PROSPECT CAPITAL CORPORATION STOCK PURCHASE AGREEMENT Dated as of August 17, 2009
Exhibit
10.1
Execution Version
PROSPECT
CAPITAL CORPORATION
Dated as
of August 17, 2009
To Each of the Purchasers Listed in
the signature page:
Ladies
and Gentlemen:
The
undersigned, Prospect Capital Corporation, a Maryland corporation (the "Corporation"), hereby
agrees with you as follows:
1. AUTHORIZATION;
SALE AND PURCHASE OF SHARES
1.1 Authorization of
Shares. The Corporation has duly authorized the issuance and sale of up
to an aggregate of 6,000,000 shares
(the "Shares")
of common stock, $0.001 par value of the Corporation (the "Common
Stock").
1.2 Sale and Purchase of the
Shares. Subject to the terms and conditions herein provided, the
Corporation hereby agrees to sell to the purchasers listed in the signature page
attached hereto (each, a "Purchaser" and
collectively, the "Purchasers"), and
each Purchaser, severally and not jointly, agrees to purchase from the
Corporation, at the Closing provided for in Section 2 hereof, up
to that number of Shares specified directly opposite its name in the signature
page. The per share purchase price for the Shares shall be the same for each
Purchaser and shall be equal to the price per share as reflected on the
signature page hereof. Each Purchaser's obligations hereunder are several and
not joint obligations, and no Purchaser shall have any liability to any person
or entity for the performance or nonperformance by any other Purchaser
hereunder. Each Purchaser understands and acknowledges that it has made its own
review of the investment merits and risks of the Shares.
1.3 On the date
hereof, the Corporation and each Purchaser are entering into that certain
Registration Rights Agreement, between the Corporation and each Purchaser,
substantially in the form of Exhibit A hereto (the
"Registration Rights
Agreement"), which provides the Purchasers with certain registration
rights with respect to the Shares being purchased hereunder, together with this
Agreement, and each of the other agreements entered into by the parties hereto
(collectively, the "Transaction
Documents") in connection with the transactions contemplated by this
Agreement (collectively, the "Transactions").
2. THE
CLOSING.
2.1 Time and Place of the
Closing. Subject to Section 3 hereof,
payment of the purchase price as reflected on the signature page hereof (the
"Purchase
Price") for and delivery of the Shares shall be made at the offices of
Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP, Four Times Square, New York, New
York 10036-6522, or at such other place or in such other manner as may be agreed
upon by the Corporation and the Purchasers, at 10:30 a.m., New York time, on
August 20, 2009, or at such other time or date as the Purchasers and the
Corporation may mutually determine (such date and time of payment and delivery
being herein called the "Closing
Date").
2.2 Delivery of and Payment for
the Shares. Subject to Section 3 hereof, at
the closing of the Transactions contemplated by this Agreement (the "Closing"), the
Corporation shall instruct the Corporation's transfer agent to deliver to each
Purchaser, at such address(es) as designated on its Signature Page, certificates
evidencing the Shares to be purchased by it (as indicated opposite such
Purchaser's name on the Signature Page hereto), dated the Closing Date and
bearing appropriate legends as hereinafter provided for, and, registered on the
books and records of the Corporation in such Purchaser's name or its nominee,
against payment in full on the Closing Date of the Purchase Price therefor by
wire transfer of immediately available funds for credit to such account as the
Corporation shall direct in writing prior to the Closing Date.
3. CONDITIONS
TO CLOSING
3.1 Conditions to the
Purchasers' Obligations. The obligations of each Purchaser hereunder are
subject to the accuracy, as of the date hereof and on the Closing Date, of the
representations and warranties of the Corporation contained herein, except to
the extent any such representation or warranty expressly specifies an earlier
date, and to the performance by the Corporation of its obligations hereunder and
to each of the following additional terms and conditions:
(a) The
representations and warranties of the Corporation herein shall be true and
correct in all respects as of the date when made and as of the Closing Date as
though made at that time (except for representations and warranties that speak
as of a specific date, which shall be true and correct as of such specified
date) and the Corporation shall have performed, satisfied and complied in all
respects with the covenants, agreements and conditions required hereby to be
performed, satisfied or complied with by the Corporation at or prior to the
Closing Date. Each Purchaser shall have received a certificate,
executed by the Chief Executive Officer of the Corporation, dated as of the
Closing Date, to the foregoing effect.
(b) Any
authorizations, consents, commitments, agreements, orders or approvals of, or
declarations or filings with, or expirations of waiting periods imposed by any
federal, state or local court or governmental or regulatory agency or authority
or applicable stock exchange or trading market (any such court, agency,
authority, exchange or market, a "Governmental
Authority") required for the consummation of the Transactions, as defined
herein, shall have been obtained or filed or shall have occurred and any such
orders shall have become final, non-appealable orders.
(c) The
Corporation shall have executed and delivered to such Purchaser each of the
Transaction Documents.
(d) ▇▇▇▇▇▇▇
LLP, counsel to the Corporation, shall have furnished to the Purchasers its
written opinion addressed to the Purchasers and dated the Closing Date that the
Shares have been duly authorized and, when issued and delivered in accordance
with this Agreement, will be validly issued, fully paid and
non-assessable.
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(e) The
aggregate purchase price of the Shares to be purchased on the Closing Date by
the Purchasers is no less than $25 million.
3.2 Conditions to the
Corporation's Obligations. The obligations of the Corporation
hereunder are subject to the accuracy, as of the date hereof and as of the
Closing Date, of the representations and warranties of each Purchaser contained
herein and to the performance by each Purchaser of its obligations hereunder and
to each of the following additional terms and conditions:
(a) The
Purchasers shall have received any and all necessary approvals from all
Governmental Authorities necessary for the purchase by the Purchasers of the
Shares as the case may be, pursuant to this Agreement, and any and all
applicable waiting periods upon which such approvals are conditioned shall have
expired.
(b) Such
Purchaser shall have executed each of the Transaction Documents of which it is a
party and delivered the same to the Corporation.
