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As
filed with the Securities and Exchange Commission on August 8, 2023
Securities
Act File No. 333-272578
U.S.
SECURITIES AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
N-2
REGISTRATION
STATEMENT
UNDER THE SECURITIES ACT OF 1933 ☒
Pre-Effective
Amendment No. 1 ☒
Post-Effective
Amendment No. ☐
SURO
CAPITAL CORP.
(Exact
Name of Registrant as Specified in Charter)
640
Fifth Avenue, 12th Floor
New
York, NY 10019
(Address
of Principal Executive Offices)
(212)
931-6331
(Registrant’s
Telephone Number, Including Area Code)
Mark
D. Klein
Chief
Executive Officer and President
SuRo
Capital Corp.
640
Fifth Avenue, 12th Floor
New
York, NY 10019
(Name
and Address of Agent for Service)
COPIES
TO:
Steven
B. Boehm, Esq.
Payam
Siadatpour, Esq.
Eversheds
Sutherland (US) LLP
700
Sixth Street, NW, Suite 700
Washington,
DC 20001
(202)
383-0100
Approximate
date of proposed public offering: From time to time after the effective date of this Registration Statement.
☐ |
Check
box if the only securities being registered on this Form are being offered pursuant to dividend or interest reinvestment plans. |
☒ |
Check
box if any securities being registered on this Form will be offered on a delayed or continuous basis in reliance on Rule 415 under
the Securities Act of 1933 (“Securities Act”), other than securities offered in connection with a dividend reinvestment
plan. |
☒ |
Check
box if this Form is a registration statement pursuant to General Instruction A.2 or a post-effective amendment thereto. |
☐ |
Check
box if this Form is a registration statement pursuant to General Instruction B or a post-effective amendment thereto that will become
effective upon filing with the Commission pursuant to Rule 462(e) under the Securities Act. |
☐ |
Check
box if this Form is a post-effective amendment to a registration statement filed pursuant to General Instruction B to register additional
securities or additional classes of securities pursuant to Rule 413(b) under the Securities Act. |
It
is proposed that this filing will become effective (check appropriate box):
☐
when declared effective pursuant to section 8(c).
If
appropriate, check the following box:
☐ |
This
[post-effective] amendment designates a new effective date for a previously filed [post-effective amendment] [registration statement]. |
☐ |
This
Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, and the Securities
Act registration statement number of the earlier effective registration statement for the same offering is: _______. |
☐ |
This
Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, and the Securities Act registration statement
number of the earlier effective registration statement for the same offering is:_______. |
☐ |
This
Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, and the Securities Act registration statement
number of the earlier effective registration statement for the same offering is:_______. |
Check
each box that appropriately characterizes the Registrant:
☐ |
Registered
Closed-End Fund (closed-end company that is registered under the Investment Company Act of 1940 (“Investment Company Act”)). |
☒ |
Business
Development Company (closed-end company that intends or has elected to be regulated as a business development company under the Investment
Company Act). |
☐ |
Interval
Fund (Registered Closed-End Fund or a Business Development Company that makes periodic repurchase offers under Rule 23c-3 under the
Investment Company Act). |
☒ |
A.2
Qualified (qualified to register securities pursuant to General Instruction A.2 of this Form). |
☐ |
Well-Known
Seasoned Issuer (as defined by Rule 405 under the Securities Act). |
☐ |
Emerging
Growth Company (as defined by Rule 12b-2 under the Securities Exchange Act of 1934 (“Exchange Act”). |
☐ |
If
an Emerging Growth Company, indicate by check mark if the Registrant has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of Securities Act. |
☐ |
New
Registrant (registered or regulated under the Investment Company Act for less than 12 calendar months preceding this filing). |
The Registrant hereby amends this Registration
Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which
specifically states that this Registration Statement shall thereafter become effective in accordance with section 8(a) of the Securities
Act of 1933, as amended, or until the Registration Statement shall become effective on such date as the U.S. Securities and Exchange
Commission, acting pursuant to said section 8(a), may determine.
The
information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement
filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and is not soliciting
an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.
SUBJECT
TO COMPLETION, DATED AUGUST 8, 2023
PROSPECTUS
![](https://www.sec.gov/Archives/edgar/data/1509470/000149315223027144/logo_001.jpg)
$400,000,000
SuRo
Capital Corp.
Common
Stock
Preferred
Stock
Subscription
Rights
Debt
Securities
Warrants
We
are an internally managed, non-diversified, closed-end management investment company that has elected to be regulated as a business development
company (“BDC”) under the Investment Company Act of 1940, as amended (the “1940 Act”). We have also elected to
be treated as a regulated investment company (“RIC”) under subchapter M of the Internal Revenue Code of 1986, as amended
(the “Code”), and expect to continue to operate in a manner so as to qualify for the tax treatment applicable to RICs. We
commenced operations upon completion of our initial public offering (“IPO”) in May 2011.
Our
investment objective is to maximize our portfolio’s total return, principally by seeking capital gains on our equity and equity-related
investments, and to a lesser extent, income from debt investments. We invest principally in the equity securities of what we believe
to be rapidly growing venture capital-backed emerging companies. We acquire our investments through direct investments in prospective
portfolio companies, secondary marketplaces for private companies, and negotiations with selling stockholders. In addition, we may invest
in private credit and in founders equity, founders warrants, forward purchase agreements, and private investment in public equity transactions
of special purpose acquisition companies. We may also invest on an opportunistic basis in select publicly traded equity securities or
certain non-U.S. companies that otherwise meet our investment criteria, subject to applicable requirements of the 1940 Act.
We
seek to deploy capital primarily in the form of non-controlling equity and equity-related investments, including common stock, warrants,
preferred stock, and similar forms of senior equity, which may or may not be convertible into a portfolio company’s common equity,
and convertible debt securities with a significant equity component. Typically, our preferred stock investments are non-income producing,
have different voting rights than our common stock investments, and are generally convertible into common stock at our discretion. As
our investment strategy is focused on equity positions, our investments generally do not produce current income, and therefore, we may
be dependent on future capital raising to meet our operating needs if no other source of liquidity is available. We seek to create a
low-turnover portfolio that includes investments in companies representing a broad range of investment themes.
We
may offer, from time to time, in one or more offerings, up to $400,000,000 of our common stock, preferred stock, subscription rights
to purchase shares of our common stock, debt securities, and warrants representing rights to purchase shares of our common stock, preferred
stock or debt securities, which we refer to, collectively, as our “securities.” The preferred stock, subscription rights,
warrants and debt securities offered hereby may be convertible or exchangeable into shares of our common stock. The securities may be
offered at prices and on terms to be described in one or more supplements to this prospectus.
The
offering price per share of our common stock, less any underwriting commissions or discounts, will generally not be less than the net
asset value per share of our common stock at the time we make the offering. However, we may in the future seek to issue shares of our
common stock pursuant to this prospectus at a price per share that is less than our net asset value per share (i) with the prior approval
of the majority of our common stockholders or (ii) under such other circumstances as the U.S. Securities and Exchange Commission (the
“SEC”) may permit. In addition, even if we seek and obtain stockholder approval to sell our common stock at a price below
our net asset value per share, we cannot do so unless our board of directors (the “Board of Directors”) determines that it
would be in our and our stockholders’ best interests to do so.
Our
securities may be offered directly to one or more purchasers, or through agents designated from time to time by us, or to or through
underwriters or dealers. The prospectus supplement relating to an offering will identify any agents or underwriters involved in the sale
of our securities, and will disclose any applicable purchase price, fee, commission or discount arrangement between us and our agents
or underwriters or among our underwriters or the basis upon which such amount may be calculated. See “Plan of Distribution”
in this prospectus. We may not sell any of our securities through agents, underwriters or dealers or otherwise without delivery of this
prospectus and a prospectus supplement describing the method and terms of the offering of securities.
Our
common stock is listed on the Nasdaq Global Select Market under the symbol “SSSS.” As of August 7, 2023, the last
reported sales price on the Nasdaq Global Select Market for our common stock was $3.96 per share.
This
prospectus describes some of the general terms that may apply to an offering of our securities. We will provide the specific terms of
these offerings and securities in one or more supplements to this prospectus. We may also authorize one or more free writing prospectuses
to be provided to you in connection with these offerings. The prospectus supplement and any related free writing prospectus may also
add, update, or change information contained in this prospectus. You should carefully read this prospectus, the applicable prospectus
supplement, and any related free writing prospectus, and the documents incorporated by reference, before buying any of the securities
being offered under this prospectus and the aforementioned documents. We file annual, quarterly and current reports, proxy statements,
and other information with the SEC (http://www.sec.gov), which are available free of charge by contacting us by mail at 640 Fifth
Avenue, 12th Floor, New York, NY 10019, on our website at http://www.surocap.com, by telephone at (212) 931-6331, or by email
at IR@surocap.com. This prospectus should be retained for future reference. Information contained on our website is not incorporated
by reference into this prospectus or any supplements to this prospectus, and you should not consider that information to be part of this
prospectus or any supplements to this prospectus. The contact information provided above may be used by you to make investor inquiries.
An
investment in our securities is very risky and highly speculative. Shares of closed-end investment companies, including BDCs, frequently
trade at a discount to their net asset value. In addition, the companies in which we invest are subject to special risks. See “Risk
Factors” beginning on page 13 of this prospectus, in Part I, Item 1A of our most recent Annual Report on Form 10-K, in Part
II, Item 1A of our most recent Quarterly Report on Form 10-Q and in, or incorporated by reference into, the applicable prospectus supplement
and in any free writing prospectuses we may authorize for use in connection with a specific offering, and under similar headings in the
other documents that are incorporated by reference into this prospectus, to read about factors you should consider, including the risk
of leverage, before investing in our securities.
Neither
the SEC nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful
or complete. Any representation to the contrary is a criminal offense.
This
prospectus may not be used to consummate sales of securities unless accompanied by a prospectus supplement.
The
date of this prospectus is , 2023.
TABLE
OF CONTENTS
ABOUT
THIS PROSPECTUS
This
prospectus is part of a registration statement that we have filed with the SEC using the “shelf” registration process. Under
this shelf registration statement, we may offer, from time to time, in one or more offerings, up to $400,000,000 of our common stock,
preferred stock, subscription rights to purchase shares of our common stock, debt securities or warrants representing rights to purchase
shares of our common stock, preferred stock or debt securities, on terms to be determined at the time of the offering. Our securities
may be offered at prices and on terms described in one or more supplements to this prospectus. This prospectus provides you with a general
description of our securities and the offerings thereof that we may make pursuant to this prospectus. Each time we use this prospectus
to offer our securities, we will provide a prospectus supplement that will contain specific information about the terms of that offering.
We may also authorize one or more free writing prospectuses to be provided to you that may contain material information relating to such
offerings. In a prospectus supplement or free writing prospectus, we may also add, update, or change any of the information contained
in this prospectus or in the documents we have incorporated by reference into this prospectus. This prospectus, together with the applicable
prospectus supplement, any related free writing prospectus, and the documents incorporated by reference into this prospectus and the
applicable prospectus supplement, will include all material information relating to the applicable offering. Before buying any of the
securities being offered, you should carefully read both this prospectus and the applicable prospectus supplement and any related free
writing prospectus, together with any exhibits and the additional information described in the sections titled “Available Information,”
“Incorporation of Certain Information by Reference,” “Prospectus Summary” and “Risk Factors”
in this prospectus.
This
prospectus may contain estimates and information concerning our industry, including market size and growth rates of the markets in
which we participate, that are based on industry publications and reports. This information involves many assumptions and
limitations, and you are cautioned not to give undue weight to these estimates. We have not independently verified the accuracy or
completeness of the data contained in these industry publications and reports. The industry in which we operate is subject to a high
degree of uncertainty and risk due to a variety of factors, including those described in the section titled “Risk
Factors” in this prospectus, in Part I, Item 1A of our most recent Annual Report on Form 10-K and in Part II, Item 1A of our
most recent Quarterly Report on Form 10-Q, that could cause results to differ materially from those expressed in these publications
and reports.
This
prospectus includes summaries of certain provisions contained in some of the documents described in this prospectus, but reference is
made to the actual documents for complete information. All of the summaries are qualified in their entirety by the actual documents.
Copies of some of the documents referred to herein have been filed, will be filed, or will be incorporated by reference as exhibits to
the registration statement of which this prospectus is a part, and you may obtain copies of those documents as described in the section
titled “Available Information” in this prospectus.
You
should rely only on the information included or incorporated by reference in this prospectus, any prospectus supplement, or in any free
writing prospectus prepared by or on behalf of us or to which we have referred you. We have not authorized any dealer, salesperson or
other person to provide you with different information or to make representations as to matters not stated in this prospectus or in any
free writing prospectus prepared by or on behalf of us or to which we have referred you. We take no responsibility for, and can provide
no assurance as to the reliability of, any other information that others may give you. If anyone provides you with different or inconsistent
information, you should not rely on it. This prospectus, any applicable prospectus supplement and any free writing prospectus prepared
by or on behalf of us or to which we have referred you do not constitute an offer to sell, or a solicitation of an offer to buy, any
securities by any person in any jurisdiction where it is unlawful for that person to make such an offer or solicitation or to any person
in any jurisdiction to whom it is unlawful to make such an offer or solicitation. You should not assume that the information included
or incorporated by reference in this prospectus or any prospectus supplement or in any such free writing prospectus is accurate as of
any date other than their respective dates.
PROSPECTUS
SUMMARY
The
following summary contains basic information about offerings pursuant to this prospectus. It may not contain all the information that
is important to you. For a more complete understanding of offerings pursuant to this prospectus, we encourage you to read this entire
prospectus and the documents to which we have referred in this prospectus, together with any accompanying prospectus supplements or free
writing prospectuses, including the risks set forth under the caption “Risk Factors” in Part I, Item 1A of our most recent
Annual Report on Form 10-K, in Part II, Item 1A of our most recent Quarterly Report on Form 10-Q, in this prospectus, the applicable
prospectus supplement and any related free writing prospectus, and under similar headings in any other documents that are incorporated
by reference into this prospectus and the applicable prospectus supplement, and the information set forth under the caption “Available
Information” in this prospectus.
Except
where the context suggests otherwise, the terms “we,” “us,” “our,” the “Company” and
“SuRo Capital” refer to SuRo Capital Corp.
SuRo
Capital
We
are an internally managed, non-diversified, closed-end management investment company that formed in 2010 as a Maryland corporation. We
have elected to be regulated as a BDC under the 1940 Act, and have elected to be treated, qualify, and intend to qualify annually as
a RIC under Subchapter M of the Code.
Our
date of inception was January 6, 2011, which is the date we commenced development stage activities, and we commenced operations as a
BDC upon completion of our IPO in May 2011. Our common stock is currently listed on the Nasdaq Global Select Market under the symbol
“SSSS.” We began our investment operations during the second quarter of 2011. On and effective June 22, 2020, we changed
our name to “SuRo Capital Corp.” from “Sutter Rock Capital Corp.”
Our
investment objective is to maximize our portfolio’s total return, principally by seeking capital gains on our equity and equity-related
investments, and to a lesser extent, income from debt investments. In addition, we may invest in private credit and in founders equity,
founders warrants, forward purchase agreements, and private investment in public equity transactions of special purpose acquisition companies.
We invest principally in the equity securities of what we believe to be rapidly growing venture capital-backed emerging companies. We
acquire our investments through direct investments in prospective portfolio companies, secondary marketplaces for private companies,
and negotiations with selling stockholders. We may also invest on an opportunistic basis in select publicly traded equity securities
or certain non-U.S. companies that otherwise meet our investment criteria. To the extent we make investments in private equity funds
and hedge funds that are excluded from the definition of “investment company” under the 1940 Act by Section 3(c)(1) or 3(c)(7)
of the 1940 Act, we will limit such investments to no more than 15% of our net assets.
Our
investment philosophy is based on a disciplined approach of identifying promising investments in high-growth, venture-backed companies
across several key industry themes, which may include, among others, social/mobile, cloud computing and big data, internet commerce,
financial technology, mobility, and enterprise software. Our investment decisions are based on a disciplined analysis of available information
regarding each potential portfolio company’s business operations, focusing on the portfolio company’s growth potential, the
quality of recurring revenues, and path to profitability, as well as an understanding of key market fundamentals. Venture capital funds
or other institutional investors have invested in the vast majority of companies that we evaluate.
We
seek to deploy capital primarily in the form of non-controlling equity and equity-related investments, including common stock, warrants,
preferred stock, and similar forms of senior equity, which may or may not be convertible into a portfolio company’s common equity,
and convertible debt securities with a significant equity component. Typically, our preferred stock investments are non-income producing,
have different voting rights than our common stock investments, and are generally convertible into common stock at our discretion. As
our investment strategy is primarily focused on equity positions, our investments generally do not produce current income, and therefore,
we may be dependent on future capital raising to meet our operating needs if no other source of liquidity is available.
We
seek to create a low-turnover portfolio that includes investments in companies representing a broad range of investment themes.
Operating
and Regulatory Structure
We
formed in 2010 as Maryland corporation that operates as an internally managed, non-diversified closed-end management investment company.
As an internally managed BDC, we are managed by our employees, rather than the employees of an external investment adviser, thereby allowing
for greater transparency to stockholders through robust disclosure regarding our compensation structure. Our investment activities are
supervised by our Board of Directors and managed by our executive officers and investments professionals, all of which are our employees.
As
a BDC, we are subject to certain regulatory requirements. See “Part I, Item 1 — Business — Regulation as a Business
Development Company” in our most recent Annual Report on Form 10-K. Further, while we are permitted to finance investments using
debt, our ability to use debt is limited in certain significant aspects. With certain limited exceptions, we may issue “senior
securities,” including borrowing money from banks or other financial institutions only in amounts such that the ratio of our total
assets (less total liabilities other than indebtedness represented by senior securities) to our total indebtedness represented by senior
securities plus preferred stock, if any, is at least 200% (or 150% if certain conditions are met) after such incurrence or issuance.
This means that generally, we can borrow up to $1 for every $1 of investor equity (or, if certain conditions are met, we can borrow up
to $2 for every $1 of investor equity). In March 2018, the Small Business Credit Availability Act modified the 1940 Act by allowing a
BDC to increase the maximum amount of leverage it may incur by decreasing the asset coverage percentage from 200% to 150%, if certain
requirements under the 1940 Act are met. Under the 1940 Act, we are allowed to increase our leverage capacity if stockholders representing
at least a majority of the votes cast, when a quorum is present, approve a proposal to do so. If we receive stockholder approval, we
would be allowed to increase our leverage capacity on the first day after such approval. Alternatively, the 1940 Act allows the majority
of our independent directors to approve an increase in our leverage capacity, and such approval would become effective after the one-year
anniversary of such approval. In either case, we would be required to make certain disclosures on our website and in SEC filings regarding,
among other things, the receipt of approval to increase our leverage, our leverage capacity and usage, and risks related to leverage.
The Company currently does not intend to seek stockholder approval or board approval to increase its leverage capacity as set forth above.
See “Risk Factors” in Part I, Item 1A in our most recent Annual Report on Form 10-K and in Part II, Item 1A of our most recent
Quarterly Report on Form 10-Q for more information.
We
have elected to be treated as a RIC under Subchapter M of the Code and expect to continue to operate in a manner so as to qualify for
the tax treatment applicable to RICs. See “Certain U.S. Federal Income Tax Considerations” in this prospectus and “Part
II, Item 8 — Financial Statements and Supplementary Data — Note 2 — Significant Accounting Policies — U.S. Federal
and State Income Taxes” and “Part II, Item 8 — Financial Statements and Supplementary Data — Note 9 — Income
Taxes” in our most recent Annual Report on Form 10-K.
As
of August 7, 2023, we had 11 employees, each of whom was directly employed by us. These employees include our executive officers,
investment and finance professionals, and administrative staff. Our principal office is located at 640 Fifth Avenue, 12th Floor, New
York, NY 10019, and we maintain a satellite office at One Sansome Street, Suite 730, San Francisco, CA 94104. Our telephone number is
(212) 931-6331. We maintain a website at http://www.surocap.com. Information contained on our website is not incorporated by reference
into this prospectus, and you should not consider information contained on our website to be part of this prospectus.
Investment
Opportunity
We
believe that society is experiencing a convergence of numerous disruptive trends, producing new high-growth markets.
At
the same time, we believe that the IPO markets have experienced substantial structural changes which have made it significantly more
challenging for private companies to go public. Volatile equity markets, a lack of investment research coverage for private and smaller
companies, and investor demand for a longer history of revenue and earnings growth have resulted in companies staying private significantly
longer than in the past. In addition, increased public company compliance obligations, such as those imposed by the Sarbanes-Oxley Act
of 2002, as amended, and the Dodd-Frank Wall Street Reform and Consumer Protection Act, have made it more costly and less attractive
to become a public company. As a result, there are significantly fewer IPOs today than there were during the 1990s, with prospective
public companies taking longer to come to market.
Investment
Strategy
We
seek to maintain our portfolio of potentially high-growth emerging private companies via a repeatable and disciplined investment approach,
as well as to provide investors with access to such companies through our publicly traded common stock.
Our
investment objective is to maximize our portfolio’s total return, principally by seeking capital gains on our equity and equity-related
investments, and to a lesser extent, income from debt investments. In addition, we may invest in private credit and in the founders equity,
founders warrants, forward purchase agreements, and private investment in public equity (“PIPE”) transactions of special
purpose acquisition companies (“SPACs”). We have adopted the following business strategies to achieve our investment objective:
● |
Identify
high quality growth companies. Based on our extensive experience in analyzing technology trends and markets, we have identified
several technology sub-sectors, including social mobile, big data and cloud, marketplaces, and education technology, as opportunities
where we believe companies are capable of producing substantial growth. We rely on our collective industry knowledge as well as an
understanding of where leading venture capitalists and other institutional investors are investing. |
We
leverage a combination of our relationships throughout Silicon Valley and our independent research to identify leaders in our targeted
sub-sectors that we believe are differentiated and best positioned for sustained growth. Our team continues to expand our sourcing network
in order to evaluate a wide range of investment opportunities in companies that demonstrate strong operating fundamentals. We are targeting
businesses that have been shown to provide scaled valuation growth before a potential IPO or strategic exit.
● |
Acquire
positions in targeted investments. We seek to selectively add to our portfolio by sourcing investments at an acceptable price
through our disciplined investing strategy. To this end, we utilize multiple methods to acquire equity stakes in private companies
that are not available to many individual investors. |
Direct
equity investments. We seek direct investments in private companies. There is a large market among emerging private companies for
equity capital investments. Many of these companies, particularly within the technology sector, lack the necessary cash flows to sustain
substantial amounts of debt, and therefore have viewed equity capital as a more attractive long-term financing tool. We seek to be a
source of such equity capital as a means of investing in these companies and look for opportunities to invest alongside other venture
capital and private equity investors with whom we have established relationships.
Private
secondary marketplaces and direct share purchases. We also utilize private secondary marketplaces as a means to acquire equity and
equity-related interests in privately held companies that meet our investment criteria and that we believe are attractive candidates
for investment. We believe that such markets offer new channels for access to equity investments in private companies and provide a potential
source of liquidity should we decide to exit an investment. In addition, we also purchase shares directly from stockholders, including
current or former employees. As certain companies grow and experience significant increased value while remaining private, employees
and other stockholders may seek liquidity by selling shares directly to a third party or to a third party via a secondary marketplace.
Sales of shares in private companies are typically restricted by contractual transfer restrictions and may be further restricted by provisions
in company charter documents, investor rights of first refusal and co-sale and company employment and trading policies, which may impose
strict limits on transfer. We believe that the reputation of our investment professionals within the industry and established history
of investing affords us a favorable position when seeking approval for a purchase of shares subject to such limitations.
● |
Create
access to a varied investment portfolio. We seek to hold a varied portfolio of non-controlling equity investments, which
we believe will minimize the impact on our portfolio of a negative downturn at any one specific company. We believe that our relatively
varied portfolio will provide a convenient means for accredited and non-accredited individual investors to obtain access to an asset
class that has generally been limited to venture capital, private equity and similar large institutional investors. |
Starting
in 2017, we began to focus our investment strategy to increase the size of our investments in individual portfolio companies. While this
will likely have the effect of reducing the number of companies in which we hold investments, we believe that the shift towards larger
positions will better allow our investment professionals to focus our investments in companies and industries that are more likely to
result in beneficial returns to our stockholders.
Competitive
Advantages
We
believe that we benefit from the following competitive advantages in executing our investment strategy:
● |
Capable
team of investment professionals. Our executive officers, investment professionals, and Board of Directors have significant
experience researching and investing in the types of high-growth venture-capital-backed companies we are targeting for investment.
Through our proprietary company evaluation process, including our identification of technology trends and themes and company research,
we believe we have developed important insight into identifying and valuing emerging private companies. |
● |
Disciplined
and repeatable investment process. We have established a disciplined and repeatable process to locate and acquire available
shares at attractive valuations by utilizing multiple sources. In contrast to industry “aggregators” that accumulate
stock at market prices, we conduct valuation analysis and make acquisitions only when we can invest at valuations that we believe
are attractive to our investors. |
● |
Deep
relationships with significant credibility to source and complete transactions. Our executive officers and investment professionals
are strategically located in New York, New York and at our additional office in San Francisco, California, allowing us to fully engage
in the technology and innovation ecosystem. Our wide network of venture capital and technology professionals supports our sourcing
efforts and helps provide access to promising investment opportunities. Our executive officers and investment professionals have
also developed strong relationships in the financial, investing and technology-related sectors. |
● |
Source
of permanent investing capital. As a publicly traded corporation, we have access to a source of permanent equity capital
that we can use to invest in portfolio companies. This permanent equity capital is a significant differentiator from other potential
investors that may be required to return capital to stockholders on a defined schedule. We believe that our ability to invest on
a long-term time horizon makes us attractive to companies looking for strong, stable owners of their equity. |
● |
Early
mover advantage. We believe we are one of the few publicly traded BDCs with a specific focus on investing in high-growth
venture-backed companies. The transactions that we have executed to date since our IPO have helped to establish our reputation with
the types of secondary sellers and emerging companies that we target for investment. We have leveraged a number of relationships
and channels to acquire the equity of private companies. As we continue to grow our portfolio with attractive investments, we believe
that our reputation as a committed partner will be further enhanced, allowing us to source and close investments that would otherwise
be unavailable. We believe that these factors collectively differentiate us from other potential investors in private company securities
and will serve our goal to complete equity transactions in compelling private companies at attractive valuations. |
Our
primary competitors include specialty finance companies including late-stage venture capital funds, private equity funds, other crossover
funds, public funds investing in private companies and public and private BDCs. Many of these entities have greater financial and managerial
resources than we will have. In addition, some of our competitors may have higher risk tolerances or different risk assessments, which
could allow them to consider more investments and establish more relationships than we do. Furthermore, many of our competitors are not
subject to the regulatory restrictions the 1940 Act imposes on us as a BDC. For additional information concerning the competitive risks
we face, see “Part I, Item 1A — Risk Factors — Risks Related to Our Business and Structure” in our most recent
Annual Report on Form 10-K and “Part II, Item 1A—Risk Factors” in our most recent Quarterly Report on Form 10-Q.
Investment
Process
Concentrated
Technology-Related Focus
Our
executive officers and investment professionals have identified five key investment themes from which we have seen significant numbers
of high-growth companies emerge: social and mobile, financial technology and services, big data and cloud, marketplaces, and education.
However, the opportunity set of high-growth venture-backed technology companies extends beyond these key investment themes into much
broader markets. These broad markets have the potential to produce disruptive technologies, reach a large addressable market, and provide
significant commercial opportunities. Within these areas, we have identified trends that could create significant positive effects on
growth such as globalization, consolidation, branding, convergence and network effects. Thus, while we remain focused on selecting market
leaders within the key investment themes identified, our executive officers and investment professionals actively seek out promising
investments across a diverse selection of new technology subsectors.
Investment
Targeting and Screening
We
identify prospective portfolio companies through an extensive network of relationships developed by our executive officers and investment
professionals, supplemented by the knowledge and relationships of our Board of Directors. Investment opportunities that fall within our
identified themes are validated against the observed behavior of leading venture capitalists and institutional investors, as well as
through our own internal and external research. We evaluate potential portfolio companies across a spectrum of criteria, including industry
positioning and leadership, stage of growth, path to profitability, the uniqueness and defensibility of the portfolio company’s
strategy, investor sponsorship, and the portfolio company’s potential access to capital to continue to fund its growth that collectively
characterize our proprietary investment process. We typically seek to invest our assets under management in the equity of well-established
and growth stage companies, and debt investments of emerging companies that fit within our targeted areas. Based on our initial screening,
we identify a select set of companies that we evaluate in greater depth.
Research
and Due Diligence Process
Once
we identify those companies that we believe warrant more in-depth analysis, we focus on their total addressable market, revenue growth
and sustainability, and earnings growth, as well as other metrics that may be strongly correlated with higher valuations. We also focus
on the company’s management team and any significant financial sponsor, their current business model, competitive positioning,
regulatory and legal issues, the quality of any intellectual property and other investment-specific due diligence. Each prospective portfolio
company that passes our initial due diligence review is given a qualitative ranking to allow us to evaluate it against others in our
pipeline, and we review and update these companies on a regular basis.
Our
due diligence process will vary depending on whether we are investing through a private secondary transaction on a marketplace or with
a selling stockholder or by direct equity investment. We access information on our potential investments through a variety of sources,
including information made available on secondary marketplaces, publications by private company research firms, industry publications,
commissioned analysis by third-party research firms, and, to a limited extent, directly from the company or financial sponsor. We utilize
a combination of each of these sources to help us set a target value for the companies we ultimately select for investment.
Portfolio
Construction and Sourcing
Upon
completion of our research and due diligence process, we select investments for inclusion in our portfolio based on their value proposition,
addressable market, fundamentals and valuation. We seek to create a relatively varied portfolio that we expect will include investments
in companies representing a broad range of investment themes. We generally choose to pursue specific investments based on the availability
of shares and valuation expectations. We utilize a combination of secondary marketplaces, direct purchases from stockholders and direct
equity investments in order to make investments in our portfolio companies. Once we have established an initial position in a portfolio
company, we may choose to increase our stake through subsequent purchases. Maintaining a balanced portfolio is a key to our success,
and as a result we constantly evaluate the composition of our investments and our pipeline to ensure we are exposed to a diverse set
of companies within our target segments.
Transaction
Execution
We
enter into purchase agreements for substantially all of our private company portfolio investments. Private company securities are typically
subject to contractual transfer limitations, which may, among other things, give the issuer, its assignees and/or its stockholders a
particular period of time, often 30 days or more, in which to exercise a veto right, or a right of first refusal over, the sale of such
securities. Accordingly, the purchase agreements we enter into for secondary transactions typically require the lapse or satisfaction
of these rights as a condition to closing. Under these circumstances, we may be required to deposit the purchase price into escrow upon
signing, with the funds released to the seller at closing or returned to us if the closing conditions are not met.
Risk
Management and Monitoring
We
monitor the financial trends of each portfolio company to assess our exposure to individual companies as well as to evaluate overall
portfolio quality. We establish valuation targets at the portfolio level and for gross and net exposures with respect to specific companies
and industries within our overall portfolio. In cases where we make a direct investment in a portfolio company, we may also obtain board
positions, board observation rights and/or information rights from that portfolio company in connection with our equity investment. We
regularly monitor our portfolio for compliance with the diversification requirements for purposes of maintaining our status as a BDC
and a RIC for tax purposes.
Risk
Associated with Our Business
Our
business is subject to numerous risks, as described in the section titled “Risk Factors” in the applicable prospectus supplement
and in any free writing prospectuses we have authorized for use in connection with a specific offering, and under similar headings in
the documents that are incorporated by reference into this prospectus, including the section titled “Risk Factors” included
in our most recent Annual Report on Form 10-K, in our most recent Quarterly Report on Form 10-Q, as well as in any of our subsequent
SEC filings.
THE
OFFERING
We
may offer, from time to time, up to $400,000,000 of our common stock, preferred stock, subscription rights to purchase shares of our
common stock, debt securities, or warrants representing rights to purchase shares of our common stock, preferred stock, or debt securities
on terms to be determined at the time of each offering and set forth in one or more supplements to this prospectus. We will offer our
securities at prices and on terms to be set forth in one or more supplements to this prospectus and any related free writing prospectus.
Our
securities may be offered directly to one or more purchasers, including to existing stockholders in a rights offering, by us or through
agents designated from time to time by us, or to or through underwriters or dealers. The prospectus supplement relating to an offering
and any related free writing prospectus will disclose the terms of such offering, including the name or names of any agents or underwriters
involved in the sale of our securities, the purchase price, and any fee, commission or discount arrangement between us and our agents
or underwriters or among our underwriters, or the basis upon which such amount may be calculated. See “Plan of Distribution”
in this prospectus for further information. We may not sell any of our securities through agents, underwriters or dealers without delivery
of this prospectus and a prospectus supplement describing the method and terms of the offering of our securities.
Set
forth below is additional information regarding offerings of our securities pursuant to this prospectus:
Use
of Proceeds |
|
Unless
otherwise specified in a prospectus supplement, we plan to invest the net proceeds from the sale of our securities pursuant to
this prospectus and any accompanying prospectus supplement in portfolio companies in accordance with our investment objective
and strategies described in this prospectus. We will also use a portion of any such net proceeds to pay operating expenses and
other expenses, such as due diligence expenses relating to potential new investments. We anticipate that substantially all of
the net proceeds of any such offering will be used for the above purposes within six to twelve months, depending on the availability
of investment opportunities that are consistent with our investment objectives and market conditions, except for such amounts
as may be retained for purposes of funding our ongoing operations subsequent to the completion of such offering. Each supplement
to this prospectus or free writing prospectus relating to an offering will more fully identify the use of the proceeds from such
offering. See “Use of Proceeds” in this prospectus for further information.
|
|
|
|
Nasdaq Global
Select Market symbol |
|
Our
common stock is listed on the Nasdaq Global Select Market under the symbol “SSSS.”
|
|
|
|
Distributions |
|
The
timing and amount of our dividends, if any, will be determined by our Board of Directors. Any dividends to our stockholders will
be declared out of assets legally available for distribution. As we focus on making primarily capital gains-based investments
in equity securities, we do not anticipate that we will pay dividends on a quarterly basis or become a predictable distributor
of dividends, and we expect that our dividends, if any, will be less consistent than the dividends of other BDCs that primarily
make debt investments.
|
|
|
|
Taxation |
|
We
have elected to be treated, qualify, and intend to comply with the requirements so to continue to qualify annually as a RIC under
Subchapter M of the Code. As a RIC, we generally will not be subject to U.S. federal income tax on any ordinary income
or capital gains that we timely distribute to our stockholders as dividends. To continue to maintain our RIC tax treatment,
we must meet specified source-of-income and asset diversification requirements and distribute annually at least 90% of our ordinary
income and realized net short-term capital gains in excess of realized net long-term capital losses, if any. See “Certain
U.S. Federal Income Tax Considerations” in this prospectus for further information.
|
Leverage |
|
We
may use leverage to make investments. As a result, to the extent we use leverage to make investments,
we may be exposed to the risks of leverage. Leverage may be considered a speculative investment technique.
The use of leverage magnifies the potential for gain and loss on amounts we invest, and therefore,
indirectly increases the risks associated with investing in shares of our common stock. With certain
limited exceptions, we may issue “senior securities,” including borrowing money from
banks or other financial institutions, only in amounts such that the ratio of our total assets (less
total liabilities other than indebtedness represented by senior securities) to our total indebtedness
represented by senior securities plus preferred stock, if any, is at least 200% (or 150% if certain
conditions are met) after such incurrence or issuance. This means that generally, we can borrow up
to $1 for every $1 of investor equity (or, if certain conditions are met, we can borrow up to $2
for every $1 of investor equity). The costs associated with our borrowings are borne by our stockholders.
In connection with this offering, neither our Board of Directors nor our shareholders are being asked
to approve a reduced asset coverage ratio. See “Risk Factors” in this prospectus, in
Part I, Item 1A of our most recent Annual Report on Form 10-K, and in Part II, Item 1A of our most
recent Quarterly Report on Form 10-Q for more information.
|
|
|
|
Trading at
a Discount |
|
Shares
of closed-end investment companies frequently trade at a discount to their net asset value. The possibility that our common stock
may trade at a discount to our net asset value per share is separate and distinct from the risk that our net asset value per share
may decline. We cannot predict whether our common stock will trade above, at or below net asset value. |
|
|
|
Sales of Common
Stock Below Net Asset Value |
|
The
offering price per share of our common stock, less any underwriting commissions or discounts, will
not be less than the net asset value per share of our common stock at the time of the offering, except
(i) with the requisite approval of our common stockholders or (ii) under such other circumstances
as the SEC may permit. In addition, we cannot issue shares of our common stock below net asset value
unless our Board of Directors determines that it would be in our and our stockholders’ best
interests to do so. We did not seek stockholder authorization to issue common stock at a price below
net asset value per share at our 2023 annual meeting of stockholders.
