FIFTH STREET FINANCE CORP. Common Stock ($0.01 par value per share) AT-THE- MARKET EQUITY OFFERING SALES AGREEMENT
Exhibit (h)
Common Stock
($0.01 par value per share)
($0.01 par value per share)
December 7, 2010
XXXXXX, XXXXXXXX & COMPANY, INCORPORATED
Xxx Xxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Xxx Xxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Ladies and Gentlemen:
Fifth Street Finance Corp., a Delaware corporation (the “Company”), proposes, subject
to the terms and conditions stated herein, to issue and sell from time to time to or through
Xxxxxx, Xxxxxxxx & Company, Incorporated (“Xxxxxx Xxxxxxxx”), as sales agent and/or principal
(“Agent”), up to 5,000,000 shares (the “Shares”) of the Company’s common stock,
$0.01 par value per share (the “Common Stock”), on the terms set forth in Section 2 of this
Sales Agreement (the “Agreement”). The Company agrees that whenever it determines to sell
Shares directly to the Agent as principal, it will enter into a separate agreement (each, a
“Terms Agreement”) in substantially the form of Annex I hereto, relating to such sale in
accordance with Section 3 of this Agreement.
On January 2, 2008, Form N-54A Notification of Election to be Subject to Sections 55 through
65 of the Investment Company Act of 1940, (File No. 814-00755) (the “Notification of
Election”) was filed with the Securities and Exchange Commission (the “Commission”)
under the Investment Company Act of 1940, as amended, and the rules and regulations thereunder
(collectively, the “Investment Company Act”), pursuant to which the Company elected to be
regulated as a business development company (“BDC”) under the Investment Company Act.
The Company has entered into an amended and restated investment advisory and management
agreement, dated as of April 30, 2008 (the “Investment Advisory Agreement”), with Fifth
Street Management LLC, a Delaware limited liability company (the “Adviser”), which is
registered as an investment adviser under the Investment Advisers Act of 1940, as amended, and the
rules and regulations thereunder (collectively, the “Advisers Act”).
The Company has entered into an administration agreement, dated as of December 14, 2007 (the
“Administration Agreement”), with FSC, Inc., a New York corporation (the
“Administrator”).
Section 1. Representations and Warranties. (a) The Company represents and warrants
to the Agent, and the Adviser and the Administrator, jointly and severally, represent and warrant
to the Agent, that as of the date of this Agreement, any applicable Registration Statement
Amendment Date, as defined in Section 3 below), each Applicable Time (as defined in Section 1(a)(i)
below) and each Settlement Date (as defined in Section 2 below):
(i) The Company has filed with the Commission a registration statement on Form N-2
(File No. 333-166012) under the Securities Act of 1933, as amended, and the rules and
regulations thereunder (collectively, the “1933 Act”), in respect of the Company’s
Common Stock (including the Shares) (collectively, the “Securities”) not earlier
than three years prior to the date hereof; the Company is eligible to use Form N-2; such
registration statement, and any post-effective amendment thereto, has become effective; and
no stop order suspending the effectiveness of such registration statement or any part
thereof has been issued and no proceeding for that purpose has been initiated or, to the
knowledge of the Company, threatened by the Commission and no notice of objection of the
Commission to the use of such registration statement has been received by the Company (the
base prospectus filed as part of such registration statement, in the form in which it has
most recently been filed with the Commission on or prior to the date of this Agreement, is
hereinafter called the “Basic Prospectus”; the various parts of such registration
statement, including all exhibits thereto and any prospectus supplement relating to the
Shares that is filed with the Commission and deemed by virtue of Rule 430C under the 1933
Act to be part of such registration
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statement, each as amended at the time such part of the registration statement became
effective, are hereinafter collectively called the “Registration Statement”; the
prospectus supplement specifically relating to the Shares prepared and filed with the
Commission pursuant to Rule 497 under the 1933 Act is hereinafter called the “Prospectus
Supplement”; the Basic Prospectus, as amended and supplemented by the Prospectus
Supplement, is hereinafter called the “Prospectus”; and any reference to the Basic
Prospectus, the Prospectus Supplement or the Prospectus shall be deemed to refer to and
include any post-effective amendment to the Registration Statement and any prospectus
supplement relating to the Shares filed with the Commission pursuant to Rule 497 under the
1933 Act, in each case after the date of the Basic Prospectus, the Prospectus Supplement or
the Prospectus, as the case may be.
No order preventing or suspending the use of the Prospectus has been issued by the
Commission, and the Prospectus, at the time of filing thereof, conformed in all material
respects to the requirements of the 1933 Act and did 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; and there are no contracts or agreements that are required to be described
in the Prospectus, or to be filed as an exhibit to the Registration Statement, that have not
been so described and filed as required under the 1933 Act.
For the purposes of this Agreement, the “Applicable Time” means, with respect
to any Shares, the time of sale of such Shares pursuant to this Agreement; the Prospectus
issued at or prior to such Applicable Time, with respect to any Shares, together with the
public offering price of such Shares, other information conveyed to investors prior to the
sale of such Shares (collectively, the “General Disclosure Package”) as of each
Applicable Time and each Settlement Date, will not include any untrue statement of a
material fact or omit to state any material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not misleading.
(ii) Neither the Company nor any of its Subsidiaries (as defined below) is a party to
any contract, agreement or understanding with any person (other than as contemplated by this
Agreement or any Terms Agreement) that would give rise to a valid claim against the Company
or any of its Subsidiaries or the Agent for a brokerage commission, finder’s fee or like
payment in connection with the offering and sale of the Shares.
(iii) The Common Stock is an “actively-traded security” exempted from the requirements
of Rule 101 of Regulation M under the Securities Exchange Act of 1934, as amended, and the
rules and regulations thereunder (collectively, the “1934 Act”) by subsection (c)(1) of such
rule.
(iv) None of Fifth Street Fund of Funds LLC, a Delaware limited liability company,
Fifth Street Funding LLC, a Delaware limited liability company (“Funding”), FSFC
Holdings, Inc., a Delaware corporation, FSF/MP Holdings, Inc., a Delaware corporation, Fifth
Street Mezzanine Partners IV, L.P., a Delaware limited partnership and FSMP IV GP, LLC, a
Delaware limited liability company (collectively, the “Subsidiaries”) or the Company
has sustained since the date of the latest audited financial statements included in the
General Disclosure Package any material 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, otherwise than as set forth or
contemplated in the General Disclosure Package; and, since the respective dates as of which
information is given in the Registration Statement and the General Disclosure Package, there
has not been any change in the capital stock or long-term debt of the Company or any of its
Subsidiaries or any material adverse change, or any development involving a prospective
material adverse change, in or affecting the general affairs, management, financial
position, stockholders’ equity, results of operations or prospects of the Company and its
Subsidiaries (any such change or development is hereinafter referred to as a “Material
Adverse Change”), otherwise than as set forth in the General Disclosure Package; and
other than the Subsidiaries, the Company has no other subsidiaries.
(v) The Company and each of its Subsidiaries have good and marketable title in fee
simple to all real property and good and marketable title to all personal property owned by
them, in each case free and clear of all liens, encumbrances and defects except such as are
described in the General Disclosure
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Package or such as do not materially affect the value of such property and do not
interfere with the use made and proposed to be made of such property by the Company and its
Subsidiaries; and any real property and buildings held under lease by the Company or any of
its Subsidiaries are held by them under valid, subsisting and enforceable leases with such
exceptions as are not material and do not interfere with the use made and proposed to be
made of such property and buildings by the Company and its Subsidiaries; the Company and its
Subsidiaries own, lease or have access to all properties and other assets that are necessary
to the conduct of their business as described in the Registration Statement and the General
Disclosure Package.
(vi) The Company has been duly incorporated and is validly existing as a corporation in
good standing under the laws of the State of Delaware, with power and authority (corporate
and other) to own its properties and conduct its business as described in the General
Disclosure Package and to enter into and perform its obligations under this Agreement and
any Terms Agreement, and has been duly qualified as a foreign corporation for the
transaction of business and is in good standing under the laws of each other jurisdiction in
which it owns or leases properties or conducts any business so as to require such
qualification, or is subject to no material liability or disability by reason of the failure
to be so qualified in any such jurisdiction; and each Subsidiary of the Company has been
duly organized and is validly existing and in good standing under the laws of its
jurisdiction of organization, with power and authority (corporate and other) to own its
properties and conduct its business as described in the General Disclosure Package, and has
been duly qualified as a foreign corporation or entity for the transaction of business and
is in good standing under the laws of each other jurisdiction in which it owns or leases
properties or conducts any business so as to require such qualification, or is subject to no
material liability or disability by reason of the failure to be so qualified in any such
jurisdiction.
(vii) All of the issued shares of capital stock of the Company have been duly and
validly authorized and issued and are fully paid and non-assessable and conform to the
description of the Common Stock contained in the General Disclosure Package and the
Prospectus; and other than the lien granted by the Company on all of its equity interests in
Funding in connection with a secured credit facility with Xxxxx Fargo Bank, National
Association, successor to Wachovia National Bank, N.A., and FSFC Holding, Inc. and FSF/MP
Holdings, Inc. in connection with a syndicated revolving credit facility with certain
lender parties thereto and ING Capital LLC, as administrative agent, all of the issued
equity capital of each Subsidiary has been duly and validly authorized and issued, is fully
paid and non-assessable and is owned directly or indirectly by the Company, free and clear
of all liens, encumbrances, equities or claims.
(viii) The Shares have been duly authorized and reserved for issuance and sale pursuant
to this Agreement and, when issued and delivered by the Company pursuant to this Agreement
or any Terms Agreement against payment therefor as provided herein, will be duly and validly
issued and fully paid and non-assessable and will conform to the description of the Common
Stock contained in the Prospectus; no holder of Shares will be subject to personal liability
by reason of being such a holder; and the issuance of the Shares is not subject to any
pre-emptive, co-sale right, rights of first refusal or other similar rights of any security
holder of the Company or any other person.
(ix) This Agreement and any Terms Agreement has been duly authorized, executed and
delivered by the Company; each of the License Agreement, dated as of December 14, 2007 (the
“License Agreement”), between the Company and Fifth Street Capital LLC, the
Custodian Agreement, dated as of May 5, 2008 (the “Custodian Agreement”), between
the Company and Bank of America, National Association, the Investment Advisory Agreement and
the Administration Agreement have been duly authorized, executed and delivered by the
Company and constitute valid, binding and enforceable agreements of the Company, subject, as
to enforcement, to applicable bankruptcy, reorganization, insolvency, moratorium or other
laws affecting creditors’ rights generally; and the Investment Advisory Agreement has been
approved by the Company’s board of directors and stockholders in accordance with Section 15
of the Investment Company Act, contains the applicable provisions required by Section 205 of
the Advisers Act and Section 15 of the Investment Company Act and otherwise complies in all
material respects with the requirements of the Advisers Act and the Investment Company Act.