(c) Such
Purchaser and each other Purchaser shall have delivered to the Corporation the
Purchase Price for the Shares being purchased by such Purchaser and each other
Purchaser, severally and not jointly, at the Closing by wire transfer of
immediately available funds pursuant to the wire instructions provided by the
Corporation.
4. REPRESENTATIONS
AND WARRANTIES
4.1 Representations and
Warranties of the Corporation. The Corporation represents and warrants
to, and agrees with each Purchaser that as of the date hereof and as of the
Closing Date:
(a) The
authorized capital stock of the Corporation consists of 100,000,000 shares of
Common Stock of which 48,415,358 shares of Common Stock are outstanding as of
the date of this Agreement.
(b) Since
December 31, 2008, the Corporation has filed all material reports, registrations
and statements, together with any required amendments thereto, that it was
required to file with the Securities and Exchange Commission (the "SEC") and any other
applicable federal or state securities authorities. All such reports and
statements filed with any such regulatory body or authority are collectively
referred to herein as the "Corporation Reports."
As of their respective dates, the Corporation Reports complied as to form in all
material respects with all the rules and regulations promulgated by the SEC and
any other applicable foreign, federal or state securities authorities, as the
case may be.
(c) Except
as previously disclosed in writing to the Purchasers, since December 31, 2008,
no change has occurred and no circumstances exist (including any changes,
occurrences, circumstances or facts existing prior to December 31, 2008 but
which become known on or after December 31, 2008) that is not disclosed in the
Disclosure Materials (as defined below) which, individually or in the aggregate,
has had, or would reasonably be expected to have, a Material Adverse
Effect.
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(d) The
Corporation has all permits, licenses, authorizations, orders and approvals of,
and has made all filings, applications and registrations with, any governmental
entities that are required in order to carry on its business as presently
conducted and that are material to the business of the Corporation, except where
the failure to have such permits, licenses, authorizations, orders and approvals
or the failure to make such filings, applications and registrations would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect; and all such permits, licenses, certificates of authority,
orders and approvals are in full force and effect and, to the knowledge of the
Corporation, no suspension or cancellation of any of them is threatened, and all
such filings, applications and registrations are current.
(e) Each
of the following publicly filed documents is available via the ▇▇▇▇▇ system to
the Purchaser: (i) the Corporation's Annual Report on Form 10-K for the year
ended June 30, 2008, as amended by Amendment No. 1 on Form 10-K/A as filed on
March 19, 2009; (ii) the Corporation's Quarterly Reports on Form 10-Q for each
of the quarters ended March 31, 2009, December 31, 2008 and September 30, 2008;
(iii) the Corporation's proxy statement for its Annual Meeting of Stockholders
held on February 12, 2009; and (iv) the Corporation's Current Reports on Form
8-K filed with the SEC since December 31, 2008, pursuant to the reporting
requirements of the Securities and Exchange Act of 1934, as amended, and the
rules and regulations promulgated thereunder (the "Exchange Act") (items
(i) through (iv) collectively, the "Disclosure
Materials"), which Disclosure Materials include, among other things, the
Agreement and Plan of Merger by and between Patriot Capital Funding, Inc. and
the Corporation, dated as of August 3, 2009, audited consolidated balance sheets
of the Corporation as of June 30, 2008 and 2007 and the related consolidated
statements of operations, changes in net assets and cash flow for each of the
three years in the period ended June 30, 2008. As of the date hereof,
each of the documents comprising a part of the Disclosure Materials, when such
documents are considered together as a whole, did not contain or will not
contain any untrue statement of material fact or omitted to state or will not
omit to state any material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading.
(f) Based
in part upon the representations and warranties of each Purchaser contained
herein, the Corporation is not required by applicable law or regulation in
connection with the offer, sale and delivery of the Shares to the Purchasers in
the manner contemplated by this Agreement to register the Shares under the
Securities Act of 1933, as amended (the "Securities Act"), or
any state securities laws.
(g) The
Corporation, (i) has been duly incorporated and is validly existing in good
standing under the laws of its jurisdiction of incorporation, (ii) is duly
qualified to do business and is in good standing as a foreign corporation in
each jurisdiction in which its ownership or lease of property or the conduct of
its businesses requires such qualification, except where the failure to be so
qualified would not result in any material adverse change in the condition,
financial or otherwise, or in the earnings or business affairs of the
Corporation, or which would not materially and adversely affect the assets or
properties of the Corporation, or which would not materially and adversely
affect the ability of the Corporation to perform its obligations under the
Transaction Documents (individually or in the aggregate, a "Material Adverse
Effect," except that the mere filing of any action, claim, suit or order
relating to any actual or threatened litigation involving the Corporation or any
of its employees after the date of this Agreement (rather than the actual facts
and circumstances underlying such action, claim, suit or order) shall not be
deemed a Material Adverse Effect); and (iii) has all corporate power and
authority necessary to own or hold its respective properties and to conduct the
businesses in which it is currently engaged.
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(h) All
of the issued shares of capital stock of the Corporation have been duly and
validly authorized and issued, are fully paid and non-assessable and no such
shares were issued in violation of the preemptive or similar rights of any
security holder of the Corporation. Except as disclosed in the Disclosure
Materials, no person has any preemptive or similar statutory or contractual
right to purchase any shares of capital stock of the
Corporation. Except as disclosed in the Disclosure Materials, there
are no outstanding warrants, options or other rights to subscribe for or
purchase any of the Corporation's capital stock and no restrictions upon the
voting or transfer of any capital stock of the Corporation pursuant to the
Corporation's charter or bylaws or any agreement or other instrument to which
the Corporation is a party or by which the Corporation is bound.
(i) The
Shares have been duly authorized by the Corporation and, when issued and
delivered by the Corporation against payment therefor in the manner contemplated
by this Agreement, will be validly issued, fully paid and non-assessable, free
from all taxes, liens and charges with respect to the issue thereof, and the
issuance of the Shares will not obligate the Corporation to issue shares of
capital stock to any person.