Sales
by us of our common stock at a discount from our net asset value pose potential risks for our existing stockholders whether or not
they participate in the offering, as well as for new investors who participate in the offering. See “Sales of Common Stock
Below Net Asset Value” in this prospectus for further information.
|
|
|
|
Dividend Reinvestment
Plan |
|
We
have adopted an “opt out” dividend reinvestment plan (the “DRIP”). If your
shares of common stock are registered in your own name, your distributions will automatically be
reinvested under our DRIP in additional shares of common stock, unless you “opt out”
of our DRIP so as to receive cash dividends by delivering a written notice to our dividend paying
agent. If your shares are held in the name of a broker or other nominee, you should contact the broker
or nominee for details regarding opting out of our DRIP. Stockholders who receive distributions in
the form of stock will be subject to the same U.S. federal, state and local tax consequences
as stockholders who elect to receive their distributions in cash. See “Dividend Reinvestment
Plan” in this prospectus for further information.
|
|
|
|
Certain Anti-Takeover
Measures |
|
Our
charter and bylaws, as well as certain statutory and regulatory requirements, contain certain provisions that may have the effect
of discouraging a third party from making an acquisition proposal for us. These anti-takeover provisions may inhibit a change in
control in circumstances that could give the holders of our securities the opportunity to realize a premium over the market price
for our securities. See “Description of Our Capital Stock” in this prospectus for further information. |
|
|
|
Available Information |
|
We
have filed with the SEC a registration statement on Form N-2 together with all amendments and related
exhibits under the Securities Act. The registration statement contains additional information about
us and the securities being offered by this prospectus.
We
are required to file annual, quarterly and current reports, proxy statements, and other information with the SEC under the Securities
Exchange Act of 1934, as amended (the “Exchange Act”). The SEC maintains an Internet site that contains reports, proxy
and information statements, and other information regarding registrants that are filed electronically, which are available free of
charge on the SEC’s website at http://www.sec.gov. This information is also available free of charge by contacting us
at SuRo Capital Corp., 640 Fifth Avenue, 12th Floor, New York, NY 10019, by telephone at (212) 931-6331, or on our website at http://www.surocap.com. |
|
|
|
Incorporation
of Certain Information by Reference |
|
This
prospectus is part of a registration statement that we have filed with the SEC. In accordance with the Small Business Credit Availability
Act, we are allowed to “incorporate by reference” the information that we file with the SEC, which means that we can
disclose important information to you by referring you to those documents. The information incorporated by reference is considered
to comprise a part of this prospectus from the date we file that information. Any reports filed by us with the SEC subsequent to
the date of this prospectus until we have sold all of the securities offered by this prospectus or the offering is otherwise terminated
will automatically update and, where applicable, supersede any information contained in this prospectus or incorporated by reference
in this prospectus. See “Incorporation of Certain Information by Reference” in this prospectus for further information. |
FEES
AND EXPENSES
The
following table is intended to assist you in understanding the costs and expenses that an investor in an offering will bear directly
or indirectly. We caution you that some of the percentages indicated in the table below are estimates and may vary. The following table
should not be considered a representation of our future expenses. Actual expenses may be greater or less than shown. Except where the
context suggests otherwise, whenever this prospectus contains a reference to fees or expenses paid by “us” or “SuRo
Capital,” or that “we” will pay fees or expenses, you will indirectly bear such fees or expenses as an investor in
SuRo Capital Corp., however, your responsibility for such fees or expenses is limited to your investment in SuRo Capital Corp. The fee
table and example below include all fees and expenses of our consolidated subsidiaries.
Stockholder transaction
expenses: | |
| | |
Sales load (as a percentage of offering price) | |
| — | %(1) |
Offering expenses (as a percentage of offering price) | |
| — | %(2) |
Dividend reinvestment
plan expenses | |
| — | %(3) |
Total stockholder transaction expenses (as a percentage of offering price) | |
| — | %(4) |
Annual
expenses (as a percentage of net assets attributable to common stock):(8) | |
| | |
Operating expenses | |
| 6.81 | %(5) |
Interest payments on borrowed funds | |
| 2.20 | %(6) |
Other expenses | |
| 0.88 | %(7) |
Total
annual expenses | |
| 9.89 | % |
(1) |
|
(2) |
|
(3) |
|
(4) |
The
total stockholder transaction expenses may include sales load and will be disclosed in a future prospectus supplement, if any. |
(5) |
We do not have an investment adviser and are internally managed by our executive officers under the supervision of our Board of Directors. As a result, we do not pay investment advisory fees; instead, we pay the operating costs associated with employing investment management professionals, including, without limitation, compensation expenses related to salaries, discretionary bonuses, and restricted stock grants. |
(6) |
|
(7) |
|
(8) |
Net
assets attributable to common stock, which we calculate to equal $215.0 million, reflects our March 31, 2023 net asset value increased
to reflect an assumed annual return of 8.0% on our $165.1 million of portfolio investments as of March 31, 2023. |
Example
The
following example demonstrates the projected dollar amount of total cumulative expenses that would be incurred over various periods with
respect to a hypothetical investment in our common stock. In calculating the following expense amounts, we have assumed that our annual
operating expenses would remain at the levels set forth in the table above. See footnote 6 above for additional information regarding
certain assumptions regarding our level of leverage.
|
|
1
Year |
|
|
3
Years |
|
|
5
Years |
|
|
10
Years |
|
You
would pay the following expenses on a $1,000 investment, assuming a 5% annual return |
|
$ |
96 |
|
|
$ |
276 |
|
|
$ |
421 |
|
|
$ |
707 |
|
The
example and the expenses in the tables above should not be considered a representation of our future expenses, and actual expenses may
be greater or less than those shown. While the example assumes, as required by the SEC, a 5.0% annual return, our performance will vary
and may result in a return greater or less than 5.0%. In addition, while the example assumes reinvestment of all dividends at net asset
value participants in our DRIP will receive a number of shares of our common stock, determined by dividing the total dollar amount of
the dividend payable to a participant by the market price per share of our common stock at the close of trading on the dividend payment
date, which may be at, above or below net asset value. See “Dividend Reinvestment Plan” in this prospectus for additional
information regarding our DRIP.
FINANCIAL
HIGHLIGHTS
The
financial data as of and for each of the ten years ended December 31, 2022 through December 31, 2013 is set forth in Note 8 to our consolidated
financial statements appearing in our most recent Annual Report on Form 10-K and our Annual Report on Form 10-K for the fiscal year ended December 31, 2017, both of which are incorporated by reference herein. Annualized financial data as of March 31, 2023 is set
forth in Note 8 to our condensed consolidated financial statements appearing in our most recent Quarterly Report on Form 10-Q and is
incorporated by reference herein. The financial data for the fiscal years ended December 31, 2022, 2021 and 2020 has been audited by
Marcum LLP, an independent registered public accounting firm whose reports thereon are incorporated by reference in this prospectus.
A copy of our Annual Report on Form 10-K filed with the SEC may be obtained from www.sec.gov or upon request. You should read
these financial highlights in conjunction with our consolidated financial statements and notes thereto and “Management’s
Discussion and Analysis of Financial Condition and Results of Operations” incorporated by reference into this prospectus, any documents
incorporated by reference in this prospectus or the accompanying prospectus supplement, or our Annual Reports on Form 10-K filed with
the SEC.
RISK
FACTORS
Investing
in our securities involves a high degree of risk. Before deciding whether to invest in our securities, you should carefully consider
the risks and uncertainties described in the section titled “Risk Factors” in the applicable prospectus supplement and any
related free writing prospectus, and discussed in the section titled “Risk Factors” in Part I, Item 1A of our most recent
Annual Report on Form 10-K, the section titled “Risk Factors” in Part II, Item 1A of our most recent Quarterly Report on Form 10-Q, and any subsequent filings we have made with the SEC that are incorporated by reference into this prospectus or any prospectus
supplement, together with other information in this prospectus, the documents incorporated by reference in this prospectus or any prospectus
supplement, and any free writing prospectus that we may authorize for use in connection with this offering. The risks described in these
documents are not the only ones we face. Additional risks and uncertainties that we are unaware of, or that we currently believe are
not material, may also become important factors that adversely affect our business. Past financial performance may not be a reliable
indicator of future performance, and historical trends should not be used to anticipate results or trends in future periods. If any of
these risks actually occurs, our business, reputation, financial condition, results of operations, revenue, and future prospects could
be seriously harmed. This could cause our net asset value and the trading price of our securities to decline, resulting in a loss of
all or part of your investment. Please also read carefully the section titled “Cautionary Statement Regarding Forward-Looking Statements”
in this prospectus.
CAUTIONARY
STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
This
prospectus contains forward-looking statements that involve substantial risks and uncertainties. These forward-looking statements are
not historical facts, but rather are based on current expectations, estimates and projections about us, our current and prospective portfolio
investments, our industry, our beliefs, and our assumptions. Words such as “anticipates,” “expects,” “intends,”
“plans,” “will,” “may,” “continue,” “believes,” “seeks,” “estimates,”
“would,” “could,” “should,” “targets,” “projects,” and variations of these
words and similar expressions are intended to identify forward-looking statements.
The
forward-looking statements contained in this prospectus involve risks and uncertainties, including, without limitation, statements as
to:
● |
our
future operating results; |
|
|
● |
our
business prospects and the prospects of our portfolio companies; |
|
|
● |
the
impact of investments that we expect to make; |
|
|
● |
our
contractual arrangements and relationships with third parties; |
|
|
● |
the
dependence of our future success on the general economy and its impact on the industries in which we invest; |
|
|
● |
the
ability of our portfolio companies to achieve their objectives; |
|
|
● |
our
expected financings and investments; |
|
|
● |
the
adequacy of our cash resources and working capital; and |
|
|
● |
the
timing of cash flows, if any, from the operations of our portfolio companies. |
These
statements are not guarantees of future performance and are subject to risks, uncertainties, and other factors, some of which are beyond
our control and difficult to predict and could cause actual results to differ materially from those expressed or forecasted in the forward-looking
statements, including without limitation:
|
● |
an
economic downturn could impair our portfolio companies’ ability to continue to operate, which could lead to the loss of some
or all of our investments in such portfolio companies; |
|
|
|
|
● |
an
economic downturn could disproportionately impact the market sectors in which a significant portion of our portfolio is concentrated,
causing us to suffer losses in our portfolio; |
|
|
|
|
● |
a
contraction of available credit and/or an inability to access the equity markets could impair our investment activities; |
|
|
|
|
● |
increases
in inflation or an inflationary economic environment could adversely affect our portfolio companies’ operating results, causing
us to suffer losses in our portfolio; |
|
|
|
|
● |
interest
rate volatility could adversely affect our results, particularly because we use leverage as part of our investment strategy; and |
|
|
|
|
● |
the
risks, uncertainties and other factors we identify in the sections entitled “Risk Factors” in our quarterly reports on
Form 10-Q, our annual report on Form 10-K, and in our other filings with the SEC. |
Although
we believe that the assumptions on which these forward-looking statements are based are reasonable, any of those assumptions could prove
to be inaccurate, and as a result, the forward-looking statements based on those assumptions also could be inaccurate. Important assumptions
include our ability to originate new investments, certain margins and levels of profitability and the availability of additional capital.
In light of these and other uncertainties, the inclusion of a projection or forward-looking statement in this prospectus should not be
regarded as a representation by us that our plans and objectives will be achieved. These risks and uncertainties include those described
or identified in “Risk Factors” in Part I, Item 1A of our most recent Annual Report on Form 10-K, in Part II, Item 1A of
our most recent Quarterly Report on Form 10-Q, and elsewhere in this prospectus, any applicable prospectus supplement or free writing
prospectus, including the documents we incorporate by reference. You should not place undue reliance on these forward-looking statements,
which are based on information available to us as of the applicable date of this prospectus, any applicable prospectus supplement or
free writing prospectus, including any documents incorporated by reference, and while we believe such information forms, or will form,
a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate
that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are
inherently uncertain and investors are cautioned not to unduly rely on these statements. The forward-looking statements in this prospectus
are excluded from the safe harbor protection provided by Section 27A of the Securities Act and Section 21E of the Exchange Act.
USE
OF PROCEEDS
We
intend to use the net proceeds from the sale of our securities pursuant to this prospectus for general corporate purposes, which may
include investing in securities consistent with our investment objective, repayment of outstanding indebtedness, and other general corporate
purposes. We are continuously identifying, reviewing and, to the extent consistent with our investment objective, funding new investments.
As a result, we typically raise capital as we deem appropriate to fund such new investments. The applicable prospectus supplement or
a free writing prospectus that we have authorized for use relating to an offering will more fully identify the use of the proceeds from
such offering. We will also use a portion of any such proceeds to pay operating expenses, and other expenses such as due diligence expenses
relating to potential new investments. We anticipate that substantially all of the net proceeds of any such offering will be used for
the above purposes within six to twelve months, depending on the availability of investment opportunities that are consistent with our
investment objectives and market conditions, except for such amounts as may be retained for purposes of funding our ongoing operations
subsequent to the completion of any such offering. We cannot assure you we will achieve our targeted investment pace. If proceeds are
not immediately used for investments, then we will invest the net proceeds of any such offering primarily in cash, cash equivalents,
U.S. government securities and other high-quality debt investments that mature in one year or less from the date of investment.
PRICE
RANGE OF COMMON STOCK AND DISTRIBUTIONS
Our
common stock is traded on the Nasdaq Global Select Market under the symbol “SSSS.” The following table sets forth the high
and low closing sale price for our common stock, and the closing sale price as a percentage of NAV for each fiscal quarter during the
last two most recently completed fiscal years and any subsequent interim periods.
| |
NAV(1) | | |
High | | |
Low | | |
to
NAV (2) | | |
to
NAV (2) | |
| |
Price
Range | | |
High
Close Price as a Premium/ (Discount) | | |
Low
Close Price as a Premium/ (Discount) | |
| |
NAV(1) | | |
High | | |
Low | | |
to NAV(2) | | |
to NAV(2) | |
Fiscal 2023 | |
| | |
| | |
| | |
| | |
| |
Third Quarter (through August 7, 2023) | |
| -* | | |
$ | 4.31 | | |
$ | 3.19 | | |
| * | | |
| * | |
Second Quarter | |
| - * | | |
| 3.93 | | |
| 3.20 | | |
| * | | |
| * | |
First Quarter | |
$ | 7.59 | | |
| 4.64 | | |
| 2.93 | | |
| (38.9 | )% | |
| (61.4 | )% |
Fiscal 2022 | |
| | | |
| | | |
| | | |
| | | |
| | |
Fourth Quarter | |
$ | 7.39 | | |
$ | 4.38 | | |
$ | 3.67 | | |
| (40.7 | )% | |
| (50.3 | )% |
Third Quarter | |
| 7.83 | | |
| 6.81 | | |
| 3.87 | | |
| (13.0 | ) | |
| (50.6 | ) |
Second Quarter | |
| 9.24 | | |
| 8.94 | | |
| 6.33 | | |
| (3.2 | ) | |
| (31.5 | ) |
First Quarter | |
| 12.22 | | |
| 13.36 | | |
| 8.27 | | |
| 9.3 | | |
| (32.3 | ) |
Fiscal 2021 | |
| | | |
| | | |
| | | |
| | | |
| | |
Fourth Quarter | |
$ | 11.72 | | |
$ | 15.60 | | |
$ | 11.41 | | |
| 33.1 | % | |
| (2.6 | )% |
Third Quarter | |
| 14.79 | | |
| 16.25 | | |
| 12.19 | | |
| 9.9 | | |
| (17.6 | ) |
Second Quarter | |
| 16.56 | | |
| 15.52 | | |
| 13.07 | | |
| (6.3 | ) | |
| (21.1 | ) |
First Quarter | |
| 18.01 | | |
| 15.43 | | |
| 12.33 | | |
| (14.3 | ) | |
| (31.5 | ) |
On
August 7, 2023, the last reported sales price of our common stock was $3.96 per share. As of August 7, 2023,
we had approximately 7 registered shareholders (including Cede & Co.).
Shares
of BDCs may trade at a market price that is less than the value of the net assets attributable to those shares. The possibility that
our shares of common stock will trade at premiums that are unsustainable over the long-term or at a discount from net asset value are
separate and distinct from the risk that our net asset value will decrease. Since the completion of our IPO in May 2011, our shares of
common stock have traded at both a discount and a premium to the net assets attributable to those shares. As of August 7, 2023,
our shares of common stock traded at a discount equal to approximately 47.8%
of the net assets attributable to those shares based
upon our $7.59 NAV per share as of March 31, 2023. It is not possible to predict whether the shares offered hereby will trade at, above,
or below net asset value.
Shareholder
Value Accretion Efforts
We
have undertaken certain efforts to mitigate the historical discount of the trading price of our shares of common stock comparable to
our net asset value per share.
Share
Repurchase Program
On
August 8, 2017, we announced the commencement of a $5.0 million discretionary open-market share repurchase program of shares of our common
stock, $0.01 par value per share, of up to $5.0 million until the earlier of (i) August 6, 2018 or (ii) the repurchase of $5.0 million
in aggregate amount of our common stock (the “Share Repurchase Program”). Our Board of Directors has authorized various extensions
to the term of, and increases in the amount of shares of our common stock that may be repurchased under, the Share Repurchase Program.
Most recently, on August 7, 2023, our Board of Directors approved an extension of, and an increase in the amount of shares that may be
repurchased under, our discretionary Share Repurchase Program until the earlier of (i) October 31, 2024 or (ii) the repurchase of $60.0
million in aggregate amount of our common stock. As of August 7, 2023, the dollar value of shares that remained available to be repurchased
under the Share Repurchase Program was approximately $21.4 million.
The
timing and number of shares to be repurchased pursuant to the discretionary Share Repurchase Program depends on a number of factors,
including market conditions and alternative investment opportunities. The Share Repurchase Program may be suspended, terminated or modified
at any time for any reason and does not obligate us to acquire any specific number of shares of our common stock. Under the Share Repurchase
Program, we may repurchase our outstanding common stock in the open market, provided that we comply with the prohibitions under our insider
trading policies and procedures and the applicable provisions of the 1940 Act and the Exchange Act.
We
believe the continuation of the Share Repurchase Program represents an efficient and accretive deployment of capital to our shareholders,
with the net effect of mitigating the historical discount at which our shares have traded comparable to our net asset value per share.
Modified
“Dutch Auction” Tender Offers
On
August 8, 2022, we commenced a modified “Dutch Auction” tender offer (the “2022 Modified Dutch Auction Tender Offer”)
to purchase up to 2,000,000 shares of our common stock from our shareholders, which expired on September 2, 2022. In accordance with
the terms of the 2022 Modified Dutch Auction Tender Offer, we selected the lowest price per share of not less than $6.00 per share and
not greater than $7.00 per share for such repurchase. Pursuant to the 2022 Modified Dutch Auction Tender Offer, on September 12, 2022,
we repurchased 2,000,000 shares, or 6.6% of our outstanding shares at the time of such repurchase, at a price of $6.60 per share. We
used available cash to fund the purchases of our shares of common stock in the 2022 Modified Dutch Auction Tender Offer and to pay for
all related fees and expenses.
On
March 31, 2023, we commenced another modified “Dutch Auction” tender offer (the “2023 Modified Dutch Auction Tender
Offer”) to purchase up to 3,000,000 shares of our common stock from our shareholders, which expired on April 17, 2023. In accordance
with the terms of the 2023 Modified Dutch Auction Tender Offer, we selected the lowest price per share of not less than $3.00 per share
and not greater than $4.50 per share for such repurchase. Pursuant to the 2023 Modified Dutch Auction Tender Offer, on April 21, 2023,
we repurchase 3,000,000 shares, or 10.6% of our outstanding shares at the time of such repurchase, at a price of $4.50 per share. We
used available cash to fund the purchases of our shares of common stock in the 2023 Modified Dutch Auction Tender Offer and to pay for
all related fees and expenses.
We
believe our employment of modified “Dutch Auction” tender offers, including the 2022 Modified Dutch Auction Tender Offer
and the 2023 Modified Dutch Auction Tender Offer, represents an efficient and accretive deployment of capital to our shareholders, with
the net effect of mitigating the historical discount at which our shares have traded comparable to our net asset value per share.
The
following table lists the distributions, including dividends and returns of capital, if any, per share that we have declared since our
formation. The table is divided by fiscal year according to record date:
Date Declared | |
Record
Date | | |
Payment
Date | | |
Amount
per Share | |
Fiscal 2015: | |
| | | |
| | | |
| | |
November 4,
2015(1) | |
| November
16, 2015 | | |
| December
31, 2015 | | |
$ | 2.76 | |
Fiscal 2016: | |
| | | |
| | | |
| | |
August 3, 2016(2) | |
| August
16, 2016 | | |
| August
24, 2016 | | |
| 0.04 | |
Fiscal 2019: | |
| | | |
| | | |
| | |
November 5, 2019(3) | |
| December
2, 2019 | | |
| December
12, 2019 | | |
| 0.20 | |
December 20, 2019(4) | |
| December
31, 2019 | | |
| January
15, 2020 | | |
| 0.12 | |
Fiscal 2020: | |
| | | |
| | | |
| | |
July 29, 2020(5) | |
| August
11, 2020 | | |
| August
25, 2020 | | |
| 0.15 | |
September 28, 2020(6) | |
| October
5, 2020 | | |
| October
20, 2020 | | |
| 0.25 | |
October 28, 2020(7) | |
| November
10, 2020 | | |
| November
30, 2020 | | |
| 0.25 | |
December 16, 2020(8) | |
| December
30, 2020 | | |
| January
15, 2021 | | |
| 0.22 | |
Fiscal 2021: | |
| | | |
| | | |
| | |
January 26, 2021(9) | |
| February
5, 2021 | | |
| February
19, 2021 | | |
| 0.25 | |
March 8, 2021(10) | |
| March
30, 2021 | | |
| April
15, 2021 | | |
| 0.25 | |
May 4, 2021(11) | |
| May
18, 2021 | | |
| June
30, 2021 | | |
| 2.50 | |
August 3, 2021(12) | |
| August
18, 2021 | | |
| September
30, 2021 | | |
| 2.25 | |
November 2, 2021(13) | |
| November
17, 2021 | | |
| December
30, 2021 | | |
| 2.00 | |
December 20, 2021(14) | |
| December
31, 2021 | | |
| January
14, 2022 | | |
| 0.75 | |
Fiscal 2022: | |
| | | |
| | | |
| | |
March
8, 2022(15) | |
| March
25, 2022 | | |
| April
15, 2022 | | |
| 0.11 | |
Total | |
| | | |
| | | |
$ | 12.10 | |
(1) |
The
distribution was paid in cash or shares of our common stock at the election of stockholders, although the total amount of cash distributed
to all stockholders was limited to approximately 50% of the total distribution to be paid to all stockholders. As a result of stockholder
elections, the distribution consisted of 2,860,903 shares of common stock issued in lieu of cash, or approximately 14.8% of our outstanding
shares prior to the distribution, as well as cash of $26,358,885. The number of shares of common stock comprising the stock portion
was calculated based on a price of $9.425 per share, which equaled the average of the volume weighted-average trading price per share
of our common stock on December 28, 29 and 30, 2015. None of the $2.76 per share distribution represented a return of capital. |
(2) |
Of
the total distribution of $887,240 on August 24, 2016, $820,753 represented a distribution from realized gains, and $66,487 represented
a return of capital. |
(3) |
All
of the $3,512,849 distribution paid on December 12, 2019 represented a distribution from realized gains. None of the distribution
represented a return of capital. |
(4) |
All
of the $2,107,709 distribution paid on January 15, 2020 represented a distribution from realized gains. None of the distribution
represented a return of capital. |
(5) |
All
of the $2,516,452 distribution paid on August 25, 2020 represented a distribution from realized gains. None of the distribution represented
a return of capital. |
(6) |
All
of the $5,071,326 distribution paid on October 20, 2020 represented a distribution from realized gains. None of the distribution
represented a return of capital. |
(7) |
All
of the $4,978,504 distribution paid on November 30, 2020 represented a distribution from realized gains. None of the distribution
represented a return of capital. |
(8) |
All
of the $4,381,084 distribution paid on January 15, 2021 represented a distribution from realized gains. None of the distribution
represented a return of capital. |
(9) |
All
of the $4,981,131 distribution paid on February 19, 2021 represented a distribution from realized gains. None of the distribution
represented a return of capital. |
(10) |
All
of the $6,051,304 distribution paid on April 15, 2021 represented a distribution from realized gains. None of the distribution represented
a return of capital. |
(11) |
The
distribution was paid in cash or shares of our common stock at the election of stockholders, although the total amount of cash distributed
to all stockholders was limited to approximately 50% of the total distribution to be paid to all stockholders. As a result of stockholder
elections, the distribution consisted of 2,335,527 shares of common stock issued in lieu of cash, or approximately 9.6% of our outstanding
shares prior to the distribution, as well as cash of $29,987,589. The number of shares of common stock comprising the stock portion
was calculated based on a price of $13.07 per share, which equaled the average of the volume weighted-average trading price per share
of our common stock on May 12, 13, and 14, 2021. None of the $2.50 per share distribution represented a return of capital. |
(12) |
The
distribution was paid in cash or shares of our common stock at the election of stockholders, although the total amount of cash distributed
to all stockholders was limited to approximately 50% of the total distribution to be paid to all stockholders. As a result of stockholder
elections, the distribution consisted of 2,225,193 shares of common stock issued in lieu of cash, or approximately 8.4% of our outstanding
shares prior to the distribution, as well as cash of $29,599,164. The number of shares of common stock comprising the stock portion
was calculated based on a price of $13.55 per share, which equaled the average of the volume weighted-average trading price per share
of our common stock on August 11, 12, and 13, 2021. None of the $2.25 per share distribution represented a return of capital. |
(13) |
The
distribution was paid in cash or shares of our common stock at the election of stockholders, although the total amount of cash distributed
to all stockholders was limited to approximately 50% of the total distribution to be paid to all stockholders. As a result of stockholder
elections, the distribution consisted of 2,170,807 shares of common stock issued in lieu of cash, or approximately 7.5% of our outstanding
shares prior to the distribution, as well as cash of $28,494,812. The number of shares of common stock comprising the stock portion
was calculated based on a price of $13.39 per share, which equaled the average of the volume weighted-average trading price per share
of our common stock on November 11, 12, and 13, 2021. None of the $2.00 per share distribution represented a return of capital. |
(14) |
All
of the $23,338,915 distribution paid on January 14, 2022 represented a distribution from realized gains. None of the distribution
represented a return of capital. |
(15) |
All
of the $3,441,824 distribution paid on April 15, 2022 represented a distribution from realized gains. None of the distribution represented
a return of capital. |
We
intend to focus on making capital gains-based investments from which we will derive primarily capital gains. As a consequence, we do
not anticipate that we will pay distributions on a quarterly basis or become a predictable distributor of distributions, and we expect
that our distributions, if any, will be much less consistent than the distributions of other BDCs that primarily make debt investments.
If there are earnings or realized capital gains to be distributed, we intend to declare and pay a distribution at least annually. The
amount of realized capital gains available for distribution to stockholders will be impacted by our tax status.
Our
current intention is to make any future distributions out of assets legally available therefrom in the form of additional shares of our
common stock under our DRIP, except in the case of stockholders who elect to receive dividends and/or long-term capital gains distributions
in cash. Under the DRIP, if a stockholder owns shares of common stock registered in its own name, the stockholder will have all cash
distributions (net of any applicable withholding) automatically reinvested in additional shares of common stock unless the stockholder
opts out of our DRIP by delivering a written notice to our dividend paying agent prior to the record date of the next dividend or distribution.
Any distributions reinvested under the plan will nevertheless be treated as received by the U.S. stockholder for U.S. federal income
tax purposes, although no cash distribution has been made. As a result, if a stockholder does not elect to opt out of the DRIP, it will
be required to pay applicable U.S. federal, state and local taxes on any reinvested dividends even though such stockholder will
not receive a corresponding cash distribution. Stockholders that hold shares in the name of a broker or financial intermediary should
contact the broker or financial intermediary regarding any election to receive distributions in cash.
So
long as we qualify and maintain our tax treatment as a RIC, we generally will not be subject to U.S. federal and state income
taxes on any ordinary income or capital gains that we distribute at least annually to our stockholders as dividends. Rather, any tax
liability related to income earned by the RIC will represent obligations of our investors and will not be reflected in our consolidated
financial statements. See “Note 2—Significant Accounting Policies—U.S. Federal and State Income Taxes”
of our most recent Annual Report on Form 10-K and “Note 9—Income Taxes” to our condensed consolidated financial statements
as of March 31, 2023 of our most recent Quarterly Report on Form 10-Q for more information. Certain of our subsidiaries (“taxable
subsidiaries”) are treated as Corporations for U.S. federal income tax purposes. These subsidiaries are subject to U.S. federal
income tax at corporate rates, regardless of whether we are taxed as a RIC. These taxable subsidiaries are not consolidated for U.S.
federal income tax purposes and may generate income tax expenses as a result of their ownership of the portfolio companies. Such
income tax expenses and deferred taxes, if any, will be reflected in our consolidated financial statements.
SENIOR
SECURITIES
Information
about our senior securities as of the fiscal years ended December 31, 2022 to December 31, 2013 is located in Part II, Item 5 in our
most recent Annual Report on Form 10-K, and is incorporated by reference into the registration statement of which this prospectus is
a part. The report of Marcum, LLP, our independent registered public accounting firm, on the audited consolidated financial statements
as of December 31, 2022 and December 31, 2021 and for each of the three years ended December 31, 2022, December 31, 2021 and December
31, 2020 is included in our most recent Annual Report on Form 10-K filed on March 16, 2023, and is incorporated by reference into the
registration statement of which this prospectus is a part.
BUSINESS
Our
business is described in “Part I — Item 1 – Business” of our most recent Annual Report on Form 10-K, which is
incorporated by reference herein.
PORTFOLIO
COMPANIES
The
tables which set forth certain information as of March 31, 2023 and December 31, 2022 regarding each portfolio company in which we had
a debt or equity investment are in our most recent Quarterly Report on Form 10-Q and our most recent Annual Report on Form 10-K, respectively,
which are incorporated by reference herein. The general terms of our expected investments are described in “Part I, Item 1 —
Business — Investment Strategy” in our most recent Annual Report on Form 10-K. Other than these investments, our only formal
relationships with our portfolio companies will be the managerial assistance we may provide upon request and the board observer or participation
rights we may receive in connection with our investment.
PORTFOLIO
MANAGEMENT
The
management of our investment portfolio is the responsibility of our management and its investment committee. The member of the investment
committee who is primarily responsible for the day-to-day management of our portfolio is Mark D. Klein. For more information regarding
the business experience of Mr. Klein, see “Part III, Item 10 — Directors, Executive Officers and Corporate Governance”
in our most recent Annual Report on Form 10-K.
Our
investment committee is led by Mr. Klein, Chairman of our Board of Directors, Chief Executive Officer and President. We consider Mr.
Klein to be our portfolio manager.
The
table below shows the dollar range of shares of our common stock beneficially owned by each of our portfolio managers as of August
7, 2023.
Name
of Portfolio Manager |
|
Dollar
Range of Equity
Securities
in SuRo Capital(1)(2) |
Mark
Klein |
|
Over
$1,000,000 |
(1)
|
The
dollar range of equity securities beneficially owned in us is based on a price per share of our common stock of $3.96,
which is the closing price of our common stock on the Nasdaq Global Select Market on August 7, 2023. |
(2)
|
The
dollar ranges are: None, $1 – $10,000, $10,001 – $50,000, $50,001 – $100,000, $100,001 – $500,000, $500,001
– $1,000,000, or Over $1,000,000. |
The
following information pertains to members of our investment committee who are not executive officers or directors of SuRo Capital
Corp.
Please
also refer to “Information about the Nominees and Directors” and “Information about the Executive Officers Who Are
Not Directors” in our most recent definitive proxy statement, which is incorporated by reference into this prospectus, for more
information relating to the management of the Company. For a discussion of the potential conflicts of interests associated with operating
an internally managed BDC, see “Related Party Transactions and Certain Relationships” in our most recent definitive proxy statement, which is incorporated by reference into this prospectus.
CORPORATE
GOVERNANCE
Please
refer to “Corporate Governance” in our most recent definitive proxy statement, which is incorporated by reference into this
prospectus, for information relating to the management of the Company.
EXECUTIVE
COMPENSATION
Please
refer to “Compensation of Executive Officers” in our most recent definitive proxy statement, which is incorporated by reference
into this prospectus, for information relating to the management of the Company.
RELATED
PARTY TRANSACTIONS AND CERTAIN RELATIONSHIPS
Please
refer to “Related Party Transactions and Certain Relationships” in our most recent definitive proxy statement, which is incorporated
by reference into this prospectus, for information relating to the management of the Company.
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The
following table sets forth, as of August 7, 2023, the beneficial ownership of each current director and executive officer of the
Company, as well as each person known to us to beneficially own 5% or more of the outstanding shares of our common stock, and the executive
officers and directors as a group.
Beneficial
ownership is determined in accordance with the rules of the SEC and includes voting or investment power with respect to the securities.
Ownership information for those persons who beneficially own 5% or more of our shares of common stock is based upon Schedule 13G or Schedule
13D filings by such persons with the SEC and other information obtained from such persons, if available.
Unless
otherwise indicated, the Company believes that each beneficial owner set forth in the table has sole voting and investment power and
has the same address as the Company. Our address is 640 Fifth Avenue, 12th Floor, New York, NY 10019.
Name and
Address of Beneficial Owner | |
Type
of Ownership | |
Number
of Shares
Owned Beneficially(1) | | |
Percentage of
Class | |
Interested
Directors | |
| |
| | | |
| | |
Mark D.
Klein(2) | |
Direct | |
| 957,496
| | |
| 3.77 | % |
Independent
Directors(3) | |
| |
| | | |
| | |
Leonard A. Potter | |
Direct | |
| 82,419 | | |
| * | |
Marc Mazur | |
Direct | |
| 45,554 | | |
| * | |
Ronald M. Lott | |
Direct | |
| 27,263 | | |
| * | |
Lisa Westley | |
Direct | |
| 35,435 | | |
| * | |
Executive
Officers | |
| |
| | | |
| | |
Allison Green(4) | |
Direct | |
| 109,547
| | |
| * | |
Executive officers and
directors as a group (6 persons)(5) | |
| |
| 1,257,714 | | |
| 4.95 | % |
*
Represents less than one percent (1.0%)
(1) |
Beneficial
ownership has been determined in accordance with Rule 13d-3 under the Securities Exchange Act of 1934, as amended (the “Exchange
Act”). |
|
|
(2) |
Includes
(i) 2,659 shares owned by Mr. Klein’s spouse, which may be deemed to be beneficially owned by Mr. Klein, and (ii) 294,012
restricted shares granted under the SuRo Capital Corp. Amended and Restated 2019 Equity Incentive Plan (the “Amended Equity
Incentive Plan”) on February 10, 2021, December 10, 2021 and February 9, 2022, including shares acquired in connection with
dividends thereon that are deemed restricted shares, all of which are subject to certain vesting schedules. |
|
|
(3) |
Includes
15,015 restricted shares granted under the Amended Equity Incentive Plan, including shares acquired in connection with dividends
thereon that are deemed restricted shares, all of which vest in full on the date of the Annual Meeting. |
|
|
(4) |
Includes
47,871 restricted shares granted under the Amended Equity Incentive Plan on February 10, 2021 and February 9, 2022, including
shares acquired in connection with dividends thereon that are deemed restricted shares, all of which are subject to certain vesting
schedules. |
|
|
(5) |
The
address for each of the directors and officers is c/o SuRo Capital Corp., 640 Fifth Avenue, 12th Floor, New York, New York 10019. |
REGULATION
AS A BUSINESS DEVELOPMENT COMPANY
We
are subject to regulation as described in “Part I, Item 1 – Business” of our most recent Annual Report on Form 10-K,
which is incorporated by reference herein.
DETERMINATION
OF NET ASSET VALUE
We
determine the net asset value of our investment portfolio after the conclusion of each fiscal quarter in connection with the preparation
of our annual and quarterly reports filed under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or
more frequently if required under the 1940 Act.
Securities
that are publicly traded are generally valued at the close price on the valuation date; however, if they remain subject to lock-up restrictions
they are discounted accordingly. Securities that are not publicly traded or for which there are no readily available market quotations,
including securities that trade on secondary markets for private securities, are valued at fair value as determined in good faith by
our Board of Directors and in accordance with Rule 2a-5 as promulgated under the 1940 Act. In connection with that determination, our
executive officers and investment professionals will prepare portfolio company valuations using, when available, the most recent portfolio
company financial statements and forecasts. We also engage an independent valuation firm to perform independent valuations of our investments
that are not publicly traded or for which there are no readily available market quotations. We may also engage an independent valuation
firm to perform independent valuations of any securities that trade on private secondary markets, but are not otherwise publicly traded,
where there is a lack of appreciable trading or a wide disparity in recently reported trades.