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(x) None of the execution, delivery and performance of this Agreement and any Terms
Agreement, or the consummation of the transactions contemplated hereby and thereby, will
(A) conflict with or result in a breach or violation of any of the terms or provisions of,
or constitute a default under, any indenture, mortgage, deed of trust, loan agreement or
other agreement or instrument to which the Company or any of its Subsidiaries is a party or
by which the Company or any of its Subsidiaries is bound or to which any of the property or
assets of the Company or any of its Subsidiaries is subject, or (B) result in any violation
of the provisions of the Restated Certificate of Incorporation or the Amended and Restated
Bylaws (the “Bylaws”) of the Company or any statute or any order, rule or regulation
of any court or governmental agency or body having jurisdiction over the Company or any of
its Subsidiaries or any of their properties except, with respect to clause (A), to the
extent that any such conflict, breach or violation would not, individually or in the
aggregate, result in a Material Adverse Change; and no consent, approval, authorization,
order, registration or qualification of or with any such court or governmental agency or
body is required for the execution, delivery or performance of any of this Agreement, any
Terms Agreement, the License Agreement, the Investment Advisory Agreement or the
Administration Agreement, or the consummation of the transactions contemplated hereby and
thereby, except the registration under the 1933 Act of the Shares, such consents, approvals,
authorizations, registrations or qualifications as may be required under state securities or
Blue Sky laws in connection with sale of the Shares and such consents, approvals,
authorization, registrations or qualifications which have been obtained or effected.
(xi) Neither the Company nor any of its Subsidiaries is in violation of its Certificate
of Incorporation, Bylaws or any other organizational documents or in default in the
performance or observance of any material obligation, agreement, covenant or condition
contained in any indenture, mortgage, deed of trust, loan agreement, lease or other
agreement or instrument to which it is a party or by which it or any of its properties may
be bound.
(xii) The statements set forth in the Prospectus and the General Disclosure Package
under the caption “Description of Our Securities”, insofar as they purport to constitute a
summary of the terms of the Common Stock, and under the captions “Regulation”, “Material
U.S. Federal Income Tax Considerations”, “Plan of Distribution”, insofar as they purport to
describe the provisions of the laws and documents referred to therein, are accurate,
complete and fair.
(xiii) The Company is not and, after giving effect to the offering and sale of the
Shares and the application of the proceeds thereof, will not be a “registered management
investment company”, as such term is used in the Investment Company Act.
(xiv) Other than as set forth in the General Disclosure Package, there are no legal or
governmental proceedings pending to which the Company or any of its Subsidiaries is a party
or of which any property of the Company or any of its Subsidiaries is the subject which, if
determined adversely to the Company or any of its Subsidiaries, would individually or in the
aggregate have a material adverse effect on the current or future financial position,
stockholders’ equity or results of operations of the Company and its Subsidiaries; and, to
the best of the Company’s knowledge, no such proceedings are threatened or contemplated by
governmental authorities or threatened by others.
(xv) The Company has duly elected to be regulated by the Commission as a BDC under the
Investment Company Act, and no order of suspension or revocation has been issued or
proceedings therefor initiated or, to the knowledge of the Company, threatened by the
Commission. Such election has not been withdrawn and the provisions of the Company’s
Restated Certificate of Incorporation and Bylaws and compliance by the Company with the
investment objective, policies and restrictions described in the General Disclosure Package
and the Prospectus, will not conflict with the provisions of the Investment Company Act
applicable to the Company.
(xvi) PricewaterhouseCoopers LLP, who have certified certain financial statements of
the Company, are independent public accountants of the Company as required by the 0000 Xxx.
(xvii) The financial statements included in the Registration Statement, the General
Disclosure Package and the Prospectus, together with the related notes, present fairly the
financial position of the
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Company and its consolidated subsidiaries at the dates indicated and the statement of
operations, changes in net assets, cash flows and financial highlights of the Company and
its consolidated subsidiaries for the periods specified; said financial statements have been
prepared in conformity with U.S. generally accepted accounting principles applied on a
consistent basis throughout the periods involved. The selected financial data included in
the General Disclosure Package and the Prospectus present fairly the information shown
therein and was compiled on a basis consistent with that of the audited financial statements
included in the Registration Statement and the Prospectus.
(xviii) The Company maintains a system of internal accounting and other controls
sufficient to provide reasonable assurances that (A) transactions are executed in accordance
with management’s general or specific authorization and with the investment objective,
policies and restrictions of the Company and the applicable requirements of the Investment
Company Act and the Code (as defined below); (B) transactions are recorded as necessary to
permit preparation of financial statements in conformity with U.S. generally accepted
accounting principles and to maintain accountability for assets and to maintain material
compliance with the books and records requirements under the Investment Company Act;
(C) access to assets is permitted only in accordance with management’s general or specific
authorization; and (D) the recorded accountability for assets is compared with the existing
assets at reasonable intervals and appropriate action is taken with respect to any
differences. Except as described in the General Disclosure Package, since the end of the
Company’s most recent audited fiscal year, there has been (1) no material weakness (whether
or not remediated) in the Company’s internal control over financial reporting (as such term
is defined in Rule 13a-15 and 15d-15 of the 1934 Act and (2) no change in the
Company’s internal control over financial reporting that has materially negatively affected,
or is reasonably likely to materially affect, the Company’s internal control over financial
reporting.
(xix) The Company has established and maintains disclosure controls and procedures (as
such term is defined in Rule 13a-15 and 15d-15 under the 1934 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 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.
(xx) There are no agreements requiring the registration under the 1933 Act of, and
there are no options, warrants or other rights to purchase any shares of, or exchange any
securities for shares of, the Company’s capital stock.
(xxi) The Company owns, or has obtained valid and enforceable licenses for, or other
rights to use, the inventions, patent applications, patents, trademarks (both registered and
unregistered), trade names, copyrights, trade secrets and other proprietary information
described in the General Disclosure Package and the Prospectus which are necessary for the
conduct of its businesses.
(xxii) The Company maintains insurance covering its properties, operations, personnel
and businesses as the Company deems adequate; such insurance insures against such losses and
risks to an extent which is adequate in accordance with customary industry practice to
protect the Company and its business; all such insurance is fully in force.
(xxiii) Except as disclosed in the General Disclosure Package, the Company has not sent
or received any communication regarding termination of, or intent not to renew, any of the
contracts or agreements referred to or described in, or filed as an exhibit to, the
Registration Statement, and no such termination or non-renewal has been threatened by the
Company or, to the Company’s knowledge, any other party to any such contract or agreement.
(xxiv) The Company has not, directly or indirectly, extended credit, arranged to extend
credit, or renewed any extension of credit, in the form of a personal loan, to or for any
director or executive officer of the Company, or to or for any family member or affiliate of
any director or executive officer of the Company.
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(xxv) Neither the Company nor, to the Company’s knowledge, any employee or agent of the
Company has made any payment of funds of the Company or received or retained any funds in
violation of any law, rule or regulation, which payment, receipt or retention of funds is of
a character required to be disclosed in the Registration Statement or the General Disclosure
Package.
(xxvi) Neither the Company nor, to the Company’s knowledge, any of its respective
directors, officers, affiliates or controlling persons has taken, nor will the Company take,
directly or indirectly, any action designed, or which has constituted or might reasonably be
expected to cause or result in, under the 1934 Act, to result in the stabilization or
manipulation of the price of any security of the Company to facilitate the sale or resale of
the Shares.
(xxvii) Except as disclosed in the General Disclosure Package, (A) 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 (B) to the
knowledge of the Company, no director of the Company is an “affiliated person” (as defined
in the Investment Company Act) of the Agent.
(xxviii) The operations of the Company are in compliance in all material respects with
the provisions of the Investment Company Act applicable to a BDC and the rules and
regulations of the Commission thereunder.
(xxix) The Company has not distributed any offering material in connection with the
sale of the Shares other than the Registration Statement, the General Disclosure Package or
the Prospectus.
(xxx) None of the persons identified as “independent directors” in the Registration
Statement or the General Disclosure Package is an “interested person” as that term is
defined in Section 2(a)(19) of the Investment Company Act.
(xxxi) Except as described in the Registration Statement and the General Disclosure
Package, no relationship, direct or indirect, exists between or among the Company, on the
one hand, and the directors, officers or stockholders of the Company, on the other hand,
that is required to be described in the Registration Statement or the General Disclosure
Package, which is not so described;
(xxxii) Except as disclosed in the Registration Statement and the General Disclosure
Package, neither the Company nor the Adviser has any lending or other commercial
relationship with any affiliate of the Agent and the Company will not use any of the
proceeds from the sale of the Shares to repay any indebtedness owed to any affiliate of the
Agent.
(xxxiii) The Company qualified to be treated as a regulated investment company
(“RIC”) under Subchapter M of the Internal Revenue Code of 1986, as amended (the
“Code”), for its taxable year ended September 30, 2010. The Company is in compliance
with the requirements of the Code necessary to continue to qualify as a RIC. The Company
intends to direct the investment of the net proceeds of the sale of the Shares and to
continue to conduct its activities in such a manner as to continue to comply with the
requirements for qualification as a RIC under Subchapter M of the Code. Each of the Company
and its Subsidiaries has filed all tax returns that are required to be filed and have paid
all taxes required to be paid by it and any other assessment, fine or penalty levied against
it, to the extent that any of the foregoing is due and payable, except for any such tax,
assessment, fine or penalty that is currently being contested in good faith by appropriate
actions and except for such taxes, assessments, fines or penalties the nonpayment of which
would not, individually or in the aggregate, would be reasonably expected to have a Material
Adverse Change. The Company has made adequate charges, accruals and reserves in the
applicable financial statements referred to in the Registration Statement and the Prospectus
in respect of all federal, state, local 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 of its Subsidiaries that could,
individually or in the aggregate, result in a Material Adverse Change.
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(xxxiv) Other than the Subsidiaries and except as disclosed in the Registration
Statement and the General Disclosure Package under the captions “Prospectus Summary—Recent
Developments” and “Portfolio Companies,” 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 as of September 30, 2010. Except for Lighting by Xxxxxxx, LLC, the Company
does not control (as such term is defined in Section 2(a)(9) of the Investment Company Act)
any of the companies described in the Registration Statement and the Pricing Prospectus
under the caption “Portfolio Companies.”