(j) This
Agreement and the Registration Rights Agreement have been duly authorized,
executed and delivered by the Corporation and constitute a valid and legally
binding agreement of the Corporation enforceable against the Corporation in
accordance with their terms, subject to the effects of bankruptcy, insolvency,
reorganization, moratorium and other similar laws relating to or affecting
creditors' rights generally, and general equitable principles (whether
considered in a proceeding in equity or at law).
(k) The
execution, delivery and performance of this Agreement and the Registration
Rights Agreement, the issuance and sale of the Shares in the manner contemplated
hereby, and the consummation of the Transactions, will not (i) conflict with or
constitute a violation of, or default (with the passage of time or the delivery
of notice) under, (A) any bond, debenture, note or other evidence of
indebtedness, or any agreement, lease, franchise, license, permit, contract,
indenture, mortgage, deed of trust, loan agreement, joint venture or other
agreement or instrument to which the Corporation is a party or by which it or
its property is bound, where such conflict, violation or default would
reasonably be expected to have a Material Adverse Effect, or (B) to the
knowledge of the Corporation, any law, administrative regulation, ordinance or
judgment, order or decree of any court or governmental agency, arbitration panel
or authority binding upon the Corporation or any of its property, where such
conflict, violation or default would reasonably be expected to have a Material
Adverse Effect, or (ii) violate any of the provisions of the Articles of
Amendment and Restatement, or Amended and Restated Bylaws, of the Corporation;
and no consent, approval, authorization or order of, or filing or registration
with any such person (including, without limitation, any such court or
governmental agency or body) is required for the consummation of the
Transactions by the Corporation, except such as may be required under state
securities laws or Regulation D under the Securities Act, or required by The
NASDAQ Stock Market ("NASDAQ").
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(l) The
audited consolidated financial statements (including the related notes) included
or incorporated in the Disclosure Materials present fairly, in all material
respects, the financial condition and results of operations of the Corporation,
at the dates and for the periods indicated, and have been prepared in conformity
with U.S. generally accepted accounting principles applied on a consistent basis
throughout the periods involved.
(m) Except
as disclosed in the Disclosure Materials or as previously disclosed to the
Purchasers, there is no action, suit or proceeding before or by any court or
governmental agency or body or any labor dispute now pending or, to the
knowledge of the Corporation, threatened against the Corporation, which would
reasonably be expected to have a Material Adverse Effect.
(n) No
temporary restraining order, preliminary or permanent injunction or other order
issued by any court of competent jurisdiction or other legal restraint or
prohibition preventing the consummation of the Transactions is in effect nor has
any action been filed or is any proceeding pending that seeks any such
event.
(o) Except
for payments made or to be made to the Corporation's placement agent, no
broker's, finder's, investment banker's or similar fee or commission has been
paid or will be payable by the Corporation with respect to, or for any services
rendered to the Corporation ancillary to, the offer, issue and sale of the
Shares contemplated by this Agreement. Any such fee or commission
shall be payable by the Corporation and not any of the Purchasers.
(p) Except
as set forth in the Disclosure Materials, the Corporation does not own or
control, directly or indirectly, any "Significant
Subsidiary" as defined in SEC Regulation S-X.
(q) The
Corporation has filed on a timely basis all material federal, state, local and
foreign income and franchise tax returns required to be filed by it through the
date hereof or had properly requested extension thereof and has paid all
material taxes shown as due thereon, and any related material assessments, fines
or penalties, except where the failure to do so would not, individually or in
the aggregate, reasonably be expected to have a Material Adverse
Effect. The Corporation has made reasonably adequate charges,
accruals and reserves in the applicable financial statements referred to in this
Section 4.1(q)
in respect of all federal, state, local and foreign income and franchise taxes
for all periods as to which the tax liability of the Corporation has not been
finally determined. The Corporation has no knowledge of a material
tax deficiency which has been or is reasonably likely to be asserted or
threatened against it.
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(r) To
its knowledge, the Corporation is in compliance with all applicable laws, rules,
regulations, orders, decrees and judgments applicable to it, including, without
limitation, the Investment Company Act of 1940, as amended, and the rules
promulgated thereunder, all applicable local, state and federal environmental
laws and regulations and the provisions of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002, as
amended ("▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act")
and the applicable federal and state banking laws, rules and regulations,
together with the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act, the "Applicable Laws"),
except where failure to be so in compliance would not have a Material Adverse
Effect. The Corporation has not received any notice of purported or
actual non-compliance with Applicable Laws, except to the extent it would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect. The Corporation has not received any communication from any
Governmental Authority threatening to revoke any permit, license, franchise,
certificate of authority or other governmental authorization.
(s) To its
knowledge, the Corporation's Common Stock is in compliance with all the
requirements of NASDAQ for continued listing of the Common Stock
thereon. Furthermore, the Corporation has taken no action designed
to, or reasonably likely to have the effect of, terminate the registration of
the Common Stock under the Exchange Act or de-listing the Common Stock from
NASDAQ, nor has the Corporation received any notification that the SEC or NASDAQ
is contemplating terminating such registration or listing.
(t) The
Corporation maintains insurance (issued by insurers of recognized financial
responsibility) of the types, against such losses and in the amounts, with such
insurers and subject to deductibles and exclusions as are customary in the
Corporation's industry and otherwise reasonably prudent, including, without
limitation, insurance covering all real and personal property owned or leased by
the Corporation against theft, damage, destruction, acts of vandalism and all
other risks customarily insured against by similarly situated companies, all of
which insurance is in full force and effect.
(u) The
Corporation has satisfied the conditions for use of Form N-2 as set forth in the
General Instructions to such Form.
(v) The
Corporation has not taken, directly or indirectly, any action designed to or
that would constitute, under the Exchange Act or otherwise, stabilization or
manipulation of the price of any security of the Corporation to facilitate the
sale or resale of the Shares.