For
those securities that are not publicly traded or for which there are no readily available market quotations, our Board of Directors,
with the assistance of its valuation committee (the “Valuation Committee”), will use the recommended valuations as prepared
by our executive officers and investment professionals and the independent valuation firm, respectively, as a component of the foundation
for its final fair value determination. Due to the uncertainty inherent in the valuation process, such estimates of fair value may differ
significantly from the values that would have resulted had others made the determination using the same or different procedures or had
a readily available market for the securities existed, and the differences could be material. Additionally, changes in the market environment
and other events that may occur over the life of the investments may cause the gains or losses ultimately realized on these investments
to be different than the gains or losses implied by the valuation currently assigned to such investments. For those investments that
are publicly traded, we generally record unrealized appreciation or depreciation based on changes in the market value of the securities
as of the valuation date. Publicly traded securities that remain subject to lock-up restrictions are discounted accordingly. For those
investments that are not publicly traded and for which there are no readily available market quotations, we record unrealized depreciation
on such investments when we believe that an investment has become impaired and record unrealized appreciation if we believe that the
underlying portfolio company has appreciated in value and our equity security has also appreciated in value. Changes in fair value are
recorded in the consolidated statement of operations as the net change in unrealized appreciation or depreciation.
We
generally determine the fair value of our investments by considering a number of factors. The following represent factors that, among
others, could impact our fair value determinations:
1. |
Public
trading of our portfolio securities, taking into consideration lock-up requirements and liquidity; |
|
|
2. |
Active
trading of our portfolio securities on a private secondary market, where we have determined that there is meaningful volume and the
transactions are considered arm’s length by sophisticated investors; |
|
|
3. |
Qualified
funding rounds in the companies in which we invested, where there is meaningful and reputable information available on size, valuation
and investors; and |
|
|
4. |
Additional
investments by us in current portfolio companies, where the price of the new investment differs materially from prior investments. |
There
is inherent subjectivity in determining the fair value of our investments. We expect that most of our portfolio investments, other than
those for which market quotations are readily available and that may be sold without restriction, will be valued at fair value as determined
in good faith by our Board of Directors, with the assistance of our valuation committee. Furthermore, when calculating net asset value,
we also consider our recognition of a deferred tax liability for unrealized gains on investments for those investments held in our taxable
subsidiaries.
The
following list sets forth each of our consolidated subsidiaries, the state or country under whose laws the subsidiary is organized, and
the percentage of voting securities or membership interests owned by us in such subsidiary:
GSV Capital Lending, LLC (Delaware) | |
| 100 | % |
GSVC AE Holdings, Inc. (Delaware) | |
| 100 | % |
GSVC AV Holdings, Inc. (Delaware) | |
| 100 | % |
GSVC SW Holdings, Inc. (Delaware) | |
| 100 | % |
GSVC SVDS Holdings, Inc. (Delaware) | |
| 100 | % |
SuRo Capital Sports, LLC (Delaware) | |
| 100 | % |
The
principal investment strategies of GSVC AE Holdings, Inc., GSVC AV Holdings, Inc., GSVC SW Holdings, Inc., and GSVC SVDS Holdings, Inc.
are substantially similar to our principal investment strategies. The principal investment strategies of GSV Capital Lending, LLC are
substantially similar to our principal investment strategies, with exception for that entity’s formative purpose to originate portfolio
loan investments within the state of California pursuant to its California lending license. The principal investment strategies of SuRo
Capital Sports, LLC are substantially similar to our principal investment strategies, with exception for that entity’s formative
purpose to originate investments specifically centered in the sports betting market. The principal investment risks for each of our subsidiaries
are substantially similar to our principal investment risks. We do not currently intend to create or acquire primary control of any entity
which primarily engages in investment activities in securities or other assets other than entities that we wholly own.
Currently,
each of our subsidiaries is consolidated with us for financial reporting purposes. We comply with the provisions of the 1940 Act governing
capital structure and leverage (Section 18 and Section 61) on an aggregate basis such that we treat the debt of any such subsidiary as
our own for purposes of Section 18 and Section 61. Additionally, we and our subsidiaries comply with provisions of the 1940 Act relating
to affiliated transactions and custody.
Determinations
in Connection with Offerings
In
connection with future offerings of shares of our common stock, our Board of Directors, or an authorized committee thereof, will be required
to make a determination of our net asset value and a good faith determination that we are not selling shares of our common stock at a
price below the then current net asset value of our common stock at the time at which the sale is made. Our Board of Directors, or an
authorized committee thereof, will consider the following factors, among others, in making such a determination:
● |
the
net asset value of our common stock disclosed in the most recent periodic report that we filed with the SEC; |
|
|
● |
our
management’s assessment of whether any material change in the net asset value of our common stock has occurred (including through
the realization of gains on the sale of our portfolio securities) during the period beginning on the date of the most recently disclosed
net asset value of our common stock and ending as of a time within 48 hours (excluding Sundays and holidays) of the sale of our common
stock; and |
|
|
● |
the
magnitude of the difference between (i) a value that our Board of Directors or an authorized committee thereof has determined reflects
the current (as of a time within 48 hours, excluding Sundays and holidays) net asset value of our common stock, which is generally
based upon the net asset value of our common stock disclosed in the most recent periodic report that we filed with the SEC, as adjusted
to reflect our management’s assessment of any material change in the net asset value of our common stock since the date of
the most recently disclosed net asset value of our common stock, and (ii) the offering price of the shares of our common stock in
the proposed offering. |
These
processes and procedures are part of our compliance policies and procedures. Records will be made contemporaneously with all determinations
described in this section and these records will be maintained with other records that we are required to maintain under the 1940 Act.
Sales
of Common Stock Below Net Asset Value
Our
stockholders may, from time to time, vote to allow us to issue common stock at a price below the net asset value per share of our common
stock. In such an approval, our stockholders may not specify a maximum discount below net asset value at which we are able to issue our
common stock. In order to sell shares pursuant to such a stockholder authorization:
● |
a
majority of our independent directors who have no financial interest in the sale must have approved the sale; and |
|
|
● |
a
majority of such directors who are not interested persons of SuRo Capital, in consultation with the underwriter or underwriters of
the offering if it is to be underwritten, must have determined in good faith, and as of a time immediately prior to the first solicitation
by us or on our behalf of firm commitments to purchase such shares or immediately prior to the issuance of such shares, that the
price at which such shares are to be sold is not less than a price which closely approximates the market value of those shares, less
any underwriting commission or discount. |
Any
offering of common stock below net asset value per share will be designed to raise capital for investment in accordance with our investment
objectives and business strategies.
In
making a determination that an offering below net asset value per share is in our and our stockholders’ best interests, our Board
of Directors would consider a variety of factors including:
● |
The
effect that an offering below net asset value per share would have on our stockholders, including the potential dilution they would
experience as a result of the offering; |
|
|
● |
The
amount per share by which the offering price per share and the net proceeds per share are less than the most recently determined
net asset value per share; |
|
|
● |
The
relationship of recent market prices of our common stock to our net asset value per share and the potential impact of the offering
on the market price per share of our common stock; |
|
|
● |
Whether
the proposed offering price would closely approximate the market value of our shares; |
|
|
● |
The
potential market impact of being able to raise capital during the current financial market difficulties; |
|
|
● |
The
nature of any new investors anticipated to acquire shares in the offering; |
|
|
● |
The
anticipated rate of return on and quality, type and availability of investments to be funded with the proceeds from the offering,
if any; and |
|
|
● |
The
leverage available to us, both before and after any offering, and the terms thereof. |
Sales
by us of our common stock at a discount from our net asset value per share pose potential risks for our existing stockholders whether
or not they participate in the offering, as well as for new investors who participate in the offering.
The
following three headings and accompanying tables will explain and provide hypothetical examples on the impact of an offering at a price
less than net asset value per share on three different sets of investors:
● |
existing
stockholders who do not purchase any shares in the offering; |
|
|
● |
existing
stockholders who purchase a relatively small amount of shares in the offering or a relatively large amount of shares in the offering;
and |
|
|
● |
new
investors who become stockholders by purchasing shares in the offering. |
Impact
on Existing Stockholders who do not Participate in the Offering
Our
existing stockholders who do not participate in an offering below net asset value per share or who do not buy additional shares in the
secondary market at the same or lower price we obtain in the offering (after expenses and commissions) face the greatest potential risks.
These stockholders will experience an immediate decrease (often called dilution) in the net asset value of the shares they hold and their
net asset value per share. These stockholders will also experience a disproportionately greater decrease in their participation in our
earnings and assets and their voting power than the increase we will experience in our assets, potential earning power and voting interests
due to the offering. These stockholders may also experience a decline in the market price of their shares, which often reflects to some
degree announced or potential decreases in net asset value per share. This decrease could be more pronounced as the size of the offering
and level of discount to net asset value increases.
The
following table illustrates the level of net asset value dilution that would be experienced by a nonparticipating stockholder in four
different hypothetical offerings of different sizes and levels of discount from NAV per share. Actual sales prices and discounts may
differ from the presentation below.
The
examples assume that the Company has 1,000,000 common shares outstanding, $15,000,000 in total assets and $5,000,000
in total liabilities. The current NAV and net asset value per share are thus $10,000,000 and $10.00, respectively. The table illustrates
the dilutive effect on nonparticipating Stockholder A of (1) an offering of 50,000 shares (5% of the outstanding shares) at $9.50 per
share after offering expenses and commissions (a 5% discount from net asset value), (2) an offering of 100,000 shares (10% of the outstanding
shares) at $9.00 per share after offering expenses and commissions (a 10% discount from NAV) and (3) an offering of 250,000 shares (25%
of the outstanding shares) at $8.00 per share after offering expenses and commissions (a 20% discount from net asset value). The prospectus
supplement pursuant to which any discounted offering is made will include a chart based on the actual number of shares in such offering
and the actual discount to the most recently determined net asset value.
| |
Prior
to Sale | | |
Example
1 5%
Offering at 5% Discount | | |
Example
2 10%
Offering at 10% Discount | | |
Example
2 10%
Offering at 10% Discount | |
| |
Below NAV | | |
Following
Sale | | |
%
Change | | |
Following
Sale | | |
%
Change | | |
Following
Sale | | |
%
Change | |
Offering Price | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Price per Share
to Public(1) | |
| | | |
$ | 10.00 | | |
| | | |
$ | 9.47 | | |
| | | |
$ | 8.42 | | |
| | |
Net Proceeds per Share
to Issuer | |
| | | |
$ | 9.50 | | |
| | | |
$ | 9.00 | | |
| | | |
$ | 8.00 | | |
| | |
Increase
in Shares and Decrease to NAV | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Total Shares Outstanding | |
| 1,000,000 | | |
| 1,050,000 | | |
| 5.00 | % | |
| 1,100,000 | | |
| 10.00 | % | |
| 1,250,000 | | |
| 25.00 | % |
NAV per Share | |
$ | 10.00 | | |
$ | 9.98 | | |
| (0.24 | )% | |
$ | 9.91 | | |
| (0.91 | )% | |
$ | 9.60 | | |
| (4.00 | )% |
Dilution
to Nonparticipating Stockholder A | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Share Dilution | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Shares Held by Stockholder
A | |
| 10,000 | | |
| 10,000 | | |
| | | |
| 10,000 | | |
| | | |
| 10,000 | | |
| | |
Percentage Outstanding
Held by Stockholder A | |
| 1.00 | % | |
| 0.95 | % | |
| (4.76 | )% | |
| 0.91 | % | |
| (9.09 | )% | |
| 0.80 | % | |
| (20.00 | )% |
NAV Dilution | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Total NAV Held by Stockholder
A | |
$ | 100,000 | | |
$ | 99,762 | | |
| (0.24 | )% | |
$ | 99,091 | | |
| (0.91 | )% | |
$ | 96,000 | | |
| (4.00 | )% |
Total Investment by Stockholder
A (Assumed to be $10 per Share) | |
$ | 100,000 | | |
$ | 100,000 | | |
| | | |
$ | 100,000 | | |
| | | |
$ | 100,000 | | |
| | |
Total Dilution to Stockholder
A (Total NAV Less Total Investment) | |
$ | — | | |
$ | (238 | ) | |
| | | |
$ | (909 | ) | |
| | | |
$ | (4,000 | ) | |
| | |
NAV Dilution per Share | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
NAV per Share Held by Stockholder
A | |
| | | |
$ | 9.98 | | |
| | | |
$ | 9.91 | | |
| | | |
$ | 9.60 | | |
| | |
Investment per Share Held
by Stockholder A (Assumed to be $10 per Share on Shares Held Prior to Sale) | |
$ | 10.00 | | |
$ | 10.00 | | |
| | | |
$ | 10.00 | | |
| | | |
$ | 10.00 | | |
| | |
NAV Dilution per Share
Experienced by Stockholder A (NAV per Share Less Investment per Share) | |
| | | |
$ | (0.02 | ) | |
| | | |
$ | (0.09 | ) | |
| | | |
$ | (0.40 | ) | |
| | |
Percentage NAV Dilution
per Share Experienced by Stockholder A (NAV Dilution per Share Divided by Investment per Share) | |
| | | |
| | | |
| (0.24 | )% | |
| | | |
| (0.91 | )% | |
| | | |
| (4.00 | )% |
(1)
Assumes 5% in selling compensation and expenses paid by us
Impact
on Existing Stockholders who do Participate in the Offering
Our
existing stockholders who participate in an offering below net asset value per share or who buy additional shares in the secondary market
at the same or lower price as we obtain in the offering (after expenses and commissions) will experience the same types of net asset
value dilution as the nonparticipating stockholders, albeit at a lower level, to the extent they purchase less than the same percentage
of the discounted offering as their interest in our shares immediately prior to the offering. The level of net asset value dilution to
such stockholders will decrease as the number of shares such stockholders purchase increases. Existing stockholders who buy more than
their proportionate percentage will experience net asset value dilution but will, in contrast to existing stockholders who purchase less
than their proportionate share of the offering, experience an increase (often called accretion) in net asset value per share over their
investment per share and will also experience a disproportionately greater increase in their participation in our earnings and assets
and their voting power than our increase in assets, potential earning power and voting interests due to the offering. The level of accretion
will increase as the excess number of shares purchased by such stockholder increases. Even a stockholder who over-participates will,
however, be subject to the risk that we may make additional discounted offerings in which such stockholder does not participate, in which
case such a stockholder will experience net asset value dilution as described above in such subsequent offerings. These stockholders
may also experience a decline in the market price of their shares, which often reflects to some degree announced or potential decreases
in net asset value per share. This decrease could be more pronounced as the size of the offering and the level of discount to NAV increases.
The
following chart illustrates the level of dilution and accretion in the hypothetical 25% offering at a 20% discount from the prior chart
(Example 3) for a stockholder that acquires shares equal to (1) 50% of its proportionate share of the offering (i.e., 1,250 shares, which
is 0.5% of an offering of 250,000 shares rather than its 1.0% proportionate share) and (2) 150% of such percentage (i.e., 3,750 shares,
which is 1.5% of an offering of 250,000 shares rather than its 1.0% proportionate share). The prospectus supplement pursuant to which
any discounted offering is made will include a chart for this example based on the actual number of shares in such offering and the actual
discount from the most recently determined net asset value per share.
| |
Prior to | | |
50%
Participation | | |
150%
Participation | |
| |
Sale Below
NAV | | |
Following
Sale | | |
%
Change | | |
Following
Sale | | |
%
Change | |
Offering Price | |
| | | |
| | | |
| | | |
| | | |
| | |
Price per Share
to Public(1) | |
| | | |
$ | 8.42 | | |
| | | |
$ | 8.42 | | |
| | |
Net Proceeds per Share
to Issuer | |
| | | |
$ | 8.00 | | |
| | | |
$ | 8.00 | | |
| | |
Increase
in Shares and Decrease to NAV | |
| | | |
| | | |
| | | |
| | | |
| | |
Total Shares Outstanding | |
| 1,000,000 | | |
| 1,250,000 | | |
| 25.00 | % | |
| 1,250,000 | | |
| 25.00 | % |
NAV per Share | |
$ | 10.00 | | |
$ | 9.60 | | |
| (4.00 | )% | |
$ | 9.60 | | |
| (4.00 | )% |
Dilution
to Nonparticipating Stockholder A | |
| | | |
| | | |
| | | |
| | | |
| | |
Share Dilution | |
| | | |
| | | |
| | | |
| | | |
| | |
Shares Held by Stockholder
A | |
| 10,000 | | |
| 11,250 | | |
| 12.50 | % | |
| 13,750 | | |
| 37.50 | % |
Percentage Outstanding
Held by Stockholder A | |
| 1.00 | % | |
| 0.90 | % | |
| (10.00 | )% | |
| 1.10 | % | |
| 10.00 | % |
NAV Dilution | |
| | | |
| | | |
| | | |
| | | |
| | |
Total NAV Held by Stockholder
A | |
$ | 100,000 | | |
$ | 108,000 | | |
| 8.00 | % | |
$ | 132,000 | | |
| 32.00 | % |
Total Investment by Stockholder
A (Assumed to be $10 per Share) | |
$ | 100,000 | | |
$ | 110,525 | | |
| | | |
$ | 131,575 | | |
| | |
Total Dilution to Stockholder
A (Total NAV Less Total Investment) | |
$ | — | | |
$ | (2,525 | ) | |
| | | |
$ | 425 | | |
| | |
NAV Dilution per Share | |
| | | |
| | | |
| | | |
| | | |
| | |
NAV per Share Held by Stockholder
A | |
| | | |
$ | 9.60 | | |
| | | |
$ | 9.60 | | |
| | |
Investment per Share Held
by Stockholder A (Assumed to be $10 per Share on Shares Held Prior to Sale) | |
$ | 10.00 | | |
$ | 9.82 | | |
| (1.76 | )% | |
$ | 9.57 | | |
| (4.31 | )% |
NAV Dilution per Share
Experienced by Stockholder A (NAV per Share Less Investment per Share) | |
| | | |
$ | (0.22 | ) | |
| | | |
$ | 0.03 | | |
| | |
Percentage NAV Dilution
per Share Experienced by Stockholder A (NAV Dilution per Share Divided by Investment per Share) | |
| | | |
| | | |
| (2.28 | )% | |
| | | |
| 0.32 | % |
(1)
Assumes 5% in selling compensation and expenses paid by us
Impact
on New Investors
Investors
who are not currently stockholders, but who participate in an offering below net asset value and whose investment per share is greater
than the resulting net asset value per share due to selling compensation and expenses paid by us will experience an immediate decrease,
albeit small, in the net asset value of their shares and their net asset value per share compared to the price they pay for their shares
(Example 1 below). On the other hand, investors who are not currently stockholders, but who participate in an offering below net asset
value per share and whose investment per share is also less than the resulting net asset value per share will experience an immediate
increase in the net asset value of their shares and their net asset value per share compared to the price they pay for their shares (Examples
2 and 3 below). These latter investors will experience a disproportionately greater participation in our earnings and assets and their
voting power than our increase in assets, potential earning power and voting interests. These investors will, however, be subject to
the risk that we may make additional discounted offerings in which such new stockholder does not participate, in which case such new
stockholder will experience dilution as described above in such subsequent offerings. These investors may also experience a decline in
the market price of their shares, which often reflects to some degree announced or potential decreases in net asset value per share.
This decrease could be more pronounced as the size of the offering and level of discount to net asset value increases.
The
following chart illustrates the level of dilution or accretion for new investors that would be experienced by a new investor in the same
hypothetical discounted offerings as described in the first chart above. The illustration is for a new investor who purchases the same
percentage (1.00%) of the shares in the offering as Stockholder A in the prior examples held immediately prior to the offering. The prospectus
supplement pursuant to which any discounted offering is made will include a chart for these examples based on the actual number of shares
in such offering and the actual discount from the most recently determined NAV per share.
| |
Prior to
Sale | | |
Example
1 5%
Offering at 5% Discount | | |
Example
2 10%
Offering at 10% Discount | | |
Example
2 10%
Offering at 10% Discount | |
| |
Below NAV | | |
Following
Sale | | |
%
Change | | |
Following
Sale | | |
%
Change | | |
Following
Sale | | |
%
Change | |
Offering Price | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Price per Share
to Public(1) | |
| | | |
$ | 10.00 | | |
| | | |
$ | 9.47 | | |
| | | |
$ | 8.42 | | |
| | |
Net Proceeds per Share
to Issuer | |
| | | |
$ | 9.50 | | |
| | | |
$ | 9.00 | | |
| | | |
$ | 8.00 | | |
| | |
Increase
in Shares and Decrease to NAV | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Total Shares Outstanding | |
| 1,000,000 | | |
| 1,050,000 | | |
| 5.00 | % | |
| 1,100,000 | | |
| 10.00 | % | |
| 1,250,000 | | |
| 25.00 | % |
NAV per Share | |
$ | 10.00 | | |
$ | 9.98 | | |
| (0.24 | )% | |
$ | 9.91 | | |
| (0.91 | )% | |
$ | 9.60 | | |
| (4.00 | )% |
Dilution
to Nonparticipating Stockholder A | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Share Dilution | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Shares Held by Stockholder
A | |
| — | | |
| 500 | | |
| | | |
| 1,000 | | |
| | | |
| 2,500 | | |
| | |
Percentage Outstanding
Held by Stockholder A | |
| — | % | |
| 0.05 | % | |
| | | |
| 0.09 | % | |
| | | |
| 0.20 | % | |
| | |
NAV Dilution | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Total NAV Held by Stockholder
A | |
$ | — | | |
$ | 4,988 | | |
| | | |
$ | 9,909 | | |
| | | |
$ | 24,000 | | |
| | |
Total Investment by Stockholder
A (Assumed to be $10 per Share) | |
$ | — | | |
$ | 5,000 | | |
| | | |
$ | 9,470 | | |
| | | |
$ | 21,050 | | |
| | |
Total Dilution to Stockholder
A (Total NAV Less Total Investment) | |
$ | — | | |
$ | (12 | ) | |
| | | |
$ | 439 | | |
| | | |
$ | 2,950 | | |
| | |
NAV Dilution per Share | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
NAV per Share Held by Stockholder
A | |
| | | |
$ | 9.98 | | |
| | | |
$ | 9.91 | | |
| | | |
$ | 9.60 | | |
| | |
Investment per Share Held
by Stockholder A (Assumed to be $10 per Share on Shares Held Prior to Sale) | |
| | | |
$ | 10.00 | | |
| | | |
$ | 9.47 | | |
| | | |
$ | 8.42 | | |
| | |
NAV Dilution per Share
Experienced by Stockholder A (NAV per Share Less Investment per Share) | |
| | | |
$ | (0.02 | ) | |
| | | |
$ | 0.44 | | |
| | | |
$ | 1.18 | | |
| | |
Percentage NAV Dilution
per Share Experienced by Stockholder A (NAV Dilution per Share Divided by Investment per Share) | |
| | | |
| | | |
| (0.20 | )% | |
| | | |
| 4.64 | % | |
| | | |
| 14.01 | % |
DIVIDEND
REINVESTMENT PLAN
We
have adopted a DRIP, through which all dividends are paid to stockholders in the form of additional shares of our common stock, unless
a stockholder elects to receive cash as provided below. In this way, a stockholder can maintain an undiluted investment in us and still
allow us to pay out the required distributable income.
No
action is required on the part of a registered stockholder to receive a distribution in shares of our common stock. A registered stockholder
may elect to receive an entire distribution in cash by notifying American Stock Transfer & Trust Company, the plan administrator
and our transfer agent and registrar, in writing so that such notice is received by the plan administrator no later than 10 days prior
to the record date for distributions to stockholders. The plan administrator will set up an account for shares acquired through the plan
for each stockholder who has not elected to receive distributions in cash and hold such shares in non-certificated form. Upon request
by a participant, received in writing not less than 10 days prior to the record date, the plan administrator will, instead of crediting
shares to the participant’s account, issue a certificate registered in the participant’s name for the number of whole shares
of our common stock and a check for any fractional share.
Those
stockholders whose shares are held by a broker or other financial intermediary may receive distributions in cash by notifying their broker
or other financial intermediary of their election.
We
intend to use only newly issued shares to implement the plan if our shares are trading at a premium to net asset value. The number of
shares to be issued to a stockholder is determined by dividing the total dollar amount of the distribution payable to such stockholder
by the market price per share of our common stock at the close of regular trading on the Nasdaq Global Select Market on the valuation
date for such distribution. Market price per share on that date will be the closing price for such shares on the Nasdaq Global Select
Market or, if no sale is reported for such day, at the average of their electronically-reported bid and asked prices. The number of shares
of our common stock to be outstanding after giving effect to payment of the distribution cannot be established until the value per share
at which additional shares will be issued has been determined and elections of our stockholders have been tabulated.
There
is no charge to stockholders for receiving their distributions in the form of additional shares of our common stock. The plan administrator’s
fees for handling distributions in stock are paid by us. There are no brokerage charges with respect to shares we have issued directly
as a result of distributions payable in stock. If a participant elects by written or telephonic notice to the plan administrator to have
the plan administrator sell part or all of the shares held by the plan administrator in the participant’s account and remit the
proceeds to the participant, the plan administrator is authorized to deduct a $15 transaction fee plus brokerage commissions from the
proceeds.
Stockholders
who receive distributions in the form of stock are subject to the same U.S. federal, state and local tax consequences as are stockholders
who elect to receive their distributions in cash. A stockholder’s adjusted tax basis for determining gain or loss upon the
sale of stock received in a distribution from us will be equal to the total dollar amount of the distribution payable to the stockholder.
As a result, if you do not elect to opt out of the DRIP, you will be required to pay applicable U.S. federal, state and local
taxes on any reinvested dividends even though you will not receive a corresponding cash distribution.
The
plan may be terminated by us upon notice in writing mailed to each participant at least 30 days prior to any record date for the payment
of any dividend or distribution by us. All correspondence concerning the plan should be directed to the plan administrator by mail at
6201 15th Avenue, Brooklyn, New York 11219 or by phone at (800) 937-5449.
CERTAIN
U.S. FEDERAL INCOME TAX CONSIDERATIONS
The
following discussion is a general summary of certain U.S. federal income tax considerations relating to our qualification and taxation
as a RIC under subchapter M of the Code, and the acquisition, ownership and disposition of our common stock. This summary does not purport
to be a complete description of the income tax considerations applicable to such an investment. For example, we have not described tax
consequences that we assume to be generally known by investors or certain considerations that may be relevant to certain types of holders
subject to special treatment under U.S. federal income tax laws, including stockholders subject to the alternative minimum tax, tax-exempt
organizations, insurance companies, dealers in securities, traders in securities that elect to use a market-to-market method of accounting
for their securities holdings, pension plans and trusts, financial institutions, U.S. stockholders (as defined below) whose functional
currency is not the U.S. dollar, persons who mark-to-market our shares, persons who hold our shares as part of a “straddle,”
“hedge” or “conversion” transaction, partnerships or other pass-through entities, RICs, real estate investment
trusts, personal holding companies, persons who acquire our common stock in connection with the performance of services, persons who have ceased to be U.S. citizens or to be taxed as
resident aliens, and individual non-U.S. stockholders present in the United States for 183 days or more during a taxable year.. This
summary is limited to beneficial owners of our common stock that will hold such common stock as capital assets (within the meaning of
the Code). The discussion is based upon the Code, Treasury regulations, and administrative and judicial interpretations, each as of the
date of this prospectus and all of which are subject to change, possibly retroactively, which could affect the continuing validity of
this discussion. We have not sought and will not seek any ruling from the Internal Revenue Service (“IRS”) regarding the
offering of the common stock. This summary does not discuss any aspects of U.S. estate or gift tax or foreign, state or local tax. It
does not discuss the special treatment under U.S. federal income tax laws that could result if we invested in tax-exempt securities or
certain other investment assets.
This
summary does not discuss the consequences of an investment in our preferred stock, subscription rights to purchase shares of our common
stock, debt securities or warrants representing rights to purchase shares of our common stock, preferred stock or debt securities. The
U.S. federal income tax consequences of such an investment will be discussed in the relevant prospectus supplement.
As
used herein, a “U.S. stockholder” generally
is a beneficial owner of common stock who is for U.S. federal income tax purposes:
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a
citizen or individual resident of the United States; |
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a
corporation or other entity treated as a corporation created or organized in or under the
laws of the United States, any state thereof or the District of Columbia; |
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a
trust, if a court within the United States has primary supervision over its administration and one or more U.S. persons have the
authority to control all of its substantive decisions, or if the trust has a valid election in effect under applicable U.S. Treasury
regulations to be treated as a U.S. person; or |
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an
estate, the income of which is subject to U.S. federal income taxation regardless of its source. |
As
used herein, the term “Non-U.S. stockholder” means a beneficial owner of common stock that is neither a U.S. stockholder
nor a partnership for U.S. federal income tax purposes.
If
a partnership (including an entity treated as a partnership for U.S. federal income tax purposes)
holds the shares of our common stock, the tax treatment of a partner in the partnership generally
will depend upon the status of the partner, the activities of the partnership and certain
determinations made at the partner level. Investors treated as a partnership for U.S. federal
income tax purposes (or investors that are partners in such a partnership), are encouraged
to consult with their own tax advisers with respect to the tax consequences relating to the
acquisition, ownership and disposition of our common stock.
Tax
matters are complicated and the tax consequences to an investor of an investment in our common stock will depend on the facts of his,
her or its particular situation. We encourage investors to consult their own tax advisers regarding the specific consequences of such
an investment, including tax reporting requirements, the applicability of federal, state, local and foreign tax laws, eligibility for
the benefits of any applicable tax treaty and the effect of any possible changes in the tax laws.
Taxation
of the Company
Election
to be Treated as a RIC
We
elected to be taxed as a RIC under the Code beginning with our taxable year ended December 31, 2014, and qualified for taxation as a
RIC for such taxable year and each of the subsequent taxable years. We intend to operate in a manner so as to qualify for taxation as
a RIC. So long as we maintain our qualification for taxation a RIC, we generally will not be subject to U.S. federal income tax
on any ordinary income or capital gains that we timely distribute to our stockholders as dividends. To qualify for taxation as a RIC,
we must, among other things, meet certain source-of-income and asset diversification requirements (as described below). In addition,
in order to qualify for the special treatment accorded to RICs, we generally are required to distribute to our stockholders on
a timely basis each year at least 90% of our “investment company taxable income,” which is generally our net ordinary income
plus the excess of realized net short-term capital gains over realized net long-term capital losses (the “Annual Distribution Requirement”).
Taxation
of the Company as a RIC
If
we:
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qualify
as a RIC; and |
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satisfy
the Annual Distribution Requirement, |
then
we will not be subject to U.S. federal income tax on the portion of our income and capital gains that we timely distribute (or are deemed
to distribute) to stockholders. We will be subject to U.S. federal income tax at the regular corporate rates on any income, including
capital gains not distributed (or deemed distributed) to our stockholders.
We
will be subject to a 4% nondeductible U.S. federal excise tax on certain undistributed income unless we distribute in a timely manner
each calendar year an amount equal to at least the sum of (1) 98% of our net ordinary income for each calendar year, (2) 98.2% of our
capital gains in excess of capital losses for the one-year period ending October 31 in that calendar year and (3) any ordinary income
and net capital gains that we recognized for preceding years, but were not distributed during such years and on which we paid no U.S.
federal income tax (the “Excise Tax Avoidance Requirement”). While we intend to timely distribute our income and capital
gains in order to avoid imposition of this 4% U.S. federal excise tax, we may not be successful in avoiding entirely the imposition of
this tax. In that case, we will be liable for the tax only on the amount by which we do not meet the foregoing distribution requirement.
In
order to qualify as a RIC for U.S. federal income tax purposes, we must, among other things:
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have
in effect an election to be regulated as a BDC under the 1940 Act at all times during each taxable year; |
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derive
in each taxable year at least 90% of our gross income from dividends, interest, payments with respect to loans of certain securities,
gains from the sale of stock or other securities or foreign currencies, other income derived with respect to our business of investing
in such stock or securities and net income from “qualified publicly traded partnerships” (the “90% Income Test”); |
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diversify
our holdings so that at the end of each quarter of the taxable year: |
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at
least 50% of the value of our assets consists of cash, cash equivalents, U.S. Government securities, securities of other RICs, and
other securities if such other securities of any one issuer do not represent more than 5% of the value of our assets or more than
10% of the outstanding voting securities of the issuer (the “50% Diversification Test”); and |
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no
more than 25% of the value of our assets is invested in (i) the securities, other than U.S. Government securities or
securities of other RICs, of one issuer, (ii) the securities, other than securities of other RICs, of two or more issuers
that are controlled, as determined under applicable Code rules, by us and that are engaged in the same or similar or related trades
or businesses, or (iii) the securities of certain “qualified publicly traded partnerships” (the “25%
Diversification Test,” and together with the 50% Diversification Test, the “Diversification Tests”). |
If
we satisfy the Diversification Tests as of the close of any quarter, we will not fail the Diversification Tests as of the close of a
subsequent quarter as a consequence of a discrepancy between the value of our assets and the requirements of the Diversification Tests
that is attributable solely to fluctuations in the value of our assets. Rather, we will fail the Diversification Tests as of the end
of a subsequent quarter only if such a discrepancy existed immediately after our acquisition of any asset and such discrepancy is wholly
or partly the result of that acquisition. In addition, if we fail the Diversification Tests as of the end of any quarter, we will not
lose our status as a RIC if we eliminate the discrepancy within thirty days of the end of such quarter and, if we eliminate the discrepancy
within that thirty-day period, we will be treated as having satisfied the Diversification Tests as of the end of such quarter for purposes
of applying the rule described in the preceding sentence.
We
may be required to recognize taxable income in circumstances in which we do not receive cash. For example, if we hold debt obligations
that are treated under applicable tax rules as having original issue discount (which may arise if we receive warrants in connection with
the origination of a loan or possibly in other circumstances), we must include in income each year a portion of the original issue discount
that accrues over the life of the obligation, regardless of whether we receive cash representing such income is received by us in the
same taxable year. We may also have to include in income other amounts that we have not yet received in cash, such as contractual payment-in-kind,
or PIK, interest (which represents contractual interest added to the loan balance and due at the end of the loan term) dividends and
deferred loan origination fees that are paid after origination of the loan or are paid in non-cash compensation such as warrants or stock.
Because any original issue discount or other amounts accrued will be included in our investment company taxable income for the year of
accrual, we may be required to make a distribution to our stockholders in order to satisfy the Annual Distribution Requirement and the
Excise Tax Avoidance Requirement, even though we will not have received any corresponding cash amount.
We
will be subject to certain asset coverage ratio requirements under the 1940 Act and financial covenants under loan and credit agreements
that could, under certain circumstances, restrict us from making distributions necessary to satisfy the Annual Distribution Requirement.
See “Part I, Item 1 — Business — Regulation as a Business Development Company — Senior Securities” in our
most recent Annual Report on Form 10-K. Moreover, our ability to dispose of assets to meet our distribution requirements may be limited
by (1) the illiquid nature of our portfolio and/or (2) other requirements relating to our status as a RIC, including the Diversification
Tests. If we dispose of assets in order to meet the Annual Distribution Requirement or the Excise Tax Avoidance Requirement, we may make
such dispositions at times that, from an investment standpoint, are not advantageous.
We
may be required to sell assets in order to satisfy the Diversification Tests. However, our ability to dispose of assets to meet the Diversification
Tests may be limited by the illiquid nature of our portfolio. If we dispose of assets in order to meet the Diversification Tests, we
may make such dispositions at times that, from an investment standpoint, are not advantageous and may result in substantial losses.
We
may invest in partnerships, including qualified publicly traded partnerships, which may result in our being subject to state, local or
foreign income taxes, franchise taxes, or withholding liabilities. To the extent that we invest in entities treated as partnerships for
U.S. federal income tax purposes (other than a “qualified publicly-traded partnership”), we generally must include the items
of gross income derived by the partnerships for purposes of the 90% Income Test, and the income that is derived from a partnership (other
than a “qualified publicly-traded partnership”) will be treated as qualifying income for purposes of the 90% Income Test
only to the extent that such income is attributable to items of income of the partnership which would be qualifying income if realized
by us directly.
In
order to meet the 90% Income Test, we may establish one or more special purpose corporations to hold assets from which we do not anticipate
earning dividend, interest or other qualifying income described in the 90% Income Test. Any investments held through a special
purpose corporation would generally be subject to U.S. federal income and other taxes, and therefore we can expect to achieve a reduced
after-tax yield on such investments.
Certain
of our investment practices may be subject to special and complex U.S. federal income tax provisions that may, among other things: (i)
disallow, suspend or otherwise limit the allowance of certain losses or deductions; (ii) convert lower-taxed long-term capital gain into
higher-taxed short-term capital gain or ordinary income; (iii) convert an ordinary loss or a deduction into a capital loss (the deductibility
of which is more limited); (iv) cause us to recognize income or gain without a corresponding receipt of cash; (v) adversely affect the
time as to when a purchase or sale of securities is deemed to occur; (vi) adversely alter the characterization of certain complex financial
transactions; and (vii) produce income that will not be qualifying income for purposes of the 90% Income Test described above. We will
monitor our transactions and may make certain tax elections in order to mitigate the potential adverse effect of these provisions.
A
portfolio company may face financial difficulty that requires us to work-out, modify or otherwise restructure our investment in the portfolio
company. Any such restructuring may result in unusable capital losses and future non-cash income. Any restructuring may also result in
our recognition of a substantial amount of non-qualifying income for purposes of the 90% Income Test.
Gain
or loss that realized by us from the sale or exchange of warrants acquired by us, as well as any loss attributable to the lapse of such
warrants, generally will be treated as capital gain or loss. The treatment of such gain or loss as long-term or short-term will depend
on how long we held a particular warrant. Upon the exercise of a warrant acquired by us, our adjusted tax basis in the stock purchased
under the warrant will equal the sum of the amount paid for the warrant plus the strike price paid on the exercise of the warrant.