(xxxv) Other than as set forth in the General Disclosure Package, the Company is not
aware that any executive, key employee or significant group of employees of any of the
Company, the Adviser or the Administrator, plans to terminate employment with the Company or
any such executive or key employee is subject to any noncompete, nondisclosure,
confidentiality, employment, consulting or similar agreement that would be violated by the
present or proposed business activities of the Company.
(xxxvi) The Common Stock is registered pursuant to Section 12(b) of the 1934 Act and is
listed on The New York Stock Exchange (the “Exchange”). The Company has taken no
action designed to, or likely to have the effect of, terminating the registration of the
Common Stock under the 1934 Act or delisting the Common Stock from the Exchange, nor has the
Company received any notification that the Commission or the Exchange is contemplating
terminating such registration or listing. The Company has continued to satisfy all Exchange
listing requirements.
(xxxvii) The Company (A) has adopted and implemented written policies and procedures
reasonably designed to prevent violation of the Federal Securities Laws (as that term is
defined in Rule 38a-1 under the Investment Company Act) by the Company and its Subsidiaries,
(B) is conducting its business in compliance with all laws, rules, regulations, decisions,
directives and orders, except for such failure to comply which would not, either
individually or in the aggregate, reasonably be expected to, result in a Material Adverse
Change and (C) is conducting its business in compliance with the requirements of the
Investment Company Act.
(xxxviii) The Company’s filings under the 1934 Act and the Investment Company Act, when
they were filed with the Commission, as the case may be, conformed in all material respects
to the requirements of the 1934 Act and the Investment Company Act, as applicable, and none
of such documents contained an untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary to make the statements therein not
misleading in light of the circumstances under which they were made.
(xxxix) Neither the Company nor any of its Subsidiaries nor, to the knowledge of the
Company, any director, officer, agent, employee, affiliate or other person acting on behalf
of the Company or any of its Subsidiaries is aware of or has taken any action, directly or
indirectly, that has resulted or would result in a violation by such persons of the Foreign
Corrupt Practices Act of 1977, as amended, and the rules and regulations thereunder
(collectively, the “FCPA”), including, without limitation, making use of the mails
or any means or instrumentality of interstate commerce corruptly in furtherance of an offer,
payment, promise to pay or authorization of the payment of any money, or other property,
gift, promise to give, or authorization of the giving of anything of value to any “foreign
official” (as such term is defined in the FCPA) or any foreign political party or official
thereof or any candidate for foreign political office, in contravention of the FCPA.
(xl) 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.
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(xli) Neither the Company nor any of its Subsidiaries nor, to the knowledge of the
Company, any director, officer, agent, employee, affiliate, person acting on behalf of the
Company or any of its Subsidiaries or any person or entity to whom the Company or any of its
Subsidiaries has made loans 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 Shares 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.
(b) The Adviser represents and warrants to the Agent that as of the date of this Agreement,
any applicable Registration Statement Amendment Date, each Applicable Time and each Settlement
Date:
(i) The Adviser has not sustained since January 2, 2008 any material 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, otherwise than as set forth or contemplated in the General Disclosure Package; and,
since January 2, 2008, there has not been any material adverse change, or any development
involving a prospective material adverse change, in or affecting the general affairs,
management, financial position, stockholders’ equity or results of operations of the Adviser
(any such change or development is hereinafter referred to as an “Adviser Material
Adverse Change”), otherwise than as set forth or contemplated in the General Disclosure
Package.
(ii) The Adviser has been duly formed and is validly existing as a limited liability
company and is in good standing under the laws of the State of Delaware, with power and
authority to own its properties and conduct its business as described in the General
Disclosure Package, and has been duly qualified as a foreign entity for the transaction of
business and is in good standing under the laws of each other jurisdiction in which it owns
or leases properties or conducts any business so as to require such qualification, or is
subject to no material liability or disability by reason of the failure to be so qualified
in any such jurisdiction.
(iii) 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
General Disclosure Package. 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.
(iv) This Agreement, any Terms Agreements and the Investment Advisory Agreement have
each been duly authorized, executed and delivered by the Adviser and constitute valid,
binding and enforceable agreements of the Adviser, subject, as to enforcement, to applicable
bankruptcy, reorganization, insolvency, moratorium or other laws affecting creditors’ rights
generally; except as amended and restated as of April 30, 2008, the Investment Advisory
Agreement has not been amended and continues in full force and effect.
(v) None of the execution, delivery and performance of this Agreement, any Terms
Agreement or the Investment Advisory Agreement, or the consummation of the transactions
contemplated hereby and thereby, will (A) conflict with or result in a breach or violation
of any of the terms or provisions of, or constitute a default under, any indenture,
mortgage, deed of trust, loan agreement or other agreement or instrument to which the
Adviser or any of its subsidiaries is a party or by which the Adviser or any of its
subsidiaries is bound or to which any of the property or assets of the Adviser or any of its
subsidiaries is subject, or (B) result in any violation of the provisions of the limited
liability company agreement of the Adviser or any statute or any order, rule or regulation
of any court or governmental agency or body having jurisdiction over the Adviser or any of
its subsidiaries or any of its properties except, with respect to clause (A), to the extent
that any such conflict, breach or violation would not, individually or in the aggregate,
result in an Adviser Material Adverse Change; and no consent, approval, authorization,
order, registration or qualification of or with any such court or governmental agency or
body is required for the execution,
8
delivery or performance of any of this Agreement, any Terms Agreement or the Investment
Advisory Agreement, or the consummation of the transactions contemplated hereby and thereby
by the Adviser, including the conduct of its business, except such as have been obtained
under the 1933 Act, the Investment Company Act and the Advisers Act.
(vi) There are no legal or governmental proceedings pending to which the Adviser is a
party or of which any of its property is the subject which, if determined adversely to the
Adviser would individually or in the aggregate materially adversely affect the Adviser’s
ability to properly render services to the Company or have a material adverse effect on the
current or future financial position, stockholders’ equity or results of operations of the
Adviser and, to the best of its knowledge, no such proceedings are threatened or
contemplated by governmental authorities or threatened by others.
(vii) The Adviser is not in violation of its limited liability company agreement or in
default in the performance or observance of any material obligation, agreement, covenant or
condition contained in any indenture, mortgage, deed of trust, loan agreement, lease or
other agreement or instrument to which it is a party or by which it or any of its properties
may be bound.
(viii) The Adviser possesses all licenses, certificates, permits and other
authorizations issued by appropriate federal, state or foreign regulatory authorities
necessary to conduct its business, and has not received any notice of proceeding relating to
the revocation or modification of any such license, certificate, permit or authorization
which, singly or in the aggregate, if the subject of an unfavorable decision, ruling or
finding, would have a Adviser Material Adverse Change.
(ix) The descriptions of the Adviser and its principals and business, and the
statements attributable to the Adviser, in the Registration Statement, the General
Disclosure Package and the Prospectus do 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 not misleading.
(x) The Adviser has the financial resources available to it necessary for the
performance of its services and obligations as contemplated in the General Disclosure
Package and under this Agreement, any Terms Agreement and the Investment Advisory Agreement;
the Adviser owns, leases or has access to all properties and other assets that are necessary
to the conduct of its business and to perform the services, as described in the Registration
Statement and the General Disclosure Package.
(xi) Except as set forth in the General Disclosure Package, the Adviser is not aware
that (A) any of its executives, key employees or significant group of employees plans to
terminate employment with the Adviser or (B) any such executive or key employee is subject
to any noncompete, nondisclosure, confidentiality, employment, consulting or similar
agreement that would be violated by the present or proposed business activities of the
Adviser.
(xii) The Adviser maintains a system of internal controls sufficient to provide
reasonable assurance that (A) transactions effectuated by it under the Investment Advisory
Agreement are executed in accordance with its management’s general or specific
authorization; and (B) access to the Company’s assets is permitted only in accordance with
its management’s general or specific authorization.
(xiii) The Adviser has not taken, nor will the Adviser take, directly or indirectly,
any action designed to or that would constitute or that might reasonably be expected to
cause or result in, under the 1934 Act or otherwise, stabilization or manipulation of the
price of any security of the Company to facilitate the sale or resale of the Shares, and the
Adviser is not aware of any such action being taken by any affiliates of the Adviser.
(xiv) The Adviser maintains insurance covering its properties, operations, personnel
and businesses as it deems adequate; such insurance insures against such losses and risks to
an extent which is adequate in accordance with customary industry practice to protect the
Adviser and its businesses; all such insurance is fully in force and effect.
9
(xv) Neither the Adviser nor and of its subsidiaries, nor, to the knowledge of the
Adviser, any director, officer, agent, employee, affiliate or other person acting on behalf
of the Adviser or any of its subsidiaries is aware of or has taken any action, directly or
indirectly, that has resulted or would result in a violation by such persons of the 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.
(xvi) The operations of the Adviser and its subsidiaries are and have been conducted at
all times in compliance with applicable financial recordkeeping and reporting requirements
of the 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 Adviser or any of its
subsidiaries with respect to the Money Laundering Laws is pending or, to the knowledge of
the Adviser, threatened.
(xvii) Neither the Adviser nor any of its subsidiaries nor, to the knowledge of the
Adviser, any director, officer, agent, employee, affiliate or person acting on behalf of the
Adviser or any of its subsidiaries is currently subject to any U.S. sanctions administered
by the OFAC; and the Adviser will not cause the Company to use any of the proceeds received
by the Company from the sale of Shares contemplated by this Agreement or any Terms
Agreement, or cause the Company to 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.
(c) The Administrator represents and warrants to the Agent that as of the date of this
Agreement, any applicable Registration Statement Amendment Date, each Applicable Time and each
Settlement Date:
(i) The Administrator has not sustained since January 2, 2008 any material 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, otherwise than as set forth or contemplated in the General Disclosure Package; and,
since January 2, 2008, there has not been any material adverse change, or any development
involving a prospective material adverse change, in or affecting the general affairs,
management, financial position, stockholders’ equity or results of operations of the
Administrator (any such change or development is hereinafter referred to as an
“Administrator Material Adverse Change”), otherwise than as set forth or
contemplated in the General Disclosure Package.
(ii) The Administrator has been duly formed and is validly existing as a corporation
and is in good standing under the laws of the State of New York, with power and authority to
own its properties and conduct its business as described in the General Disclosure Package,
and has been duly qualified as a foreign corporation for the transaction of business and is
in good standing under the laws of each other jurisdiction in which it owns or leases
properties or conducts any business so as to require such qualification, or is subject to no
material liability or disability by reason of the failure to be so qualified in any such
jurisdiction.