(w) None
of the Corporation, any of its affiliates, and any Person acting on its behalf,
including the Corporation's placement agent has, directly or indirectly, made
any offers or sales of the Shares or solicited any offers to buy the Shares,
under circumstances that would require registration of the Shares under the
Securities Act. None of the Corporation, any of its affiliates, and any Person
acting on its behalf has, directly or indirectly, made any offers or sales of
any security or solicited any offers to buy any security under circumstances
that would cause this offering of the Shares to be integrated with prior
offerings by the Corporation for purposes of the Securities Act or any
applicable stockholder approval provisions, including, without limitation, under
the rules and regulations of any exchange or automated quotation system on which
any of the securities of the Corporation are listed or
designated. None of the Corporation, its affiliates and any Person
acting on its behalf will take any action or steps referred to in the preceding
sentence that would require registration of any of the Shares under the
Securities Act. For the purposes of this Agreement, "Person" shall mean
any individual, corporation, partnership, joint venture, limited liability
company, business trust, joint stock corporation, trust or unincorporated
organization or any government or agency or political subdivision
thereof.
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(x) Except
as disclosed in the Disclosure Materials or as is exempt from such disclosure
under applicable SEC regulations, none of the officers, directors or employees
of the Corporation is presently a party to any transaction with the Corporation
(other than for ordinary course services as employees, officers or directors),
including any contract, agreement or other arrangement providing for the
furnishing of services to or by, providing for rental of real or personal
property to or from, or otherwise requiring payments to or from any such
officer, director or employee or, to the knowledge of the Corporation, any
corporation, partnership, trust or other entity in which any such officer,
director, or employee has a substantial interest or is an officer, director,
trustee or partner.
(y) The
Corporation shall use the proceeds from the sale of Shares for general corporate
purposes.
4.2 Representations and
Warranties of the Purchasers. Each Purchaser severally and not jointly,
represents and warrants to, and agrees with the Corporation that, as of the date
hereof:
(a) Such
Purchaser has full power and authority to enter into this Agreement and this
Agreement constitutes a valid and legally binding obligation of such Purchaser,
enforceable against such Purchaser in accordance with its terms, subject to the
effects of bankruptcy, insolvency, reorganization, moratorium and other similar
laws relating to or affecting creditor's rights generally, and general equitable
principles (whether considered in a proceeding in equity or at
law).
(b) If
the Purchaser is a corporation, partnership, limited liability company, trust,
or other entity, it represents that: (i) it is duly organized, validly existing
and in good standing in its jurisdiction of incorporation or organization and
has all the requisite power and authority to purchase the Shares as provided
herein, and (ii) such investment has been duly authorized by all necessary
action on behalf of the Purchaser.
(c) If
the Purchaser is purchasing the Shares in a representative or fiduciary
capacity, the representations and warranties contained herein (and in any other
written statement or document delivered to the Corporation in connection
herewith) shall be deemed to have been made on behalf of the person or persons
for whom such Shares are being purchased.
(d) Such
Purchaser is purchasing the Shares for Purchaser's own account and not with a
view to or for sale in connection with any distribution thereof in a transaction
that would violate or cause a violation of the Securities Act or the securities
laws of any state or any other applicable jurisdiction. The Purchaser has no
present intention of selling the Shares, granting any participation interest in
the Shares or otherwise distributing the Shares, in each case in violation of
the Securities Act. If the Purchaser is an entity, the Purchaser has not been
organized solely for the purpose of acquiring the Shares. Purchaser is not a
broker dealer registered with the SEC under the Exchange Act or an entity
engaged in a business that would require it to be so registered.
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(e) Such
Purchaser is a "qualified institutional buyer" as defined in Rule 144A
promulgated under the Securities Act and understands and agrees that the offer
and sale of the Shares to Purchasers hereunder have not been registered under
the Securities Act or any state securities law in reliance on the availability
of an exemption from such registration requirements based in part on the
accuracy of the Purchaser's representations in this Section
4.2.
(f) In
the normal course of such Purchaser's business or affairs, Purchaser invests in
or purchases securities similar to the Shares and has such knowledge and
experience in financial and business matters as to be capable of evaluating the
merits and risks of purchasing the Shares. Purchaser has received and has
carefully reviewed the Disclosure Materials and understands the information
contained therein. Purchaser understands that the Disclosure Materials contain
certain "forward-looking" information regarding the Corporation and its
business, and that the Corporation's ability to predict results or the actual
effect of future plans or strategies is inherently
uncertain. Purchaser has had access to such financial and other
information concerning the Corporation as Purchaser deemed necessary or
desirable in making a decision to purchase the Shares, including an opportunity
to ask questions and receive answers from officers of the Corporation and to
obtain additional information (to the extent the Corporation possessed such
information or could acquire it without unreasonable effort or expense)
necessary to verify the accuracy of any information furnished to Purchaser or to
which Purchaser had access.
(g) Such
Purchaser is not relying on the Corporation or any of its affiliates with
respect to an analysis or consideration of the terms of or economic
considerations relating to an investment in the Shares. In regard to such
considerations and analysis, the Purchaser has relied on the advice of, or has
consulted with, only his, her or its own advisors, other than those advisors of
the undersigned affiliated with the Corporation or any of its affiliates or the
Corporation's placement agent.
(h) Such
Purchaser acknowledges and is aware that there are substantial restrictions on
the transferability of the Shares. Purchaser understands that the Shares have
not been registered under the Securities Act and are "restricted securities"
within the meaning of Rule 144 and may not be sold, transferred, or otherwise
disposed of without registration under the Securities Act or an exemption
therefrom. Furthermore, Purchaser acknowledges that each certificate evidencing
the Shares purchased hereunder will bear a legend substantially to the effect
set forth below, and each Purchaser covenants that, except to the extent such
restrictions are waived by the Corporation, such Purchaser shall not transfer
the shares represented by any such certificate without complying with the
restrictions on transfer described in the legend endorsed on such
certificate:
THE
SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES
LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED
OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR
THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION
OF COUNSEL, IN A GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED
UNDER SAID ACT AND APPLICABLE STATE SECURITIES LAWS OR (II) UNLESS SOLD PURSUANT
TO RULE 144 UNDER SAID ACT. NOTWITHSTANDING THE
FOREGOING, THE SECURITIES MAY BE PLEDGED PURSUANT TO AN AVAILABLE EXEMPTION FROM
REGISTRATION UNDER THE 1933 ACT IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR
OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES.