As
a RIC, we are generally limited in our ability to deduct expenses in excess of our “investment company taxable income” (which
is, generally, ordinary income plus the excess of net short-term capital gains over net long-term capital losses). If our expenses in
a given year exceed investment company taxable income, we would experience a net operating loss for that year. However, a RIC is not
permitted to carry forward net operating losses to subsequent years. In addition, expenses can be used only to offset investment company
taxable income, not net capital gain. Due to these limits on the deductibility of expenses, we may, for tax purposes, may have aggregate
taxable income or net capital gains for several years that we are required to distribute and that is taxable to our stockholders even
if such income or net capital gains is greater than the aggregate net income we actually earned during those years. Such required distributions
may be made from the Company’s cash assets or by liquidation of investments, if necessary. We may realize gains or losses from
such liquidations. In the event we realize net capital gains from such transactions, a stockholder may receive a larger capital gain
distribution than it would have received in the absence of such transactions.
U.S.
federal income tax law generally permits RICs to carry forward net capital losses indefinitely. However, future Company transactions
may limit its ability to use any capital loss carryforwards, and unrealized losses once realized, under Section 382 of the Code.
Our
investment in non-U.S. securities may be subject to non-U.S. income, withholding and other taxes. In that case, our yield on those securities
would be decreased. Stockholders will generally not be entitled to claim a credit or deduction with respect to non-U.S. taxes paid by
us.
If
we purchase shares in a “passive foreign investment company” (a “PFIC”), we may be subject to U.S. federal income
tax on our allocable share of a portion of any “excess distribution” received on, or any gain from the disposition of, such
shares even if our allocable share of such income is distributed to our stockholder as a taxable dividend. Additional charges in the
nature of interest generally will be imposed on us in respect of deferred taxes arising from any such excess distribution or gain. If
we invest in a PFIC and elect to treat the PFIC as a “qualified electing fund” under the Code (a “QEF”), in lieu
of the foregoing requirements, we will be required to include in income each year our proportionate share of the ordinary earnings and
net capital gain of the QEF, even if such income is not distributed by the QEF. Alternatively, we may be able to elect to mark-to-market
at the end of each taxable year its shares in a PFIC; in this case, we will recognize as ordinary income our allocable share of any increase
in the value of such shares, and as ordinary loss our allocable share of any decrease in such value to the extent that any such decrease
does not exceed prior increases included in our income. Under either election, we may be required to recognize in a year income in excess
of distributions from PFICs and proceeds from dispositions of PFIC stock during that year, and such income will nevertheless be subject
to the Annual Distribution Requirement and will be taken into account for purposes of the 4% U.S. federal excise tax.
Failure
to Maintain our Qualification as a RIC
If
we fail to satisfy the 90% Income Test or the Diversification Tests for any taxable year, we may nevertheless continue to qualify as
a RIC for such year if certain relief provisions are applicable (which may, among other things, require us to pay certain U.S. federal income tax or to dispose of certain assets).
If
we were unable to qualify for treatment as a RIC and the foregoing relief provisions are not applicable, we would be subject to U.S.
federal income tax on all of our taxable income at regular corporate rates, regardless of whether we make any distributions to our
stockholders. Distributions would not be required, and any distributions would be taxable to our stockholders as ordinary dividend income
that, subject to certain limitations, may be eligible for the 20% maximum rate to the extent of our current and accumulated earnings
and profits provided certain holding period and other requirements were met. Subject to certain limitations under the Code, corporate
distributees would be eligible for the dividends-received deduction. Distributions in excess of our current and accumulated earnings
and profits would be treated first as a return of capital that would reduce the stockholder’s adjusted tax basis in its common
stock (and correspondingly increase such stockholder’s gain, or reduce such stockholder’s loss, on disposition of such common
stock), and any remaining distributions would be treated as a capital gain. To requalify as a RIC in a subsequent taxable year, we would
be required to satisfy the RIC qualification requirements for that year and dispose of any earnings and profits from any year in which
we failed to qualify as a RIC. Subject to a limited exception applicable to RICs that qualified as such under Subchapter M of the Code
for at least one year prior to disqualification and that requalify as a RIC no later than the second year following the nonqualifying
year, we could be subject to U.S. federal income tax on any unrealized net built-in gains in the assets held by us during the
period in which we failed to qualify as a RIC that are recognized within the subsequent 5 years, unless we made a special election to
pay U.S. federal income tax at corporate rates on such built-in gain at the time of our requalification as a RIC.
The
remainder of this discussion assumes that we will qualify for taxation as a RIC and satisfy the Annual Distribution Requirement for the
current taxable year and each future taxable year.
Taxation
of U.S. Stockholders
Distributions
by us generally are taxable to U.S. stockholders as ordinary income or capital gains. Distributions of our “investment company
taxable income” (which is, generally, our net ordinary income plus realized net short-term capital gains in excess of realized
net long-term capital losses) will be taxable as ordinary income to U.S. stockholders to the extent of our current or accumulated earnings
and profits, whether paid in cash or reinvested in additional common stock. To the extent such distributions paid by us to non-corporate
U.S. stockholders (including individuals) are attributable to dividends from U.S. corporations and certain qualified foreign corporations,
such distributions (“Qualifying Dividends”) may be eligible for a maximum tax rate of 20%. In this regard, it is anticipated
that distributions paid by us generally will not be attributable to dividends and, therefore, generally will not qualify for the 20%
maximum rate applicable to Qualifying Dividends. Distributions of our net capital gains (which are generally our realized net long-term
capital gains in excess of realized net short-term capital losses) properly reported by us as “capital gain dividends” will
be taxable to a U.S. stockholder as long-term capital gains which are currently taxable at a maximum rate of 20% in the case of individuals
or estates, regardless of the U.S. stockholder’s holding period for his, her or its common stock and regardless of whether paid
in cash or reinvested in additional common stock. Distributions in excess of our current and accumulated earnings and profits first will
reduce a U.S. stockholder’s adjusted tax basis in such U.S. stockholder’s common stock and, after the adjusted basis is reduced
to zero, will constitute capital gains to such U.S. stockholder.
Under
the DRIP, our U.S. stockholders who have not “opted out” of our DRIP will have their cash distributions automatically reinvested
in additional shares of our common stock, rather than receiving the cash distributions. Any distributions reinvested under the plan will
nevertheless be treated as received by the U.S. stockholders for U.S. federal income tax purposes. A U.S. stockholder’s
adjusted tax basis in the additional common stock purchased through the plan is equal to the amount of the reinvested distribution.
The additional shares will have a new holding period commencing on the day following the day on which the shares are credited to the
U.S. stockholder’s account.
We
may retain some or all of our realized net long-term capital gains in excess of realized net short-term capital losses, but designate
the retained net capital gain as a “deemed distribution.” In that case, among other consequences, we will pay U.S. federal
income tax on the retained amount, each U.S. stockholder will be required to include his, her or its share of the deemed distribution
in income as if it had been actually distributed to the U.S. stockholder, and the U.S. stockholder will be entitled to claim a credit
equal to his, her or its allocable share of the tax paid thereon by us. If the amount of tax that a U.S. stockholder is treated as having
paid exceeds the tax they owe on the deemed capital gain distribution, such excess generally may be claimed as a credit against the U.S.
stockholder’s other U.S. federal income tax obligations or may be refunded to the extent it exceeds a U.S. stockholder’s
liability for U.S. federal income tax. The U.S. stockholder’s adjusted tax basis for his, her or its common stock will
be increased by the amount of the deemed distribution net of such tax. In order to utilize the deemed distribution approach, we must
provide written notice to our U.S. stockholders within 60 days after the close of the relevant taxable year. We cannot treat any of our
investment company taxable income as a “deemed distribution.”
We
may distribute taxable distributions that are payable in cash or shares of our common stock at the election of each stockholder. Under
certain applicable provisions of the Code and the U.S. Treasury regulations and certain IRS guidance, distributions by RICs that are
payable in cash or in shares of stock at the election of stockholders are treated as taxable distributions. The IRS has published a revenue
procedure indicating that, in the case of publicly offered RICs, this rule will apply where the total amount of cash to be distributed
is not less than 20% of the total distribution. Under this revenue procedure, if too many stockholders elect to receive their distributions
in cash, the cash available for distribution must be allocated among the stockholders electing to receive cash (with the balance of the
distribution paid in stock). In no event will any stockholder electing to receive cash, receive less than the lesser of (a) the portion
of the distribution such stockholder has elected to receive in cash or (b) an amount equal to his, her or its entire distribution times
the percentage limitation on cash available for distribution. If the Company decides to make any distributions consistent with this guidance
that are payable in part in its stock, taxable U.S. stockholders receiving such distributions will be required to include the full amount
of the distribution (whether received in cash, our stock, or a combination thereof) as ordinary income (or as long-term capital gain
to the extent such distribution is properly reported as a capital gain distribution) to the extent of our current and accumulated earnings
and profits for U.S. federal income tax purposes. As a result, a U.S. stockholder may be required to pay tax with respect to such distributions
in excess of any cash received. If a U.S. stockholder sells the stock it receives as a distribution in order to pay this tax, the sales
proceeds may be less than the amount included in income with respect to the distribution, depending on the market price of our stock
at the time of the sale.
For
purposes of determining (1) whether the Annual Distribution Requirement is satisfied for any year and (2) the amount of capital gain
dividends paid for that year, we may, under certain circumstances, elect to treat a dividend that is paid during the following taxable
year as if it had been paid during the taxable year in question. If we make such an election, U.S. stockholders will nonetheless be treated
as receiving the dividend in the taxable year in which the distribution is made. However, any dividend declared by us in October, November
or December of any calendar year, payable to stockholders of record on a specified date in such a month and actually paid during January
of the following year, will be treated as if it had been received by our U.S. stockholders on December 31 of the year in which the dividend
was declared.
If
an investor purchases shares of our common stock shortly before the record date of a distribution, the price of the shares will include
the value of the distribution and the investor will be subject to tax on the distribution even though economically it may represent a
return of his, her or its investment.
A
U.S. stockholder generally will recognize taxable gain or loss if the U.S. stockholder sells or otherwise disposes of his, her or its
shares of our common stock. The amount of gain or loss will be measured by the difference between such U.S. stockholder’s adjusted
tax basis in the common stock sold and the amount of the proceeds received in exchange. Any gain or loss arising from such sale or disposition
generally will be treated as long-term capital gain or loss if the U.S. stockholder has held his, her or its shares for more than one
year. Otherwise, it will be classified as short-term capital gain or loss. However, any capital loss arising from the sale or disposition
of shares of our common stock held for six months or less will be treated as long-term capital loss to the extent of the amount of capital
gain dividends received, or undistributed capital gain deemed received, with respect to such shares. In addition, all or a portion of
any loss recognized by a U.S. stockholder upon a disposition of shares of our common stock will generally be disallowed if the U.S. stockholder
purchases other shares of our common stock (whether through reinvestment of distributions or otherwise) within 30 days before or after
the disposition.
The
maximum U.S. federal income tax rate on long-term capital gains for non-corporate taxpayers is 20%. In addition, individuals with modified
adjusted gross incomes in excess of $200,000 ($250,000 in the case of married individuals filing jointly) and certain estates and trusts
are subject to an additional 3.8% tax on their “net investment income,” which generally includes net income from interest,
dividends, annuities, royalties, and rents, and net capital gains (other than certain amounts earned from trades or businesses). Corporate
U.S. stockholders currently are subject to U.S. federal income tax on net capital gain at the maximum 21% rate also applied to ordinary
income. Non-corporate U.S. stockholders with net capital losses for a year (i.e., capital losses in excess of capital gains) generally
may deduct up to $3,000 of such losses against their ordinary income that year; any net capital losses of a non-corporate U.S. stockholder
in excess of $3,000 generally may be carried forward and used in subsequent years as provided in the Code. Corporate U.S. stockholders
generally may not deduct any net capital losses for a year, but may carry back such losses for three years or carry forward such losses
for five years.
We
or the applicable withholding agent will send to each of our U.S. stockholders, as promptly as possible after the end of each calendar
year, a notice detailing the amounts includible in such U.S. stockholder’s taxable income for such year as ordinary income, Qualifying
Dividends and as long-term capital gain. In addition, the federal tax status of each year’s distributions generally will be reported
to the IRS. Distributions may also be subject to additional state, local and foreign taxes depending on a U.S. stockholder’s particular
situation.
Taxation
of Non-U.S. Stockholders
Whether
an investment in the shares is appropriate for a Non-U.S. stockholder will depend upon that person’s particular circumstances.
An investment in the shares by a Non-U.S. stockholder may have adverse tax consequences. Non-U.S. stockholders should consult their tax
advisers before investing in our common stock.
In
general, distributions by us to a Non-U.S. stockholder of our “investment company taxable income” generally are subject
to withholding of U.S. federal tax at a 30% rate (or lower rate provided by an applicable treaty) to the extent of our current or accumulated
earnings and profits unless an applicable exception applies. No withholding is required with respect to certain distributions if (i)
the distributions are properly reported to our stockholders as “interest-related dividends” or “short-term capital
gain dividends,” (ii) the distributions are derived from sources specified in the Code for such dividends and (iii) certain other
requirements are satisfied. Currently, we do not anticipate that a significant amount of our distributions would be reported as eligible
for this exemption from withholding. No assurance can be provided that any of our distributions will qualify for this exemption.
In
addition, if the distributions are effectively connected
with the Non-U.S. stockholder’s conduct of a trade or business in the United States (and, if a treaty applies, are
attributable to a U.S. permanent establishment maintained by the Non-U.S. stockholder in the United States), we will not be required
to withhold U.S. federal tax if the Non-U.S. stockholder complies with applicable certification and disclosure requirements, although
the distributions will be subject to U.S. federal income tax at the rates applicable to U.S. stockholders. Special certification
requirements apply to a Non-U.S. stockholder that is a foreign partnership or a foreign trust, and such entities are urged to consult
their own tax advisers.
Actual
or deemed distributions of our net capital gains to a Non-U.S. stockholder, and gains realized by a Non-U.S. stockholder upon the sale
or redemption of our common stock, will not be subject to U.S. federal income tax if properly reported by us as capital gain dividends
unless the distributions or gains, as the case may be, are effectively connected with the Non-U.S. stockholder’s conduct of
a trade or business within the United States (and, if an income tax treaty applies, are attributable to a permanent establishment
maintained by the Non-U.S. stockholder in the United States) or, in the case of an individual, the Non-U.S. stockholder was present in
the United States for 183 days or more during the taxable year and certain other conditions are met.
If
we distribute our net capital gains in the form of deemed rather than actual distributions, a Non-U.S. stockholder will be entitled to
a U.S. federal income tax credit or tax refund equal to the stockholder’s allocable share of the U.S. federal income
tax we pay on the capital gains deemed to have been distributed; however, in order to obtain the refund, the Non-U.S. stockholder must
obtain a U.S. taxpayer identification number and file a U.S. federal income tax return even if the Non-U.S. stockholder would not otherwise
be required to obtain a U.S. taxpayer identification number or file a U.S. federal income tax return.
If
any actual or deemed distributions of our net capital gains, or any gains realized upon the sale or redemption of our common stock, are
effectively connected with a Non-U.S. stockholder’s conduct of a trade or business within the United States (and,
if an income tax treaty applies, are attributable to a U.S. permanent establishment maintained by the Non-U.S. stockholder), such amounts
will be subject to U.S. federal income tax, on a net income basis, in the same manner, and at the graduated rates applicable to,
a U.S. stockholder. For a corporate Non-U.S. stockholder, the after-tax amount of distributions (both actual and deemed) and gains realized
upon the sale or redemption of our common stock that are effectively connected to the Non-U.S. stockholder’s conduct of
a trade or business within the United States (and, if a treaty applies, are attributable to a U.S. permanent establishment), may,
under certain circumstances, be subject to an additional “branch profits tax” at a 30% rate (or at a lower rate if provided
for by an applicable treaty). Accordingly, investment in shares of our common stock may not be appropriate for certain Non-U.S. stockholders.
Under
the DRIP, our stockholders who have not “opted out” of our DRIP will have their cash distributions automatically reinvested
in additional shares of our common stock, rather than receiving the cash distributions. If the distribution is a distribution of our
investment company taxable income and is not properly reported by us as a short-term capital gains dividend or interest-related dividend
(assuming an extension of the exemption discussed above), the amount distributed (to the extent of our current and accumulated earnings
and profits) will be subject to U.S. federal withholding tax as described above and only the net after-tax amount will be reinvested
in our common stock. If the distribution is effectively connected with the Non-U.S. stockholder’s conduct of a trade or
business in the United States (and, if a treaty applies, is attributable to a U.S. permanent establishment), generally the full
amount of the distribution will be reinvested in the plan and will nevertheless be subject to U.S. federal income tax at the ordinary
income rates applicable to U.S. stockholders. The Non-U.S. stockholder will have an adjusted tax basis in the additional
common stock purchased through the plan equal to the amount reinvested. The additional shares will have a new holding period commencing
on the day following the day on which the shares are credited to the Non-U.S. stockholder’s account.
The
tax consequences to Non-U.S. stockholders entitled to claim the benefits of an applicable tax treaty or that are individuals that are
present in the U.S. for 183 days or more during a taxable year may be different from those described herein. Non-U.S. stockholders are
urged to consult their tax advisers with respect to the procedure for claiming the benefit of a lower treaty rate and the applicability
of foreign taxes.
Non-U.S.
persons should consult their own tax advisers with respect to the U.S. federal income tax and withholding tax, and state, local and foreign
tax consequences of an investment in the shares.
If
we were unable to qualify for treatment as a RIC, any distributions by us would be treated as dividends to the extent of our current
and accumulated earnings and profits. We would not be eligible to report any such dividends as interest-related dividends, short-term
capital gain dividends, or capital gain dividends. As a result, any such dividend paid to a Non-U.S. stockholder that is not effectively
connected with the Non-U.S. stockholder’s conduct of a trade or business within the United States (and, if an income
tax treaty applies, attributable to a permanent establishment maintained by the Non-U.S. stockholder in the United States) would be subject
to the 30% (or reduced applicable treaty rate) withholding tax discussed above regardless of the source of the income giving rise to
such distribution. Distributions in excess of our current and accumulated earnings and profits would be treated first as a return of
capital to the extent of the Non-U.S. stockholder’s adjusted tax basis, and any remaining distributions would be treated
as a gain from the sale of the Non-U.S. stockholder’s shares subject to taxation as discussed above. For the consequences to the
Company for failing to qualify as a RIC, see “Failure to Qualify as a RIC” above.
Backup
Withholding and Information Reporting
U.S.
stockholders. Information returns are required to be filed with the IRS in connection with dividends on the common stock and proceeds
received from a sale or other disposition of the common stock to a U.S. stockholder unless the U.S. stockholder is an exempt recipient.
U.S. stockholders may also be subject to backup withholding on these payments in respect of the common stock unless such U.S. stockholder
provides its taxpayer identification number and otherwise complies with applicable requirements of the backup withholding rules or provides
proof of an applicable exemption.
Non-U.S.
stockholders. The amount of taxable distributions that we pay to any Non-U.S. stockholder with respect to our common stock will
be reported to the Non-U.S. stockholder and to the IRS annually on an IRS Form 1042-S, regardless of the amount of U.S. federal income
tax withheld. Copies of these information returns may also be made available under the provisions of a specific income tax treaty or
agreement with the tax authorities of the country in which the Non-U.S. stockholder resides. However, a Non-U.S. stockholder generally
will not be subject to backup withholding and certain other information reporting with respect to payments that we make to the Non-U.S.
stockholder, provided that we do not have actual knowledge or reason to know that such Non-U.S. stockholder is a “United States
person” within the meaning of the Code, and the Non-U.S. stockholder complies with applicable certification and disclosure requirements
and furnishes to us the requisite information.
Amounts
withheld under the backup withholding rules are not additional taxes and may be refunded or credited against a U.S. stockholder’s
or Non-U.S. stockholder’s U.S. federal income tax liability, if any, provided the required information is timely furnished to the
IRS.
Foreign
Account Tax Compliance Act
Legislation commonly
referred to as the “Foreign Account Tax Compliance Act,” or “FATCA,” generally imposes a 30% withholding tax
on payments of certain types of income to foreign financial institutions (“FFIs”) unless such FFIs either: (i) enter into
an agreement with the U.S. Treasury to report certain required information with respect to accounts held by certain specified
U.S. persons (or held by foreign entities that have certain specified U.S. persons as substantial owners) or (ii) reside in a
jurisdiction that has entered into an intergovernmental agreement (“IGA”) with the United States to collect and share such
information and are in compliance with the terms of such IGA and any enabling legislation or regulations. The types of income subject
to the tax include U.S. source interest and dividends. While the Code would also require withholding or payments of the gross
proceeds from the sale of any property that could produce U.S. source interest or dividends, the U.S. Treasury department has indicated
its intent to eliminate this requirement in subsequent proposed regulations, which state that taxpayers may rely on the proposed regulations
until final regulations are issued. The information required to be reported includes the identity and taxpayer identification number
of each account holder that is a specified U.S. person and transaction activity within the holder’s account. In addition,
subject to certain exceptions, FATCA also imposes a 30% withholding on certain payments to certain foreign entities that
are not FFIs unless such foreign entities certify that they do not have a greater than 10% owner that is a specified U.S. person
or provide the withholding agent with identifying information on each greater than 10% owner that is a specified U.S. person.
Depending on the status of a Non-U.S. stockholder and the status of the intermediaries through which they hold their shares, Non-U.S.
stockholders could be subject to this 30% withholding tax with respect to distributions on their shares. Under certain circumstances,
a Non-U.S. stockholder might be eligible for refunds or credits of such taxes.
DESCRIPTION
OF OUR SECURITIES
This
prospectus contains a summary of the common stock, preferred stock, subscription rights, warrants and debt securities that may be offered
hereunder. These summaries are not meant to be a complete description of each security. However, this prospectus and the accompanying
prospectus supplement will contain the material terms and conditions for each security.
DESCRIPTION
OF OUR CAPITAL STOCK
This
prospectus contains a summary of our capital stock and is not meant to be a complete description. However, this prospectus and any accompanying
prospectus supplement will contain the material terms and conditions for each security sold thereunder. The following description is
based on relevant portions of the Maryland General Corporation Law (the “MGCL”) and on our charter and bylaws.
Stock
The
authorized stock of SuRo Capital as of August 7, 2023 consists of 100,000,000 shares of stock, par value $0.01 per share, all
of which are initially designated as common stock. Our common stock is listed on the Nasdaq Global Select Market under the ticker symbol
“SSSS.” As of August 7, 2023, there are no outstanding options or warrants to purchase our stock. Under the Company’s
Amended and Restated 2019 Equity Incentive Plan (the “Amended Equity Incentive Plan”), and subject to the terms therein,
the Company may issue (i) restricted shares to its employees, officers and all directors, including non-employee directors, and (ii)
options to its employees, officers, and directors, excluding non-employee directors. Under the Amended Equity Incentive Plan, the maximum
aggregate number of our common stock that may be authorized for issuance is 1,627,967.
Under the MGCL, our stockholders generally
are not personally liable for our debts or obligations.
The
following are our outstanding classes of equity securities as of August 7, 2023:
| |
| | |
| | |
|
Title of
Class | |
Amount
Authorized | | |
Amount
Held by Us or for
Our Account | | |
Amount
Outstanding |
Common stock | |
| 100,000,000 | | |
| — | | |
25,398,640 |
Under
our Articles of Amendment and Restatement (the “Charter”), our Board of Directors is authorized to classify and reclassify
any unissued shares of stock into other classes or series of stock without obtaining stockholder approval. As permitted by the MGCL,
our Charter provides that the Board of Directors, without any action by our stockholders, may amend the charter from time to time to
increase or decrease the aggregate number of shares of stock or the number of shares of stock of any class or series that we have authority
to issue.
Common
Stock
All
shares of our common stock have equal rights as to earnings, assets, voting, and dividends and, when they are issued, will be duly authorized,
validly issued, fully paid and nonassessable. Distributions
may be paid to the holders of our common stock if, as and when authorized by our Board of Directors and declared by us out of assets
legally available therefor. Shares
of our common stock have no preemptive, conversion or redemption rights and are freely transferable, except where their transfer is restricted
by federal and state securities laws or by contract. In
the event of our liquidation, dissolution or winding up, each share of our common stock would be entitled to share ratably in all of
our assets that are legally available for distribution after we pay all debts and other liabilities and subject to any preferential rights
of holders of our preferred stock, if any preferred stock is outstanding at such time. Each
share of our common stock is entitled to one vote on all matters submitted to a vote of stockholders, including the election of directors.
Except as provided with respect to any other class or series of stock, the holders of our common stock will possess exclusive voting
power. There is no cumulative voting in the election of directors, which means that holders of a majority of the outstanding shares of
common stock can elect all of our directors, and holders of less than a majority of such shares will be unable to elect any director.
Preferred
Stock
Our
Charter authorizes our Board of Directors to classify and reclassify any unissued shares of stock into other classes or series of stock,
including preferred stock. The cost of any such reclassification would be borne by our existing common stockholders. Prior to issuance
of shares of each class or series, the Board of Directors is required by the MGCL and by our charter to set the terms, preferences, conversion
or other rights, voting powers, restrictions, limitations as to dividends or other distributions, qualifications and terms or conditions
of redemption for each class or series. Thus, the Board of Directors could authorize the issuance of shares of preferred stock with terms
and conditions which could have the effect of delaying, deferring or preventing a transaction or a change in control that might involve
a premium price for holders of our common stock or otherwise be in their best interest. Any issuance of preferred stock must comply with
the requirements of the 1940 Act. The 1940 Act requires, among other things, that (1) immediately after issuance and before any dividend
or other distribution is made with respect to our common stock and before any purchase of common stock is made, such preferred stock
together with all other senior securities must not exceed an amount equal to 50% of our gross assets after (or 66 2/3%, if certain requirements
are met) deducting the amount of such dividend, distribution or purchase price, as the case may be, and (2) the holders of shares of
preferred stock, if any are issued, must be entitled as a class to elect two directors at all times and to elect a majority of the directors
if dividends on such preferred stock are in arrears by two full years or more. Certain matters under the 1940 Act require the separate
vote of the holders of any issued and outstanding preferred stock. For example, holders of preferred stock would vote separately from
the holders of common stock on a proposal to cease operations as a BDC. We expect that the availability for issuance of preferred stock
will provide us with increased flexibility in structuring future financings and acquisitions. However, we do not currently have any plans
to issue preferred stock.
Limitation
on Liability of Directors and Officers; Indemnification and Advance of Expenses
The
MGCL permits a Maryland corporation to include in its charter a provision limiting the liability of its directors and officers to the
corporation and its stockholders for money damages except for liability resulting from (a) actual receipt of an improper benefit or profit
in money, property or services or (b) active and deliberate dishonesty established by a final judgment as being material to the cause
of action. Our charter contains such a provision which eliminates directors’ and officers’ liability to the maximum extent
permitted by the MGCL, subject to the requirements of the 1940 Act.
Our
charter authorizes us, to the maximum extent permitted by the MGCL and subject to the requirements of the 1940 Act, to indemnify any
present or former director or officer or any individual who, while serving as our director or officer and at our request, serves or has
served another corporation, real estate investment trust, partnership, joint venture, trust, employee benefit plan or other enterprise
as a director, officer, partner or trustee, from and against any claim or liability to which that person may become subject or which
that person may incur by reason of his or her service in any such capacity and to pay or reimburse their reasonable expenses in advance
of final disposition of a proceeding. Our bylaws obligate us, to the maximum extent permitted by the MGCL and subject to the requirements
of the 1940 Act, to indemnify any present or former director or officer or any individual who, while serving as our director or officer
and at our request, serves or has served another corporation, real estate investment trust, partnership, joint venture, trust, employee
benefit plan or other enterprise as a director, officer, partner or trustee and who is made, or threatened to be made, a party to the
proceeding by reason of his or her service in that capacity from and against any claim or liability to which that person may become subject
or which that person may incur by reason of his or her service in any such capacity and to pay or reimburse his or her reasonable expenses
in advance of final disposition of a proceeding. The charter and bylaws also permit us to indemnify and advance expenses to any person
who served a predecessor of us in any of the capacities described above and any of our employees or agents or any employees or agents
of our predecessor. In accordance with the 1940 Act, we will not indemnify any person for any liability to which such person would be
subject by reason of such person’s willful misfeasance, bad faith, gross negligence or reckless disregard of the duties involved
in the conduct of his or her office.
The
MGCL requires a corporation (unless its charter provides otherwise, which our charter does not) to indemnify a director or officer who
has been successful in the defense of any proceeding to which he or she is made, or threatened to be made, a party by reason of his or
her service in that capacity. The MGCL permits a corporation to indemnify its present and former directors and officers, among others,
against judgments, penalties, fines, settlements and reasonable expenses actually incurred by them in connection with any proceeding
to which they may be made, or threatened to be made, a party by reason of their service in those or other capacities unless it is established
that (a) the act or omission of the director or officer was material to the matter giving rise to the proceeding and (1) was committed
in bad faith or (2) was the result of active and deliberate dishonesty, (b) the director or officer actually received an improper personal
benefit in money, property or services or (c) in the case of any criminal proceeding, the director or officer had reasonable cause to
believe that the act or omission was unlawful. However, under the MGCL, a Maryland corporation may not indemnify for an adverse judgment
in a suit by or in the right of the corporation or for a judgment of liability on the basis that a personal benefit was improperly received
unless, in either, case a court orders indemnification, and then only for expenses. In addition, the MGCL permits a corporation to advance
reasonable expenses to a director or officer in advance of final disposition of a proceeding upon the corporation’s receipt of
(a) a written affirmation by the director or officer of his or her good faith belief that he or she has met the standard of conduct necessary
for indemnification by the corporation and (b) a written undertaking by him or her or on his or her behalf to repay the amount paid or
reimbursed by the corporation if it is ultimately determined that the standard of conduct was not met.
We
have entered into indemnification agreements with our directors and executive officers. The indemnification agreements provide our directors
and executive officers the maximum indemnification permitted under the MGCL and the 1940 Act.
Certain
Provisions of the MGCL and Our Charter and Bylaws
The
MGCL and our charter and bylaws contain provisions that could make it more difficult for a potential acquirer to acquire us by means
of a tender offer, proxy contest or otherwise, the material ones of which are discussed below. These provisions are expected to discourage
certain coercive takeover practices and inadequate takeover bids and to encourage persons seeking to acquire control of us to negotiate
first with our Board of Directors. We expect the benefits of these provisions to outweigh the potential disadvantages of discouraging
any such acquisition proposals because, among other things, the negotiation of such proposals may improve their terms.
Classified
Board of Directors
Our
Board of Directors is divided into three classes of directors serving staggered three-year terms. The current terms of the first, second
and third classes will expire in 2024, 2025, and 2023 respectively, and in each case, those directors will serve until their successors
are elected and qualify. Upon expiration of their terms, directors of each class will be elected to serve for three-year terms and until
their successors are duly elected and qualify and each year one class of directors will be elected by the stockholders. A classified
Board may render a change in control of us or removal of our incumbent management more difficult. We believe, however, that the longer
time required to elect a majority of a classified Board of Directors will help to ensure the continuity and stability of our management
and policies.
Election
of Directors
Our
bylaws, as authorized by our charter, provide that a plurality of all the votes cast at a meeting of stockholders duly called and at
which a quorum is present is required to elect a director. Pursuant to our charter our Board of Directors may amend the bylaws to alter
the vote required to elect directors.
Number
of Directors; Vacancies; Removal
Our
charter provides that the number of directors will be set only by the Board of Directors in accordance with our bylaws. Our bylaws provide
that a majority of our entire Board of Directors may at any time increase or decrease the number of directors. However, unless our bylaws
are amended, the number of directors may never be less than one nor more than nine. Our charter provides that, at such time as we have
at least three independent directors and our common stock is registered under the Exchange Act, as amended, we elect to be subject to
the provision of Subtitle 8 of Title 3 of the MGCL regarding the filling of vacancies on the Board of Directors. Accordingly, at such
time, except as may be provided by the Board of Directors in setting the terms of any class or series of preferred stock, any and all
vacancies on the Board of Directors may be filled only by the affirmative vote of a majority of the remaining directors in office, even
if the remaining directors do not constitute a quorum, and any director elected to fill a vacancy will serve for the remainder of the
full term of the directorship in which the vacancy occurred and until a successor is elected and qualifies, subject to any applicable
requirements of the 1940 Act.
Our
charter provides that a director may be removed only for cause, as defined in our charter, and then only by the affirmative vote of at
least two-thirds of the votes entitled to be cast in the election of directors.
Action
by Stockholders
Under
the MGCL, stockholder action can be taken only at an annual or special meeting of stockholders or (unless the charter provides for stockholder
action by less than unanimous written consent, which our charter does not) by unanimous written consent in lieu of a meeting. These provisions,
combined with the requirements of our bylaws regarding the calling of a stockholder-requested special meeting of stockholders discussed
below, may have the effect of delaying consideration of a stockholder proposal until the next annual meeting.
Advance
Notice Provisions for Stockholder Nominations and Stockholder Proposals
Our
bylaws provide that with respect to an annual meeting of stockholders, nominations of persons for election to the Board of Directors
and the proposal of business to be considered by stockholders may be made only (1) pursuant to our notice of the meeting, (2) by the
Board of Directors or (3) by a stockholder who is entitled to vote at the meeting and who has complied with the advance notice procedures
of our bylaws. With respect to special meetings of stockholders, only the business specified in our notice of the meeting may be brought
before the meeting. Nominations of persons for election to the Board of Directors at a special meeting may be made only (1) pursuant
to our notice of the meeting, (2) by the Board of Directors or (3) provided that the Board of Directors has determined that directors
will be elected at the meeting, by a stockholder who is entitled to vote at the meeting and who has complied with the advance notice
provisions of the bylaws.
The
purpose of requiring stockholders to give us advance notice of nominations and other business is to afford our Board of Directors a meaningful
opportunity to consider the qualifications of the proposed nominees and the advisability of any other proposed business and, to the extent
deemed necessary or desirable by our Board of Directors, to inform stockholders and make recommendations about such qualifications or
business, as well as to provide a more orderly procedure for conducting meetings of stockholders. Although our bylaws do not give our
Board of Directors any power to disapprove stockholder nominations for the election of directors or proposals recommending certain action,
they may have the effect of precluding a contest for the election of directors or the consideration of stockholder proposals if proper
procedures are not followed and of discouraging or deterring a third party from conducting a solicitation of proxies to elect its own
slate of directors or to approve its own proposal without regard to whether consideration of such nominees or proposals might be harmful
or beneficial to us and our stockholders.
Calling
of Special Meetings of Stockholders
Our
bylaws provide that special meetings of stockholders may be called by our Board of Directors and certain of our officers. Additionally,
our bylaws provide that, subject to the satisfaction of certain procedural and informational requirements by the stockholders requesting
the meeting, a special meeting of stockholders will be called by the secretary of the corporation upon the written request of stockholders
entitled to cast not less than a majority of all the votes entitled to be cast at such meeting.
Approval
of Extraordinary Corporate Action; Amendment of Charter and Bylaws
Under
the MGCL, a Maryland corporation generally cannot dissolve, amend its charter, merge, sell all or substantially all of its assets, engage
in a share exchange or engage in similar transactions outside the ordinary course of business, unless approved by the affirmative vote
of stockholders entitled to cast at least two-thirds of the votes entitled to be cast on the matter. However, a Maryland corporation
may provide in its charter for approval of these matters by a lesser percentage, but not less than a majority of all of the votes entitled
to be cast on the matter. Our charter generally provides for approval of charter amendments and extraordinary transactions by the stockholders
entitled to cast at least a majority of the votes entitled to be cast on the matter. Our charter also provides that the following matters
require the approval of stockholders entitled to cast at least 80% of the votes entitled to be cast: (i) certain charter amendments;
(ii) any proposal for our conversion, whether by merger or otherwise, from a closed-end company to an open-end company; (iii) any proposal
for our liquidation or dissolution; or (iv) any proposal regarding a merger, consolidation, share exchange or sale or exchange of all
or substantially all of our assets that the MGCL requires to be approved by our stockholders. However, if such amendment or proposal
is approved by a majority of our continuing directors (in addition to approval by our Board of Directors), such amendment or proposal
may be approved by a majority of the votes entitled to be cast on such a matter. The “continuing directors” are defined in
our charter as (1) our current directors, (2) those directors whose nomination for election by the stockholders or whose election by
the directors to fill vacancies is approved by a majority of our current directors then on our Board of Directors or (3) any successor
directors whose nomination for election by the stockholders or whose election by the directors to fill vacancies is approved by a majority
of continuing directors or the successor continuing directors then in office.
Our
charter and bylaws provide that the Board of Directors will have the exclusive power to make, alter, amend or repeal any provision of
our bylaws.
No
Appraisal Rights
Except
with respect to appraisal rights arising in connection with the Control Share Act discussed below, as permitted by the MGCL, our charter
provides that stockholders will not be entitled to exercise appraisal rights unless a majority of the Board of Directors shall determine
such rights apply.