(iii) This Agreement, any Terms Agreement and the Administration Agreement have each
been duly authorized, executed and delivered by the Administrator and constitute valid,
binding and enforceable agreements of the Administrator, subject, as to enforcement, to
applicable bankruptcy, reorganization, insolvency, moratorium or other laws affecting
creditors’ rights generally; and the Administration Agreement has not been amended and
continues in full force and effect.
(iv) None of the execution, delivery and performance of this Agreement, any Terms
Agreement or the Administration Agreement, or the consummation of transactions contemplated
hereby and thereby, will (A) conflict with or result in a breach or violation of any of the
terms or provisions of, or constitute a default under, any indenture, mortgage, deed of
trust, loan agreement or other agreement or instrument to which the Administrator or any of
its subsidiaries is a party or by which the Administrator or any of its subsidiaries is
bound or to which any of the property or assets of the Administrator or any of its
10
subsidiaries is subject, or (B) result in any violation of the provisions of the
organizational documents of the Administrator or any statute or any order, rule or
regulation of any court or governmental agency or body having jurisdiction over the
Administrator or any of its subsidiaries or any of its properties except, with respect to
clause (A), to the extent that any such conflict, breach or violation would not,
individually or in the aggregate, result in an Administrator Material Adverse Change; and no
consent, approval, authorization, order, registration or qualification of or with any such
court or governmental agency or body is required for the execution, delivery or performance
of any of this Agreement, any Terms Agreement or the Administration Agreement, or the
consummation of the transactions contemplated hereby and thereby by the Administrator,
including the conduct of its business, except such as have been obtained.
(v) There are no legal or governmental proceedings pending to which the Administrator
is a party or of which any of its property is the subject which, if determined adversely to
the Administrator would individually or in the aggregate have a material adverse effect on
the current or future financial position, stockholders’ equity or results of operations of
the Administrator and, to the best of its knowledge, no such proceedings are threatened or
contemplated by governmental authorities or threatened by others.
(vi) The Administrator is not in violation of its certificate of incorporation or
bylaws or in default in the performance or observance of any material obligation, agreement,
covenant or condition contained in any indenture, mortgage, deed of trust, loan agreement,
lease or other agreement or instrument to which it is a party or by which it or any of its
properties may be bound.
(vii) The Administrator possesses all licenses, certificates, permits and other
authorizations issued by appropriate federal, state or foreign regulatory authorities
necessary to conduct its business, and has not received any notice of proceeding relating to
the revocation or modification of any such license, certificate, permit or authorization
which, singly or in the aggregate, if the subject of an unfavorable decision, ruling or
finding, would have a Administrator Material Adverse Change.
(viii) The descriptions of the Administrator and its principals and business, and the
statements attributable to the Administrator, in the Registration Statement, the General
Disclosure Package and the Prospectus, if any, do not and will not contain an untrue
statement of a material fact or omit to state a material fact necessary required to be
stated therein or necessary to make the statements therein not misleading.
(ix) The Administrator has the financial resources available to it necessary for the
performance of its services and obligations as contemplated in the General Disclosure
Package and under this Agreement, any Terms Agreement and the Administration Agreement; the
Administrator owns, leases or has access to all properties and other assets that are
necessary to the conduct of its business and to perform the services, as described in the
Registration Statement and the General Disclosure Package.
(x) The Administrator is not aware that (A) any of its executives, key employees or
significant group of employees plans to terminate employment with the Administrator or (B)
any such executive or key employee is subject to any noncompete, nondisclosure,
confidentiality, employment, consulting or similar agreement that would be violated by the
present or proposed business activities of the Administrator.
(xi) The Administrator maintains a system of internal accounting controls sufficient to
provide reasonable assurance that (A) transactions for which it has bookkeeping and record
keeping responsibility for under the Administration Agreement are recorded as necessary to
permit preparation of the Company’s financial statements in conformity with generally
accepted accounting principles and to maintain accountability for the Company’s assets and
(B) the recorded accountability for such assets is compared with existing assets at
reasonable intervals and appropriate action is taken with respect to any differences.
(xii) The Administrator has not taken, nor will the Administrator take, nor will the
Administrator take, directly or indirectly, any action designed to or that would constitute
or that might reasonably be expected to cause or result in, under the 1934 Act or otherwise,
stabilization or manipulation
11
of the price of any security of the Company to facilitate the sale or resale of the
Shares, and the Administrator is not aware of any such action being taken by any affiliates
of the Administrator.
(xiii) The Administrator maintains insurance covering its properties, operations,
personnel and businesses as it deems adequate; such insurance insures against such losses
and risks to an extent which is adequate in accordance with customary industry practice to
protect the Administrator and its businesses; all such insurance is in full force and
effect.
(xiv) Neither the Administrator nor and of its subsidiaries, nor, to the knowledge of
the Administrator, any director, officer, agent, employee, affiliate or other person acting
on behalf of the Administrator or any of its subsidiaries is aware of or has taken any
action, directly or indirectly, that has resulted or would result in a violation by such
persons of the 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.
(xv) The operations of the Administrator and its subsidiaries are and have been
conducted at all times in compliance with applicable financial recordkeeping and reporting
requirements of the 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
Administrator or any of its subsidiaries with respect to the Money Laundering Laws is
pending or, to the knowledge of the Administrator, threatened.
(xvi) Neither the Administrator nor any of its subsidiaries nor, to the knowledge of
the Administrator, any director, officer, agent, employee, affiliate or person acting on
behalf of the Administrator or any of its subsidiaries is currently subject to any U.S.
sanctions administered by the OFAC.
(d) Any certificate signed by any officer of the Company, the Administrator or the Adviser
delivered to the Agent or to counsel for the Agent pursuant to or in connection with this Agreement
or any Terms Agreement shall be deemed a representation and warranty by the Company, the
Administrator or the Adviser, as the case may be, to the Agent as to the matters covered thereby as
of the date or dates indicated in such certificate.
Section 2. Sale and Delivery of Shares.
(a) Subject to the terms and conditions set forth herein, the Company agrees to issue and sell
exclusively through the Agent acting as sales agent for the Company or directly to the Agent acting
as principal from time to time, and the Agent agrees to use its commercially reasonable efforts to
sell as sales agent for the Company, the Shares. Sales of the Shares, if any, through the Agent
acting as sales agent will be made by means of ordinary brokers’ transactions on the NYSE that
qualify for delivery of the Prospectus to the NYSE in accordance with Rule 153 under the 1933 Act
or directly to the Agent acting as principal will be made through public or private transactions
at market prices prevailing at the time of sale, at fixed prices, at negotiated prices, at various
prices determined at the time of sale or at prices related to prevailing market prices.
(b) The Shares are to be sold on a daily basis or otherwise as shall be agreed to by the
Company and the Agent on that trading day (other than a day on which the NYSE is scheduled to close
prior to its regular weekday closing time, each, a “Trading Day”) that the Company has
satisfied its obligations under Section 6 of this Agreement and that the Company has instructed the
Agent to make such sales. For the avoidance of doubt, the foregoing limitation shall not apply to
sales solely to employees or security holders of the Company or its Subsidiaries, or to a trustee
or other person acquiring such securities for the accounts of such persons in which Xxxxxx Xxxxxxxx
is acting for the Company in a capacity other than as Agent under this Agreement. On any Trading
Day, the Company may instruct the Agent by telephone (confirmed promptly by telecopy or email,
which confirmation will be promptly acknowledged by the Agent) as to the maximum number of Shares
to be sold by the Agent on such day (in any event not in excess of the number available for
issuance under the Prospectus and the currently effective Registration Statement) and the minimum
price per Share at which such Shares may be sold. Subject to the terms
12
and conditions hereof, the Agent shall use its commercially reasonable efforts to sell as
sales agent all of the Shares so designated by the Company. The Company and the Agent each
acknowledge and agree that (A) there can be no assurance that the Agent will be successful in
selling the Shares, (B) the Agent will incur no liability or obligation to the Company or any other
person or entity if they do not sell Shares for any reason other than a failure by the Agent to use
its commercially reasonable efforts consistent with its normal trading and sales practices and
applicable law and regulations to sell such Shares as required by this Agreement, and (C) the Agent
shall be under no obligation to purchase Shares on a principal basis except as otherwise
specifically agreed by each of the Agent and the Company pursuant to a Terms Agreement. In the
event of a conflict between the terms of this Agreement and the terms of a Terms Agreement, the
terms of such Terms Agreement will control.
(c) Notwithstanding the foregoing, the Company shall not authorize the issuance and sale of,
and the Agent as sales agent shall not be obligated to use its commercially reasonable efforts to
sell, any Shares (i) at a price lower than the minimum price therefor authorized from time to time,
or (ii) in a number in excess of the number of Shares authorized from time to time to be issued and
sold under this Agreement, in each case, by the Company’s board of directors, or a duly authorized
committee thereof, and notified to the Agent in writing. In addition, the Company may, upon notice
to the Agent, suspend the offering of the Shares or the Agent may, upon notice to the Company,
suspend the offering of the Shares with respect to which the Agent is acting as sales agent for any
reason and at any time; provided, however, that such suspension or termination
shall not affect or impair the parties’ respective obligations with respect to the Shares sold
hereunder prior to the giving of such notice. Any notice given pursuant to the preceding sentence
may be given by telephone (confirmed promptly by telecopy or email, which confirmation will be
promptly acknowledged).
(d) The gross sales price of any Shares sold pursuant to this Agreement by the Agent acting
as sales agent of the Company shall be the market price prevailing at the time of sale for shares
of the Company’s Common Stock sold by the Agent on the NYSE. The compensation payable to the Agent
for sales of Shares with respect to which the Agent acts as sales agent shall be a percentage of
the gross sale price of the Shares sold pursuant to this Agreement as set forth in the following
schedule:
Shares Sold Pursuant to this | Percentage of the Gross Sale | |||
Agreement | Price | |||
Up to 500,000 |
2.00 | % | ||
Above 500,000 up to 1,000,000 |
1.50 | % | ||
Above 1,000,000 |
1.00 | % |
The Company may sell Shares to the Agent, acting as principal, at a price agreed upon with the
Agent at the relevant Applicable Time and pursuant to a separate Terms Agreement. The remaining
proceeds, after further deduction for any transaction fees imposed by any governmental, regulatory
or self-regulatory organization in respect of such sales, shall constitute the net proceeds to the
Company for such Shares (the “Net Proceeds”). The Agent shall notify the Company as
promptly as practicable if any deduction referenced in the preceding sentence will be required.