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Purchaser
understands that except as provided in the Registration Rights Agreement,
Purchaser has no right to require that the Shares be registered under the
Securities Act.
The
legend set forth above shall be removed and the Corporation shall issue a
certificate without such legend to the holder of the Shares upon which it
is stamped or issue to such holder by electronic delivery at the applicable
balance account at The Depository Trust Company ("DTC"), if, unless
otherwise required by state securities laws, (i) such Shares are registered
for resale under the Securities Act, (ii) in connection with a sale, assignment
or other transfer, such holder provides the Corporation with an opinion of
counsel, in a generally acceptable form, to the effect that such sale,
assignment or transfer of the Shares may be made without registration under
the applicable requirements of the Securities Act, or (iii) such holder provides
the Corporation with reasonable assurance that the Shares can be sold,
assigned or transferred pursuant to Rule 144 of the Securities
Act. If the Corporation shall fail for any reason or for no reason to
issue to the holder of the Shares within three (3) business days
(after the occurrence of any of (i) through (iii) above, a certificate without
such legend to the holder or to issue such Shares to such holder by
electronic delivery at the applicable balance account at DTC, and if on or after
such business day the holder purchases (in an open market transaction or
otherwise) shares of Common Stock to deliver in satisfaction of a sale by the
holder of such Shares that the holder anticipated receiving without legend from
the Corporation (a "Buy-In"), then the
Corporation shall, within three (3) business days after the holder's request and
in the holder's discretion, either (i) pay cash to the holder in an amount equal
to the holder's total purchase price (including brokerage commissions, if any)
for the shares of Common Stock so purchased (the "Buy-In Price"), at
which point the Corporation's obligation to deliver such unlegended Shares
shall terminate, or (ii) promptly honor its obligation to deliver to the holder
such unlegended Shares as provided above and pay cash to the holder in an amount
equal to the excess (if any) of the Buy-In Price over the product of (A) such
number of shares of Common Stock, times (B) the closing bid price on the date of
exercise.
(i) Each
Purchaser represents and warrants that it is not required to obtain, prepare or
file any authorization, approval, consent, filing or registration with any
federal Governmental Authority in order to consummate the Transactions at the
Closing Date.
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(j) Purchaser
did not learn of the investment in the Shares by means of any formal general or
public solicitation or general advertising or publicly disseminated
advertisements or sales literature, including (i) any advertisement, articles,
notices or other communication published in any newspaper, magazine or similar
media, or broadcast over television or radio, or (ii) any seminar or meeting to
which such Purchaser was invited by any of the foregoing means of
communications.
(k) Each
Purchaser understands that the Shares are being offered and sold to it in
reliance upon specific exemptions from the registration requirements of United
States federal and state securities laws and that the Corporation is relying
upon the truth and accuracy of, and such Purchaser's compliance with, the
representations, warranties, agreements, acknowledgements and understandings of
the Purchasers set forth in this Section 4.2 in order
to determine the availability of such exemption and the eligibility of the
Purchaser to acquire the Shares.
(l) Such
Purchaser acknowledges and understands that its investment in the Shares
involves a significant degree of risk, including, without limitation that (i) an
investment in the Corporation is not without risk (and specific reference is
made to the "Risk Factors" discussion included in "Risk Factors" of the
Corporation's Prospectus Supplement, dated June 30, 2009, to the Prospectus,
dated June 26, 2009) and (ii) in the event of a disposition of the Shares, the
Purchaser could sustain the loss of its entire investment.
(m) Except for
such transactions as contemplated by the last sentence of this Section 4.2(m),
no Purchaser, nor any affiliate, foreign or domestic, with whom such Purchaser
has engaged in communications relating to the Transactions, has directly or
indirectly, nor has any person acting on behalf of or pursuant to any
understanding with the undersigned, engaged in any transactions in the
securities of the Corporation (including, without limitation, any Short Sales
(as defined below) involving the Corporation's securities) since the date that
the undersigned was first contacted by the Corporation or the Corporation's
placement agent or any person acting on their behalf regarding the investment in
the Corporation contemplated by this Agreement, other than transactions by an
affiliate of a Purchaser initiated solely by Persons to whom no communication
with respect to the Transactions were made by such Purchaser or by any other
Person associated with any such affiliate. For purposes of this
paragraph, "Short Sales" include, without limitation, all "short sales" as
defined in Rule 200 of Regulation SHO adopted under the Exchange Act and all
types of direct and indirect stock pledges, forward sale contracts, options,
puts, calls, short sales, swaps and similar arrangements (including on a total
return basis), and sales and other transactions through non-US broker-dealers or
foreign regulated brokers having the effect of hedging the securities of the
Corporation or the investment contemplated under this Agreement. Each
Purchaser covenants that neither it, nor any person acting on its behalf or
pursuant to any understanding with it, will engage in any transactions in the
securities of the Corporation (including Short Sales) prior to the time that the
Transactions contemplated by this Agreement are publicly disclosed by the
Corporation.
11
5. ADDITIONAL
AGREEMENTS
5.1 Availability of
Information. The Corporation agrees to use its reasonable best efforts to
timely file all periodic reports required under Sections 13(a), 15(d) and 14(a)
of the Exchange Act and to maintain the listing of its Common Stock on the
NASDAQ or other similar stock exchange following the Closing Date for so long as
is required under Rule 144 for the sale of the Shares.
5.2 Form D and Blue
Sky. The Corporation agrees to file a Form D with respect to
the Shares as required under Regulation D and to provide a copy thereof to each
Purchaser promptly after such filing. The Corporation, on or before
the Closing Date, shall take such action as the Corporation shall reasonably
determine is necessary in order to obtain an exemption for or to qualify the
Shares for sale to the Purchasers at the Closing pursuant to this Agreement
under applicable securities or "Blue Sky" laws of the states of the United
States (or to obtain an exemption from such qualification), and shall provide
evidence of any such action so taken to the Purchasers on or prior to the
Closing Date. The Corporation shall make all filings and reports
relating to the offer and sale of the Shares required under applicable
securities or "Blue Sky" laws of the states of the United States following the
Closing Date.