Control
Share Acquisitions
The
MGCL, pursuant to the Control Share Act, provides that control shares of a Maryland corporation acquired in a control share acquisition
have no voting rights except to the extent approved by a vote of two-thirds of the votes entitled to be cast on the matter. Shares owned
by the acquiror, by officers or by directors who are employees of the corporation are excluded from shares entitled to vote on the matter.
Control shares are voting shares of stock which, if aggregated with all other shares of stock owned by the acquiror or in respect of
which the acquiror is able to exercise or direct the exercise of voting power (except solely by virtue of a revocable proxy), would entitle
the acquiror to exercise voting power in electing directors within one of the increasing ranges of voting power listed in the Control
Share Act. The requisite stockholder approval must be obtained each time an acquiror crosses one of the thresholds of voting power. Control
shares do not include shares the acquiring person is then entitled to vote as a result of having previously obtained stockholder approval.
A control share acquisition means the acquisition of control shares, subject to certain exceptions.
Our
bylaws contain a provision exempting from the Control Share Act any and all acquisitions by any person of our shares of stock. There
can be no assurance that such provision will not be amended or eliminated at any time in the future. However, we will amend our bylaws
to be subject to the Control Share Act only if our Board of Directors determines that it would be in our best interests and if the SEC
staff does not object to our determination that our being subject to the Control Share Act does not conflict with the 1940 Act.
Business
Combinations
Under
the MGCL, “business combinations” between a Maryland corporation and an interested stockholder or an affiliate of an interested
stockholder are prohibited for five years after the most recent date on which the interested stockholder becomes an interested stockholder.
These business combinations include a merger, consolidation, share exchange or, in circumstances specified in the statute, an asset transfer
or issuance or reclassification of equity securities. An interested stockholder is defined as:
● |
any
person who beneficially owns 10% or more of the voting power of the corporation’s outstanding voting stock; or |
|
|
● |
an
affiliate or associate of the corporation who, at any time within the two-year period prior to the date in question, was the beneficial
owner of 10% or more of the voting power of the then outstanding voting stock of the corporation. |
A
person is not an interested stockholder under this statute if the Board of Directors approved in advance the transaction by which the
stockholder otherwise would have become an interested stockholder. However, in approving a transaction, the Board of Directors may provide
that its approval is subject to compliance, at or after the time of approval, with any terms and conditions determined by the Board of
Directors.
After
the five-year prohibition, any business combination between the Maryland corporation and an interested stockholder generally must be
recommended by the Board of Directors of the corporation and approved by the affirmative vote of at least:
● |
80%
of the votes entitled to be cast by holders of outstanding shares of voting stock of the corporation; and |
|
|
● |
two-thirds
of the votes entitled to be cast by holders of voting stock of the corporation other than shares held by the interested stockholder
with whom or with whose affiliate the business combination is to be effected or held by an affiliate or associate of the interested
stockholder. |
These
super-majority vote requirements do not apply if the corporation’s common stockholders receive a minimum price, as defined under
the MGCL, for their shares in the form of cash or other consideration in the same form as previously paid by the interested stockholder
for its shares.
The
statute permits various exemptions from its provisions, including business combinations that are exempted by the Board of Directors before
the time that the interested stockholder becomes an interested stockholder. Our Board of Directors has adopted a resolution that any
business combination between us and any other person is exempted from the provisions of the Model Business Corporation Act (the “MBCA”),
provided that the business combination is first approved by the Board of Directors, including a majority of the directors who are not
“interested persons” as defined in the 1940 Act. This resolution may be altered or repealed in whole or in part at any time;
however, our Board of Directors will adopt resolutions so as to make us subject to the provisions of the MBCA only if the Board of Directors
determines that it would be in our best interests and if the SEC staff does not object to our determination that our being subject to
the MBCA does not conflict with the 1940 Act. If this resolution is repealed, or the Board of Directors does not otherwise approve a
business combination, the statute may discourage others from trying to acquire control of us and increase the difficulty of consummating
any offer.
Conflict
with 1940 Act
Our
bylaws provide that, if and to the extent that any provision of the MGCL, including the Control Share Act (if we amend our bylaws to
be subject to such Act) and the MBCA, or any provision of our charter or bylaws conflicts with any provision of the 1940 Act, the applicable
provision of the 1940 Act will control.
DESCRIPTION
OF OUR PREFERRED STOCK
In
addition to shares of common stock, our charter authorizes the issuance of preferred stock. If we offer preferred stock under this prospectus,
we will issue an appropriate prospectus supplement. We may issue preferred stock from time to time in one or more classes or series,
without stockholder approval. Prior to issuance of shares of each class or series, our Board of Directors is required by the MGCL and
by our charter to set the terms, preferences, conversion or other rights, voting powers, restrictions, limitations as to dividends or
other distributions, qualifications and terms or conditions of redemption for each class or series. Any such an issuance must adhere
to the requirements of the 1940 Act, the MGCL and any other limitations imposed by law.
The
1940 Act currently requires, among other things, that (a) immediately after issuance and before any distribution is made with respect
to common stock, the liquidation preference of the preferred stock, together with all other senior securities, must not exceed an amount
equal to 50% (or 66 2/3% if certain requirements are met) of our total assets (taking into account such distribution), (b) the holders
of shares of preferred stock, if any are issued, must be entitled as a class to elect two directors at all times and to elect a majority
of the directors if dividends on the preferred stock are in arrears by two years or more and (c) such class of stock have complete priority
over any other class of stock as to distribution of assets and payment of dividends, which dividends shall be cumulative.
For
any series of preferred stock that we may issue, our Board of Directors will determine and the articles supplementary and the prospectus
supplement relating to such series will describe:
● |
the
designation and number of shares of such series; |
|
|
● |
the
rate and time at which, and the preferences and conditions under which, any dividends will be paid on shares of such series, as well
as whether such dividends are participating or non-participating; |
|
|
● |
any
provisions relating to convertibility or exchangeability of the shares of such series, including adjustments to the conversion price
of such series; |
|
|
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the
rights and preferences, if any, of holders of shares of such series upon our liquidation, dissolution or winding up of our affairs; |
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the
voting powers, if any, of the holders of shares of such series; |
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any
provisions relating to the redemption of the shares of such series; |
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any
limitations on our ability to pay dividends or make distributions on, or acquire or redeem, other securities while shares of such
series are outstanding; |
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any
conditions or restrictions on our ability to issue additional shares of such series or other securities; |
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if
applicable, a discussion of certain U.S. federal income tax considerations; and |
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any
other relative powers, preferences and participating, optional or special rights of shares of such series, and the qualifications,
limitations or restrictions thereof. |
All
shares of preferred stock that we may issue will be identical and of equal rank except as to the particular terms thereof that may be
fixed by our Board of Directors, and all shares of each series of preferred stock will be identical and of equal rank except as to the
dates from which dividends, if any, thereon will be cumulative.
DESCRIPTION
OF OUR SUBSCRIPTION RIGHTS
General
We
may issue subscription rights to our stockholders to purchase common stock. Subscription rights may be issued independently or together
with any other offered security and may or may not be transferable by the person purchasing or receiving the subscription rights. In
connection with a subscription rights offering to our stockholders, we would distribute certificates evidencing the subscription rights
and a prospectus supplement to our stockholders on the record date that we set for receiving subscription rights in such subscription
rights offering. We will not offer transferable subscription rights to our stockholders at a price equivalent to less than the then current
net asset value per share of common stock, excluding underwriting commissions, unless we first file a post-effective amendment that is
declared effective by the SEC with respect to such issuance and the common stock to be purchased in connection with the rights represents
no more than one-third of our outstanding common stock at the time such rights are issued (i.e., the right to purchase one new
share for a minimum of every three rights held). In connection with a subscription rights offering to our stockholders, we would distribute
certificates evidencing the subscription rights and a prospectus supplement to our stockholders on the record date that we set for receiving
subscription rights in such subscription rights offering. Our common stockholders will indirectly bear the expenses of such subscription
rights offerings, regardless of whether our common stockholders exercise any subscription rights.
The
applicable prospectus supplement would describe the following terms of subscription rights in respect of which this prospectus is being
delivered:
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the
period of time the offering would remain open (which shall be open a minimum number of days such that all record holders would be
eligible to participate in the offering and shall not be open longer than 120 days); |
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the
title of such subscription rights; |
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the
exercise price for such subscription rights (or method of calculation thereof); |
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the
ratio of the offering (which, in the case of transferable rights, will require a minimum of three shares to be held of record before
a person is entitled to purchase an additional share); |
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the
number of such subscription rights issued to each stockholder; |
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the
extent to which such subscription rights are transferable and the market on which they may be traded if they are transferable; |
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if
applicable, a discussion of certain U.S. federal income tax considerations applicable to the issuance or exercise of such subscription
rights; |
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the
date on which the right to exercise such subscription rights shall commence, and the date on which such right shall expire (subject
to any extension); |
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the
extent to which such subscription rights include an over-subscription privilege with respect to unsubscribed securities and the terms
of such over-subscription privilege; |
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any
termination right we may have in connection with such subscription rights offering; and |
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any
other terms of such subscription rights, including exercise, settlement and other procedures and limitations relating to the transfer
and exercise of such subscription rights. |
Exercise
of Subscription Rights
Each
subscription right would entitle the holder of the subscription right to purchase for cash such amount of shares of common stock at such
exercise price as shall in each case be set forth in, or be determinable as set forth in, the prospectus supplement relating to the subscription
rights offered thereby. Subscription rights may be exercised at any time up to the close of business on the expiration date for such
subscription rights set forth in the prospectus supplement. After the close of business on the expiration date, all unexercised subscription
rights would become void.
Subscription
rights may be exercised as set forth in the prospectus supplement relating to the subscription rights offered thereby. Upon receipt of
payment and the subscription rights certificate properly completed and duly executed at the corporate trust office of the subscription
rights agent or any other office indicated in the prospectus supplement we will forward, as soon as practicable, the shares of common
stock purchasable upon such exercise. To the extent permissible under applicable law, we may determine to offer any unsubscribed offered
securities directly to persons other than stockholders, to or through agents, underwriters or dealers or through a combination of such
methods, as set forth in the applicable prospectus supplement.
Dilutive
Effects
Any
stockholder who chooses not to participate in a rights offering should expect to own a smaller interest in us upon completion of such
rights offering. Any rights offering will dilute the ownership interest and voting power of stockholders who do not fully exercise their
subscription rights. Further, because the net proceeds per share from any rights offering may be lower than our then current net asset
value per share, the rights offering may reduce our net asset value per share. The amount of dilution that a stockholder will experience
could be substantial, particularly to the extent we engage in multiple rights offerings within a limited time period. In addition, the
market price of our common stock could be adversely affected while a rights offering is ongoing as a result of the possibility that a
significant number of additional shares may be issued upon completion of such rights offering. All of our stockholders will also indirectly
bear the expenses associated with any rights offering we may conduct, regardless of whether they elect to exercise any rights.
DESCRIPTION
OF OUR DEBT SECURITIES
We
may issue debt securities in one or more series. The specific terms of each series of debt securities will be described in the particular
prospectus supplement relating to that series. The prospectus supplement may or may not modify the general terms found in this prospectus
and will be filed with the SEC. For a complete description of the terms of a particular series of debt securities, you should read both
this prospectus and the prospectus supplement relating to that particular series.
As
required by federal law for all bonds and notes of companies that are publicly offered, the debt securities are governed by a document
called an “indenture.” An indenture is a contract between us and the financial institution acting as trustee on your behalf,
and is subject to and governed by the Trust Indenture Act of 1939, as amended. The trustee has two main roles. First, the trustee can
enforce your rights against us if we default. There are some limitations on the extent to which the trustee acts on your behalf, described
in the second paragraph under “— Events of Default — Remedies if an Event of Default Occurs.” Second, the trustee
performs certain administrative duties for us with respect to our debt securities.
This
section includes a description of the material provisions of the indenture. Because this section is a summary, however, it does not describe
every aspect of the debt securities and the indenture. We urge you to read the indenture because it, and not this description, defines
your rights as a holder of debt securities. A copy of the form of indenture is attached as an exhibit to the registration statement of
which this prospectus is a part. We will file a supplemental indenture with the SEC in connection with any debt offering, at which time
the supplemental indenture would be publicly available. See “Available Information” in this prospectus for information on
how to obtain a copy of the indenture.
The
prospectus supplement, which will accompany this prospectus, will describe the particular series of debt securities being offered by
including:
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the
designation or title of the series of debt securities; |
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the
total principal amount of the series of debt securities; |
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the
percentage of the principal amount at which the series of debt securities will be offered; |
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the
date or dates on which principal will be payable; |
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the
rate or rates (which may be either fixed or variable) and/or the method of determining such rate or rates of interest, if any; |
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the
date or dates from which any interest will accrue, or the method of determining such date or dates, and the date or dates on which
any interest will be payable; |
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whether
any interest may be paid by issuing additional securities of the same series in lieu of cash (and the terms upon which any such interest
may be paid by issuing additional securities); |
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the
terms for redemption, extension or early repayment, if any; |
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the
currencies in which the series of debt securities are issued and payable; |
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whether
the amount of payments of principal, premium or interest, if any, on a series of debt securities will be determined with reference
to an index, formula or other method (which could be based on one or more currencies, commodities, equity indices or other indices)
and how these amounts will be determined; |
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the
place or places, if any, other than or in addition to the Borough of Manhattan in the City of New York, of payment, transfer, conversion
and/or exchange of the debt securities; |
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the
denominations in which the offered debt securities will be issued (if other than $1,000 and any integral multiple thereof); |
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the
provision for any sinking fund; |
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any
restrictive covenants; |
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any
Events of Default (as defined in “Events of Default” below); |
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whether
the series of debt securities are issuable in certificated form; |
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any
provisions for defeasance or covenant defeasance; |
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any
special U.S. federal income tax implications, including, if applicable, U.S. federal income tax considerations relating to original
issue discount; |
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whether
and under what circumstances we will pay additional amounts in respect of any tax, assessment or governmental charge and, if so,
whether we will have the option to redeem the debt securities rather than pay the additional amounts (and the terms of this option); |
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any
provisions for convertibility or exchangeability of the debt securities into or for any other securities; |
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whether
the debt securities are subject to subordination and the terms of such subordination; |
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whether
the debt securities are secured and the terms of any security interest; |
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the
listing, if any, on a securities exchange; and |
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any
other terms. |
The
debt securities may be secured or unsecured obligations. Unless the prospectus supplement states otherwise, principal (and premium, if
any) and interest, if any, will be paid by us in immediately available funds.
We
are permitted, under specified conditions, to issue multiple classes of indebtedness if our asset coverage, as defined in the 1940 Act,
is at least equal to 200% (or 150% if certain requirements are met) immediately after each such issuance after giving effect to any exemptive
relief granted to us by the SEC. In addition, while any indebtedness and senior securities remain outstanding, we must make provisions
to prohibit the distribution to our stockholders or the repurchase of such securities or shares unless we meet the applicable asset coverage
ratios at the time of the distribution or repurchase. For a discussion of the risks associated with leverage, see “Risk Factors
— Risks Related to Our Business and Structure — Regulations governing our operation as a business development company affect
our ability to, and the way in which we, raise additional capital, which may expose us to risks, including the typical risks associated
with leverage” in our most recent Annual Report on Form 10-K.
General
The
indenture provides that any debt securities proposed to be sold under this prospectus and the accompanying prospectus supplement (“offered
debt securities”) and any debt securities issuable upon the exercise of warrants or upon conversion or exchange of other offered
securities (“underlying debt securities”) may be issued under the indenture in one or more series.
For
purposes of this prospectus, any reference to the payment of principal of, or premium or interest, if any, on, debt securities will include
additional amounts if required by the terms of the debt securities.
The
indenture does not limit the amount of debt securities that may be issued thereunder from time to time. Debt securities issued under
the indenture, when a single trustee is acting for all debt securities issued under the indenture, are called the “indenture securities.”
The indenture also provides that there may be more than one trustee thereunder, each with respect to one or more different series of
indenture securities. See “— Resignation of Trustee” below. At a time when two or more trustees are acting under the
indenture, each with respect to only certain series, the term “indenture securities” means the one or more series of debt
securities with respect to which each respective trustee is acting. In the event that there is more than one trustee under the indenture,
the powers and trust obligations of each trustee described in this prospectus will extend only to the one or more series of indenture
securities for which it is trustee. If two or more trustees are acting under the indenture, then the indenture securities for which each
trustee is acting would be treated as if issued under separate indentures.
The
indenture does not contain any provisions that give you protection in the event we issue a large amount of debt or we are acquired by
another entity.
We
refer you to the prospectus supplement for information with respect to any deletions from, modifications of or additions to the Events
of Default or our covenants that are described below, including any addition of a covenant or other provision providing event risk protection
or similar protection.
We
have the ability to issue indenture securities with terms different from those of indenture securities previously issued and, without
the consent of the holders thereof, to reopen a previous issue of a series of indenture securities and issue additional indenture securities
of that series unless the reopening was restricted when that series was created.
Conversion
and Exchange
If
any debt securities are convertible into or exchangeable for other securities, the prospectus supplement will explain the terms and conditions
of the conversion or exchange, including the conversion price or exchange ratio (or the calculation method), the conversion or exchange
period (or how the period will be determined), if conversion or exchange will be mandatory or at the option of the holder or us, provisions
for adjusting the conversion price or the exchange ratio and provisions affecting conversion or exchange in the event of the redemption
of the underlying debt securities. These terms may also include provisions under which the number or amount of other securities to be
received by the holders of the debt securities upon conversion or exchange would be calculated according to the market price of the other
securities as of a time stated in the prospectus supplement.
Issuance
of Securities in Registered Form
We
may issue the debt securities in registered form, in which case we may issue them either in book-entry form only or in “certificated”
form. Debt securities issued in book-entry form will be represented by global securities. We expect that we will usually issue debt securities
in book-entry only form represented by global securities.
Book-Entry
Holders
We
will issue registered debt securities in book-entry form only, unless we specify otherwise in the applicable prospectus supplement. This
means debt securities will be represented by one or more global securities registered in the name of a depositary that will hold them
on behalf of financial institutions that participate in the depositary’s book-entry system. These participating institutions, in
turn, hold beneficial interests in the debt securities held by the depositary or its nominee. These institutions may hold these interests
on behalf of themselves or customers.
Under
the indenture, only the person in whose name a debt security is registered is recognized as the holder of that debt security. Consequently,
for debt securities issued in book-entry form, we will recognize only the depositary as the holder of the debt securities and we will
make all payments on the debt securities to the depositary. The depositary will then pass along the payments it receives to its participants,
which in turn will pass the payments along to their customers who are the beneficial owners. The depositary and its participants do so
under agreements they have made with one another or with their customers; they are not obligated to do so under the terms of the debt
securities.
As
a result, investors will not own debt securities directly. Instead, they will own beneficial interests in a global security, through
a bank, broker or other financial institution that participates in the depositary’s book-entry system or holds an interest through
a participant. As long as the debt securities are represented by one or more global securities, investors will be indirect holders, and
not holders, of the debt securities.
Street
Name Holders
In
the future, we may issue debt securities in certificated form or terminate a global security. In these cases, investors may choose to
hold their debt securities in their own names or in “street name.” Debt securities held in street name are registered in
the name of a bank, broker or other financial institution chosen by the investor, and the investor would hold a beneficial interest in
those debt securities through the account he or she maintains at that institution.
For
debt securities held in street name, we will recognize only the intermediary banks, brokers and other financial institutions in whose
names the debt securities are registered as the holders of those debt securities, and we will make all payments on those debt securities
to them. These institutions will pass along the payments they receive to their customers who are the beneficial owners, but only because
they agree to do so in their customer agreements or because they are legally required to do so. Investors who hold debt securities in
street name will be indirect holders, and not holders, of the debt securities.
Legal
Holders
Our
obligations, as well as the obligations of the applicable trustee and those of any third parties employed by us or the applicable trustee,
run only to the legal holders of the debt securities. We do not have obligations to investors who hold beneficial interests in global
securities, in street name or by any other indirect means. This will be the case whether an investor chooses to be an indirect holder
of a debt security or has no choice because we are issuing the debt securities only in book-entry form.
For
example, once we make a payment or give a notice to the holder, we have no further responsibility for the payment or notice even if that
holder is required, under agreements with depositary participants or customers or by law, to pass it along to the indirect holders but
does not do so. Similarly, if we want to obtain the approval of the holders for any purpose (for example, to amend an indenture or to
relieve us of the consequences of a default or of our obligation to comply with a particular provision of an indenture), we would seek
the approval only from the holders, and not the indirect holders, of the debt securities. Whether and how the holders contact the indirect
holders is up to the holders.
When
we refer to you in this Description of Debt Securities, we mean those who invest in the debt securities being offered by this prospectus,
whether they are the holders or only indirect holders of those debt securities. When we refer to your debt securities, we mean the debt
securities in which you hold a direct or indirect interest.
Special
Considerations for Indirect Holders
If
you hold debt securities through a bank, broker or other financial institution, either in book-entry form or in street name, we urge
you to check with that institution to find out:
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how
it handles securities payments and notices; |
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whether
it imposes fees or charges; |
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how
it would handle a request for the holders’ consent, if ever required; |
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whether
and how you can instruct it to send you debt securities registered in your own name so you can be a holder, if that is permitted
in the future for a particular series of debt securities; |
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how
it would exercise rights under the debt securities if there were a default or other event triggering the need for holders to act
to protect their interests; and |
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if
the debt securities are in book-entry form, how the depositary’s rules and procedures will affect these matters. |
Global
Securities
As
noted above, we usually will issue debt securities as registered securities in book-entry form only. A global security represents one
or any other number of individual debt securities. Generally, all debt securities represented by the same global securities will have
the same terms.
Each
debt security issued in book-entry form will be represented by a global security that we deposit with and register in the name of a financial
institution or its nominee that we select. The financial institution that we select for this purpose is called the depositary. Unless
we specify otherwise in the applicable prospectus supplement, The Depository Trust Company, New York, New York, known as DTC, will be
the depositary for all debt securities issued in book-entry form.
A
global security may not be transferred to or registered in the name of anyone other than the depositary or its nominee, unless special
termination situations arise. We describe those situations below under “— Termination of a Global Security.” As a result
of these arrangements, the depositary, or its nominee, will be the sole registered owner and holder of all debt securities represented
by a global security, and investors will be permitted to own only beneficial interests in a global security. Beneficial interests must
be held by means of an account with a broker, bank or other financial institution that in turn has an account with the depositary or
with another institution that has an account with the depositary. Thus, an investor whose security is represented by a global security
will not be a holder of the debt security, but only an indirect holder of a beneficial interest in the global security.
Special
Considerations for Global Securities
As
an indirect holder, an investor’s rights relating to a global security will be governed by the account rules of the investor’s
financial institution and of the depositary, as well as general laws relating to securities transfers. The depositary that holds the
global security will be considered the holder of the debt securities represented by the global security.
If
debt securities are issued only in the form of a global security, an investor should be aware of the following:
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an
investor cannot cause the debt securities to be registered in his or her name and cannot obtain certificates for his or her interest
in the debt securities, except in the special situations we describe below; |
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an
investor will be an indirect holder and must look to his or her own bank or broker for payments on the debt securities and protection
of his or her legal rights relating to the debt securities, as we describe under “— Issuance of Securities in Registered
Form” above; |
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an
investor may not be able to sell interests in the debt securities to some insurance companies and other institutions that are required
by law to own their securities in non-book-entry form; |
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an
investor may not be able to pledge his or her interest in a global security in circumstances where certificates representing the
debt securities must be delivered to the lender or other beneficiary of the pledge in order for the pledge to be effective; |
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the
depositary’s policies, which may change from time to time, will govern payments, transfers, exchanges and other matters relating
to an investor’s interest in a global security. We and the trustee have no responsibility for any aspect of the depositary’s
actions or for its records of ownership interests in a global security. We and the trustee also do not supervise the depositary in
any way; |
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if
we redeem less than all the debt securities of a particular series being redeemed, DTC’s practice is to determine by lot the
amount to be redeemed from each of its participants holding that series; |
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an
investor is required to give notice of exercise of any option to elect repayment of its debt securities, through its participant,
to the applicable trustee and to deliver the related debt securities by causing its participant to transfer its interest in those
debt securities, on DTC’s records, to the applicable trustee; |
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DTC
requires that those who purchase and sell interests in a global security deposited in its book-entry system use immediately available
funds, your broker or bank may also require you to use immediately available funds when purchasing or selling interests in a global
security; and |
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financial
institutions that participate in the depositary’s book-entry system, and through which an investor holds its interest in a
global security, may also have their own policies affecting payments, notices and other matters relating to the debt securities;
there may be more than one financial intermediary in the chain of ownership for an investor, we do not monitor and are not responsible
for the actions of any of those intermediaries. |
Termination
of a Global Security
If
a global security is terminated for any reason, interests in it will be exchanged for certificates in non-book-entry form (certificated
securities). After that exchange, the choice of whether to hold the certificated debt securities directly or in street name will be up
to the investor. Investors must consult their own banks or brokers to find out how to have their interests in a global security transferred
on termination to their own names, so that they will be holders. We have described the rights of legal holders and street name investors
under “— Issuance of Securities in Registered Form” above.
The
prospectus supplement may list situations for terminating a global security that would apply only to the particular series of debt securities
covered by the prospectus supplement. If a global security is terminated, only the depositary, and not we or the applicable trustee,
is responsible for deciding the investors in whose names the debt securities represented by the global security will be registered and,
therefore, who will be the holders of those debt securities.
Payment
and Paying Agents
We
will pay interest to the person listed in the applicable trustee’s records as the owner of the debt security at the close of business
on a particular day in advance of each due date for interest, even if that person no longer owns the debt security on the interest due
date. That day, usually about two weeks in advance of the interest due date, is called the “record date.” Because we will
pay all the interest for an interest period to the holders on the record date, holders buying and selling debt securities must work out
between themselves the appropriate purchase price. The most common manner is to adjust the sales price of the debt securities to prorate
interest fairly between buyer and seller based on their respective ownership periods within the particular interest period. This prorated
interest amount is called “accrued interest.”
Payments
on Global Securities
We
will make payments on a global security in accordance with the applicable policies of the depositary as in effect from time to time.
Under those policies, we will make payments directly to the depositary, or its nominee, and not to any indirect holders who own beneficial
interests in the global security. An indirect holder’s right to those payments will be governed by the rules and practices of the
depositary and its participants, as described under “— Special Considerations for Global Securities.”
Payments
on Certificated Securities
We
will make payments on a certificated debt security as follows. We will pay interest that is due on an interest payment date to the holder
of debt securities as shown on the trustee’s records as of the close of business on the regular record date at our office and/or
at other offices that may be specified in the prospectus supplement. We will make all payments of principal and premium, if any, by check
at the office of the applicable trustee and/or at other offices that may be specified in the prospectus supplement or in a notice to
holders against surrender of the debt security.
Alternatively,
at our option, we may pay any cash interest that becomes due on the debt security by mailing a check to the holder at his, her or its
address shown on the trustee’s records as of the close of business on the regular record date or by transfer to an account at a
bank in the United States, in either case, on the due date.
Payment
When Offices Are Closed
If
any payment is due on a debt security on a day that is not a business day, we will make the payment on the next day that is a business
day. Payments made on the next business day in this situation will be treated under the indenture as if they were made on the original
due date, except as otherwise indicated in the attached prospectus supplement. Such payment will not result in a default under any debt
security or the indenture, and no interest will accrue on the payment amount from the original due date to the next day that is a business
day.
Book-entry
and other indirect holders should consult their banks or brokers for information on how they will receive payments on their debt securities.
Events
of Default
You
will have rights if an Event of Default occurs in respect of the debt securities of your series and is not cured, as described later
in this subsection.
The
term “Event of Default” in respect of the debt securities of your series means any of the following:
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we
do not pay the principal of, or any premium on, a debt security of the series within five days of its due date; |
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we
do not pay interest on a debt security of the series within 30 days of its due date; |
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we
do not deposit any sinking fund payment in respect of debt securities of the series within five days of its due date; |
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we
remain in breach of a covenant in respect of debt securities of the series for 60 days after we receive a written notice of default
stating we are in breach (the notice must be sent by either the trustee or holders of at least 25% of the principal amount of the
outstanding debt securities of the series); |
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we
file for bankruptcy or certain other events of bankruptcy, insolvency or reorganization occur and remain undischarged or unstayed
for a period of 90 days; |
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the
series of debt securities has an asset coverage, as such term is defined in the 1940 Act, of less than 100 per centum on the last
business day of each of twenty-four consecutive calendar months, giving effect to any exemptive relief granted to the Company by
the SEC; or |
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any
other Event of Default in respect of debt securities of the series described in the prospectus supplement occurs. |
An
Event of Default for a particular series of debt securities does not necessarily constitute an Event of Default for any other series
of debt securities issued under the same or any other indenture. The trustee may withhold notice to the holders of debt securities of
any default, except in the payment of principal, premium, interest, or sinking or purchase fund installment, if it in good faith considers
the withholding of notice to be in the interest of the holders.
Remedies
if an Event of Default Occurs
If
an Event of Default has occurred and is continuing, the trustee or the holders of not less than 25% in principal amount of the outstanding
debt securities of the affected series may (and the trustee shall at the request of such holders) declare the entire principal amount
of all the debt securities of that series to be due and immediately payable. This is called a declaration of acceleration of maturity.
A declaration of acceleration of maturity may be canceled by the holders of a majority in principal amount of the outstanding debt securities
of the affected series if (1) we have deposited with the trustee all amounts due and owing with respect to the securities (other than
principal that has become due solely by reason of such acceleration) and certain other amounts, and (2) any other Events of Default have
been cured or waived.
Except
in cases of default, where the trustee has some special duties, the trustee is not required to take any action under the indenture at
the request of any holders unless the holders offer the trustee reasonable protection from expenses and liability (called an “indemnity”).
If reasonable indemnity is provided, the holders of a majority in principal amount of the outstanding debt securities of the relevant
series may direct the time, method and place of conducting any lawsuit or other formal legal action seeking any remedy available to the
trustee. The trustee may refuse to follow those directions in certain circumstances. No delay or omission in exercising any right or
remedy will be treated as a waiver of that right, remedy or Event of Default.
Before
you are allowed to bypass your trustee and bring your own lawsuit or other formal legal action or take other steps to enforce your rights
or protect your interests relating to the debt securities, the following must occur:
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you
must give the trustee written notice that an Event of Default with respect to the relevant series of debt securities has occurred
and remains uncured; |
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the
holders of at least 25% in principal amount of all outstanding debt securities of the relevant series must make a written request
that the trustee take action because of the default and must offer reasonable indemnity, security or both to the trustee against
the costs, expenses and other liabilities of taking that action; |
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the
trustee must not have taken action for 60 days after receipt of the above notice and offer of indemnity and/or security; and |
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the
holders of a majority in principal amount of the outstanding debt securities of that series must not have given the trustee a direction
inconsistent with the above notice during that 60-day period. |
However,
you are entitled at any time to bring a lawsuit for the payment of money due on your debt securities on or after the due date.
Book-entry
and other indirect holders should consult their banks or brokers for information on how to give notice or direction to or make a request
of the trustee and how to declare or cancel an acceleration of maturity.
Each
year, we will furnish to each trustee a written statement of certain of our officers certifying that to their knowledge we are in compliance
with the indenture and the debt securities, or else specifying any default.
Waiver
of Default
Holders
of a majority in principal amount of the outstanding debt securities of the affected series may waive any past defaults other than:
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the
payment of principal, any premium or interest; or |
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in
respect of a covenant that cannot be modified or amended without the consent of each holder. |
Merger
or Consolidation
Under
the terms of the indenture, we are generally permitted to consolidate or merge with another entity. We are also permitted to sell all
or substantially all of our assets to another entity. However, we may not take any of these actions unless all the following conditions
are met:
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where
we merge out of existence or sell substantially all our assets, the resulting entity or transferee must agree to be legally responsible
for our obligations under the debt securities; |
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the
merger or sale of assets must not cause a default on the debt securities and we must not already be in default (unless the merger
or sale would cure the default). For purposes of this no-default test, a default would include an Event of Default that has occurred
and has not been cured, as described under “Events of Default” above. A default for this purpose would also include any
event that would be an Event of Default if the requirements for giving us a notice of default or our default having to exist for
a specific period of time were disregarded; |
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we
must deliver certain certificates and documents to the trustee; and |
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we
must satisfy any other requirements specified in the prospectus supplement relating to a particular series of debt securities. |
Modification
or Waiver
There
are three types of changes we can make to the indenture and the debt securities issued thereunder.
Changes
Requiring Your Approval
First,
there are changes that we cannot make to your debt securities without your specific approval. The following is a list of those types
of changes:
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change
the stated maturity of the principal of or interest on a debt security or the terms of any sinking fund with respect to any security; |
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reduce
any amounts due on a debt security; |
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reduce
the amount of principal payable upon acceleration of the maturity of an original issue discount or indexed security following a default
or upon the redemption thereof or the amount thereof provable in a bankruptcy proceeding; |
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adversely
affect any right of repayment at the holder’s option; |
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change
the place or currency of payment on a debt security (except as otherwise described in the prospectus or prospectus supplement); |
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impair
your right to sue for payment; |
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adversely
affect any right to convert or exchange a debt security in accordance with its terms; |
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modify
the subordination provisions in the indenture in a manner that is adverse to outstanding holders of the debt securities; |
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reduce
the percentage of holders of debt securities whose consent is needed to modify or amend the indenture; |
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reduce
the percentage of holders of debt securities whose consent is needed to waive compliance with certain provisions of the indenture
or to waive certain defaults; |
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modify
any other aspect of the provisions of the indenture dealing with supplemental indentures with the consent of holders, waiver of past
defaults, changes to the quorum or voting requirements or the waiver of certain covenants; and |
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change
any obligation we have to pay additional amounts. |
Changes
Not Requiring Approval
The
second type of change does not require any vote by the holders of the debt securities. This type is limited to clarifications, establishment
of the form or terms of new securities of any series as permitted by the indenture and certain other changes that would not adversely
affect holders of the outstanding debt securities in any material respect. We also do not need any approval to make any change that affects
only debt securities to be issued under the indenture after the change takes effect.
Changes
Requiring Majority Approval
Any
other change to the indenture and the debt securities would require the following approval:
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if
the change affects only one series of debt securities, it must be approved by the holders of a majority in principal amount of that
series; and |
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if
the change affects more than one series of debt securities issued under the same indenture, it must be approved by the holders of
a majority in principal amount of all of the series affected by the change, with all affected series voting together as one class
for this purpose. |
In
each case, the required approval must be given by written consent.
The
holders of a majority in principal amount of a series of debt securities issued under the indenture, voting together as one class for
this purpose, may waive our compliance with some of our covenants applicable to that series of debt securities. However, we cannot obtain
a waiver of a payment default or of any of the matters covered by the bullet points included above under “— Changes Requiring
Your Approval.”
Further
Details Concerning Voting
When
taking a vote, we will use the following rules to decide how much principal to attribute to a debt security:
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for
original issue discount securities, we will use the principal amount that would be due and payable on the voting date if the maturity
of these debt securities were accelerated to that date because of a default; |
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for
debt securities whose principal amount is not known (for example, because it is based on an index), we will use the principal face
amount at original issuance or a special rule for that debt security described in the prospectus supplement; and |
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for
debt securities denominated in one or more foreign currencies, we will use the U.S. dollar equivalent. |
Debt
securities will not be considered outstanding, and therefore not eligible to vote, if we have deposited or set aside in trust money for
their payment or redemption or if we, any other obligor, or any affiliate of us or any obligor own such debt securities. Debt securities
will also not be eligible to vote if they have been fully defeased as described later under “— Defeasance — Full Defeasance.”
We
will generally be entitled to set any day as a record date for the purpose of determining the holders of outstanding indenture securities
that are entitled to vote or take other action under the indenture. However, the record date may not be more than 30 days before the
date of the first solicitation of holders to vote on or take such action. If we set a record date for a vote or other action to be taken
by holders of one or more series, that vote or action may be taken only by persons who are holders of outstanding indenture securities
of those series on the record date and must be taken within eleven months following the record date.
Book-entry
and other indirect holders should consult their banks or brokers for information on how approval may be granted or denied if we seek
to change the indenture or the debt securities or request a waiver.
Defeasance
The
following provisions will be applicable to each series of debt securities unless we state in the applicable prospectus supplement that
the provisions of covenant defeasance and full defeasance will not be applicable to that series.