Notwithstanding the foregoing, in the event the Company engages the Agent for a sale of Shares that
could constitute a “distribution,” within the meaning of Rule 100 of Regulation M under the 1934
Act, the Company and the Agent will agree to compensation that is customary for the Agent with
respect to such transactions.
(e) If acting as a sales agent hereunder, the Agent shall provide written confirmation to the
Company following the close of trading on the NYSE, each day in which Shares are sold under this
Agreement setting forth the number of Shares sold on such day, the aggregate gross sales proceeds
of the Shares, the Net Proceeds to the Company and the compensation payable by the Company to the
Agent with respect to such sales.
(f) Under no circumstances shall the aggregate offering price or number, as the case may be,
of Shares sold pursuant to this Agreement and any Terms Agreement exceed the aggregate offering
price or number, as the case may be, of Shares of Common Stock (i) set forth in the preamble
paragraph of this Agreement, (ii) available for issuance under the Prospectus and the then
currently effective Registration Statement or (iii) authorized from time to time to be issued and
sold under this Agreement or any Terms Agreement by the Company’s board of directors, or a duly
authorized committee thereof, and notified to the Agent in writing. In addition, under no
circumstances shall any Shares with respect to which the Agent acts as sales agent be sold at a
price lower than the
13
minimum price therefor authorized from time to time by the Company’s board of directors, or a
duly authorized committee thereof, and notified to the Agent in writing.
(g) If either the Company or the Agent believes that the exemptive provisions set forth in
Rule 101(c)(1) of Regulation M under the 1934 Act (applicable to securities with an average daily
trading volume of $1,000,000 that are issued by an issuer whose common equity securities have a
public float value of at least $150,000,000) are not satisfied with respect to the Company or the
Shares, such party shall promptly notify the other party and sales of Shares under this Agreement
and any Terms Agreement shall be suspended until other exemptive provisions have been satisfied in
the judgment of each party or the parties mutually agree to the waiver thereof.
(h) Settlement for sales of Shares pursuant to this Section 2 will occur on the third business
day that is also a Trading Day following the trade date on which such sales are made, unless
another date shall be agreed to by the Company and the Agent (each such day, a “Settlement
Date”). On each Settlement Date, the Shares sold through the Agent for settlement on such date
shall be delivered by the Company to the Agent against payment of the Net Proceeds from the sale of
such Shares. Settlement for all Shares shall be effected by book-entry delivery of Shares to the
Agent’s account at The Depository Trust Company against payments by the Agent of the Net Proceeds
from the sale of such Shares in same day funds delivered to an account designated by the Company.
If the Company shall default on its obligation to deliver Shares on any Settlement Date, the
Company shall (i) indemnify and hold the Agent harmless against any loss, claim or damage arising
from or as a result of such default by the Company and (ii) pay the Agent any commission to which
it would otherwise be entitled absent such default.
(i) Notwithstanding any other provision of this Agreement, the Company and the Agent agree
that no sales of Shares shall take place, and the Company shall not request the sale of any Shares
that would be sold, and the Agent shall not be obligated to sell, during any period in which the
Company’s xxxxxxx xxxxxxx policy, as it exists on the date of the Agreement and as attached hereto
as Annex II, would prohibit the purchases or sales of the Company’s Common Stock by its officers or
directors, or during any other period in which the Company is, or could be deemed to be, in
possession of material non-public information; provided that, unless otherwise agreed between the
Company and the Agent, for purposes of this paragraph (i) such period shall be deemed to end on the
later of (i) the date on which the Company files with the Commission a prospectus supplement under
Rule 497 under the 1933 Act relating to the Shares that includes updated financial information as
of the end of the Company’s most recent quarterly period or fiscal year, as applicable (the
“Quarterly 497 Filing”) and (ii) the date on which the Company’s trading window reopens
following the public release of its financial results for such quarterly period or fiscal year, as
applicable.
Section 3. Covenants. (a) The Company agrees with the Agent that:
(i) During any period when the delivery of a prospectus is required in connection with
the offering or sale of Shares (whether physically or through compliance with Rule 153 under
the 1933 Act), (A) to make no further amendment or any supplement to the Registration
Statement or the Prospectus prior to any Settlement Date which shall be disapproved by the
Agent promptly after reasonable notice thereof and to advise the Agent, promptly after it
receives notice thereof, of the time when any amendment to the Registration Statement has
been filed or becomes effective or any amendment or supplement to the Prospectus has been
filed and to furnish the Agent with copies thereof, (B) to file promptly all other material
required to be filed with the Commission pursuant to the 1940 Act and the 1934 Act within
the time periods required by the 1940 Act, the 1934 Act and the rules and regulations of the
Commission thereunder, respectively, (C) to advise the Agent, promptly after it receives
notice thereof, of the issuance by the Commission of any stop order or of any order
preventing or suspending the use of the Prospectus or other prospectus in respect of the
Shares, of the suspension of the qualification of the Shares for offering or sale in any
jurisdiction, of the initiation or threatening of any proceeding for any such purpose, or of
any request by the Commission for the amending or supplementing of the form of the
Registration Statement or the Prospectus or for additional information, and (D) in the event
of the issuance of any such stop order or of any such order preventing or suspending the use
of the Prospectus in respect of the Shares or suspending any such qualification, to promptly
use its commercially reasonable efforts to obtain the withdrawal of such order; and in the
event of any such issuance of a notice of objection, promptly to take such reasonable steps
as may be necessary to permit offers and sales of the Shares by the Agent, which may
include, without limitation, amending the Registration Statement or filing a new
registration statement, at the Company’s
14
expense (references herein to the Registration Statement shall include any such amendment or
new registration statement). The Company will promptly effect the necessary post-effective
amendment and the filings required pursuant to Rule 497 and will take such steps as it deems
necessary to ascertain promptly whether the form of prospectus transmitted for filing under
Rule 497 was received for filing by the Commission and, in the event that it was not, it
will promptly file such prospectus.
(ii) Promptly from time to time to take such action as the Agent may reasonably request
to qualify the Shares for offering and sale under the securities laws of such jurisdictions
as the Agent 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 sale of the Shares, provided that in connection therewith the Company shall not be
required to qualify as a foreign corporation or to file a general consent to service of
process in any jurisdiction; and to promptly advise the Agent of the receipt by the Company
of any notification with respect to the suspension of the qualification of the Shares for
offer or sale in any jurisdiction or the initiation or threatening of any proceeding for
such purpose.
(iii) During any period when the delivery of a prospectus is required (whether
physically or through compliance with Rule 153 under the 0000 Xxx) in connection with the
offering or sale of Shares, the Company will make available to the Agent, as soon as
practicable after the execution of this Agreement, and thereafter from time to time furnish
to the Agent, copies of the most recent Prospectus in such quantities and at such locations
as the Agent may reasonably request for the purposes contemplated by the 1933 Act. During
any period when the delivery of a prospectus is required (whether physically or through
compliance with Rule 153 under the 0000 Xxx) in connection with the offering or sale of
Shares, and if at such time any event shall have occurred as a result of which the
Prospectus as then amended or supplemented would include an untrue statement of a material
fact or omit to state any material fact necessary in order to make the statements therein,
in the light of the circumstances under which they were made when such Prospectus is
delivered, not misleading, or, if for any other reason it shall be necessary during such
same period to amend or supplement the Prospectus, to notify the Agent and to file such
document and to prepare and furnish without charge to the Agent as many written and
electronic copies as the Agent may from time to time reasonably request of an amended
Prospectus or a supplement to the Prospectus which will correct such statement or omission
or effect such compliance.
(iv) To make generally available to its security holders as soon as practicable, but in
any event not later than sixteen months after the effective date of the Registration
Statement (as defined in Rule 158(c) under the 1933 Act), an earnings statement of the
Company and its Subsidiaries (which need not be audited) complying with Section 11(a) of the
1933 Act and the rules and regulations of the Commission thereunder (including, at the
option of the Company, Rule 158).
(v) To pay the required Commission filing fees relating to the Shares within the time
required under the 1933 Act.
(vi) To use the Net Proceeds received by it from the sale of the Shares pursuant to
this Agreement and any Terms Agreement in the manner specified in the General Disclosure
Package.
(vii) In connection with the offering and sale of the Shares, the Company will file
with the NYSE all documents and notices, and make all certifications, required by the NYSE
of companies that have securities that are listed or quoted on the NYSE and will maintain
such listings or quotations.
(viii) The Company will use its best efforts to maintain in effect its qualification
and election to be treated as a RIC under Subchapter M of the Code for each taxable year
during which it is a BDC under the Investment Company Act.
(ix) The Company, during a period of two years from the effective date of the
Registration Statement, will use its best efforts to maintain its status as a BDC; provided,
however, the Company may change the nature of its business so as to cease to be, or to
withdraw its election as, a BDC, with the approval of the board of directors and a vote of
stockholders as required by Section 58 of the Investment Company Act or any successor
provision.
15
(x) To not take, directly or indirectly, and to cause its affiliates to refrain from
taking, any action designed to cause or result in, or that has constituted or might
reasonably be expected to constitute, under the 1934 Act or otherwise, the stabilization or
manipulation of the price of any securities of the Company to facilitate the sale or resale
of the Shares.
(xi) At each Applicable Time, each Settlement Date and each Registration Statement
Amendment Date (as defined below), the Company shall be deemed to have affirmed each
representation, warranty, covenant and other agreement contained in this Agreement or any
Terms Agreement. In a prospectus supplement filed with the Commission pursuant to Rule 497
under the 1933 Act, or otherwise included in an Annual Report on Form 10-K or Quarterly
Report on Form 10-Q filed by the Company in respect of any quarter in which sales of Shares
were made by or through the Agent under this Agreement or any Terms Agreement, the Company
shall set forth with regard to such quarter the number of Shares sold through the Agent
under this Agreement or any Terms Agreement and the Net Proceeds received by the Company
with respect to sales of Shares pursuant to this Agreement or any Terms Agreement.