5.3 Regulatory Matters.
Each of the Corporation and each Purchaser agrees to use commercially reasonable
efforts to take all actions and to do all things necessary, proper or advisable
to obtain any authorizations, consents, orders and approvals of all Governmental
Authorities necessary for the Corporation to sell the Shares on the Closing Date
on terms consistent with the terms set forth in this Agreement.
5.4 Disclosure of Transactions
and Other Material Information. On or before 8:30 a.m., New
York City time, on the second business day following the Closing, the
Corporation shall file a Current Report on Form 8-K describing the terms of the
transactions contemplated hereby in the form required by the Exchange Act and
attaching this Agreement as an exhibit to such filing (including all
attachments, the "8-K
Filing"). From and after the filing of the 8-K Filing with the
SEC, no Purchaser shall be in possession of any material, nonpublic information
received from the Corporation, any of its Subsidiaries or any of its respective
officers, directors, employees or agents, that is not disclosed in the 8-K
Filing. The Corporation shall not, and shall cause each of its
subsidiaries and its and each of their respective officers, directors, employees
and agents, not to, provide any Purchaser with any material, nonpublic
information regarding the Corporation or any of its subsidiaries from and after
the filing of the 8-K Filing with the SEC without the express written consent of
such Purchaser or as may be required under the terms hereof. Subject
to the foregoing, neither the Corporation, its subsidiaries nor any Purchaser
shall issue any press releases or any other public statements with respect to
the transactions contemplated hereby; provided, however, that the
Corporation shall be entitled, without the prior approval of any Purchaser, to
make any press release or other public disclosure with respect to such
transactions (i) in substantial conformity with the 8-K Filing and
contemporaneously therewith and (ii) as is required by applicable law and
regulations (provided that in the case of clause (i) each Purchaser shall be
consulted by the Corporation in connection with any such press release or other
public disclosure prior to its release). Without the prior written
consent of any applicable Purchaser, neither the Corporation nor any of its
subsidiaries or affiliates shall disclose the name of such Purchaser in any
filing, announcement, release or otherwise, unless such disclosure is required
by law, regulation or the principal market or exchange in which the Common Stock
of the Corporation is then trading.
12
6. MISCELLANEOUS
6.1 Survival of Representations
and Warranties. All statements contained in any officers' certificates
delivered by or on behalf of the Corporation pursuant to this Agreement or in
connection with the Transactions contemplated hereby will be deemed
representations or warranties of the Corporation under this Agreement. All
representations and warranties contained in this Agreement made by or on behalf
of the Corporation or the Purchasers will survive the execution and delivery of
this Agreement, any investigation at any time made by or on behalf of the
Corporation or the Purchasers, and the sale and purchase of the Shares under
this Agreement, and, except for representations and warranties set forth in
Sections
4.1(g), (h), (i), (j) shall expire on
the two year anniversary of the Closing Date and Section 4.2(b) and
(i), shall
expire on the later of (i) the six month anniversary of the Closing Date and
(ii) the date on which the Mandatory Registration Statement (as defined in the
Registration Rights Agreement) contemplated by the Registration Rights Agreement
is declared effective by the Commission.
6.2 Successors and
Assigns. Except as otherwise provided herein, the terms and conditions of
this Agreement shall inure to the benefit of and be binding upon the respective
successors and assigns of the parties (including transferees of any shares of
Registrable Securities). Nothing in this Agreement, express or
implied, is intended to confer upon any party other than the parties hereto or
their respective successors and assigns any rights, remedies, obligations, or
liabilities under or by reason of this Agreement, except as expressly provided
in this Agreement. The Corporation shall not assign this Agreement or any rights
or obligations hereunder without the prior written consent of the parties hereto
as required by any applicable law. A Purchaser may assign some or all
of its rights hereunder without the consent of the Corporation, in which event
such assignee shall be deemed to be a Purchaser hereunder with respect to such
assigned rights.
6.3 Notices. All written
communications provided for herein are required to be sent by registered or
certified mail, postage prepaid or recognized overnight delivery service (with
charges prepaid) and (i) if to a Purchaser, addressed to such Purchaser at the
address as specified for such communications in the signature page, or at such
other address as such Purchaser may have specified to the Corporation in
writing, and with a copy (for informational purposes only) to counsel for such
Purchaser at the address specified for such communication in the signature page
or at such other address as such Purchaser may have specified to the Corporation
in writing,
and (ii)
if to the Corporation, addressed to it at:
Prospect
Capital Corporation
▇▇ ▇▇▇▇
▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇
▇▇▇▇▇
▇▇▇ ▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇, Esq.
13
with a copy (for informational purposes
only) to:
Skadden,
Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP
▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
or at
such other address as the Corporation may have specified to the Purchasers in
writing. Notices under this Section 6.3 shall be
deemed given only when actually received.
6.4 Governing Law; Waiver of
Jury Trial. All questions concerning the construction,
validity, enforcement and interpretation of this Agreement shall be governed by
the internal laws of the State of New York, without giving effect to any choice
of law or conflict of law provision or rule (whether of the State of New York or
any other jurisdictions) that would cause the application of the laws of any
jurisdictions other than the State of New York. EACH PARTY HERETO
EXPRESSLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT
TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION ARISING IN
CONNECTION WITH THIS AGREEMENT OR ANY TRANSACTION RELATING HERETO OR
THERETO. EACH PARTY HERETO CONSENTS AND AGREES THAT THE STATE OR
FEDERAL COURTS LOCATED IN NEW YORK COUNTY, CITY OF NEW YORK, NEW YORK, SHALL
HAVE EXCLUSIVE JURISDICTION TO HEAR AND DETERMINE ANY CLAIMS OR DISPUTES BETWEEN
OR AMONG ANY OF THE PARTIES HERETO PERTAINING TO THIS AGREEMENT OR THE
TRANSACTION UNDER CONSIDERATION, PROVIDED, THAT ANY SUCH DISPUTE MUST FIRST BE
SUBMITTED TO BINDING ARBITRATION.