Covenant
Defeasance
Under
current U.S. federal tax law and the indenture, we can make the deposit described below and be released from some of the restrictive
covenants in the indenture under which the particular series was issued. This is called “covenant defeasance.” In that event,
you would lose the protection of those restrictive covenants but would gain the protection of having money and government securities
set aside in trust to repay your debt securities. If we achieved covenant defeasance and your debt securities were subordinated as described
under “— Indenture Provisions — Subordination” below, such subordination would not prevent the trustee under
the indenture from applying the funds available to it from the deposit described in the first bullet below to the payment of amounts
due in respect of such debt securities for the benefit of the subordinated debt holders. In order to achieve covenant defeasance, we
must do the following:
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we
must deposit in trust for the benefit of all holders of a series of debt securities a combination of cash (in such currency in which
such securities are then specified as payable at stated maturity) or government obligations applicable to such securities (determined
on the basis of the currency in which such securities are then specified as payable at stated maturity) that will generate enough
cash to make interest, principal and any other payments on the debt securities on their various due dates and any mandatory sinking
fund payments or analogous payments; |
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we
must deliver to the trustee a legal opinion of our counsel confirming that, under current U.S. federal income tax law, we may make
the above deposit without causing you to be taxed on the debt securities any differently than if we did not make the deposit; |
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we
must deliver to the trustee a legal opinion of our counsel stating that the above deposit does not require registration by us under
the 1940 Act, as amended, and a legal opinion and officers’ certificate stating that all conditions precedent to covenant defeasance
have been complied with; |
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defeasance
must not result in a breach or violation of, or result in a default under, of the indenture or any of our other material agreements
or instruments; |
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no
default or event of default with respect to such debt securities shall have occurred and be continuing and no defaults or events
of default related to bankruptcy, insolvency or reorganization shall occur during the next 90 days; and |
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satisfy
the conditions for covenant defeasance contained in any supplemental indentures. |
If
we accomplish covenant defeasance, you can still look to us for repayment of the debt securities if there were a shortfall in the trust
deposit or the trustee is prevented from making payment. For example, if one of the remaining Events of Default occurred (such as our
bankruptcy) and the debt securities became immediately due and payable, there might be such a shortfall. However, there is no assurance
that we would have sufficient funds to make payment of the shortfall.
Full
Defeasance
If
there is a change in U.S. federal tax law or we obtain an IRS ruling, as described in the second bullet below, we can legally release
ourselves from all payment and other obligations on the debt securities of a particular series (called “full defeasance”)
if we put in place the following other arrangements for you to be repaid:
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we
must deposit in trust for the benefit of all holders of a series of debt securities a combination of cash (in such currency in which
such securities are then specified as payable at stated maturity) or government obligations applicable to such securities (determined
on the basis of the currency in which such securities are then specified as payable at stated maturity) that will generate enough
cash to make interest, principal and any other payments on the debt securities on their various due dates and any mandatory sinking
fund payments or analogous payments. |
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we
must deliver to the trustee a legal opinion confirming that there has been a change in current U.S. federal tax law or an IRS ruling
that allows us to make the above deposit without causing you to be taxed on the debt securities any differently than if we did not
make the deposit. Under current U.S. federal tax law, the deposit and our legal release from the debt securities would be treated
as though we paid you your share of the cash and notes or bonds at the time the cash and notes or bonds were deposited in trust in
exchange for your debt securities and you would recognize gain or loss on the debt securities at the time of the deposit. |
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we
must deliver to the trustee a legal opinion of our counsel stating that the above deposit does not require registration by us under
the 1940 Act, as amended, and a legal opinion and officers’ certificate stating that all conditions precedent to defeasance
have been complied with. |
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defeasance
must not result in a breach or violation of, or constitute a default under, of the indenture or any of our other material agreements
or instruments. |
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no
default or event of default with respect to such debt securities shall have occurred and be continuing and no defaults or events
of default related to bankruptcy, insolvency or reorganization shall occur during the next 90 days. |
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satisfy
the conditions for full defeasance contained in any supplemental indentures. |
If
we ever did accomplish full defeasance, as described above, you would have to rely solely on the trust deposit for repayment of the debt
securities. You could not look to us for repayment in the unlikely event of any shortfall. Conversely, the trust deposit would most likely
be protected from claims of our lenders and other creditors if we ever became bankrupt or insolvent. If your debt securities were subordinated
as described later under “— Indenture Provisions — Subordination”, such subordination would not prevent the trustee
under the indenture from applying the funds available to it from the deposit referred to in the first bullet of the preceding paragraph
to the payment of amounts due in respect of such debt securities for the benefit of the subordinated debt holders.
Form,
Exchange and Transfer of Certificated Registered Securities
If
registered debt securities cease to be issued in book-entry form, they will be issued:
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only
in fully registered certificated form; |
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without
interest coupons; and |
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unless
we indicate otherwise in the prospectus supplement, in denominations of $1,000 and amounts that are multiples of $1,000. |
Holders
may exchange their certificated securities for debt securities of smaller denominations or combined into fewer debt securities of larger
denominations, as long as the total principal amount is not changed and as long as the denomination is greater than the minimum denomination
for such securities.
Holders
may exchange or transfer their certificated securities at the office of the trustee. We have appointed the trustee to act as our agent
for registering debt securities in the names of holders transferring debt securities. We may appoint another entity to perform these
functions or perform them ourselves.
Holders
will not be required to pay a service charge to transfer or exchange their certificated securities, but they may be required to pay any
tax or other governmental charge associated with the transfer or exchange. The transfer or exchange will be made only if our transfer
agent is satisfied with the holder’s proof of legal ownership.
If
we have designated additional transfer agents for your debt security, they will be named in the prospectus supplement. We may appoint
additional transfer agents or cancel the appointment of any particular transfer agent. We may also approve a change in the office through
which any transfer agent acts.
If
any certificated securities of a particular series are redeemable and we redeem less than all the debt securities of that series, we
may block the transfer or exchange of those debt securities during the period beginning 15 days before the day we mail the notice of
redemption and ending on the day of that mailing, in order to freeze the list of holders to prepare the mailing. We may also refuse to
register transfers or exchanges of any certificated securities selected for redemption, except that we will continue to permit transfers
and exchanges of the unredeemed portion of any debt security that will be partially redeemed.
If
a registered debt security is issued in book-entry form, only the depositary will be entitled to transfer and exchange the debt security
as described in this subsection, since it will be the sole holder of the debt security.
Resignation
of Trustee
Each
trustee may resign or be removed with respect to one or more series of indenture securities provided that a successor trustee is appointed
to act with respect to these series and has accepted such appointment. In the event that two or more persons are acting as trustee with
respect to different series of indenture securities under the indenture, each of the trustees will be a trustee of a trust separate and
apart from the trust administered by any other trustee.
Indenture
Provisions — Subordination
Upon
any distribution of our assets upon our dissolution, winding up, liquidation or reorganization, the payment of the principal of (and
premium, if any) and interest, if any, on any indenture securities denominated as subordinated debt securities is to be subordinated
to the extent provided in the indenture in right of payment to the prior payment in full of all Senior Indebtedness (as defined below),
but our obligation to you to make payment of the principal of (and premium, if any) and interest, if any, on such subordinated debt securities
will not otherwise be affected. In addition, no payment on account of principal (or premium, if any), sinking fund or interest, if any,
may be made on such subordinated debt securities at any time unless full payment of all amounts due in respect of the principal (and
premium, if any), sinking fund and interest on Senior Indebtedness has been made or duly provided for in money or money’s worth.
In
the event that, notwithstanding the foregoing, any payment by us is received by the trustee in respect of subordinated debt securities
or by the holders of any of such subordinated debt securities, upon our dissolution, winding up, liquidation or reorganization before
all Senior Indebtedness is paid in full, the payment or distribution received by the trustee in respect of such subordinated debt securities
or by the holders of any such subordinated debt securities must be paid over to the holders of the Senior Indebtedness or on their behalf
for application to the payment of all the Senior Indebtedness remaining unpaid until all the Senior Indebtedness has been paid in full,
after giving effect to any concurrent payment or distribution to the holders of the Senior Indebtedness. Subject to the payment in full
of all Senior Indebtedness upon this distribution by us, the holders of such subordinated debt securities will be subrogated to the rights
of the holders of the Senior Indebtedness to the extent of payments made to the holders of the Senior Indebtedness out of the distributive
share of such subordinated debt securities.
By
reason of this subordination, in the event of a distribution of our assets upon our insolvency, certain of our senior creditors may recover
more, ratably, than holders of any subordinated debt securities or the holders of any indenture securities that are not Senior Indebtedness.
The indenture provides that these subordination provisions will not apply to money and securities held in trust under the defeasance
provisions of the indenture.
Senior
Indebtedness is defined in the indenture as the principal of (and premium, if any) and unpaid interest on:
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our
indebtedness (including indebtedness of others guaranteed by us), whenever created, incurred, assumed or guaranteed, for money borrowed,
that we have designated as “Senior Indebtedness” for purposes of the indenture and in accordance with the terms of the
indenture (including any indenture securities designated as Senior Indebtedness), and |
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renewals,
extensions, modifications and refinancings of any of this indebtedness. |
If
this prospectus is being delivered in connection with the offering of a series of indenture securities denominated as subordinated debt
securities, the accompanying prospectus supplement will set forth the approximate amount of our Senior Indebtedness and of our other
Indebtedness outstanding as of a recent date.
Secured
Indebtedness and Ranking
Certain
of our indebtedness, including certain series of indenture securities, may be secured. The prospectus supplement for each series of indenture
securities will describe the terms of any security interest for such series and will indicate the approximate amount of our secured indebtedness
as of a recent date. Any unsecured indenture securities will effectively rank junior to any secured indebtedness, including any secured
indenture securities, that we incur in the future to the extent of the value of the assets securing such future secured indebtedness.
The debt securities, whether secured or unsecured, of the Company will rank structurally junior to all existing and future indebtedness
(including trade payables) incurred by our subsidiaries, financing vehicles or similar facilities.
In
the event of our bankruptcy, liquidation, reorganization or other winding up, any of our assets that secure secured debt will be available
to pay obligations on unsecured debt securities only after all indebtedness under such secured debt has been repaid in full from such
assets. We advise you that there may not be sufficient assets remaining to pay amounts due on any or all unsecured debt securities then
outstanding after fulfillment of this obligation. As a result, the holders of unsecured indenture securities may recover less, ratably,
than holders of any of our secured indebtedness.
The
Trustee under the Indenture
U.S.
Bank National Association will serve as the trustee under the indenture.
Certain
Considerations Relating to Foreign Currencies
Debt
securities denominated or payable in foreign currencies may entail significant risks. These risks include the possibility of significant
fluctuations in the foreign currency markets, the imposition or modification of foreign exchange controls and potential illiquidity in
the secondary market. These risks will vary depending upon the currency or currencies involved and will be more fully described in the
applicable prospectus supplement.
DESCRIPTION
OF OUR WARRANTS
The
following is a general description of the terms of the warrants we may issue from time to time. Particular terms of any warrants we offer
will be described in the prospectus supplement relating to such warrants.
We
may issue warrants to purchase shares of our common stock, preferred stock or debt securities. Such warrants may be issued independently
or together with shares of common stock, preferred stock or debt securities and may be attached or separate from such securities. We
will issue each series of warrants under a separate warrant agreement to be entered into between us and a warrant agent. The warrant
agent will act solely as our agent and will not assume any obligation or relationship of agency for or with holders or beneficial owners
of warrants.
A
prospectus supplement will describe the particular terms of any series of warrants we may issue, including the following:
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the
title of such warrants; |
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the
aggregate number of such warrants; |
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the
price or prices at which such warrants will be issued; |
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the
currency or currencies, including composite currencies, in which the price of such warrants may be payable; |
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if
applicable, the designation and terms of the securities with which the warrants are issued and the number of warrants issued with
each such security or each principal amount of such security; |
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in
the case of warrants to purchase debt securities, the principal amount of debt securities purchasable upon exercise of one warrant
and the price at which and the currency or currencies, including composite currencies, in which this principal amount of debt securities
may be purchased upon such exercise; |
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in
the case of warrants to purchase common stock or preferred stock, the number of shares of common stock or preferred stock purchasable
upon exercise of one warrant and the price at which and the currency or currencies, including composite currencies, in which these
shares may be purchased upon such exercise; |
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the
date on which the right to exercise such warrants shall commence and the date on which such right will expire; |
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whether
such warrants will be issued in registered form or bearer form; |
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if
applicable, the minimum or maximum amount of such warrants which may be exercised at any one time; |
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if
applicable, the date on and after which such warrants and the related securities will be separately transferable; |
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information
with respect to book-entry procedures, if any; |
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the
terms of the securities issuable upon exercise of the warrants; |
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if
applicable, a discussion of certain U.S. federal income tax considerations; and |
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any
other terms of such warrants, including terms, procedures and limitations relating to the exchange and exercise of such warrants. |
We
and the warrant agent may amend or supplement the warrant agreement for a series of warrants without the consent of the holders of the
warrants issued thereunder to effect changes that are not inconsistent with the provisions of the warrants and that do not materially
and adversely affect the interests of the holders of the warrants.
Each
warrant will entitle the holder to purchase for cash such common stock or preferred stock at the exercise price or such principal amount
of debt securities as shall in each case be set forth in, or be determinable as set forth in, the prospectus supplement relating to the
warrants offered thereby. Warrants may be exercised as set forth in the prospectus supplement beginning on the date specified therein
and continuing until the close of business on the expiration date set forth in the prospectus supplement. After the close of business
on the expiration date, unexercised warrants will become void.
Upon
receipt of payment and a warrant certificate properly completed and duly executed at the corporate trust office of the warrant agent
or any other office indicated in the prospectus supplement, we will, as soon as practicable, forward the securities purchasable upon
such exercise. If less than all of the warrants represented by such warrant certificate are exercised, a new warrant certificate will
be issued for the remaining warrants. If we so indicate in the applicable prospectus supplement, holders of the warrants may surrender
securities as all or part of the exercise price for warrants.
Prior
to exercising their warrants, holders of warrants will not have any of the rights of holders of the securities purchasable upon such
exercise, including, in the case of warrants to purchase debt securities, the right to receive principal, premium, if any, or interest
payments, on the debt securities purchasable upon exercise or to enforce covenants in the applicable indenture or, in the case of warrants
to purchase common stock or preferred stock, the right to receive dividends or other distributions, if any, or payments upon our liquidation,
dissolution or winding up or to exercise any voting rights.
Under
the 1940 Act, we may generally only offer warrants provided that (1) the warrants expire by their terms within ten years; (2) the exercise
or conversion price is not less than the current market value at the date of issuance; (3) our stockholders authorize the issuance of
such warrants, and our Board of Directors approves such issuance on the basis that the issuance is in the best interests of the Company
and its stockholders; and (4) if the warrants are accompanied by other securities, the warrants are not separately transferable unless
no class of such warrants and the securities accompanying them has been publicly distributed. The 1940 Act also provides that the amount
of our voting securities that would result from the exercise of all outstanding warrants at the time of issuance may not exceed 25% of
our outstanding voting securities. As of the date of this prospectus, our stockholders have not authorized any issuance of warrants beyond
those that would otherwise be permitted without stockholder approval under the 1940 Act.
PLAN
OF DISTRIBUTION
We
may offer, from time to time, in more than one offering, up to $400,000,000 of common stock, preferred stock, subscription rights to
purchase shares of common stock, warrants and debt securities, in one or more underwritten public offerings, at-the-market offerings
to or through a market maker or into an existing trading market for our securities, on an exchange or otherwise, negotiated transactions,
block trades, best efforts or a combination of these methods. The holders of our common stock will indirectly bear any fees and expenses
in connection with any such offering.
We
may sell our securities through underwriters or dealers, directly to one or more purchasers, through agents or through a combination
of any such methods of sale. In the case of a rights offering, the applicable prospectus supplement will set forth the number of shares
of our common stock issuable upon the exercise of each right and the other terms of such rights offering. Any underwriter or agent involved
in the offer and sale of our securities will be named in the applicable prospectus supplement. A prospectus supplement or supplements
will also describe the terms of the offering of our securities, including: the purchase price and the proceeds we will receive from the
sale; any over-allotment options under which underwriters may purchase additional securities from us; any agency fees or underwriting
discounts and other items constituting agents’ or underwriters’ compensation; the public offering price; any discounts or
concessions allowed or re-allowed or paid to dealers; and any securities exchange or market on which our securities may be listed. Only
underwriters or agents named in the prospectus supplement will be underwriters or agents of securities offered by the prospectus supplement.
The
distribution of the securities may be effected from time to time in one or more transactions at a fixed price or prices, which may be
changed, at prevailing market prices at the time of sale, at prices related to such prevailing market prices, or at negotiated prices,
provided, however, that the offering price per share of our common stock, less any underwriting commissions or discounts, must equal
or exceed the net asset value per share of our common stock at the time of the offering except (i) in connection with a rights offering
to our existing stockholders, (ii) with the prior approval of the majority of our common stockholders, or (iii) under such other circumstances
as the SEC may permit. Any offering of securities by us that requires the consent of the majority of our common stockholders, must occur,
if at all, within one year after receiving such consent. The price at which our securities may be distributed may represent a discount
from prevailing market prices. As an investor in our securities, you will indirectly bear the expenses incurred in connection with all
of the distribution activities described herein.
In
connection with the sale of our securities, underwriters or agents may receive compensation from us or from purchasers of our securities,
for whom they may act as agents, in the form of discounts, concessions or commissions. Underwriters may sell our securities to or through
dealers and such dealers may receive compensation in the form of discounts, concessions or commissions from the underwriters and/or commissions
from the purchasers for whom they may act as agents. Underwriters, dealers and agents that participate in the distribution of our securities
may be deemed to be underwriters under the Securities Act, and any discounts and commissions they receive from us and any profit realized
by them on the resale of our securities may be deemed to be underwriting discounts and commissions under the Securities Act. Any such
underwriter or agent will be identified and any such compensation received from us will be described in the applicable prospectus supplement.
The maximum aggregate commission or discount to be received by any member of FINRA or independent broker-dealer will not be greater than
10% of the gross proceeds of the sale of our securities offered pursuant to this prospectus and any applicable prospectus supplement.
We may also reimburse the underwriter or agent for certain fees and legal expenses incurred by it.
Any
underwriter may engage in over-allotment, stabilizing transactions, short-covering transactions and penalty bids in accordance with Regulation
M under the Exchange Act. Over-allotment involves sales in excess of the offering size, which create a short position. Stabilizing transactions
permit bids to purchase the underlying security so long as the stabilizing bids do not exceed a specified maximum price. Syndicate-covering
or other short-covering transactions involve purchases of our securities, either through exercise of the option to purchase additional
shares from us or in the open market after the distribution is completed, to cover short positions. Penalty bids permit the underwriters
to reclaim a selling concession from a dealer when our securities originally sold by the dealer are purchased in a stabilizing or covering
transaction to cover short positions. Those activities may cause the price of our securities to be higher than it would otherwise be.
If commenced, the underwriters may discontinue any of the activities at any time.
Any
underwriters that are qualified market makers on the Nasdaq Global Select Market may engage in passive market making transactions in
our common stock on the Nasdaq Global Select Market in accordance with Regulation M under the Exchange Act, during the business day prior
to the pricing of the offering, before the commencement of offers or sales of our common stock. Passive market makers must comply with
applicable volume and price limitations and must be identified as passive market makers. In general, a passive market maker must display
its bid at a price not in excess of the highest independent bid for such security; if all independent bids are lowered below the passive
market maker’s bid, however, the passive market maker’s bid must then be lowered when certain purchase limits are exceeded.
Passive market making may stabilize the market price of our common stock at a level above that which might otherwise prevail in the open
market and, if commenced, may be discontinued at any time.
We
may sell our securities directly or through agents we designate from time to time. We will name any agent involved in the offering and
sale of our securities and we will describe any commissions we will pay the agent in the prospectus supplement. Unless the prospectus
supplement states otherwise, our agent will act on a best-efforts basis for the period of its appointment.
Unless
otherwise specified in the applicable prospectus supplement, each class or series of securities will be a new issue with no trading market,
other than our common stock and the 6.00% Notes due 2026, both of which are traded on the Nasdaq Global Select Market. We may
elect to list any other class or series of securities on any exchanges, but we are not obligated to do so. We cannot guarantee the liquidity
of the trading markets for any securities.
Under
agreements that we may enter, underwriters, dealers and agents who participate in the distribution of our securities may be entitled
to indemnification by us against certain liabilities, including liabilities under the Securities Act, or contribution with respect to
payments that the agents or underwriters may make with respect to these liabilities. Underwriters, dealers and agents may engage in transactions
with, or perform services for, us in the ordinary course of business.
If
so indicated in the applicable prospectus supplement, we will authorize underwriters or other persons acting as our agents to solicit
offers by certain institutions to purchase our securities from us pursuant to contracts providing for payment and delivery on a future
date. Institutions with which such contracts may be made include commercial and savings banks, insurance companies, pension funds, investment
companies, educational and charitable institutions and others, but in all cases such institutions must be approved by us. The obligations
of any purchaser under any such contract will be subject to the condition that the purchase of our securities shall not at the time of
delivery be prohibited under the laws of the jurisdiction to which such purchaser is subject. The underwriters and such other agents
will not have any responsibility in respect of the validity or performance of such contracts. Such contracts will be subject only to
those conditions set forth in the prospectus supplement, and the prospectus supplement will set forth the commission payable for solicitation
of such contracts.
We
may enter into derivative transactions with third parties or sell securities not covered by this prospectus to third parties in
privately negotiated transactions. If the applicable prospectus supplement indicates, in connection with those derivatives, the
third parties may sell securities covered by this prospectus and the applicable prospectus supplement, including in short sale
transactions. If so, the third party may use securities pledged by us or borrowed from us or others to settle those sales or to
close out any related open borrowings of stock, and may use securities received from us in settlement of those derivatives to close
out any related open borrowings of stock. The third parties in such sale transactions will be underwriters and, if not identified in
this prospectus, will be identified in the applicable prospectus supplement.
In
order to comply with the securities laws of certain states, if applicable, our securities offered hereby will be sold in such jurisdictions
only through registered or licensed brokers or dealers.
CUSTODIAN,
TRANSFER AND DISTRIBUTION PAYING AGENT AND REGISTRAR
Our
investments are held under a custody agreement with Western Alliance Bank Trust Company, National Association. The address of
the custodian is One East Washington Street, Ste. 400, Phoenix, Arizona 85004. American Stock Transfer & Trust Company acts as our
transfer agent, distribution paying agent and registrar. The principal business address of our transfer agent is 6201 15th Avenue, Brooklyn,
New York 11219 or by phone at (800) 937-5449.
BROKERAGE
ALLOCATION AND OTHER PRACTICES
Though
we generally acquire and dispose of our investments in privately negotiated transactions, including in connection with private secondary
market transactions, we also use brokers in the normal course of our business. We paid $49,669, $248,145 and $184,642 in brokerage
commissions for the fiscal years ended December 31, 2022, 2021 and 2020, respectively, for an aggregate sum of $482,456. Subject
to policies established by our Board of Directors, our investment team is primarily responsible for the execution of the publicly traded
securities portion of our portfolio transactions and the allocation of brokerage commissions. We do not expect to execute transactions
through any particular broker or dealer, but will seek to obtain the best net results for us, taking into account such factors as price
(including the applicable brokerage commission or dealer spread), size of order, difficulty of execution, and operational facilities
of the firm and the firm’s risk and skill in positioning blocks of securities. While we will generally seek reasonably competitive
trade execution costs, we will not necessarily pay the lowest spread or commission available. Subject to applicable legal requirements,
we may select a broker based partly upon brokerage or research services provided to us. In return for such services, we may pay a higher
commission than other brokers would charge if we determine in good faith that such commission is reasonable in relation to the services
provided.
LEGAL
MATTERS
Certain
legal matters in connection with the securities offered hereby will be passed upon for us by Eversheds Sutherland (US) LLP, Washington,
D.C. Certain legal matters in connection with any offering pursuant to this prospectus, will be passed upon for the underwriters, if
any, by counsel named in the applicable prospectus supplement.
INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM
The
audited consolidated financial statements for the years ended December 31, 2022, 2021, and 2020 of SuRo Capital Corp. and subsidiaries
incorporated by reference in this prospectus and elsewhere in the registration statement have been so included in reliance upon the report
of Marcum LLP, independent registered public accountants, as stated in their report incorporated by reference.
The
senior securities table as of December 31, 2022, 2021, 2020, and 2019 of SuRo Capital Corp. and subsidiaries included in this
prospectus and elsewhere in the registration statement have been so included in reliance upon the report of Marcum LLP, independent
registered public accountants, as stated in their report appearing herein. The senior securities table as of December 31, 2018 of
SuRo Capital Corp. and subsidiaries included in this prospectus and elsewhere in the registration statement have been so included in
reliance upon the report of the Company’s former independent registered public accounting firm, as stated in their report
incorporated by reference herein.
Marcum
LLP’s principal business address is 1 Montgomery Street, Suite 1700, San Francisco, California 94104.
INCORPORATION
OF CERTAIN INFORMATION BY REFERENCE
This
prospectus is part of a registration statement that we have filed with the SEC. Pursuant to the Small Business Credit Availability Act,
we are allowed to “incorporate by reference” the information that we file with the SEC, which means that we can disclose
important information to you by referring you to those documents. The information incorporated by reference is considered to comprise
a part of this prospectus from the date we file that document. Any reports filed by us with the SEC subsequent to the date of this prospectus
and before the date that any offering of any securities by means of this prospectus and any accompanying prospectus supplement is terminated
will automatically update and, where applicable, supersede any information contained in this prospectus or incorporated by reference
in this prospectus.
We
incorporate by reference into this prospectus our filings listed below and any future filings that we may file with the SEC under Section
13(a), 13(c), 14 or 15(d) of the Exchange Act, subsequent to the date of this prospectus until all of the securities offered by this
prospectus and any accompanying prospectus supplement have been sold or we otherwise terminate the offering of these securities; provided,
however, that information “furnished” under Item 2.02 or Item 7.01 of Form 8-K or other information “furnished”
to the SEC which is not deemed filed is not incorporated by reference in this prospectus and any accompanying prospectus supplement.
Information that we file with the SEC subsequent to the date of this prospectus will automatically update and may supersede information
in this prospectus, any accompanying prospectus supplement and information previously filed with the SEC.
This
prospectus and any accompanying prospectus supplement incorporate by reference the documents set forth below that have previously been
filed with the SEC:
|
● |
Annual
Report on Form
10-K for the fiscal year ended December 31, 2022 filed with the SEC on March 16, 2023, and Annual Report on Form 10-K for
the fiscal year ended December 31, 2017 filed with the SEC on March 16, 2018; |
|
● |
Quarterly
Report on Form
10-Q for the three months ended March 31, 2023, filed with the SEC on May 10, 2023; |
|
● |
Current
Reports on Form 8-K (other than information furnished rather than filed in accordance with SEC rules) filed on January
17, 2023, April
10, 2023, April
20, 2023, and May 31, 2023; |
|
● |
Our
Definitive Proxy Statement on Schedule
14A, filed with the SEC on April 20, 2023 (to the extent incorporated by reference into Part III of our Annual Report on Form
10-K for the fiscal year ended December 31, 2022); and |
|
● |
The
description of our common stock contained in Exhibit 4.5 of our Annual Report on Form 10-K for the year ended December 31, 2022,
which updated the description thereof in our Registration Statement on Form 8-A (File No. 001-35156), as filed with the SEC on April
27, 2011, including any amendment or report filed for the purpose of updating such description prior to the termination of the offering
of the common stock registered hereby. |
To
obtain copies of these filings, see “Available Information” in this prospectus, or you may request a copy of these filings
(other than exhibits, unless the exhibits are specifically incorporated by reference into these documents) at no cost by writing or calling
the following address and telephone number:
SuRo
Capital Corp.
640
Fifth Avenue, 12th Floor
New
York, NY 10019
(212)
931-6331
You
should rely only on the information incorporated by reference or provided in this prospectus or any prospectus supplement. We have not
authorized anyone to provide you with different or additional information, and you should not rely on such information if you receive
it. We are not making an offer of or soliciting an offer to buy any securities in any state or other jurisdiction where such offer or
sale is not permitted. You should not assume that the information in this prospectus or in the documents incorporated by reference is
accurate as of any date other than the date on the front of this prospectus or those documents.
AVAILABLE
INFORMATION
This
prospectus is part of a registration statement on Form N-2 we filed with the SEC under the Securities Act. This prospectus does not contain
all of the information set forth in the registration statement, some of which is contained in exhibits to the registration statement
as permitted by the rules and regulations of the SEC. For further information with respect to us and the securities we are offering under
this prospectus, we refer you to the registration statement, including the exhibits filed as a part of the registration statement. Statements
contained in this prospectus concerning the contents of any contract or any other document are not necessarily complete. If a contract
or other document has been filed as an exhibit to the registration statement, please see the copy of the contract or document that has
been filed. Each statement in this prospectus relating to a contract or document filed as an exhibit is qualified in all respects by
the filed exhibit.
We
are required to file with or submit to the SEC annual, quarterly and current reports, proxy statements and other information meeting
the informational requirements of the Exchange Act. The SEC maintains a website that contains reports, proxy and information statements
and other information filed electronically by us with the SEC, which are available free of charge on the SEC’s website at http://www.sec.gov.
This information will also be available free of charge by contacting us at 640 Fifth Avenue, 12th Floor, New York, NY 10019, by telephone
at (212) 931-6331, or on our website at http://www.surocap.com. Information contained on our website or on the SEC’s web
site about us is not incorporated into this prospectus and you should not consider information contained on our website or on the SEC’s
website to be part of this prospectus.
![](https://www.sec.gov/Archives/edgar/data/1509470/000149315223027144/formn-2_001.jpg)
$400,000,000
SuRo
Capital Corp.
Common
Stock
Preferred
Stock
Subscription
Rights
Debt
Securities
Warrants
PROSPECTUS
,
2023
PART
C — OTHER INFORMATION
ITEM
25. FINANCIAL STATEMENTS AND EXHIBITS
1.
Financial Statements
The
audited consolidated financial statements of SuRo Capital Corp. and subsidiaries as of the years ended December 31, 2022, 2021, and 2020
have been incorporated by reference in this registration statement in Part A of this Registration Statement in reliance on the report
of Marcum LLP, an independent registered public accounting firm, given on the authority of said firm as experts in auditing and accounting.
2.
Exhibits
Exhibit
Number |
|
Description |
a. |
|
Articles
of Amendment(1) |
|
|
|
b. |
|
Second
Amended and Restated Bylaws(1) |
|
|
|
d.1 |
|
Form
of Common Stock Certificate(2) |
|
|
|
d.2 |
|
Base
Indenture, dated March 28, 2018, by and between the Registrant and U.S. Bank National Association, as trustee(3) |
|
|
|
d.3 |
|
Second
Supplemental Indenture, dated December 17, 2021, relating to the 6.00% Notes due 2026, by and between the Registrant and U.S. Bank
National Association, as trustee(4) |
|
|
|
d.4 |
|
Form
of 6.00% Notes due 2023 (incorporated by reference to exhibit d.3)(4) |
|
|
|
d.5 |
|
Statement of Eligibility of Trustee on Form T-1(17) |
|
|
|
e. |
|
Dividend
Reinvestment Plan(5) |
|
|
|
h. |
|
Form
of Underwriting Agreement(6) |
|
|
|
i.1 |
|
SuRo
Capital Corp. Amended and Restated 2019 Equity Incentive Plan(7) |
|
|
|
i.2 |
|
Form
of SuRo Capital Corp. Restricted Stock Agreement (Non-Employee Directors)(7) |
|
|
|
i.3 |
|
Form
of SuRo Capital Corp. Restricted Stock Agreement (Employees and Officers)(7) |
|
|
|
i.4 |
|
Form
of SuRo Capital Corp. Non-Qualified Stock Option Award(7) |
|
|
|
j. |
|
Custody
Agreement, dated April 19, 2023, by and between the Registrant and Western Alliance Trust Company, N.A., as custodian(8) |
|
|
|
k.1 |
|
Form
of Indemnification Agreement by and between Registrant and each of its directors(5) |
|
|
|
k.2 |
|
Second
Amended and Restated Employment Agreement, dated April 26, 2021, by and between SuRo Capital Corp. and Mark D. Klein(9) |
|
|
|
k.3 |
|
Second
Amended and Restated Employment Agreement, dated April 26, 2021, by and between SuRo Capital Corp. and Allison Green(9) |
|
|
|
k.4 |
|
Amendment
No. 1 to the Second Amended and Restated Employment Agreement, dated March 10, 2022, by and between SuRo Capital Corp. and Allison
Green(10) |
|
|
|
k.5 |
|
At-the-Market
Sales Agreement dated as of July 29, 2020, by and among SuRo Capital Corp., BTIG LLC, JMP Securities LLC, and Ladenburg Thalmann
& Co., Inc.(11) |
(1)
|
Previously
filed in connection with the Registrant’s Current Report on Form 8-K (File No. 814-00852) filed on June 16, 2020, and incorporated
by reference herein. |
(2) |
Previously
filed in connection with Pre-Effective Amendment No. 3 to the Registrant’s Registration Statement on Form N-2 (File No. 333-175655),
filed on September 20, 2011, and incorporated by reference herein. |
(3)
|
Previously
filed in connection with the Registrant’s Registration Statement on Form N-2 (File No. 333-239681) filed on July 2, 2020, and
incorporated by reference herein. |
(4) |
Previously
filed in connection with the Registrant’s Current Report on Form 8-K (File No. 814-00852) filed on December 17, 2021, and incorporated
by reference herein. |
(5) |
Previously
filed in connection with Pre-Effective Amendment No. 2 to the Registrant’s Registration Statement on Form N-2 (File No. 333-171578)
filed on March 30, 2011, and incorporated by reference herein. |
(6) |
Previously
filed in connection with Pre-Effective Amendment No. 1 to the Registrant’s Registration Statement on Form N-2 (File No. 333-180416),
filed on May 7, 2012, and incorporated by reference herein. |
(7) |
Previously
filed in connection with the Registrant’s Registration Statement on Form S-8 (File No. 333-239662) filed on July 2, 2020, and
incorporated by reference herein. |
(8) |
Previously
filed in connection with the Registrant’s Current Report on Form 8-K (File No. 814-00852) filed on April 19, 2023, and incorporated
by reference herein. |
(9) |
Previously
filed in connection with the Registrant’s Quarterly Report on Form 10-Q (File No. 814-00852) filed on May 6, 2021, and incorporated
by reference herein. |
(10) |
Previously
filed in connection with the Registrant’s Annual Report on Form 10-K (File No. 814-00852) filed on March 11, 2022, and incorporated
by reference herein. |
(11) |
Previously
filed in connection with the Registrant’s Current Report on Form 8-K (File No. 814-00852) filed on August 3, 2020, and incorporated
by reference herein. |
(12) |
Previously
filed in connection with the Registrant’s Current Report on Form 8-K (File No. 814-00852) filed on September 23, 2020, and
incorporated by reference herein. |
(13) |
Previously
filed in connection with the Registrant’s Annual Report on Form 10-K (File No. 814-00852) filed on March 16, 2023, and incorporated
by reference herein. |
(14) |
Previously
filed in connection with the Registrant’s Annual Report on Form 10-K (File No. 814-00852), filed on March 13, 2020, and incorporated
by reference herein. |
(15) |
Previously
filed in connection with Pre-Effective Amendment No. 2 to the Registrant’s Registration Statement on Form N-2 (File No. 333-191307)
filed on January 17, 2014, and incorporated by reference herein. |
(16)
|
Previously
filed in connection with the Registrant’s Annual Report on Form 10-Q (File No. 814-00852) filed on May 8, 2020, and incorporated
by reference herein. |
(17) |
Previously filed in connection with the Registrant's
Registration Statement on Form N-2 (File No. 333-272578) filed on June 9, 2023, and incorporated by reference herein. |
ITEM
26. MARKETING ARRANGEMENTS
The
information contained under the heading “Plan of Distribution” in Part A of this Registration Statement is incorporated herein
by reference and any information concerning any underwriters for a particular offering will be contained in the prospectus supplement
related to that offering.
ITEM
27. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
SEC registration
fee | |
$ | 13,908 | |
FINRA filing fee | |
$ | 19,432 | * |
Nasdaq Global Select Market | |
$ | 30,000 | * |
Printing and postage | |
$ | 75,000 | * |
Legal fees and expenses | |
$ | 500,000 | * |
Accounting fees and expenses | |
$ | 100,000 | * |
Sales
and marketing | |
$ | 200,000 | * |
Total | |
$ | 938,340 | * |
*
Estimated.
ITEM
28. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL
The
following list sets forth each of the Company’s consolidated subsidiaries, the state or country under whose laws the subsidiary
is organized, and the percentage of voting securities or membership interests owned by the Company in such subsidiary:
GSV Capital Lending, LLC (Delaware) | |
| 100 | % |
GSVC AE Holdings, Inc. (Delaware) | |
| 100 | % |
GSVC AV Holdings, Inc. (Delaware) | |
| 100 | % |
GSVC SW Holdings, Inc. (Delaware) | |
| 100 | % |
GSVC SVDS Holdings, Inc. (Delaware) | |
| 100 | % |
SuRo Capital Sports, LLC (Delaware) | |
| 100 | % |
The principal
investment strategies of GSVC AE Holdings, Inc., GSVC AV Holdings, Inc., GSVC SW Holdings, Inc., and GSVC SVDS Holdings, Inc. are substantially
similar to those of the Company. The principal investment strategies of GSV Capital Lending, LLC are substantially similar to those of
the Company, with exception for that entity’s formative purpose to originate portfolio loan investments within the state of California
pursuant to its California lending license. The principal investment strategies of SuRo Capital Sports, LLC are substantially similar
to those of the Company, with exception for that entity’s formative purpose to originate investments specifically centered in the
sports betting market. The principal investment risks for each of the Company’s subsidiaries are substantially similar to those
of the Company.