(xii) Upon commencement of the offering of Shares under this Agreement and each time
the Shares are delivered to the Agent as principal on a Settlement Date and promptly after
each date the Registration Statement or the Prospectus shall be amended or supplemented in
connection with a Quarterly 497 Filing or otherwise (other than (1) by an amendment or
supplement providing solely for the determination of the terms of the Shares, (2) in
connection with the filing of a prospectus supplement that contains solely the information
set forth in Section 3(a)(xi) or (3) by a prospectus supplement relating to the offering of
other securities (including, without limitation, other shares of Common Stock)) (each such
date, a “Registration Statement Amendment Date”), the Company will furnish or cause
to be furnished forthwith to the Agent a certificate dated the date of effectiveness of such
amendment or the date of filing with the Commission of such supplement, as the case may be,
in a form reasonably satisfactory to the Agent to the effect that the statements contained
in the certificate referred to in Section 6(f) of this Agreement which were last furnished
to the Agent are true and correct at the time of such amendment or supplement, as the case
may be, as though made at and as of such time (except that such statements shall be deemed
to relate to the Registration Statement and the Prospectus as amended and supplemented to
such time) or, in lieu of such certificate, a certificate of the same tenor as the
certificate referred to in said Section 6(f), but modified as necessary to relate to the
Registration Statement, the Disclosure Package and the Prospectus as amended and
supplemented, to the time of delivery of such certificate. As used in this paragraph, to the
extent there shall be an Applicable Time on or following the date referred to above,
promptly shall be deemed to be on or prior to the next succeeding Applicable Time.
(xiii) Upon commencement of the offering of Shares under this Agreement and each time
the Shares are delivered to the Agent as principal on a Settlement Date and promptly after
each Registration Statement Amendment Date, the Company will furnish or cause to be
furnished to the Agent the written opinion and letter of Xxxxxxxxxx Xxxxxx & Xxxxxxx LLP,
counsel for the Company, dated the date of effectiveness of such amendment or the date of
filing with the Commission of such supplement, as the case may be, in a form and substance
reasonably satisfactory to the Agent and its counsel, of the same tenor as the opinions and
letters referred to in Sections 6(c) and 6(d) of this Agreement, but modified as necessary
to relate to the Registration Statement, the General Disclosure Package and the Prospectus
as amended and supplemented, to the time of delivery of such opinion and letter or, in lieu
of such opinion and letter, such counsel shall furnish the Agent with a letter substantially
to the effect that the Agent may rely on the last opinion and letter furnished to the Agent
to the same extent as though each were dated the date of such letter authorizing reliance
(except that statements in such last letter shall be deemed to relate to the Registration
Statement and the Prospectus as amended and supplemented to the time of delivery of such
letter authorizing reliance). As used in this paragraph, to the extent there shall be an
Applicable Time on or following the date referred to above, promptly shall be deemed to be
on or prior to the next succeeding Applicable Time.
(xiv) Upon commencement of the offering of Shares under this Agreement and each time
the Shares are delivered to the Agent as principal on a Settlement Date and promptly after
each time that the Registration Statement is amended or the Prospectus is supplemented to
include additional financial
16
information, the Company will cause PricewaterhouseCoopers LLP, or other independent
accountants reasonably satisfactory to the Agent, to furnish to the Agent a letter, dated
the date of effectiveness of such amendment or the date of filing of such supplement with
the Commission, as the case may be, in form reasonably satisfactory to the Agent and its
counsel, of the same tenor as the letter referred to in Section 6(e) hereof, but modified as
necessary to relate to the Registration Statement, the General Disclosure Package and the
Prospectus, as amended and supplemented, to the date of such letter. As used in this
paragraph, to the extent there shall be an Applicable Time on or following the date referred
to above, promptly shall be deemed to be on or prior to the next succeeding Applicable Time.
(xv) The Company consents to Xxxxxx Xxxxxxxx trading in the Company’s Common Stock for
Xxxxxx Xxxxxxxx’ own account and for the account of its clients at the same time as sales of
Shares occur pursuant to this Agreement or any Terms Agreement.
(xvi) If, to the knowledge of the Company, all filings required by Rule 497 in
connection with this offering shall not have been made or the representations in Section
1(a) shall not be true and correct on the applicable Settlement Date, the Company will offer
to any person who has agreed to purchase Shares from the Company as the result of an offer
to purchase solicited by the Agent the right to refuse to purchase and pay for such Shares.
(xvii) The Company will cooperate timely with any reasonable due diligence review
conducted by the Agent or its counsel from time to time in connection with the transactions
contemplated hereby or in any Terms Agreement, including, without limitation, and upon
reasonable notice providing information and making available documents and appropriate
corporate officers, during regular business hours and at the Company’s principal offices, as
the Agent may reasonably request.
(xviii) The Company will not, without (A) giving the Agent at least one business day’s
prior written notice specifying the nature of the proposed sale and the date of such
proposed sale and (B) the Agent suspending activity under this program for such period of
time as requested by the Company or as deemed appropriate by the Agent in light of the
proposed sale, (I) offer, pledge, announce the intention to sell, sell, contract to sell,
sell any option or contract to purchase, purchase any option or contract to sell, purchase
pursuant to its share repurchase program, grant any option, right or warrant for the sale
of, lend or otherwise transfer or dispose of, directly or indirectly, any shares of Common
Stock or securities convertible into or exchangeable or exercisable for or repayable with
Common Stock, or file any registration statement under the 1933 Act with respect to any of
the foregoing (other than a shelf registration under Rule 415 under the 1933 Act, a
registration statement on Form N-14 or a post-effective amendment to the Registration
Statement) or (II) enter into any swap or other agreement or any transaction that transfers
in whole or in part, directly or indirectly, any of the economic consequence of ownership of
the Common Stock, or any securities convertible into or exchangeable or exercisable for or
repayable with Common Stock, whether any such swap or transaction described in clause (I) or
(II) above is to be settled by delivery of Common Stock or such other securities, in cash or
otherwise. The foregoing sentence shall not apply to (w) securities issued pursuant to a
registration statement on Form N-14, (x) any shares issued pursuant to the Company’s
Dividend Reinvestment Plan, (y) the Shares to be offered and sold through the Agent pursuant
to this Agreement or any Terms Agreement and (z) equity incentive awards approved by the
board of directors of the Company or the compensation committee thereof or the issuance of
Common Stock upon exercise thereof.
(xix) If immediately prior to the third anniversary (the “Renewal Deadline”) of
the initial effective date of the Registration Statement, any of the Shares remain unsold,
the Company will, prior to the Renewal Deadline file, if it has not already done so, a new
registration statement relating to the Shares, in a form satisfactory to the Agent, and will
use its best efforts to cause such registration statement to be declared effective within 60
days after the Renewal Deadline. The Company will take all other action necessary or
appropriate to permit the issuance and sale of the Shares to continue as contemplated in the
expired registration statement relating to the Shares.
Section 4. The Company represents and agrees that, without the prior consent of the Agent,
(i) it will not distribute any offering material other than the Registration Statement, the General
Disclosure Package or the
17
Prospectus, and (ii) it has not made and will not make any offer relating to the Shares that would
constitute a “free writing prospectus” as defined in Rule 405 under the Act and which the
parties agree, for the purposes of this Agreement, includes any “advertisement” as defined
in Rule 482 under the 1933 Act.
Section 5. Payment of Expenses.
(a) The Company covenants and agrees with the Agent that the Company will pay or cause to be
paid the following: (i) the fees, disbursements and expenses of the Company’s counsel and
accountants in connection with the registration of the Shares under the 1933 Act and all other
expenses in connection with the preparation, printing and filing of the Registration Statement, the
Basic Prospectus, Prospectus Supplement and the Prospectus and amendments and supplements thereto
and the mailing and delivering of copies thereof to the Agent; (ii) the cost of printing or
producing this Agreement or any Terms Agreement, any Blue Sky and Legal Investment Memoranda,
closing documents (including any compilations thereof) and any other documents in connection with
the offering, purchase, sale and delivery of the Shares; (iii) all expenses in connection with the
qualification of the Shares for offering and sale under state securities laws as provided in
Section 3(a)(ii) hereof, including the reasonable fees and disbursements of counsel for the Agent
in connection with such qualification and in connection with the Blue Sky and Legal Investment
Surveys; (iv) any filing fees incident to, and the reasonable fees and disbursements of counsel for
the Agent in connection with, any required review by the Financial Industry Regulatory Authority,
Inc. (“FINRA”) of the terms of the sale of the Shares; (v) all fees and expenses in connection with
listing or quoting the Shares on the NYSE; (vi) the cost of preparing the Shares; (vii) the costs
and charges of any transfer agent or registrar or any dividend distribution agent; and (viii) all
other costs and expenses incident to the performance by the Company, the Adviser and the
Administrator of their obligations hereunder which are not otherwise specifically provided for in
this Section. It is understood, however, that, except as provided in this Section, and Section 7
hereof, the Agent will pay all of its own costs and expenses, including the fees of its counsel.
(b) Notwithstanding the foregoing, the Company shall be obligated to pay or cause to be paid
the reasonable fees and disbursements of counsel for the Agent incurred by the Agent in connection
with the offering contemplated by this Agreement, including as set forth in Section 5(a)(ii) and
(iv), up to an amount equal to $75,000, unless it consents in writing to the payment of such fees
and disbursements in excess of such amount.
Section 6. Conditions of the Agent’s Obligation. The obligations of the Agent
hereunder shall be subject, in its discretion, to the condition that all representations and
warranties and other statements of the Company, the Adviser and the Administrator herein or in
certificates of any officer of the Company, the Adviser and the Administrator delivered pursuant to
the provisions hereof are true and correct as of the time of the execution of this Agreement, the
date of any executed Terms Agreement and as of each Registration Statement Amendment Date,
Applicable Time and Settlement Date, to the condition that the Company, the Adviser and the
Administrator shall have performed all of their respective obligations hereunder theretofore to be
performed, and the following additional conditions:
(a) The Prospectus shall have been filed with the Commission pursuant to Rule 497 under the
1933 Act on or prior to the date hereof and in accordance with Section 3(a)(i) hereof; no stop
order suspending the effectiveness of the Registration Statement or any part thereof shall have
been issued and no proceeding for that purpose shall have been initiated or threatened by the
Commission; the Registration Statement shall be effective and no stop order suspending or
preventing the use of the Prospectus shall have been initiated or threatened by the Commission; and
all requests for additional information on the part of the Commission shall have been complied with
to the reasonable satisfaction of the Agent.
(b) On every date specified in Section 3(a)(xiii) hereof and on such other dates as reasonably
requested by Agent, Fried, Frank, Harris, Xxxxxxx & Xxxxxxxx LLP, counsel for the Agent, shall have
furnished to the Agent such written opinion or opinions, dated as of such date, with respect to
such matters as the Agent may reasonably request, and such counsel shall have received such papers
and information as they may reasonably request to enable them to pass upon such matters.
(c) On every date specified in Section 3(a)(xiii) hereof and on such other dates as reasonably
requested by Agent, Xxxxxxxxxx Xxxxxx & Xxxxxxx LLP, counsel for the Company, shall have furnished
to the Agent written opinion or opinions, dated as of such date, in form and substance reasonably
satisfactory to the Agent.