6.5 Counterparts. This
Agreement may be executed in one or more counterparts and, if executed in more
than one counterpart, the executed counterparts shall each be deemed to be an
original, but all such counterparts shall together constitute one and the same
instrument.
6.6 Headings. The
headings herein are inserted for convenience of reference only and are not
intended to be part of, or to affect the meaning or interpretation of, this
Agreement.
6.7 Severability. Any
provision of this Agreement that is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall (to the full extent permitted by law) not invalidate or
render unenforceable such provision in any other jurisdiction.
6.8 Expenses. Each
Purchaser and the Corporation shall bear all expenses incurred by it in
connection with the Agreement and the Transactions contemplated
hereby.
6.9 Construction. Each
agreement contained herein shall be construed (absent express provision to the
contrary) as being independent of each other agreement contained herein, so that
compliance with any one agreement shall not (absent such an express contrary
provision) be deemed to excuse compliance with any other agreement. Where any
provision herein refers to action to be taken by any person or entity, or which
such person or entity is prohibited from taking, such provision shall be
applicable whether such action is taken directly or indirectly by such person or
entity.
14
6.10 Entire Agreement;
Amendments. This Agreement supersedes all other prior oral or
written agreements between the Purchasers, the Corporation, their affiliates and
Persons acting on their behalf with respect to the matters discussed herein, and
this Agreement and the instruments referenced herein contain the entire
understanding of the parties with respect to the matters covered herein and
therein and, except as specifically set forth herein or therein, neither the
Corporation nor any Purchaser makes any representation, warranty, covenant or
undertaking with respect to such matters. No provision of this
Agreement may be amended other than by an instrument in writing signed by the
parties hereto in accordance with any applicable law. No provision
hereof may be waived other than by an instrument in writing signed by the party
against whom enforcement is sought. No such amendment shall be
effective to the extent that it applies to less than all of the holders of the
Shares then outstanding. No consideration shall be offered or paid to
any Person to amend or consent to a waiver or modification of any provision of
any of the Transaction Documents unless the same consideration also is offered
to all of the parties to the Transaction Documents, including holders of the
Shares. Any repurchase of Shares by the Corporation from the
Purchasers must be offered to all of the Purchasers (or their transferees, as
applicable) on a pro rata basis. The Corporation has not, directly or
indirectly, made any agreements with any Purchasers relating to the terms or
conditions of the transactions contemplated by the Transaction Documents except
as set forth in the Transaction Documents. Without limiting the
foregoing, the Corporation confirms that, except as set forth in this Agreement,
no Purchaser has made any commitment or promise or has any other obligation to
provide any financing to the Corporation or otherwise.
6.11 No Third Party
Beneficiaries. This Agreement is intended for the benefit of
the parties hereto and their respective permitted successors and assigns, and is
not for the benefit of, nor may any provision hereof be enforced by, any other
Person.
6.12 Indemnification.
(a) In
consideration of each Purchaser's execution and delivery of the Transaction
Documents and acquiring the Shares thereunder and in addition to all of the
Corporation's other obligations under the Transaction Documents, the Corporation
shall defend, protect, indemnify and hold harmless each Purchaser and all of
their stockholders, partners, members, officers, directors, employees, advisors
and any of the foregoing Persons' agents or other representatives (including,
without limitation, those retained in connection with the transactions
contemplated by this Agreement) (collectively, the "Indemnitees") from
and against any and all actions, causes of action, suits, claims, losses, costs,
penalties, fees, liabilities and damages, and expenses in connection therewith
(irrespective of whether any such Indemnitee is a party to the action for which
indemnification hereunder is sought), and including reasonable and documented
attorneys' fees and disbursements (the "Indemnified
Liabilities"), incurred by any Indemnitee as a result of, or arising out
of, or relating to (a) any misrepresentation or breach of any representation or
warranty made by the Corporation in the Transaction Documents or any other
certificate, instrument or document contemplated hereby or thereby, (b) any
breach of any covenant, agreement or obligation of the Corporation contained in
the Transaction Documents or any other certificate, instrument or document
contemplated hereby or thereby or (c) any cause of action, suit or claim brought
or made against such Indemnitee by a third party (including for these purposes a
derivative action brought on behalf of the Corporation) and arising out of or
resulting from any misrepresentation or breach of any representation or warranty
made by the Corporation in the Transaction Documents, or any covenant, agreement
or obligation of the Corporation contained in the Transaction Documents, or any
other certificate, instrument or document contemplated hereby or
thereby. To the extent that the foregoing undertaking by the
Corporation may be unenforceable for any reason, the Corporation shall make the
maximum contribution to the payment and satisfaction of each of the Indemnified
Liabilities which is permissible under applicable law.