Currently,
each of the Company’s subsidiaries is consolidated with the Company for financial reporting purposes. The Company complies with
the provisions of the 1940 Act governing capital structure and leverage (Section 18 and Section 61) on an aggregate basis such that the
Company treats the debt of any such subsidiary as the Company’s own for purposes of Section 18 and Section 61. Additionally, the
Company and its subsidiaries comply with provisions of the 1940 Act relating to affiliated transactions and custody.
In
addition, the Company may be deemed to control certain portfolio companies. See “Portfolio Companies” in Part A of
this Registration Statement.
ITEM
29. NUMBER OF HOLDERS OF SECURITIES
The following table sets forth
the number of registered shareholders of the Company’s common stock at August 7, 2023 (including Cede & Co.):
Title
of Class | |
| Number
of Registered
Shareholders | |
Common Stock, par value $0.01 per share | |
| 7 | |
ITEM
30. INDEMNIFICATION
Directors
and Officers
Reference
is made to Section 2-418 of the Maryland General Corporation Law (the “MGCL”), Article VII of the Registrant’s Articles
of Amendment and Restatement and Article XI of the Registrant’s Bylaws.
The
MGCL permits a Maryland corporation to include in its charter a provision limiting the liability of its directors and officers to the
corporation and its stockholders for money damages except for liability resulting from (a) actual receipt of an improper benefit or profit
in money, property or services or (b) active and deliberate dishonesty established by a final judgment as being material to the cause
of action. The Registrant’s charter contains such a provision which eliminates directors’ and officers’ liability to
the maximum extent permitted by the MGCL, subject to the requirements of the Investment Company Act of 1940, as amended (the “1940
Act”).
The
Registrant’s charter authorizes the Registrant, to the maximum extent permitted by the MGCL and subject to the requirements of
the 1940 Act, to indemnify any present or former director or officer or any individual who, while serving as the Registrant’s director
or officer and at the Registrant’s request, serves or has served another corporation, real estate investment trust, partnership,
joint venture, trust, employee benefit plan or other enterprise as a director, officer, partner or trustee, from and against any claim
or liability to which that person may become subject or which that person may incur by reason of his or her service in any such capacity
and to pay or reimburse their reasonable expenses in advance of final disposition of a proceeding. The Registrant’s bylaws obligate
the Registrant, to the maximum extent permitted by the MGCL and subject to the requirements of the 1940 Act, to indemnify any present
or former director or officer or any individual who, while serving as the Registrant’s director or officer and at the Registrant’s
request, serves or has served another corporation, real estate investment trust, partnership, joint venture, trust, employee benefit
plan or other enterprise as a director, officer, partner or trustee and who is made, or threatened to be made, a party to the proceeding
by reason of his or her service in that capacity from and against any claim or liability to which that person may become subject or which
that person may incur by reason of his or her service in any such capacity and to pay or reimburse his or her reasonable expenses in
advance of final disposition of a proceeding. The charter and bylaws also permit the Registrant to indemnify and advance expenses to
any person who served a predecessor of the Registrant in any of the capacities described above and any of the Registrant’s employees
or agents or any employees or agents of the Registrant’s predecessor. In accordance with the 1940 Act, the Registrant will not
indemnify any person for any liability to which such person would be subject by reason of such person’s willful misfeasance, bad
faith, gross negligence or reckless disregard of the duties involved in the conduct of his or her office.
The
MGCL requires a corporation (unless its charter provides otherwise, which the Registrant’s charter does not) to indemnify a director
or officer who has been successful in the defense of any proceeding to which he or she is made, or threatened to be made, a party by
reason of his or her service in that capacity. The MGCL permits a corporation to indemnify its present and former directors and officers,
among others, against judgments, penalties, fines, settlements and reasonable expenses actually incurred by them in connection with any
proceeding to which they may be made, or threatened to be made, a party by reason of their service in those or other capacities unless
it is established that (a) the act or omission of the director or officer was material to the matter giving rise to the proceeding and
(1) was committed in bad faith or (2) was the result of active and deliberate dishonesty, (b) the director or officer actually received
an improper personal benefit in money, property or services or (c) in the case of any criminal proceeding, the director or officer had
reasonable cause to believe that the act or omission was unlawful. However, under the MGCL, a Maryland corporation may not indemnify
for an adverse judgment in a suit by or in the right of the corporation or for a judgment of liability on the basis that a personal benefit
was improperly received unless, in either case, a court orders indemnification, and then only for expenses. In addition, the MGCL permits
a corporation to advance reasonable expenses to a director or officer in advance of final disposition of a proceeding upon the corporation’s
receipt of (a) a written affirmation by the director or officer of his or her good faith belief that he or she has met the standard of
conduct necessary for indemnification by the corporation and (b) a written undertaking by him or her or on his or her behalf to repay
the amount paid or reimbursed by the corporation if it is ultimately determined that the standard of conduct was not met.
ITEM
31. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER
Not
Applicable.
ITEM
32. LOCATION OF ACCOUNTS AND RECORDS
All
accounts, books, and other documents required to be maintained by Section 31(a) of the 1940 Act, and the rules thereunder are maintained
at the offices of:
(1) |
the
Registrant, SuRo Capital Corp., 640 Fifth Avenue, 12th Floor, New York, NY 10019; |
(2) |
the
Transfer Agent, American Stock Transfer & Trust Company, 6201 15th Avenue, Brooklyn, New York 11219 or by phone at (800) 937-5449; |
(3) |
the
Custodian, Western Alliance Trust Company, National Association, One East Washington Street, Suite 1400, Phoenix, AZ 85004; and |
(4) |
the
sub-administrator, SS&C Technologies, 580 California Street, Suite 200, San Francisco, CA 94104. |
ITEM
33. MANAGEMENT SERVICES
Not
applicable.
ITEM
34. UNDERTAKINGS
(3) |
Registrant
hereby undertakes: |
(a) |
to
file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement: |
(i) |
to
include any prospectus required by Section 10(a)(3) of the Securities Act of 1933, as amended (the “Securities Act”); |
|
|
(ii) |
to
reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set
forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if
the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end
of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b)
if, in the aggregate, the changes in volume and price represent no more than 20% change in the maximum aggregate offering price set
forth in the “Calculation of Registration Fee” table in the effective registration statement; and |
|
|
(iii) |
to
include any material information with respect to the plan of distribution not previously disclosed in the registration statement
or any material change to such information in the registration statement; |
provided,
however, that paragraphs 3(a)(i), (ii), and (iii) of this section do not apply if the information required to be included in a post-effective
amendment by those paragraphs is contained in reports filed with or furnished to the Commission by the Registrant pursuant to Section
13 or Section 15(d) of the Exchange Act that are incorporated by reference into the registration statement, or is contained in a form
of prospectus filed pursuant to Rule 424(b) that is part of the registration statement.
(b) |
that,
for the purpose of determining any liability under the Securities Act, each such post-effective amendment shall be deemed to be a
new registration statement relating to the securities offered therein, and the offering of those securities at the time shall be
deemed to be the initial bona fide offering thereof; |
|
|
(c) |
to
remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the
termination of the offering; |
|
|
(d) |
that,
for the purpose of determining liability under the Securities Act to any purchaser: |
(i)
if the Registrant is relying on Rule 430B:
(A)
Each prospectus filed by the Registrant pursuant to Rule 424(b)(3) shall be deemed to be part of the registration statement as of the
date the filed prospectus was deemed part of and included in the registration statement; and
(B)
Each prospectus required to be filed pursuant to Rule 424(b)(2), (b)(5), or (b)(7) as part of a registration statement in reliance on
Rule 430B relating to an offering made pursuant to Rule 415(a)(1)(i), (x), or (xi) for the purpose of providing the information required
by Section 10(a) of the Securities Act shall be deemed to be part of and included in the registration statement as of the earlier of
the date such form of prospectus is first used after effectiveness or the date of the first contract of sale of securities in the offering
described in the prospectus. As provided in Rule 430B, for liability purposes of the issuer and any person that is at that date an underwriter,
such date shall be deemed to be a new effective date of the registration statement relating to the securities in the registration statement
to which that prospectus relates, and the offering of such securities at that time shall be deemed to be the initial bona fide offering
thereof; provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement
or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of
the registration statement will, as to a purchaser with a time of contract of sale prior to such effective date, supersede or modify
any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such
document immediately prior to such effective date; or
(ii)
if the Registrant is subject to Rule 430C: each prospectus filed pursuant to Rule 424(b) under the Securities Act as part of a registration
statement relating to an offering, other than registration statements relying on Rule 430B or other than prospectuses filed in reliance
on Rule 430A under the Securities Act, shall be deemed to be part of and included in the registration statement as of the date it is
first used after effectiveness; Provided, however, that no statement made in a registration statement or prospectus that is part
of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement
or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such first
use, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement
or made in any such document immediately prior to such date of first use;
(e) |
that
for the purpose of determining liability of the Registrant under the Securities Act to any
purchaser in the initial distribution of securities:
The
undersigned Registrant undertakes that in a primary offering of securities of the undersigned Registrant pursuant to this registration
statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold
to such purchaser by means of any of the following communications, the undersigned Registrant will be a seller to the purchaser and
will be considered to offer or sell such securities to the purchaser: |
(i) |
any
preliminary prospectus or prospectus of the undersigned Registrant relating to the offering required to be filed pursuant to Rule
424 under the Securities Act; |
|
|
(ii) |
any
free writing prospectus relating to the offering prepared by or on behalf of the undersigned Registrant or used or referred to by
the undersigned Registrants; |
|
|
(iii) |
the
portion of any other free writing prospectus or advertisement pursuant to Rule 482 under the Securities Act relating to the offering
containing material information about the undersigned Registrant or its securities provided by or on behalf of the undersigned Registrant;
and |
|
|
(iv) |
any
other communication that is an offer in the offering made by the undersigned Registrant to the purchaser. |
(5) |
The
Registrant hereby undertakes that, for purposes of determining any liability under the Securities Act, each filing of the Registrant’s
annual report pursuant to Section 13(a) or 15(d) of the Exchange Act that is incorporated by reference in the registration statement
shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof. |
|
|
(6) |
Insofar
as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons
of the Registrant, the Registrant has been advised that in the opinion of the Commission such indemnification is against public policy
as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities
(other than the payment by the Registrant of expenses incurred or paid by a director, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection
with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy
as expressed in the Securities Act and will be governed by the final adjudication of such issue. |
|
|
(7) |
The
Registrant undertakes to send by first class mail or other means designed to ensure equally prompt delivery within two business days
of receipt of a written or oral request, any prospectus or Statement of Additional Information. |
SIGNATURES
Pursuant
to the requirements of the Securities Act, the Registrant has duly caused this Registration Statement on Form N-2 to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of New York, in the State of New York, on the 8th day of August,
2023.
SURO
CAPITAL CORP.
By: |
/s/
Mark D. Klein |
|
|
Mark
D. Klein |
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|
Chief
Executive Officer and President |
|
Pursuant
to the requirements of the Securities Act, this Pre-Effective Amendment No. 1 to the Registration Statement on Form N-2 has been
signed by the following persons, in the capacities and on the dates indicated below.
Signature |
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Title |
|
Date |
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|
/s/
Mark D. Klein |
|
Chief
Executive Officer, President and Director (Principal Executive Officer) |
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August
8, 2023 |
Mark
D. Klein |
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* |
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Chief
Financial Officer, Chief Compliance Officer, Treasurer and |
|
August
8, 2023 |
Allison
Green |
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Corporate
Secretary (Principal Financial and Accounting Officer) |
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* |
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Director
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August 8, 2023 |
Leonard
A. Potter |
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* |
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Director
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August
8, 2023 |
Ronald
M. Lott |
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* |
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Director
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August
8, 2023 |
Marc
Mazur |
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* |
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Director
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August
8, 2023 |
Lisa
Westley |
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|
* Signed by Mark D. Klein pursuant to a power
of attorney signed by each individual and filed with this Registration Statement on June 9, 2023.
Exhibit
(l)
[Letterhead
of Eversheds Sutherland (US) LLP]
August 8, 2023
SuRo
Capital Corp.
640
Fifth Avenue, 12th Floor
New
York, New York 10019
|
Re: |
SuRo
Capital Corp. |
|
|
Registration
Statement on Form N-2 |
Ladies
and Gentlemen:
We
have acted as counsel to SuRo Capital Corp., a Maryland corporation (the “Company”), in connection with
the preparation and filing by the Company with the Securities and Exchange Commission (the “Commission”)
of a registration statement on Form N-2 on June 9, 2023 (as amended on August 8, 2023, the “Registration
Statement”) under the Securities Act of 1933, as amended (the “Securities Act”), with
respect to the offer, issuance and sale from time to time pursuant to Rule 415 under the Securities Act of up to $400,000,000 in
aggregate offering amount of the following securities (collectively, the “Securities”):
|
(a) |
shares
of the Company’s common stock, par value $0.01 per share (the “Common Stock”), including shares to
be issued upon exercise of the Rights (as defined below) and/or the Warrants (as defined below) (the “Common Shares”); |
|
|
|
|
(b) |
shares
of the Company’s preferred stock, par value $0.01 per share (the “Preferred Stock”), including shares
to be issued upon exercise of the Warrants (the “Preferred Shares”); |
|
|
|
|
(c) |
subscription
rights to purchase Common Stock (“Rights”); |
|
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|
|
(d) |
debt
securities of the Company, including debt securities to be issued upon exercise of the Warrants (“Debt Securities”);
and |
|
|
|
|
(e) |
warrants
representing rights to purchase Common Stock, Preferred Stock or Debt Securities (“Warrants”). |
The
Registration Statement provides that the Securities may be issued from time to time in amounts, at prices, and on terms to be set forth
in one or more supplements (each, a “Prospectus Supplement”) to the final prospectus included in the Registration
Statement at the time it becomes effective (the “Prospectus”).
The
Debt Securities are to be issued in one or more series under (a) the base indenture, dated March 28, 2018 (the “Base
Indenture”) entered into by and between the Company and U.S. Bank Trust Company, National Association (as successor
in interest to U.S. Bank National Association), as trustee (the “Trustee”) and (b) one or more supplemental
indentures containing the specific terms and conditions for each issuance of the Debt Securities (each a “Supplemental Indenture”
and together with the Base Indenture, the “Indenture”). The Rights are to be issued under rights agreements
(each a “Rights Agreement”) to be entered into between the Company and the purchasers thereof or a rights agent
to be identified in the applicable rights agreement. The Warrants are to be issued under warrant agreements (each a “Warrant
Agreement”) to be entered into by and between the Company and the purchasers thereof or a warrant agent to be identified
in the applicable agreement (the “Warrant Agent”).
As
counsel to the Company, we have participated in the preparation of the Registration Statement and have examined the originals or copies,
certified or otherwise identified to our satisfaction as being true copies, of the following:
|
(i) |
the
Articles of Incorporation of the Company (the “Charter”), certified as of a recent date by the State Department
of Assessments and Taxation of Maryland (the “SDAT”); |
|
|
|
|
(ii) |
the
Second Amended and Restated Bylaws of the Company, certified as of the date hereof by an officer of the Company (the “Bylaws”); |
|
|
|
|
(iii) |
the
Base Indenture; |
|
|
|
|
(iv) |
a
Certificate of Good Standing with respect to the Company issued by the SDAT as of a recent date (the “Certificate of
Good Standing”); and |
|
|
|
|
(v) |
the
resolutions of the board of directors of the Company (the “Board”) relating to, among other things, (a)
the authorization and approval of the preparation and filing of the Registration Statement, (b) the authorization of the issuance,
offer and sale of the Securities pursuant to the Registration Statement, and (c) the authorization, execution and delivery of the
Base Indenture, certified as of the date hereof by an officer of the Company (collectively, the “Resolutions”). |
With
respect to such examination and our opinions expressed herein, we have assumed, without any independent investigation or verification,
(i) the genuineness of all signatures on all documents submitted to us for examination, (ii) the legal capacity of all natural persons,
(iii) the authenticity of all documents submitted to us as originals, (iv) the conformity to original documents of all documents submitted
to us as conformed or reproduced copies and the authenticity of the originals of such copied documents, (v) that all certificates issued
by public officials or the officers of the Company have been properly issued, (vi) that each Supplemental Indenture, the Rights Agreements
and the Warrant Agreements will be governed by the laws of the State of New York and (vii) that the Indenture will be a valid and legally
binding obligation of all parties thereto (other than the Company). We also have assumed, without independent investigation or verification,
the accuracy and completeness of all corporate records made available to us by the Company.
As
to certain matters of fact relevant to the opinions in this opinion letter, we have relied upon certificates and/or representations of
officers of the Company. We also have relied upon certificates and confirmations of public officials (which we have assumed remain accurate
as of the date of this opinion). We have not independently established the facts, or in the case of certificates or confirmations of
public officials, the other statements, so relied upon.
The
opinions set forth below are limited to the effect of the Maryland General Corporation Law (the “MGCL”), and,
as to the Debt Securities, the Rights and the Warrants constituting valid and legally binding obligations of the Company, the laws of
the State of New York, and we express no opinion as to the applicability or effect of any other laws of Maryland or the laws of any other
jurisdictions. Without limiting the preceding sentence, we express no opinion as to any federal or state securities or broker-dealer
laws or regulations thereunder relating to the offer, issuance and sale of the Securities pursuant to the Registration Statement.
This
opinion letter has been prepared, and should be interpreted, in accordance with customary practice followed in the preparation of opinion
letters by lawyers who regularly give, and such customary practice followed by lawyers who on behalf of their clients regularly advise
opinion recipients regarding, opinion letters of this kind.
The
opinions expressed in paragraphs 3, 4 and 5 below are limited by (i) applicable bankruptcy, insolvency, reorganization, receivership,
moratorium, fraudulent conveyance, and other similar laws affecting the rights and remedies of creditors generally, (ii) general principles
of equity (including, without limitation, the availability of specific performance or injunctive relief and the application of concepts
of materiality, reasonableness, good faith and fair dealing), regardless of whether considered in a proceeding at law or in equity and
(iii) federal and state securities laws or principles of public policy that may limit enforcement of rights to indemnity, contribution
and exculpation.
On
the basis of and subject to the foregoing, and in reliance thereon, and subject to the assumptions, limitations and qualifications set
forth in this opinion letter, and further assuming that:
|
(i) |
the
Articles Supplementary classifying and designating the number of shares and the terms of any class or series of the Preferred Stock
to be issued by the Company (the “Articles Supplementary”) will have been duly authorized and determined
or otherwise established by proper action of the Board or a duly authorized committee thereof in accordance with the Charter and
Bylaws and will have been filed with and accepted for record by the SDAT prior to the issuance of any such Preferred Shares, and
the Articles Supplementary complies with the applicable requirements with respect thereto under the MGCL, the Charter and the Bylaws; |
|
|
|
|
(ii) |
the
Base Indenture and each Supplemental Indenture will have been duly authorized, executed and delivered by each of the Company and
the Trustee in accordance with the terms of the Base Indenture; |
|
|
|
|
(iii) |
each
Supplemental Indenture will constitute a valid and legally binding obligation of each of the Company and the Trustee; |
|
|
|
|
(iv) |
each
Warrant Agreement, including any amendments or supplements thereto, and the Warrants issued thereunder will have been duly authorized,
executed and delivered by each of the parties thereto in accordance with the terms of such Warrant Agreement; |
|
|
|
|
(v) |
each
Warrant Agreement will constitute a valid and legally binding obligation of each of the parties thereto; |
|
|
|
|
(vi) |
each
Rights Agreement, including any amendments or supplements thereto, and the Rights issued thereunder will have been duly authorized,
executed and delivered by each of the Company and the other parties thereto in accordance with the terms of the Rights Agreement; |
|
|
|
|
(vii) |
each
Rights Agreement will constitute a valid and legally binding obligation of each of the Company and the other parties thereto; |
|
|
|
|
(viii) |
the
issuance, offer and sale of the Securities from time to time and the final terms of such issuance, offer and sale, including those
relating to price and amount of the Securities to be issued, offered and sold, and certain terms thereof, will have been duly authorized
and determined or otherwise established by proper action of the Board or a duly authorized committee thereof in accordance with the
Charter, if applicable, the Articles Supplementary, if applicable, the Base Indenture, if applicable, the Supplemental Indenture,
if applicable, the Warrant Agreement, if applicable, the Rights Agreement, if applicable, and the Bylaws, if applicable, and are
consistent with the terms and conditions for such issuance, offer and sale set forth in the Resolutions and the descriptions thereof
in the Registration Statement, the Prospectus and the applicable Prospectus Supplement (such authorization or action being hereinafter
referred to as the “Corporate Proceedings”); |
|
|
|
|
(ix) |
the
terms of the Debt Securities, the Warrants and the Rights as established and the issuance thereof (a) will not violate any applicable
law, (b) will not violate or result in a default under or breach of any agreement, instrument or other document binding upon the
Company, and (c) will comply with all requirements or restrictions imposed by any court or governmental body having jurisdiction
over the Company; |
|
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|
(x) |
none
of the Debt Securities, the Warrants or the Rights will include any provision that is unenforceable against the Company; |
|
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|
(xi) |
each
issuance of the Debt Securities will have been duly executed by the Company and duly authenticated by the Trustee in accordance with
the Base Indenture, as supplemented by the applicable Supplemental Indenture, and delivered to, and the agreed consideration will
have been fully paid at the time of such delivery by, the purchasers thereof; |
|
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|
(xii) |
the
Warrants will have been duly executed by the Company and duly authenticated by the Warrant Agent in accordance with the Warrant Agreement,
and delivered to, and the agreed consideration will have been fully paid at the time of such delivery by, the purchasers thereof; |
|
(xiii) |
any
Common Shares, Preferred Shares or Warrants issued and sold pursuant to the Registration Statement, including upon the exercise of
any Securities convertible into or exercisable for Common Shares or Preferred Shares, will have been delivered to, and the agreed
consideration has been fully paid at the time of such delivery by, the purchasers thereof; |
|
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|
(xiv) |
upon
the issuance of any Common Shares or Preferred Shares by the Company pursuant to the Registration Statement, including upon the exercise
of any Securities convertible into or exercisable for Common Shares or Preferred Shares, the total number of shares of Common Stock
or Preferred Stock, as applicable, issued and outstanding will not exceed the total number of shares of Common Stock or Preferred
Stock, as applicable, that the Company is then authorized to issue under the Charter; |
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|
(xv) |
at
the time of issuance of the Debt Securities, after giving effect to the issuance of the Debt Securities, the Company will be in compliance
with Section 18(a)(1)(A) of the Investment Company Act of 1940, as amended, giving effect to Section 61(a)(1) thereof; and |
|
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(xvi) |
the
Certificate of Good Standing remains accurate, the Resolutions and the applicable Corporate Proceedings remain in effect, without
amendment, and the Registration Statement will have become effective under the Securities Act and remains effective at the time of
the issuance, offer and/or sale of the Securities, |
we
are of the opinion that:
|
1. |
Upon
completion of all Corporate Proceedings relating thereto, the issuance of the Common Shares by the Company will be duly authorized
and, when issued and paid for in accordance with the Registration Statement, the Prospectus, the applicable Prospectus Supplement,
the Resolutions and all Corporate Proceedings relating thereto, the Common Shares will be validly issued, fully paid and non-assessable. |
|
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|
2. |
Upon
completion of all Corporate Proceedings relating thereto, the issuance of the Preferred Shares will be duly authorized and, when
issued and paid for in accordance with the Registration Statement, the Prospectus, the applicable Prospectus Supplement, the Resolutions
and all Corporate Proceedings relating thereto, the Preferred Shares will be validly issued, fully paid and non-assessable. |
|
|
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|
3. |
Upon
completion of all Corporate Proceedings relating thereto, the issuance of the Rights will be duly authorized and when issued and
paid for in accordance with the applicable Rights Agreement, the Registration Statement, the Prospectus, the applicable Prospectus
Supplement, the Resolutions, and all Corporate Proceedings relating thereto, the Rights will constitute valid and legally binding
obligations of the Company under the law of the jurisdiction governing the Rights. |
|
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|
4. |
Upon
completion of all Corporate Proceedings relating thereto, the issuance of the Debt Securities will be duly authorized and, when issued
and paid for in accordance with the Base Indenture, the applicable Supplemental Indenture, the Registration Statement, the Prospectus,
the applicable Prospectus Supplement, the Resolutions and all Corporate Proceedings relating thereto, each issuance of the Debt Securities
will constitute valid and legally binding obligations of the Company. |
|
|
|
|
5. |
Upon
completion of all Corporate Proceedings relating thereto, the issuance of the Warrants will be duly authorized and, when issued and
paid for in accordance with the applicable Warrant Agreement, the Registration Statement, the Prospectus, the applicable Prospectus
Supplement, the Resolutions and all Corporate Proceedings relating thereto, the Warrants will constitute valid and legally binding
obligations of the Company under the law of the jurisdiction governing the Warrants. |
The
opinions expressed in this opinion letter are (i) strictly limited to the matters stated in this opinion letter, and without limiting
the foregoing, no other opinions are to be inferred and (ii) only as of the date of this opinion letter, and we are under no obligation,
and do not undertake, to advise the Company or any other person or entity either of any change of law or fact that occurs, or of any
fact that comes to our attention, after the date of this opinion letter, even though such change or such fact may affect the legal analysis
or a legal conclusion in this opinion letter.
We
hereby consent to the filing of this opinion letter as an exhibit to the Registration Statement and to the reference to our firm in the
“Legal Matters” section of the Registration Statement. We do not admit by giving this consent that we are in the category
of persons whose consent is required under Section 7 of the Securities Act.
|
Respectfully
submitted, |
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|
/s/
EVERSHEDS SUTHERLAND (US) LLP |
Exhibit
n.1
Independent
Registered Public Accounting Firm’s Consent
We
consent to the incorporation by reference in the Registration Statement of SuRo Capital Corp. on Amendment 1 of Form N-2 (File No. 333-272578)
of our report dated March 16, 2023, with respect to our audit of the consolidated financial statements as of December 31, 2022 and 2021,
and for each of the three years in the period ended December 31, 2022, which report is included in the Annual Report on Form 10-K of
SuRo Capital Corp. for the year ended December 31, 2022.
We
consent to the incorporation by reference in the Registration Statement of SuRo Capital Corp. on Amendment 1 of Form N-2 (File No. 333-272578)
of our report dated March 16, 2023, relating to the financial information set forth under the heading “Senior Securities”
in such Prospectus, which is part of this Registration Statement.
We
also consent to the references to us under the headings “Financial Highlights”, “Independent Registered Public Accounting
Firm”, “Financial Statements and Exhibits” and the “Senior Securities” table in such Prospectus.
/s/
Marcum llp |
|
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|
Marcum
llp |
|
San Francisco, California |
|
August 8, 2023 |
|
v3.23.2
N-2 - USD ($)
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1 Months Ended |
3 Months Ended |
Aug. 08, 2023 |
Aug. 07, 2023 |
Aug. 07, 2023 |
Jun. 30, 2023 |
Mar. 31, 2023 |
Dec. 31, 2022 |
Sep. 30, 2022 |
Jun. 30, 2022 |
Mar. 31, 2022 |
Dec. 31, 2021 |
Sep. 30, 2021 |
Jun. 30, 2021 |
Mar. 31, 2021 |
Cover [Abstract] |
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Entity Central Index Key |
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0001509470
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Amendment Flag |
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false
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Entity Inv Company Type |
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N-2
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Securities Act File Number |
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333-272578
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Document Type |
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N-2/A
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Document Registration Statement |
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true
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Pre-Effective Amendment |
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true
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Pre-Effective Amendment Number |
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1
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Post-Effective Amendment |
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false
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Entity Registrant Name |
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SURO
CAPITAL CORP.
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Entity Address, Address Line One |
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640
Fifth Avenue
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Entity Address, Address Line Two |
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12th Floor
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Entity Address, City or Town |
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New
York
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Entity Address, State or Province |
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NY
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Entity Address, Postal Zip Code |
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10019
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City Area Code |
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(212)
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Local Phone Number |
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931-6331
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Approximate Date of Commencement of Proposed Sale to Public |
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From time to time after the effective date of this Registration Statement.
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Dividend or Interest Reinvestment Plan Only |
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false
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Delayed or Continuous Offering |
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true
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Primary Shelf [Flag] |
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true
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Effective Upon Filing, 462(e) |
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false
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Additional Securities Effective, 413(b) |
|
false
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Effective when Declared, Section 8(c) |
|
false
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New Effective Date for Previous Filing |
|
false
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Additional Securities. 462(b) |
|
false
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No Substantive Changes, 462(c) |
|
false
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Exhibits Only, 462(d) |
|
false
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Registered Closed-End Fund [Flag] |
|
false
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Business Development Company [Flag] |
|
true
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Interval Fund [Flag] |
|
false
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Primary Shelf Qualified [Flag] |
|
true
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Entity Well-known Seasoned Issuer |
|
No
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Entity Emerging Growth Company |
|
false
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New CEF or BDC Registrant [Flag] |
|
false
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Fee Table [Abstract] |
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Shareholder Transaction Expenses [Table Text Block] |
|
Stockholder transaction
expenses: | |
| | |
Sales load (as a percentage of offering price) | |
| — | %(1) |
Offering expenses (as a percentage of offering price) | |
| — | %(2) |
Dividend reinvestment
plan expenses | |
| — | %(3) |
Total stockholder transaction expenses (as a percentage of offering price) | |
| — | %(4) |
|
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|
Sales Load [Percent] |
[1] |
0.00%
|
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|
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Dividend Reinvestment and Cash Purchase Fees |
[2] |
$ 0
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Other Transaction Expenses [Abstract] |
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Other Transaction Expenses [Percent] |
[3] |
0.00%
|
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|
Annual Expenses [Table Text Block] |
|
Annual
expenses (as a percentage of net assets attributable to common stock):(8) | |
| | |
Operating expenses | |
| 6.81 | %(5) |
Interest payments on borrowed funds | |
| 2.20 | %(6) |
Other expenses | |
| 0.88 | %(7) |
Total
annual expenses | |
| 9.89 | % |
|
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Management Fees [Percent] |
[4] |
6.81%
|
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Interest Expenses on Borrowings [Percent] |
[5] |
2.20%
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Other Annual Expenses [Abstract] |
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Other Annual Expenses [Percent] |
[6] |
0.88%
|
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|
Total Annual Expenses [Percent] |
|
9.89%
|
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Expense Example [Table Text Block] |
|
The
following example demonstrates the projected dollar amount of total cumulative expenses that would be incurred over various periods with
respect to a hypothetical investment in our common stock. In calculating the following expense amounts, we have assumed that our annual
operating expenses would remain at the levels set forth in the table above. See footnote 6 above for additional information regarding
certain assumptions regarding our level of leverage.
|
|
1
Year |
|
|
3
Years |
|
|
5
Years |
|
|
10
Years |
|
You
would pay the following expenses on a $1,000 investment, assuming a 5% annual return |
|
$ |
96 |
|
|
$ |
276 |
|
|
$ |
421 |
|
|
$ |
707 |
|
The
example and the expenses in the tables above should not be considered a representation of our future expenses, and actual expenses may
be greater or less than those shown. While the example assumes, as required by the SEC, a 5.0% annual return, our performance will vary
and may result in a return greater or less than 5.0%. In addition, while the example assumes reinvestment of all dividends at net asset
value participants in our DRIP will receive a number of shares of our common stock, determined by dividing the total dollar amount of
the dividend payable to a participant by the market price per share of our common stock at the close of trading on the dividend payment
date, which may be at, above or below net asset value. See “Dividend Reinvestment Plan” in this prospectus for additional
information regarding our DRIP.
|
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|
Expense Example, Year 01 |
|
$ 96
|
|
|
|
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|
Expense Example, Years 1 to 3 |
|
276
|
|
|
|
|
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|
|
Expense Example, Years 1 to 5 |
|
421
|
|
|
|
|
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|
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|
|
Expense Example, Years 1 to 10 |
|
$ 707
|
|
|
|
|
|
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|
|
Purpose of Fee Table , Note [Text Block] |
|
The
following table is intended to assist you in understanding the costs and expenses that an investor in an offering will bear directly
or indirectly. We caution you that some of the percentages indicated in the table below are estimates and may vary. The following table
should not be considered a representation of our future expenses. Actual expenses may be greater or less than shown. Except where the
context suggests otherwise, whenever this prospectus contains a reference to fees or expenses paid by “us” or “SuRo
Capital,” or that “we” will pay fees or expenses, you will indirectly bear such fees or expenses as an investor in
SuRo Capital Corp., however, your responsibility for such fees or expenses is limited to your investment in SuRo Capital Corp. The fee
table and example below include all fees and expenses of our consolidated subsidiaries.
|
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|
Basis of Transaction Fees, Note [Text Block] |
|
as a percentage of offering price
|
|
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|
|
Other Transaction Fees Basis, Maximum |
|
$ 15
|
|
|
|
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|
Other Expenses, Note [Text Block] |
|
Other
expenses,” which we calculate to equal $2.0 million, are based upon estimates for the twelve months ending March 31, 2024.
|
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|
Financial Highlights [Abstract] |
|
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|
Senior Securities, Note [Text Block] |
|
SENIOR
SECURITIES
Information
about our senior securities as of the fiscal years ended December 31, 2022 to December 31, 2013 is located in Part II, Item 5 in our
most recent Annual Report on Form 10-K, and is incorporated by reference into the registration statement of which this prospectus is
a part. The report of Marcum, LLP, our independent registered public accounting firm, on the audited consolidated financial statements
as of December 31, 2022 and December 31, 2021 and for each of the three years ended December 31, 2022, December 31, 2021 and December
31, 2020 is included in our most recent Annual Report on Form 10-K filed on March 16, 2023, and is incorporated by reference into the
registration statement of which this prospectus is a part.
|
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General Description of Registrant [Abstract] |
|
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Risk Factors [Table Text Block] |
|
RISK
FACTORS
Investing
in our securities involves a high degree of risk. Before deciding whether to invest in our securities, you should carefully consider
the risks and uncertainties described in the section titled “Risk Factors” in the applicable prospectus supplement and any
related free writing prospectus, and discussed in the section titled “Risk Factors” in Part I, Item 1A of our most recent
Annual Report on Form 10-K, the section titled “Risk Factors” in Part II, Item 1A of our most recent Quarterly Report on Form 10-Q, and any subsequent filings we have made with the SEC that are incorporated by reference into this prospectus or any prospectus
supplement, together with other information in this prospectus, the documents incorporated by reference in this prospectus or any prospectus
supplement, and any free writing prospectus that we may authorize for use in connection with this offering. The risks described in these
documents are not the only ones we face. Additional risks and uncertainties that we are unaware of, or that we currently believe are
not material, may also become important factors that adversely affect our business. Past financial performance may not be a reliable
indicator of future performance, and historical trends should not be used to anticipate results or trends in future periods. If any of
these risks actually occurs, our business, reputation, financial condition, results of operations, revenue, and future prospects could
be seriously harmed. This could cause our net asset value and the trading price of our securities to decline, resulting in a loss of
all or part of your investment. Please also read carefully the section titled “Cautionary Statement Regarding Forward-Looking Statements”
in this prospectus.
|
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|
|
Share Price [Table Text Block] |
|
| |
NAV(1) | | |
High | | |
Low | | |
to
NAV (2) | | |
to
NAV (2) | |
| |
Price
Range | | |
High
Close Price as a Premium/ (Discount) | | |
Low
Close Price as a Premium/ (Discount) | |
| |
NAV(1) | | |
High | | |
Low | | |
to NAV(2) | | |
to NAV(2) | |
Fiscal 2023 | |
| | |
| | |
| | |
| | |
| |
Third Quarter (through August 7, 2023) | |
| -* | | |
$ | 4.31 | | |
$ | 3.19 | | |
| * | | |
| * | |
Second Quarter | |
| - * | | |
| 3.93 | | |
| 3.20 | | |
| * | | |
| * | |
First Quarter | |
$ | 7.59 | | |
| 4.64 | | |
| 2.93 | | |
| (38.9 | )% | |
| (61.4 | )% |
Fiscal 2022 | |
| | | |
| | | |
| | | |
| | | |
| | |
Fourth Quarter | |
$ | 7.39 | | |
$ | 4.38 | | |
$ | 3.67 | | |
| (40.7 | )% | |
| (50.3 | )% |
Third Quarter | |
| 7.83 | | |
| 6.81 | | |
| 3.87 | | |
| (13.0 | ) | |
| (50.6 | ) |
Second Quarter | |
| 9.24 | | |
| 8.94 | | |
| 6.33 | | |
| (3.2 | ) | |
| (31.5 | ) |
First Quarter | |
| 12.22 | | |
| 13.36 | | |
| 8.27 | | |
| 9.3 | | |
| (32.3 | ) |
Fiscal 2021 | |
| | | |
| | | |
| | | |
| | | |
| | |
Fourth Quarter | |
$ | 11.72 | | |
$ | 15.60 | | |
$ | 11.41 | | |
| 33.1 | % | |
| (2.6 | )% |
Third Quarter | |
| 14.79 | | |
| 16.25 | | |
| 12.19 | | |
| 9.9 | | |
| (17.6 | ) |
Second Quarter | |
| 16.56 | | |
| 15.52 | | |
| 13.07 | | |
| (6.3 | ) | |
| (21.1 | ) |
First Quarter | |
| 18.01 | | |
| 15.43 | | |
| 12.33 | | |
| (14.3 | ) | |
| (31.5 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lowest Price or Bid |
|
|
|
|
$ 3.19
|
|
$ 3.20
|
|
$ 2.93
|
$ 3.67
|
$ 3.87
|
$ 6.33
|
$ 8.27
|
$ 11.41
|
$ 12.19
|
$ 13.07
|
$ 12.33
|
Highest Price or Bid |
|
|
|
|
4.31
|
|
3.93
|
|
$ 4.64
|
$ 4.38
|
$ 6.81
|
$ 8.94
|
$ 13.36
|
$ 15.60
|
$ 16.25
|
$ 15.52
|
$ 15.43
|
Highest Price or Bid, Premium (Discount) to NAV [Percent] |
[7] |
|
|
|
|
|
|
|
(38.90%)
|
(40.70%)
|
(13.00%)
|
(3.20%)
|
9.30%
|
33.10%
|
9.90%
|
(6.30%)
|
(14.30%)
|
Lowest Price or Bid, Premium (Discount) to NAV [Percent] |
[7] |
|
|
|
|
|
|
|
(61.40%)
|
(50.30%)
|
(50.60%)
|
(31.50%)
|
(32.30%)
|
(2.60%)
|
(17.60%)
|
(21.10%)
|
(31.50%)
|
NAV Per Share |
[8] |
|
$ (0)
|
[9] |
$ (0)
|
[9] |
$ (0)
|
[9] |
$ 7.59
|
$ 7.39
|
$ 7.83
|
$ 9.24
|
$ 12.22
|
$ 11.72
|
$ 14.79
|
$ 16.56
|
$ 18.01
|
Latest Premium (Discount) to NAV [Percent] |
|
|
47.80%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital Stock, Long-Term Debt, and Other Securities [Abstract] |
|
|
|
|
|
|
|
|
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|
|
|
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|
|
Capital Stock [Table Text Block] |
|
DESCRIPTION
OF OUR CAPITAL STOCK
This
prospectus contains a summary of our capital stock and is not meant to be a complete description. However, this prospectus and any accompanying
prospectus supplement will contain the material terms and conditions for each security sold thereunder. The following description is
based on relevant portions of the Maryland General Corporation Law (the “MGCL”) and on our charter and bylaws.