18
(d) On every date specified in Section 3(a)(xiii) hereof and on such other dates as reasonably
requested by Agent, Xxxxxxxxxx Xxxxxx & Xxxxxxx LLP, counsel for the Adviser and the Administrator,
shall have furnished to the Agent written opinion or opinions, dated as of such date, in form and
substance reasonably satisfactory to the Agent.
(e) At the dates specified in Section 3(a)(xiv) hereof and on such other dates as reasonably
requested by Agent, PricewaterhouseCoopers LLP shall have furnished to the Agent a letter or
letters dated as of the date of delivery thereof and addressed to the Agent in form and substance
reasonably satisfactory to the Agent and its counsel, containing statements and information of the
type ordinarily included in accountants’ “comfort letters” to underwriters with respect to the
financial statements of the Company and its Subsidiaries included in the Registration Statement,
the General Disclosure Package and the Prospectus.
(f) (i) Upon commencement of the offering of Shares under this Agreement and on such
other dates as reasonably requested by Agent, the Company will furnish or cause to be furnished
promptly to the Agent a certificate of an officer in a form satisfactory to the Agent stating the
minimum price for the sale of such Shares pursuant to this Agreement and the maximum number of
Shares that may be issued and sold pursuant to this Agreement or, alternatively, maximum gross
proceeds from such sales, as authorized from time to time by the Company’s board of directors or a
duly authorized committee thereof or, in connection with any amendment, revision or modification of
such minimum price or maximum Share number or amount, a new certificate with respect thereto and
(ii) on each date specified in Section 3(a)(xii) and on such other dates as reasonably
requested by Agent, the Company, the Adviser and the Administrator will furnish or cause to be
furnished promptly to the Agent certificates of their respective officers, dated as of the date
thereof, to the effect that (A) there has been no Material Adverse Effect since the date as of
which information is given in the General Disclosure Package and the Prospectus as then amended or
supplemented, (B) the representations and warranties in Section 1 hereof are true and correct as of
such date and (C) the Company has complied with all of the agreements entered into in connection
with the transaction contemplated herein and satisfied all conditions on its part to be performed
or satisfied.
(g) Since the date of the latest audited financial statements then included in the General
Disclosure Package and the Prospectus, no Material Adverse Effect shall have occurred.
(h) The Company shall have conducted weekly due diligence sessions, in form and substance
satisfactory to the Agent.
(i) All filings with the Commission required by Rule 497 under the 1933 Act to have been filed
by each Applicable Time or related Settlement Date shall have been made within the applicable time
period prescribed for such filing by the 1933 Act Regulations.
(j) The Shares shall have received approval for listing or quotation on the NYSE prior to the
first Settlement Date.
(k) The Company shall continue to be regulated as a BDC under the Investment Company Act.
(l) Prior to any Settlement Date, the Company shall have furnished to the Agent such further
information, documents or certificates as the Agent may reasonably request.
Section 7. Indemnification.
(a) The Company will indemnify and hold harmless the Agent against any losses, claims, damages
or liabilities, joint or several, to which the Agent may become subject, under the 1933 Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon an untrue statement or alleged untrue statement of a material fact
contained in the Registration Statement, the Basic Prospectus, the Prospectus Supplement or the
Prospectus or any amendment or supplement thereto or arise out of or are based upon the omission or
alleged omission to state therein a material fact required to be stated therein or necessary to
make the statements therein not misleading, and will reimburse the Agent for any legal or other
expenses reasonably incurred by the Agent in connection with investigating or defending any such
action or claim as such expenses are
19
incurred; provided, however, that the Company shall not be liable in any such case to the extent
that any such loss, claim, damage or liability arises out of or is based upon an untrue statement
or alleged untrue statement or omission or alleged omission made in the Registration Statement, the
Basic Prospectus, the Prospectus Supplement or the Prospectus, or any amendment or supplement
thereto in reliance upon and in strict conformity with written information furnished to the Company
by the Agent expressly for use therein.
(b) The Adviser and the Administrator, severally and not jointly, will indemnify and hold
harmless the Agent against any losses, claims, damages or liabilities, joint or several, to which
the Agent may become subject, under the 1933 Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are based upon an untrue
statement or alleged untrue statement of a material fact contained in the Registration Statement,
the Basic Prospectus, the Prospectus Supplement or the Prospectus or any amendment or supplement
thereto or arise out of or are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements therein not
misleading, and will reimburse the Agent for any legal or other expenses reasonably incurred by the
Agent in connection with investigating or defending any such action or claim as such expenses are
incurred, in each case to the extent, but only to the extent, that such untrue statement or alleged
untrue statement or omission or alleged omission was made in the Registration Statement, the Basic
Prospectus, the Prospectus Supplement or the Prospectus, or any amendment or supplement thereto in
reliance upon and in conformity with written information furnished to the Company by the Adviser
(in the case of the Adviser) or the Administrator (in the case of the Administrator), respectively.
(c) The Agent will indemnify and hold harmless the Company, the Adviser and the Administrator
against any losses, claims, damages or liabilities to which the Company may become subject, under
the 1933 Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon an untrue statement or alleged untrue statement of
a material fact contained in the Registration Statement, the Basic Prospectus, the Prospectus
Supplement or the Prospectus, or any amendment or supplement thereto or arise out of or are based
upon the omission or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, in each case to the extent, but
only to the extent, that such untrue statement or alleged untrue statement or omission or alleged
omission was made in the Registration Statement, the Basic Prospectus, the Prospectus Supplement or
the Prospectus, or any such amendment or supplement thereto in reliance upon and in strict
conformity with written information furnished to the Company by the Agent expressly for use
therein; and will reimburse the Company for any legal or other expenses reasonably incurred by the
Company in connection with investigating or defending any such action or claim as such expenses are
incurred.
(d) Promptly after receipt by an indemnified party under subsection (a), (b) or (c) above of
notice of the commencement of any action, such indemnified party shall, if a claim in respect
thereof is to be made against the indemnifying party under such subsection, notify the indemnifying
party in writing of the commencement thereof; but the omission so to notify the indemnifying party
shall not relieve it from any liability which it may have to any indemnified party otherwise than
under such subsection except and then only to the extent such indemnifying party is materially
prejudiced thereby. In case any such action shall be brought against any indemnified party and it
shall notify the indemnifying party of the commencement thereof, the indemnifying party shall be
entitled to participate therein and, to the extent that it shall wish, jointly with any other
indemnifying party similarly notified, to assume the defense thereof, with counsel satisfactory to
such indemnified party (who shall not, except with the consent of the indemnified party, be counsel
to the indemnifying party), and, after notice from the indemnifying party to such indemnified party
of its election so to assume the defense thereof, the indemnifying party shall not be liable to
such indemnified party under this Section 7 for any legal expenses of other counsel or any other
expenses, in each case subsequently incurred by such indemnified party, in connection with the
defense thereof other than reasonable costs of investigation. No indemnifying party shall, without
the written consent of the indemnified party, effect the settlement or compromise of, or consent to
the entry of any judgment with respect to, any pending or threatened action or claim in respect of
which indemnification or contribution may be sought hereunder (whether or not the indemnified party
is an actual or potential party to such action or claim) unless such settlement, compromise or
judgment (i) includes an unconditional release of the indemnified party from all liability arising
out of such action or claim and (ii) 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.
20
(e) If the indemnification provided for in this Section 7 is unavailable to hold harmless an
indemnified party under subsection (a), (b) or (c) above in respect of any losses, claims, damages
or liabilities (or actions in respect thereof) referred to therein, then each indemnifying party
shall contribute to the amount paid or payable by such indemnified party as a result of such
losses, claims, damages or liabilities (or actions in respect thereof) in such proportion as is
appropriate to reflect the relative benefits received by the Company, the Adviser and the
Administrator on the one hand and the Agent on the other from the offering of the Shares to which
such loss, claim, damage or liability (or action in respect thereof) relates. If, however, the
allocation provided by the immediately preceding sentence is not permitted by applicable law, then
each indemnifying party shall contribute to such amount paid or payable by such indemnified party
in such proportion as is appropriate to reflect not only such relative benefits but also the
relative fault of the Company, the Adviser and the Administrator on the one hand and the Agent on
the other in connection with the statements or omissions which resulted in such losses, claims,
damages or liabilities (or actions in respect thereof), as well as any other relevant equitable
considerations. The relative benefits received by the Company, the Adviser and the Administrator on
the one hand and the Agent on the other shall be deemed to be in the same proportion as the total
net proceeds from the offering (before deducting expenses) received by the Company bear to the
total commissions received by the Agent. The relative fault shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information supplied by the
Company, the Adviser or the Administrator on the one hand or the Agent on the other and the
parties’ relative intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission. The Company, the Adviser and the Administrator and the Agent agree
that it would not be just and equitable if contribution pursuant to this subsection (d) were
determined by pro rata allocation or by any other method of allocation which does not take account
of the equitable considerations referred to above in this subsection (d). The amount paid or
payable by an indemnified party as a result of the losses, claims, damages or liabilities (or
actions in respect thereof) referred to above in this subsection (d) shall be deemed to include 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
subsection (d), the Agent shall not be required to contribute any amount in excess of the amount by
which the total compensation received by the Agent with respect to sales of the Shares sold by it
to the public exceeds the amount of any damages which the Agent has otherwise been required to pay
by reason of such 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 0000 Xxx) shall
be entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation.
(f) The obligations of the Company, the Adviser and the Administrator under this Section 7
shall be in addition to any liability which the Company, the Adviser and the Administrator may
otherwise have and shall extend, upon the same terms and conditions, to the directors, officers,
employees, attorneys and agents of the Agent and to each person, if any, who controls the Agent
within the meaning of the 1933 Act and each broker dealer affiliate of the Agent; and the
obligations of the Agent under this Section 7 shall be in addition to any liability which the Agent
may otherwise have and shall extend, upon the same terms and conditions, to each director, officer,
employee, attorney and agent of the Company, the Adviser and the Administrator and to each person,
if any, who controls the Company within the meaning of the 1933 Act. No party shall be entitled to
indemnification under this Section 10 if such indemnification of such party would violate Section
17(i) of the Investment Company Act.
Section 8. Representations, Warranties and Agreements to Survive Delivery. The
respective indemnities, agreements, representations, warranties and other statements of the
Company, the Adviser, the Administrator and the Agent, as set forth in this Agreement or made by or
on behalf of them, respectively, pursuant to this Agreement, shall remain in full force and effect,
regardless of any investigation (or any statement as to the results thereof) made by or on behalf
of the Agent or any controlling person of the Agent, or the Company, or any officer or director or
controlling person of the Company, and shall survive delivery of and payment for the Shares.