15
(b) Promptly
after receipt by an Indemnitee under this Section 6.12 of
notice of the commencement of any action or proceeding (including any
governmental action or proceeding) involving an Indemnified Liability, such
Indemnitee shall, if a claim for indemnification in respect thereof is to be
made against any indemnifying party under this Section 6.12, deliver
to the indemnifying party a written notice of the commencement thereof, and the
indemnifying party shall have the right to participate in, and, to the extent
the indemnifying party so desires, jointly with any other indemnifying party
similarly noticed, to assume control of the defense thereof with counsel
mutually satisfactory to the indemnifying party and the Indemnitee; provided, however, that an
Indemnitee shall have the right to retain its own counsel with the fees and
expenses of not more than one counsel for such Indemnitee to be paid by the
indemnifying party, if, in the reasonable opinion of counsel to the Indemnitee,
the representation by such counsel of the Indemnitee and the indemnifying party
would be inappropriate due to actual or potential differing interests between
such Indemnitee and the indemnifying party. Legal counsel
referred to in the immediately preceding sentence shall be selected by the
Purchasers holding at least a majority of the Shares issued and issuable
hereunder that are subject to such action or proceeding. The
Indemnitee shall cooperate fully with the indemnifying party in connection with
any negotiation or defense of any such action or Indemnified Liabilities by the
indemnifying party and shall furnish to the indemnifying party all information
reasonably available to the Indemnitee that relates to such action or
Indemnified Liabilities. The indemnifying party shall keep the
Indemnitee fully apprised at all times as to the status of the defense or any
settlement negotiations with respect thereto. No indemnifying party
shall be liable for any settlement of any action, claim or proceeding effected
without its prior written consent, provided, however, that the
indemnifying party shall not unreasonably withhold, delay or condition its
consent. No indemnifying party shall, without the prior written
consent of the Indemnitee, which consent shall not be unreasonably withheld
conditioned or delayed, consent to entry of any judgment or enter into any
settlement or other compromise which (i) does not include as an unconditional
term thereof the giving by the claimant or plaintiff to such Indemnitee of a
release from all liability in respect to such Indemnified Liabilities or
litigation, (ii) requires any admission of wrongdoing by such Indemnitee, or
(iii) obligates or requires an Indemnitee to take, or refrain from taking, any
action. Following indemnification as provided for hereunder, the
indemnifying party shall be subrogated to all rights of the Indemnitee with
respect to all third parties, firms or corporations relating to the matter for
which indemnification has been made. The failure to deliver written
notice to the indemnifying party within a reasonable time of the commencement of
any such action shall not relieve such indemnifying party of any liability to
the Indemnitee under this Section 6.12, except
to the extent that the indemnifying party is materially prejudiced in its
ability to defend such action.
16
(c) The
indemnification required by this Section 6.12 shall be
made by periodic payments of the amount thereof during the course of the
investigation or defense, as and when bills are received or Indemnified
Liabilities are incurred.
(d) The
indemnity agreements contained herein shall be in addition to (x) any cause of
action or similar right of the Indemnitee against the indemnifying party or
others, and (y) any liabilities the indemnifying party may be subject to
pursuant to the law.
6.13 No Strict
Construction. The language used in this Agreement will be
deemed to be the language chosen by the parties to express their mutual intent,
and no rules of strict construction will be applied against any
party.
6.14 Rescission and Withdrawal
Right. Notwithstanding anything to the contrary contained in
(and without limiting any similar provisions of) the Transaction Documents,
whenever any Purchaser exercises a right, election, demand or option under a
Transaction Document and the Corporation does not timely perform its related
obligations within the periods therein provided, then such Purchaser may rescind
or withdraw, in its sole discretion from time to time upon written notice to the
Corporation, any relevant notice, demand or election in whole or in part without
prejudice to its future actions and rights.
6.15 Payment Set
Aside. To the extent that the Corporation makes a payment or
payments to the Purchasers hereunder or pursuant to any of the other Transaction
Documents or the Purchasers enforce or exercise their rights hereunder or
thereunder, and such payment or payments or the proceeds of such enforcement or
exercise or any part thereof are subsequently invalidated, declared to be
fraudulent or preferential, set aside, recovered from, disgorged by or are
required to be refunded, repaid or otherwise restored to the Corporation, a
trustee, receiver or any other person under any law (including, without
limitation, any bankruptcy law, foreign, state or federal law, common law or
equitable cause of action), then to the extent of any such restoration the
obligation or part thereof originally intended to be satisfied shall be revived
and continued in full force and effect as if such payment had not been made or
such enforcement or setoff had not occurred.
17
6.16 Independent Nature of
Purchasers' Obligations and Rights. The obligations of each
Purchaser under any Transaction Document are several and not joint with the
obligations of any other Purchaser, and no Purchaser shall be responsible in any
way for the performance of the obligations of any other Purchaser under any
Transaction Document. Nothing contained herein or in any other
Transaction Document, and no action taken by any Purchaser pursuant hereto or
thereto, shall be deemed to constitute the Purchasers as a partnership, an
association, a joint venture or any other kind of entity, or create a
presumption that the Purchasers are in any way acting in concert or as a group
with respect to such obligations or the transactions contemplated by the
Transaction Documents and the Corporation acknowledges that the Purchasers are
not acting in concert or as a group with respect to such obligations or the
transactions contemplated by the Transaction Documents. Each
Purchaser confirms that it has independently participated in the negotiation of
the transaction contemplated hereby with the advice of its own counsel and
advisors. Each Purchaser shall be entitled to independently protect
and enforce its rights, including, without limitation, the rights arising out of
this Agreement or out of any other Transaction Documents, and it shall not be
necessary for any other Purchaser to be joined as an additional party in any
proceeding for such purpose.
[SIGNATURE PAGE
FOLLOWS]
18
Execution Version
If the foregoing correctly sets forth
the agreement between the Corporation and the Purchaser, please indicate your
acceptance in the space provided for that purpose below.
| Very truly yours, | |
| PROSPECT CAPITAL CORPORATION | |
| By: | |
| Name: ▇. ▇▇▇▇▇ ▇▇▇▇▇▇▇ | |
| Title: President & Chief Operating Officer | |
SIGNATURE PAGE
| PURCHASER NAME: | No. of Shares to be Purchased: |
| ___________________________________ | _________________________ |
| Price per Share $____________ | |
| Purchase Price: | |
| $________________________ | |
| By:________________________________ | |
| Name: ___________________________ | |
| Title: ___________________________ |
Exact
Name for Registration of Shares:
_______________________________
Registered
Address:
_______________________________
_______________________________
_______________________________
Delivery
Address:
_______________________________
_______________________________
_______________________________
Contact
Person: __________________
Telephone: __________________
Facsimile:
__________________
Email:
__________________
Address
of Counsel for Purposes of Section 6.3:
_______________________________
_______________________________
_______________________________
Contact
Person: __________________
Telephone: __________________
Facsimile:
__________________
[Signature
Page Follows]
Name of
Beneficial Holder:___________________________
DTC# (and
any relevant sub-account):___________________
Tax ID
No.: _______________________________________
Relationship
between the Purchaser and the person or entity in whose name the Shares should
be registered (if different):
_________________________________________________________
Exhibit
A
Form of
Registration Rights Agreement