandum”), setting forth
information regarding the Company and the Securities. 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 11:00 p.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 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.”



     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):



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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 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.



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NO AFFILIATE (AS DEFINED IN RULE 144 UNDER THE SECURITIES ACT) OF THE COMPANY OR PERSON THAT
HAS BEEN AN AFFILIATE (AS DEFINED IN 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 after providing reasonable notice to the Company but such
price must be the same for the Firm Securities and the Additional Securities.



     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 of 1939 (the “1939 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






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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 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 Goldman, Sachs & Co., as representative of the Initial
Purchasers (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, as of the Closing Date, and as of any Option Closing Date (as defined in
Section 4(a) herein), if applicable, 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). The February 11, 2011 draft of the Preliminary Offering Memorandum
provided to certain investors prior to the date of the Preliminary Offering Memorandum and the use
of which has been consented to by the Company (the “Pre-Launch Offering Document”) does not
conflict with the information contained in the Preliminary Offering Memorandum and, as supplemented
by and taken together with 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 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 Pre-Launch Offering Document 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) [Reserved].




          (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 (other than the convertible notes issued by
the Company in December 2010 (the “2010 Notes”)) 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






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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, within six months subsequent to the date on
which the distribution of the Securities has been completed (as notified to the Company by the
Representative), 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 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




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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.




          (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 of
the Company, 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




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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 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




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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 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 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




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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 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 material 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 (the “NASDAQ”) 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




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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 Adviser 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 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.




11









 





          (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 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.
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.







12









 








          (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, including the Exchange
Act Reports, 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 Reports, as of their respective dates of filing, 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.




          (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 of 2002 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




13









 




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, 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).







14









 








          (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 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




15









 




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 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.







16









 








          (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; 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 Firm Securities set forth opposite the name of



17









 




such Initial Purchaser in Schedule I hereto plus any additional principal amount of Firm
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). On the basis of the representations and warranties contained in this Agreement,
and subject to its terms and conditions, the Company agrees to sell to the Initial Purchasers the
Additional Securities, and the Initial Purchasers shall have the right to purchase, severally and
not jointly, up to $22,500,000 aggregate principal amount of Additional Securities at the Purchase
Price. The Representative may exercise this right on behalf of the Initial Purchasers in whole or
from time to time in part by giving written notice not later than 30 days after the date of this
Agreement. Any exercise notice shall specify the principal amount of Additional Securities to be
purchased by the Initial Purchasers and the date on which such Additional Securities are to be
purchased. Each purchase date must be at least two business days after the written notice is given
and may not be earlier than the closing date for the Firm Securities nor later than ten business
days after the date of such notice. Additional Securities may be purchased as provided in Section 5
solely for the purpose of covering over allotments made in connection with the offering of the Firm
Securities. On each day, if any, that Additional Securities are to be purchased (an “Option
Closing Date”), each Initial Purchaser agrees, severally and not jointly, to purchase the principal
amount of Additional Securities (subject to such adjustments to eliminate fractional Securities as
you may determine) that bears the same proportion to the total principal amount of Additional
Securities to be purchased on such Option Closing Date as the principal amount of Firm Securities
set forth in Schedule I opposite the name of such Initial Purchaser bears to the total principal
amount of Firm Securities plus any additional principal amount of Additional Securities which such
Initial Purchasers may become obligated to purchase pursuant to the provisions of Section 10
hereof. 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:




               (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 that in purchasing
the Securities are deemed to have represented and agreed as provided in the Pricing Disclosure
Package and the Offering Memorandum under the caption “Transfer Restrictions; Notice to Investors”
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;



18









 





               (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); and



          (c) Each Initial Purchaser, severally and not jointly, represents, warrants, and agrees with
respect to offers and sales outside the United States that:




               (i) such Initial Purchaser understands that no action has been or will be taken in any
jurisdiction by the Company that would permit a public offering of the Securities, or possession or
distribution of the Preliminary Offering Memorandum, the Pricing Disclosure Package, the Offering
Memorandum or any other offering or publicity material relating to the Securities, in any country
or jurisdiction where action for that purpose is required; and



               (ii) such Initial Purchaser will comply with all applicable laws and regulations in each
jurisdiction in which it acquires, offers, sells or delivers Securities or has in its possession or
distributes the Preliminary Offering Memorandum, the Pricing Disclosure Package, the Offering
Memorandum or any such other material, in all cases at its own expense.



               (iii) the Securities have not been registered under the Securities Act and may not be offered
or sold within the United States or to, or for the account or benefit of, U.S. persons except in
accordance with Rule 144A or pursuant to another exemption from the registration requirements of
the Securities Act;



          (d) 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 Securities Act) that was not included (including through incorporation by reference) in
the Preliminary Offering Memorandum, (iii) the Free Writing Offering Documents listed on Schedule
III hereto, (iv) the Pre-Launch Offering Document, (v) any written communication prepared by such
Initial Purchaser and approved by the Company in writing, or (vi) 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), 8(d) and 8(f) 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.