Section 9. No Advisory or Fiduciary Relationship. Each of the Company, the Adviser
and the Administrator acknowledges and agrees that (i) the Agent is acting solely in the capacity
of an arm’s length contractual counterparty to the Company with respect to the offering of Shares
contemplated hereby (including in connection with determining the terms of such offering) and (ii)
the Agent has not assumed an advisory or fiduciary responsibility in favor of the Company, the
Adviser or the Administrator with respect to the offering contemplated hereby or the process
leading thereto (irrespective of whether the Agent has advised or is currently advising the
Company, the Adviser or the Administrator on other matters) or any other obligation to the Company,
the Adviser or
21
the Administrator except the obligations expressly set forth in this Agreement and (iii) each of
the Company, the Adviser and the Administrator has consulted its own legal and financial advisors
to the extent it deemed appropriate. Each of the Company, the Adviser and the Administrator agrees
that it will not claim that the Agent has rendered advisory services of any nature or respect, or
owe a fiduciary or similar duty to the Company, the Adviser or the Administrator, in connection
with such transaction or the process leading thereto.
Section 10. Termination.
(a) The Company shall have the right, by giving written notice as hereinafter specified, to
terminate this Agreement in its sole discretion at any time. Any such termination shall be without
liability of any party to any other party, except that the provisions of Section 5(b), Section 7
and Section 8 of this Agreement shall remain in full force and effect notwithstanding such
termination.
(b) The Agent shall have the right, by giving written notice as hereinafter specified, to
terminate this Agreement in its sole discretion at any time. Any such termination shall be without
liability of any party to any other party except that the provisions of Section 5(b), Section 7 and
Section 8 of this Agreement shall remain in full force and effect notwithstanding such termination.
(c) This Agreement shall remain in full force and effect until and unless terminated pursuant
to Section 10(a) or (b) above or otherwise by mutual agreement of the parties; provided
that any such termination by mutual agreement or pursuant to this clause (c) shall in all cases be
deemed to provide that Section 5(b), Section 7 and Section 8 of this Agreement shall remain in full
force and effect.
(d) Any termination of this Agreement shall be effective on the date specified in such notice
of termination; provided that such termination shall not be effective until the close of
business on the date of receipt of such notice by the Agent or the Company, as the case may be. If
such termination shall occur prior to the Settlement Date for any sale of Shares, such sale shall
settle in accordance with the provisions of Section 2(h) hereof.
(e) In the case of any purchase by the Agent pursuant to a Terms Agreement, the Agent may
terminate this Agreement, at any time at or prior to the Settlement Date (i) if there has been,
since the time of execution of this Agreement or since the respective dates as of which information
is given in the General Disclosure Package or the Prospectus, any Material Adverse Effect, or (ii)
if there has occurred any material adverse change in the financial markets in the United States or
the international financial markets, any outbreak of hostilities or escalation thereof or other
calamity or crisis or any change or development involving a prospective change in national or
international political, financial or economic conditions, in each case the effect of which is such
as to make it, in the judgment of the Agent, impracticable or inadvisable to market the Shares or
to enforce contracts for the sale of Shares, or (iii) if trading in any securities of the Company
has been suspended or materially limited by the Commission or the NYSE, or if trading generally on
the American Stock Exchange or the NYSE or Nasdaq has been suspended or materially limited, or
minimum or maximum prices for trading have been fixed, or maximum ranges for prices have been
required, by any of said exchanges or by such system or by order of the Commission, FINRA or any
other governmental authority, or (iv) a material disruption has occurred in commercial banking or
securities settlement or clearance services in the United States, or (v) if a banking moratorium
has been declared by either Federal or New York authorities.
Section 11. Notices. All statements, requests, notices and agreements hereunder
shall be in writing, and if to Xxxxxx Xxxxxxxx shall be delivered or sent by mail, telex or
facsimile transmission to:
Xxxxxx, Xxxxxxxx & Company, Incorporated
Xxx Xxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Fax No. (000) 000-0000
Attention: Syndicate Department
Xxx Xxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Fax No. (000) 000-0000
Attention: Syndicate Department
22
with a copy to:
Fried, Frank, Harris, Xxxxxxx & Xxxxxxxx LLP
Xxx Xxx Xxxx Xxxxx
Xxx Xxxx, XX 00000
Fax No. (000) 000-0000
Attention: Xxxxxx X. Xxxxxxx, Esq.
Xxx Xxx Xxxx Xxxxx
Xxx Xxxx, XX 00000
Fax No. (000) 000-0000
Attention: Xxxxxx X. Xxxxxxx, Esq.
and if to the Company to:
Any such statements, requests, notices or agreements shall take effect upon receipt thereof.
Section 12. Parties. This Agreement shall be binding upon, and inure solely to the
benefit of, the Agent and the Company, the Adviser and the Administrator and, to the extent
provided in Sections 7 and 8 hereof, the officers, directors, employees, attorneys and agents of
the Company, the Adviser, the Administrator and the Agent and each person who controls the Company,
the Adviser, the Administrator or the Agent, and their respective heirs, executors, administrators,
successors and assigns, and no other person shall acquire or have any right under or by virtue of
this Agreement. No purchaser of Shares through the Agent shall be deemed a successor or assign by
reason merely of such purchase.
Section 13. Time of the Essence. Time shall be of the essence of this Agreement. As
used herein, the term “business day” shall mean any day when the Commission’s office in Washington,
D.C. is open for business.
Section 14. Waiver of Jury Trial. The Company, the Adviser, the Administrator and
the Agent hereby irrevocably waive, to the fullest extent permitted by applicable law, any and all
right to jury trial by jury in any legal proceeding arising out of or relating to this Agreement or
the transactions contemplated hereby.
Section 15. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REFERENCE TO ITS PRINCIPLES OF CONFLICTS
OF LAW.
Section 16. Counterparts. This Agreement and any Terms Agreement may be executed by
any one or more of the parties hereto and thereto in any number of counterparts, each of which
shall be deemed to be an original, but all such respective counterparts shall together constitute
one and the same instrument. This Agreement and any Terms Agreement may be delivered by any party
by facsimile or other electronic transmission.
Section 17. Severability. The invalidity or unenforceability of any Section,
paragraph or provision of this Agreement shall not affect the validity or enforceability of any
other Section, paragraph or provision hereof. If any Section, paragraph or provision of this
Agreement is for any reason determined to be invalid or unenforceable, there shall be deemed to be
made such minor changes (and only such minor changes) as are necessary to make it valid and
enforceable.
If the foregoing is in accordance with your understanding of our agreement, please sign and
return to the Company a counterpart hereof, whereupon this instrument, along with all counterparts,
will become a binding agreement between the Agent and the Company in accordance with its terms.
[Signatures appear on the following page]
23
Very truly yours, FIFTH STREET FINANCE CORP. |
||||
By: | /s/ Xxxxxxx X. Xxxxxx | |||
Name: | Xxxxxxx X. Xxxxxx | |||
Title: | President, Secretary, and Chief Compliance Officer | |||
FIFTH STREET MANAGEMENT LLC |
||||
By: | /s/ Xxxxxxx X. Xxxxxx | |||
Name: | Xxxxxxx X. Xxxxxx | |||
Title: | Member | |||
FSC, INC. |
||||
By: | /s/ Xxxxxxx X. Xxxxxx | |||
Name: | Xxxxxxx X. Xxxxxx | |||
Title: | President, Treasurer and Secretary |
Accepted as of the date hereof: XXXXXX, XXXXXXXX & COMPANY, INCORPORATED |
||||
By: | /s/ Xxxxx X. Xxxxxxxxxx | |||
Name: | Xxxxx X. Xxxxxxxxxx | |||
Title: | Managing Director | |||
[Signature page to the Sales Agreement]
Common Stock
($0.01 par value per share)
($0.01 par value per share)
TERMS AGREEMENT
XXXXXX, XXXXXXXX & COMPANY, INCORPORATED
Xxx Xxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxxxx, XX 00000
Attn: Syndicate Department
Xxx Xxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxxxx, XX 00000
Attn: Syndicate Department
Ladies and Gentlemen:
Fifth Street Finance Corp., a Delaware corporation (the “Company”), proposes, subject
to the terms and conditions stated herein and in the At-the-Market Equity Offering Sales Agreement,
dated [__________], 2010 (the “Sales Agreement”), between the Company and Xxxxxx, Xxxxxxxx
& Company, Incorporated (the “Agent”), to issue and sell to the Agent the securities
specified in the Schedule hereto (the “Purchased Securities”).
Each of the provisions of the Sales Agreement not specifically related to the solicitation by
the Agent, as agent of the Company, of offers to purchase securities is incorporated herein by
reference in its entirety, and shall be deemed to be part of this Terms Agreement to the same
extent as if such provisions had been set forth in full herein. Each of the representations and
warranties set forth therein shall be deemed to have been made at and as of the date of this Terms
Agreement and the Applicable Time, except that each representation and warranty in Section 1 of the
Sales Agreement which makes reference to the Prospectus (as therein defined) shall be deemed to be
a representation and warranty as of the date of the Sales Agreement in relation to the Prospectus,
and also a representation and warranty as of the date of this Terms Agreement and the Settlement
Date in relation to the Prospectus as amended and supplemented to relate to the Purchased
Securities.
An amendment to the Registration Statement (as defined in the Sales Agreement), or a
supplement to the Prospectus, as the case may be, relating to the Purchased Securities, in the form
heretofore delivered to the Agent is now proposed to be filed with the Securities and Exchange
Commission.
Subject to the terms and conditions set forth herein and in the Sales Agreement which are
incorporated herein by reference, the Company agrees to issue and sell to the Agent and the latter
agrees to purchase from the Company the number of shares of the Purchased Securities at the time
and place and at the purchase price set forth in the Schedule hereto.
If the foregoing is in accordance with your understanding of our agreement, please sign and
return to the Company a counterpart hereof, whereupon this instrument, along with all counterparts,
will become a binding agreement between the Agent and the Company in accordance with its terms.
[Signatures appear on the following page]
Very truly yours,
FIFTH STREET FINANCE CORP. |
||||
By: | ||||
Name: | ||||
Title: | ||||
FIFTH STREET MANAGEMENT LLC |
||||
By: | ||||
Name: | ||||
Title: | ||||
FSC, INC. |
||||
By: | ||||
Name: | ||||
Title: | ||||
Accepted as of the date hereof: | ||||
XXXXXX, XXXXXXXX & COMPANY, INCORPORATED | ||||
By: |
||||
Name:
|
||||
Title: |
[Signature page to the Terms Agreement]