19









 








     5. Delivery of the Securities and Payment Therefor. Delivery to the Initial Purchasers of and
payment for the Firm 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 February 18, 2011
(the “Closing Date”). The place of closing for the Firm Securities and the Closing Date may be
varied by agreement between the Initial Purchasers and the Company.



          Payment for any Additional Securities shall be made to the Company against delivery of such
Additional Securities for the respective accounts of the Initial Purchasers at 9:00 A.M., New York
City time, on the date specified in the corresponding notice described in Section 4(a) or at such
other time on the same or on such other date, as 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:



          (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,




20









 




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 the Company will 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 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 90th 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






21









 







the contemplated transactions in clause (1), (2) or (3), in each case without the prior
written consent of Goldman, Sachs & Co., 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) beginning 30 days after the date of the Offering Memorandum, the
issuance and sale by the Company of common stock, including any option granted to underwriters or
sales agents for additional shares in connection with an offering, (iv) the grant of options or
other equity-based awards for common stock pursuant to employee benefit plans existing on the date
hereof, and (v) 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.”




          (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 Representative notice of its intention to make
any such filing from the Applicable Time to the Closing Date and will furnish the Representative
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




22









 




document to which the Representative 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.




          (q) 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, 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



23









 




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, and,
if applicable, on and as of any Option 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, and, if applicable any Option 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 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, and, if applicable, any Option 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, and, if applicable, any
Option 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,
and, if applicable, any Option Closing Date, substantially in the form of Exhibit C hereto.







24









 








          (f) The Initial Purchasers shall have received from Troutman Sanders LLP, counsel for the
Initial Purchasers, such opinion or opinions, dated the Closing Date, and, if applicable, any
Option 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, and,
if applicable, any Option 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, and, if applicable, as of any Option 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, and, if
applicable, any Option Closing Date), the conclusions and findings of such firm with respect to 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




25









 




of the Representative, 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, and, if applicable, on any Option 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, if applicable, on and as of any
Option 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, if applicable, any Option Closing Date; and



               (ii) The Company and the Adviser 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 the Offering Memorandum, as of its date, as of the Closing Date, and, if
applicable, as of any Option 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 or the
Offering Memorandum.



          (k) The Company and the Trustee shall have executed and delivered the Indenture, and the
Initial Purchasers shall have received a copy thereof, duly executed by the Company and the
Trustee.




          (l) As of the Closing Date, and, if applicable, on and as of any Option Closing Date, the
common stock issuable upon conversion of the Securities shall have been approved for listing on the
NASDAQ, subject only to official notice of issuance.




          (m) The Representative 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 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




26









 




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, and, if applicable, on
any Option 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.




          (o) On or after the Applicable Time (i) no downgrading shall have occurred in the rating
accorded to the Company’s 2010 Notes by any “nationally recognized statistical rating
organization”, as that term is defined by the Commission for purposes of Rule 436(g)(2) under the
Securities Act, and (ii) no such organization shall have publicly announced that it has under
surveillance or review, with possible negative implications, its rating of the Company’s 2010
Notes.




          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 the Pre-Launch Offering Document or 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 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






27









 







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 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 Investment Company 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 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 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 such indemnified party shall notify the
indemnifying party thereof, the indemnifying party shall be entitled to participate






28









 







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 and does not include a
statement as to or an admission of fault, culpability or a failure to act, by or on behalf of any
indemnified party, 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 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






29









 







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 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 purchase the
Securities that the defaulting Initial Purchaser agreed but failed to purchase on the Closing Date
or on an 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



30









 




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 on an Option Closing Date, as the case may be, or 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 an 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 an 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 or an Option Closing Date, as the case may be, 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: (a) 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; or
(b) the Additional Securities that the defaulting Initial Purchaser or Initial Purchasers agreed
but failed to purchase on an Option Closing Date, the non-defaulting Initial Purchasers shall have,
the option to either: (i) terminate their obligation hereunder to purchase the Additional
Securities to be sold on such Option Closing Date without liability on the part of any
non-defaulting Initial Purchaser or the Company; or (ii) purchase not less than the principal
amount of Additional Securities that such non-defaulting Initial Purchaser would have been
obligated to purchase in the absence of such default.




          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), (n) 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



31









 




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 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 Goldman, Sachs & Co., 200 West Street, New York, New
York 10282, Attention: Registration Department, with a copy to Troutman Sanders LLP, Attention:
David M. Carter (Fax: (804) 698-5196);




          (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 Goldman, Sachs & Co., which address will be supplied
to any other party hereto by Goldman, Sachs & Co. 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 Goldman, Sachs & Co.




     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



32









 




Exchange 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]






33









 








EXECUTION VERSION




          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:




Goldman, Sachs & Co.,

For itself and as Representative

of the several Initial Purchasers named

in Schedule I hereto




                    (Goldman, Sachs & Co.)                    






D-2-1