Stock
The
authorized stock of SuRo Capital as of August 7, 2023 consists of 100,000,000 shares of stock, par value $0.01 per share, all
of which are initially designated as common stock. Our common stock is listed on the Nasdaq Global Select Market under the ticker symbol
“SSSS.” As of August 7, 2023, there are no outstanding options or warrants to purchase our stock. Under the Company’s
Amended and Restated 2019 Equity Incentive Plan (the “Amended Equity Incentive Plan”), and subject to the terms therein,
the Company may issue (i) restricted shares to its employees, officers and all directors, including non-employee directors, and (ii)
options to its employees, officers, and directors, excluding non-employee directors. Under the Amended Equity Incentive Plan, the maximum
aggregate number of our common stock that may be authorized for issuance is 1,627,967.
Under the MGCL, our stockholders generally
are not personally liable for our debts or obligations.
The
following are our outstanding classes of equity securities as of August 7, 2023:
|
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|
Rights Limited by Other Securities [Text Block] |
|
any
other terms of such subscription rights, including exercise, settlement and other procedures and limitations relating to the transfer
and exercise of such subscription rights.
|
|
|
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|
Long Term Debt [Table Text Block] |
|
We
may issue debt securities in one or more series. The specific terms of each series of debt securities will be described in the particular
prospectus supplement relating to that series. The prospectus supplement may or may not modify the general terms found in this prospectus
and will be filed with the SEC. For a complete description of the terms of a particular series of debt securities, you should read both
this prospectus and the prospectus supplement relating to that particular series.
As
required by federal law for all bonds and notes of companies that are publicly offered, the debt securities are governed by a document
called an “indenture.” An indenture is a contract between us and the financial institution acting as trustee on your behalf,
and is subject to and governed by the Trust Indenture Act of 1939, as amended. The trustee has two main roles. First, the trustee can
enforce your rights against us if we default. There are some limitations on the extent to which the trustee acts on your behalf, described
in the second paragraph under “— Events of Default — Remedies if an Event of Default Occurs.” Second, the trustee
performs certain administrative duties for us with respect to our debt securities.
This
section includes a description of the material provisions of the indenture. Because this section is a summary, however, it does not describe
every aspect of the debt securities and the indenture. We urge you to read the indenture because it, and not this description, defines
your rights as a holder of debt securities. A copy of the form of indenture is attached as an exhibit to the registration statement of
which this prospectus is a part. We will file a supplemental indenture with the SEC in connection with any debt offering, at which time
the supplemental indenture would be publicly available. See “Available Information” in this prospectus for information on
how to obtain a copy of the indenture.
The
prospectus supplement, which will accompany this prospectus, will describe the particular series of debt securities being offered by
including:
● |
the
designation or title of the series of debt securities; |
|
|
● |
the
total principal amount of the series of debt securities; |
|
|
● |
the
percentage of the principal amount at which the series of debt securities will be offered; |
|
|
● |
the
date or dates on which principal will be payable; |
|
|
● |
the
rate or rates (which may be either fixed or variable) and/or the method of determining such rate or rates of interest, if any; |
|
|
● |
the
date or dates from which any interest will accrue, or the method of determining such date or dates, and the date or dates on which
any interest will be payable; |
|
|
● |
whether
any interest may be paid by issuing additional securities of the same series in lieu of cash (and the terms upon which any such interest
may be paid by issuing additional securities); |
|
|
● |
the
terms for redemption, extension or early repayment, if any; |
|
|
● |
the
currencies in which the series of debt securities are issued and payable; |
|
|
● |
whether
the amount of payments of principal, premium or interest, if any, on a series of debt securities will be determined with reference
to an index, formula or other method (which could be based on one or more currencies, commodities, equity indices or other indices)
and how these amounts will be determined; |
|
|
● |
the
place or places, if any, other than or in addition to the Borough of Manhattan in the City of New York, of payment, transfer, conversion
and/or exchange of the debt securities; |
● |
the
denominations in which the offered debt securities will be issued (if other than $1,000 and any integral multiple thereof); |
|
|
● |
the
provision for any sinking fund; |
|
|
● |
any
restrictive covenants; |
|
|
● |
any
Events of Default (as defined in “Events of Default” below); |
|
|
● |
whether
the series of debt securities are issuable in certificated form; |
|
|
● |
any
provisions for defeasance or covenant defeasance; |
|
|
● |
any
special U.S. federal income tax implications, including, if applicable, U.S. federal income tax considerations relating to original
issue discount; |
|
|
● |
whether
and under what circumstances we will pay additional amounts in respect of any tax, assessment or governmental charge and, if so,
whether we will have the option to redeem the debt securities rather than pay the additional amounts (and the terms of this option); |
|
|
● |
any
provisions for convertibility or exchangeability of the debt securities into or for any other securities; |
|
|
● |
whether
the debt securities are subject to subordination and the terms of such subordination; |
|
|
● |
whether
the debt securities are secured and the terms of any security interest; |
|
|
● |
the
listing, if any, on a securities exchange; and |
|
|
● |
any
other terms. |
The
debt securities may be secured or unsecured obligations. Unless the prospectus supplement states otherwise, principal (and premium, if
any) and interest, if any, will be paid by us in immediately available funds.
We
are permitted, under specified conditions, to issue multiple classes of indebtedness if our asset coverage, as defined in the 1940 Act,
is at least equal to 200% (or 150% if certain requirements are met) immediately after each such issuance after giving effect to any exemptive
relief granted to us by the SEC. In addition, while any indebtedness and senior securities remain outstanding, we must make provisions
to prohibit the distribution to our stockholders or the repurchase of such securities or shares unless we meet the applicable asset coverage
ratios at the time of the distribution or repurchase. For a discussion of the risks associated with leverage, see “Risk Factors
— Risks Related to Our Business and Structure — Regulations governing our operation as a business development company affect
our ability to, and the way in which we, raise additional capital, which may expose us to risks, including the typical risks associated
with leverage” in our most recent Annual Report on Form 10-K.
General
The
indenture provides that any debt securities proposed to be sold under this prospectus and the accompanying prospectus supplement (“offered
debt securities”) and any debt securities issuable upon the exercise of warrants or upon conversion or exchange of other offered
securities (“underlying debt securities”) may be issued under the indenture in one or more series.
For
purposes of this prospectus, any reference to the payment of principal of, or premium or interest, if any, on, debt securities will include
additional amounts if required by the terms of the debt securities.
The
indenture does not limit the amount of debt securities that may be issued thereunder from time to time. Debt securities issued under
the indenture, when a single trustee is acting for all debt securities issued under the indenture, are called the “indenture securities.”
The indenture also provides that there may be more than one trustee thereunder, each with respect to one or more different series of
indenture securities. See “— Resignation of Trustee” below. At a time when two or more trustees are acting under the
indenture, each with respect to only certain series, the term “indenture securities” means the one or more series of debt
securities with respect to which each respective trustee is acting. In the event that there is more than one trustee under the indenture,
the powers and trust obligations of each trustee described in this prospectus will extend only to the one or more series of indenture
securities for which it is trustee. If two or more trustees are acting under the indenture, then the indenture securities for which each
trustee is acting would be treated as if issued under separate indentures.
The
indenture does not contain any provisions that give you protection in the event we issue a large amount of debt or we are acquired by
another entity.
We
refer you to the prospectus supplement for information with respect to any deletions from, modifications of or additions to the Events
of Default or our covenants that are described below, including any addition of a covenant or other provision providing event risk protection
or similar protection.
We
have the ability to issue indenture securities with terms different from those of indenture securities previously issued and, without
the consent of the holders thereof, to reopen a previous issue of a series of indenture securities and issue additional indenture securities
of that series unless the reopening was restricted when that series was created.
Conversion
and Exchange
If
any debt securities are convertible into or exchangeable for other securities, the prospectus supplement will explain the terms and conditions
of the conversion or exchange, including the conversion price or exchange ratio (or the calculation method), the conversion or exchange
period (or how the period will be determined), if conversion or exchange will be mandatory or at the option of the holder or us, provisions
for adjusting the conversion price or the exchange ratio and provisions affecting conversion or exchange in the event of the redemption
of the underlying debt securities. These terms may also include provisions under which the number or amount of other securities to be
received by the holders of the debt securities upon conversion or exchange would be calculated according to the market price of the other
securities as of a time stated in the prospectus supplement.
Issuance
of Securities in Registered Form
We
may issue the debt securities in registered form, in which case we may issue them either in book-entry form only or in “certificated”
form. Debt securities issued in book-entry form will be represented by global securities. We expect that we will usually issue debt securities
in book-entry only form represented by global securities.
Book-Entry
Holders
We
will issue registered debt securities in book-entry form only, unless we specify otherwise in the applicable prospectus supplement. This
means debt securities will be represented by one or more global securities registered in the name of a depositary that will hold them
on behalf of financial institutions that participate in the depositary’s book-entry system. These participating institutions, in
turn, hold beneficial interests in the debt securities held by the depositary or its nominee. These institutions may hold these interests
on behalf of themselves or customers.
Under
the indenture, only the person in whose name a debt security is registered is recognized as the holder of that debt security. Consequently,
for debt securities issued in book-entry form, we will recognize only the depositary as the holder of the debt securities and we will
make all payments on the debt securities to the depositary. The depositary will then pass along the payments it receives to its participants,
which in turn will pass the payments along to their customers who are the beneficial owners. The depositary and its participants do so
under agreements they have made with one another or with their customers; they are not obligated to do so under the terms of the debt
securities.
As
a result, investors will not own debt securities directly. Instead, they will own beneficial interests in a global security, through
a bank, broker or other financial institution that participates in the depositary’s book-entry system or holds an interest through
a participant. As long as the debt securities are represented by one or more global securities, investors will be indirect holders, and
not holders, of the debt securities.
Street
Name Holders
In
the future, we may issue debt securities in certificated form or terminate a global security. In these cases, investors may choose to
hold their debt securities in their own names or in “street name.” Debt securities held in street name are registered in
the name of a bank, broker or other financial institution chosen by the investor, and the investor would hold a beneficial interest in
those debt securities through the account he or she maintains at that institution.
For
debt securities held in street name, we will recognize only the intermediary banks, brokers and other financial institutions in whose
names the debt securities are registered as the holders of those debt securities, and we will make all payments on those debt securities
to them. These institutions will pass along the payments they receive to their customers who are the beneficial owners, but only because
they agree to do so in their customer agreements or because they are legally required to do so. Investors who hold debt securities in
street name will be indirect holders, and not holders, of the debt securities.
Legal
Holders
Our
obligations, as well as the obligations of the applicable trustee and those of any third parties employed by us or the applicable trustee,
run only to the legal holders of the debt securities. We do not have obligations to investors who hold beneficial interests in global
securities, in street name or by any other indirect means. This will be the case whether an investor chooses to be an indirect holder
of a debt security or has no choice because we are issuing the debt securities only in book-entry form.
For
example, once we make a payment or give a notice to the holder, we have no further responsibility for the payment or notice even if that
holder is required, under agreements with depositary participants or customers or by law, to pass it along to the indirect holders but
does not do so. Similarly, if we want to obtain the approval of the holders for any purpose (for example, to amend an indenture or to
relieve us of the consequences of a default or of our obligation to comply with a particular provision of an indenture), we would seek
the approval only from the holders, and not the indirect holders, of the debt securities. Whether and how the holders contact the indirect
holders is up to the holders.
When
we refer to you in this Description of Debt Securities, we mean those who invest in the debt securities being offered by this prospectus,
whether they are the holders or only indirect holders of those debt securities. When we refer to your debt securities, we mean the debt
securities in which you hold a direct or indirect interest.
Special
Considerations for Indirect Holders
If
you hold debt securities through a bank, broker or other financial institution, either in book-entry form or in street name, we urge
you to check with that institution to find out:
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how
it handles securities payments and notices; |
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whether
it imposes fees or charges; |
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how
it would handle a request for the holders’ consent, if ever required; |
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whether
and how you can instruct it to send you debt securities registered in your own name so you can be a holder, if that is permitted
in the future for a particular series of debt securities; |
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how
it would exercise rights under the debt securities if there were a default or other event triggering the need for holders to act
to protect their interests; and |
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if
the debt securities are in book-entry form, how the depositary’s rules and procedures will affect these matters. |
Global
Securities
As
noted above, we usually will issue debt securities as registered securities in book-entry form only. A global security represents one
or any other number of individual debt securities. Generally, all debt securities represented by the same global securities will have
the same terms.
Each
debt security issued in book-entry form will be represented by a global security that we deposit with and register in the name of a financial
institution or its nominee that we select. The financial institution that we select for this purpose is called the depositary. Unless
we specify otherwise in the applicable prospectus supplement, The Depository Trust Company, New York, New York, known as DTC, will be
the depositary for all debt securities issued in book-entry form.
A
global security may not be transferred to or registered in the name of anyone other than the depositary or its nominee, unless special
termination situations arise. We describe those situations below under “— Termination of a Global Security.” As a result
of these arrangements, the depositary, or its nominee, will be the sole registered owner and holder of all debt securities represented
by a global security, and investors will be permitted to own only beneficial interests in a global security. Beneficial interests must
be held by means of an account with a broker, bank or other financial institution that in turn has an account with the depositary or
with another institution that has an account with the depositary. Thus, an investor whose security is represented by a global security
will not be a holder of the debt security, but only an indirect holder of a beneficial interest in the global security.
Special
Considerations for Global Securities
As
an indirect holder, an investor’s rights relating to a global security will be governed by the account rules of the investor’s
financial institution and of the depositary, as well as general laws relating to securities transfers. The depositary that holds the
global security will be considered the holder of the debt securities represented by the global security.
If
debt securities are issued only in the form of a global security, an investor should be aware of the following:
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an
investor cannot cause the debt securities to be registered in his or her name and cannot obtain certificates for his or her interest
in the debt securities, except in the special situations we describe below; |
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an
investor will be an indirect holder and must look to his or her own bank or broker for payments on the debt securities and protection
of his or her legal rights relating to the debt securities, as we describe under “— Issuance of Securities in Registered
Form” above; |
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an
investor may not be able to sell interests in the debt securities to some insurance companies and other institutions that are required
by law to own their securities in non-book-entry form; |
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an
investor may not be able to pledge his or her interest in a global security in circumstances where certificates representing the
debt securities must be delivered to the lender or other beneficiary of the pledge in order for the pledge to be effective; |
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the
depositary’s policies, which may change from time to time, will govern payments, transfers, exchanges and other matters relating
to an investor’s interest in a global security. We and the trustee have no responsibility for any aspect of the depositary’s
actions or for its records of ownership interests in a global security. We and the trustee also do not supervise the depositary in
any way; |
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if
we redeem less than all the debt securities of a particular series being redeemed, DTC’s practice is to determine by lot the
amount to be redeemed from each of its participants holding that series; |
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an
investor is required to give notice of exercise of any option to elect repayment of its debt securities, through its participant,
to the applicable trustee and to deliver the related debt securities by causing its participant to transfer its interest in those
debt securities, on DTC’s records, to the applicable trustee; |
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DTC
requires that those who purchase and sell interests in a global security deposited in its book-entry system use immediately available
funds, your broker or bank may also require you to use immediately available funds when purchasing or selling interests in a global
security; and |
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financial
institutions that participate in the depositary’s book-entry system, and through which an investor holds its interest in a
global security, may also have their own policies affecting payments, notices and other matters relating to the debt securities;
there may be more than one financial intermediary in the chain of ownership for an investor, we do not monitor and are not responsible
for the actions of any of those intermediaries. |
Termination
of a Global Security
If
a global security is terminated for any reason, interests in it will be exchanged for certificates in non-book-entry form (certificated
securities). After that exchange, the choice of whether to hold the certificated debt securities directly or in street name will be up
to the investor. Investors must consult their own banks or brokers to find out how to have their interests in a global security transferred
on termination to their own names, so that they will be holders. We have described the rights of legal holders and street name investors
under “— Issuance of Securities in Registered Form” above.
The
prospectus supplement may list situations for terminating a global security that would apply only to the particular series of debt securities
covered by the prospectus supplement. If a global security is terminated, only the depositary, and not we or the applicable trustee,
is responsible for deciding the investors in whose names the debt securities represented by the global security will be registered and,
therefore, who will be the holders of those debt securities.
Payment
and Paying Agents
We
will pay interest to the person listed in the applicable trustee’s records as the owner of the debt security at the close of business
on a particular day in advance of each due date for interest, even if that person no longer owns the debt security on the interest due
date. That day, usually about two weeks in advance of the interest due date, is called the “record date.” Because we will
pay all the interest for an interest period to the holders on the record date, holders buying and selling debt securities must work out
between themselves the appropriate purchase price. The most common manner is to adjust the sales price of the debt securities to prorate
interest fairly between buyer and seller based on their respective ownership periods within the particular interest period. This prorated
interest amount is called “accrued interest.”
Payments
on Global Securities
We
will make payments on a global security in accordance with the applicable policies of the depositary as in effect from time to time.
Under those policies, we will make payments directly to the depositary, or its nominee, and not to any indirect holders who own beneficial
interests in the global security. An indirect holder’s right to those payments will be governed by the rules and practices of the
depositary and its participants, as described under “— Special Considerations for Global Securities.”
Payments
on Certificated Securities
We
will make payments on a certificated debt security as follows. We will pay interest that is due on an interest payment date to the holder
of debt securities as shown on the trustee’s records as of the close of business on the regular record date at our office and/or
at other offices that may be specified in the prospectus supplement. We will make all payments of principal and premium, if any, by check
at the office of the applicable trustee and/or at other offices that may be specified in the prospectus supplement or in a notice to
holders against surrender of the debt security.
Alternatively,
at our option, we may pay any cash interest that becomes due on the debt security by mailing a check to the holder at his, her or its
address shown on the trustee’s records as of the close of business on the regular record date or by transfer to an account at a
bank in the United States, in either case, on the due date.
Payment
When Offices Are Closed
If
any payment is due on a debt security on a day that is not a business day, we will make the payment on the next day that is a business
day. Payments made on the next business day in this situation will be treated under the indenture as if they were made on the original
due date, except as otherwise indicated in the attached prospectus supplement. Such payment will not result in a default under any debt
security or the indenture, and no interest will accrue on the payment amount from the original due date to the next day that is a business
day.
Book-entry
and other indirect holders should consult their banks or brokers for information on how they will receive payments on their debt securities.
Events
of Default
You
will have rights if an Event of Default occurs in respect of the debt securities of your series and is not cured, as described later
in this subsection.
The
term “Event of Default” in respect of the debt securities of your series means any of the following:
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we
do not pay the principal of, or any premium on, a debt security of the series within five days of its due date; |
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we
do not pay interest on a debt security of the series within 30 days of its due date; |
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we
do not deposit any sinking fund payment in respect of debt securities of the series within five days of its due date; |
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we
remain in breach of a covenant in respect of debt securities of the series for 60 days after we receive a written notice of default
stating we are in breach (the notice must be sent by either the trustee or holders of at least 25% of the principal amount of the
outstanding debt securities of the series); |
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we
file for bankruptcy or certain other events of bankruptcy, insolvency or reorganization occur and remain undischarged or unstayed
for a period of 90 days; |
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the
series of debt securities has an asset coverage, as such term is defined in the 1940 Act, of less than 100 per centum on the last
business day of each of twenty-four consecutive calendar months, giving effect to any exemptive relief granted to the Company by
the SEC; or |
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any
other Event of Default in respect of debt securities of the series described in the prospectus supplement occurs. |
An
Event of Default for a particular series of debt securities does not necessarily constitute an Event of Default for any other series
of debt securities issued under the same or any other indenture. The trustee may withhold notice to the holders of debt securities of
any default, except in the payment of principal, premium, interest, or sinking or purchase fund installment, if it in good faith considers
the withholding of notice to be in the interest of the holders.
Remedies
if an Event of Default Occurs
If
an Event of Default has occurred and is continuing, the trustee or the holders of not less than 25% in principal amount of the outstanding
debt securities of the affected series may (and the trustee shall at the request of such holders) declare the entire principal amount
of all the debt securities of that series to be due and immediately payable. This is called a declaration of acceleration of maturity.
A declaration of acceleration of maturity may be canceled by the holders of a majority in principal amount of the outstanding debt securities
of the affected series if (1) we have deposited with the trustee all amounts due and owing with respect to the securities (other than
principal that has become due solely by reason of such acceleration) and certain other amounts, and (2) any other Events of Default have
been cured or waived.
Except
in cases of default, where the trustee has some special duties, the trustee is not required to take any action under the indenture at
the request of any holders unless the holders offer the trustee reasonable protection from expenses and liability (called an “indemnity”).
If reasonable indemnity is provided, the holders of a majority in principal amount of the outstanding debt securities of the relevant
series may direct the time, method and place of conducting any lawsuit or other formal legal action seeking any remedy available to the
trustee. The trustee may refuse to follow those directions in certain circumstances. No delay or omission in exercising any right or
remedy will be treated as a waiver of that right, remedy or Event of Default.
Before
you are allowed to bypass your trustee and bring your own lawsuit or other formal legal action or take other steps to enforce your rights
or protect your interests relating to the debt securities, the following must occur:
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you
must give the trustee written notice that an Event of Default with respect to the relevant series of debt securities has occurred
and remains uncured; |
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the
holders of at least 25% in principal amount of all outstanding debt securities of the relevant series must make a written request
that the trustee take action because of the default and must offer reasonable indemnity, security or both to the trustee against
the costs, expenses and other liabilities of taking that action; |
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the
trustee must not have taken action for 60 days after receipt of the above notice and offer of indemnity and/or security; and |
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the
holders of a majority in principal amount of the outstanding debt securities of that series must not have given the trustee a direction
inconsistent with the above notice during that 60-day period. |
However,
you are entitled at any time to bring a lawsuit for the payment of money due on your debt securities on or after the due date.
Book-entry
and other indirect holders should consult their banks or brokers for information on how to give notice or direction to or make a request
of the trustee and how to declare or cancel an acceleration of maturity.
Each
year, we will furnish to each trustee a written statement of certain of our officers certifying that to their knowledge we are in compliance
with the indenture and the debt securities, or else specifying any default.
Waiver
of Default
Holders
of a majority in principal amount of the outstanding debt securities of the affected series may waive any past defaults other than:
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the
payment of principal, any premium or interest; or |
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in
respect of a covenant that cannot be modified or amended without the consent of each holder. |
Merger
or Consolidation
Under
the terms of the indenture, we are generally permitted to consolidate or merge with another entity. We are also permitted to sell all
or substantially all of our assets to another entity. However, we may not take any of these actions unless all the following conditions
are met:
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where
we merge out of existence or sell substantially all our assets, the resulting entity or transferee must agree to be legally responsible
for our obligations under the debt securities; |
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the
merger or sale of assets must not cause a default on the debt securities and we must not already be in default (unless the merger
or sale would cure the default). For purposes of this no-default test, a default would include an Event of Default that has occurred
and has not been cured, as described under “Events of Default” above. A default for this purpose would also include any
event that would be an Event of Default if the requirements for giving us a notice of default or our default having to exist for
a specific period of time were disregarded; |
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we
must deliver certain certificates and documents to the trustee; and |
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we
must satisfy any other requirements specified in the prospectus supplement relating to a particular series of debt securities. |
Modification
or Waiver
There
are three types of changes we can make to the indenture and the debt securities issued thereunder.
Changes
Requiring Your Approval
First,
there are changes that we cannot make to your debt securities without your specific approval. The following is a list of those types
of changes:
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change
the stated maturity of the principal of or interest on a debt security or the terms of any sinking fund with respect to any security; |
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reduce
any amounts due on a debt security; |
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reduce
the amount of principal payable upon acceleration of the maturity of an original issue discount or indexed security following a default
or upon the redemption thereof or the amount thereof provable in a bankruptcy proceeding; |
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adversely
affect any right of repayment at the holder’s option; |
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change
the place or currency of payment on a debt security (except as otherwise described in the prospectus or prospectus supplement); |
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impair
your right to sue for payment; |
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adversely
affect any right to convert or exchange a debt security in accordance with its terms; |
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modify
the subordination provisions in the indenture in a manner that is adverse to outstanding holders of the debt securities; |
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reduce
the percentage of holders of debt securities whose consent is needed to modify or amend the indenture; |
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reduce
the percentage of holders of debt securities whose consent is needed to waive compliance with certain provisions of the indenture
or to waive certain defaults; |
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modify
any other aspect of the provisions of the indenture dealing with supplemental indentures with the consent of holders, waiver of past
defaults, changes to the quorum or voting requirements or the waiver of certain covenants; and |
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change
any obligation we have to pay additional amounts. |
Changes
Not Requiring Approval
The
second type of change does not require any vote by the holders of the debt securities. This type is limited to clarifications, establishment
of the form or terms of new securities of any series as permitted by the indenture and certain other changes that would not adversely
affect holders of the outstanding debt securities in any material respect. We also do not need any approval to make any change that affects
only debt securities to be issued under the indenture after the change takes effect.
Changes
Requiring Majority Approval
Any
other change to the indenture and the debt securities would require the following approval:
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if
the change affects only one series of debt securities, it must be approved by the holders of a majority in principal amount of that
series; and |
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if
the change affects more than one series of debt securities issued under the same indenture, it must be approved by the holders of
a majority in principal amount of all of the series affected by the change, with all affected series voting together as one class
for this purpose. |
In
each case, the required approval must be given by written consent.
The
holders of a majority in principal amount of a series of debt securities issued under the indenture, voting together as one class for
this purpose, may waive our compliance with some of our covenants applicable to that series of debt securities. However, we cannot obtain
a waiver of a payment default or of any of the matters covered by the bullet points included above under “— Changes Requiring
Your Approval.”
Further
Details Concerning Voting
When
taking a vote, we will use the following rules to decide how much principal to attribute to a debt security:
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for
original issue discount securities, we will use the principal amount that would be due and payable on the voting date if the maturity
of these debt securities were accelerated to that date because of a default; |
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for
debt securities whose principal amount is not known (for example, because it is based on an index), we will use the principal face
amount at original issuance or a special rule for that debt security described in the prospectus supplement; and |
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for
debt securities denominated in one or more foreign currencies, we will use the U.S. dollar equivalent. |
Debt
securities will not be considered outstanding, and therefore not eligible to vote, if we have deposited or set aside in trust money for
their payment or redemption or if we, any other obligor, or any affiliate of us or any obligor own such debt securities. Debt securities
will also not be eligible to vote if they have been fully defeased as described later under “— Defeasance — Full Defeasance.”
We
will generally be entitled to set any day as a record date for the purpose of determining the holders of outstanding indenture securities
that are entitled to vote or take other action under the indenture. However, the record date may not be more than 30 days before the
date of the first solicitation of holders to vote on or take such action. If we set a record date for a vote or other action to be taken
by holders of one or more series, that vote or action may be taken only by persons who are holders of outstanding indenture securities
of those series on the record date and must be taken within eleven months following the record date.
Book-entry
and other indirect holders should consult their banks or brokers for information on how approval may be granted or denied if we seek
to change the indenture or the debt securities or request a waiver.
Defeasance
The
following provisions will be applicable to each series of debt securities unless we state in the applicable prospectus supplement that
the provisions of covenant defeasance and full defeasance will not be applicable to that series.
Covenant
Defeasance
Under
current U.S. federal tax law and the indenture, we can make the deposit described below and be released from some of the restrictive
covenants in the indenture under which the particular series was issued. This is called “covenant defeasance.” In that event,
you would lose the protection of those restrictive covenants but would gain the protection of having money and government securities
set aside in trust to repay your debt securities. If we achieved covenant defeasance and your debt securities were subordinated as described
under “— Indenture Provisions — Subordination” below, such subordination would not prevent the trustee under
the indenture from applying the funds available to it from the deposit described in the first bullet below to the payment of amounts
due in respect of such debt securities for the benefit of the subordinated debt holders. In order to achieve covenant defeasance, we
must do the following:
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we
must deposit in trust for the benefit of all holders of a series of debt securities a combination of cash (in such currency in which
such securities are then specified as payable at stated maturity) or government obligations applicable to such securities (determined
on the basis of the currency in which such securities are then specified as payable at stated maturity) that will generate enough
cash to make interest, principal and any other payments on the debt securities on their various due dates and any mandatory sinking
fund payments or analogous payments; |
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we
must deliver to the trustee a legal opinion of our counsel confirming that, under current U.S. federal income tax law, we may make
the above deposit without causing you to be taxed on the debt securities any differently than if we did not make the deposit; |
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we
must deliver to the trustee a legal opinion of our counsel stating that the above deposit does not require registration by us under
the 1940 Act, as amended, and a legal opinion and officers’ certificate stating that all conditions precedent to covenant defeasance
have been complied with; |
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defeasance
must not result in a breach or violation of, or result in a default under, of the indenture or any of our other material agreements
or instruments; |
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no
default or event of default with respect to such debt securities shall have occurred and be continuing and no defaults or events
of default related to bankruptcy, insolvency or reorganization shall occur during the next 90 days; and |
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satisfy
the conditions for covenant defeasance contained in any supplemental indentures. |
If
we accomplish covenant defeasance, you can still look to us for repayment of the debt securities if there were a shortfall in the trust
deposit or the trustee is prevented from making payment. For example, if one of the remaining Events of Default occurred (such as our
bankruptcy) and the debt securities became immediately due and payable, there might be such a shortfall. However, there is no assurance
that we would have sufficient funds to make payment of the shortfall.
Full
Defeasance
If
there is a change in U.S. federal tax law or we obtain an IRS ruling, as described in the second bullet below, we can legally release
ourselves from all payment and other obligations on the debt securities of a particular series (called “full defeasance”)
if we put in place the following other arrangements for you to be repaid:
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we
must deposit in trust for the benefit of all holders of a series of debt securities a combination of cash (in such currency in which
such securities are then specified as payable at stated maturity) or government obligations applicable to such securities (determined
on the basis of the currency in which such securities are then specified as payable at stated maturity) that will generate enough
cash to make interest, principal and any other payments on the debt securities on their various due dates and any mandatory sinking
fund payments or analogous payments. |
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we
must deliver to the trustee a legal opinion confirming that there has been a change in current U.S. federal tax law or an IRS ruling
that allows us to make the above deposit without causing you to be taxed on the debt securities any differently than if we did not
make the deposit. Under current U.S. federal tax law, the deposit and our legal release from the debt securities would be treated
as though we paid you your share of the cash and notes or bonds at the time the cash and notes or bonds were deposited in trust in
exchange for your debt securities and you would recognize gain or loss on the debt securities at the time of the deposit. |
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we
must deliver to the trustee a legal opinion of our counsel stating that the above deposit does not require registration by us under
the 1940 Act, as amended, and a legal opinion and officers’ certificate stating that all conditions precedent to defeasance
have been complied with. |
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defeasance
must not result in a breach or violation of, or constitute a default under, of the indenture or any of our other material agreements
or instruments. |
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no
default or event of default with respect to such debt securities shall have occurred and be continuing and no defaults or events
of default related to bankruptcy, insolvency or reorganization shall occur during the next 90 days. |
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satisfy
the conditions for full defeasance contained in any supplemental indentures. |
If
we ever did accomplish full defeasance, as described above, you would have to rely solely on the trust deposit for repayment of the debt
securities. You could not look to us for repayment in the unlikely event of any shortfall. Conversely, the trust deposit would most likely
be protected from claims of our lenders and other creditors if we ever became bankrupt or insolvent. If your debt securities were subordinated
as described later under “— Indenture Provisions — Subordination”, such subordination would not prevent the trustee
under the indenture from applying the funds available to it from the deposit referred to in the first bullet of the preceding paragraph
to the payment of amounts due in respect of such debt securities for the benefit of the subordinated debt holders.
Form,
Exchange and Transfer of Certificated Registered Securities
If
registered debt securities cease to be issued in book-entry form, they will be issued:
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interest coupons; and |
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unless
we indicate otherwise in the prospectus supplement, in denominations of $1,000 and amounts that are multiples of $1,000. |
Holders
may exchange their certificated securities for debt securities of smaller denominations or combined into fewer debt securities of larger
denominations, as long as the total principal amount is not changed and as long as the denomination is greater than the minimum denomination
for such securities.
Holders
may exchange or transfer their certificated securities at the office of the trustee. We have appointed the trustee to act as our agent
for registering debt securities in the names of holders transferring debt securities. We may appoint another entity to perform these
functions or perform them ourselves.
Holders
will not be required to pay a service charge to transfer or exchange their certificated securities, but they may be required to pay any
tax or other governmental charge associated with the transfer or exchange. The transfer or exchange will be made only if our transfer
agent is satisfied with the holder’s proof of legal ownership.
If
we have designated additional transfer agents for your debt security, they will be named in the prospectus supplement. We may appoint
additional transfer agents or cancel the appointment of any particular transfer agent. We may also approve a change in the office through
which any transfer agent acts.
If
any certificated securities of a particular series are redeemable and we redeem less than all the debt securities of that series, we
may block the transfer or exchange of those debt securities during the period beginning 15 days before the day we mail the notice of
redemption and ending on the day of that mailing, in order to freeze the list of holders to prepare the mailing. We may also refuse to
register transfers or exchanges of any certificated securities selected for redemption, except that we will continue to permit transfers
and exchanges of the unredeemed portion of any debt security that will be partially redeemed.
If
a registered debt security is issued in book-entry form, only the depositary will be entitled to transfer and exchange the debt security
as described in this subsection, since it will be the sole holder of the debt security.
Resignation
of Trustee
Each
trustee may resign or be removed with respect to one or more series of indenture securities provided that a successor trustee is appointed
to act with respect to these series and has accepted such appointment. In the event that two or more persons are acting as trustee with
respect to different series of indenture securities under the indenture, each of the trustees will be a trustee of a trust separate and
apart from the trust administered by any other trustee.
Indenture
Provisions — Subordination
Upon
any distribution of our assets upon our dissolution, winding up, liquidation or reorganization, the payment of the principal of (and
premium, if any) and interest, if any, on any indenture securities denominated as subordinated debt securities is to be subordinated
to the extent provided in the indenture in right of payment to the prior payment in full of all Senior Indebtedness (as defined below),
but our obligation to you to make payment of the principal of (and premium, if any) and interest, if any, on such subordinated debt securities
will not otherwise be affected. In addition, no payment on account of principal (or premium, if any), sinking fund or interest, if any,
may be made on such subordinated debt securities at any time unless full payment of all amounts due in respect of the principal (and
premium, if any), sinking fund and interest on Senior Indebtedness has been made or duly provided for in money or money’s worth.
In
the event that, notwithstanding the foregoing, any payment by us is received by the trustee in respect of subordinated debt securities
or by the holders of any of such subordinated debt securities, upon our dissolution, winding up, liquidation or reorganization before
all Senior Indebtedness is paid in full, the payment or distribution received by the trustee in respect of such subordinated debt securities
or by the holders of any such subordinated debt securities must be paid over to the holders of the Senior Indebtedness or on their behalf
for application to the payment of all the Senior Indebtedness remaining unpaid until all the Senior Indebtedness has been paid in full,
after giving effect to any concurrent payment or distribution to the holders of the Senior Indebtedness. Subject to the payment in full
of all Senior Indebtedness upon this distribution by us, the holders of such subordinated debt securities will be subrogated to the rights
of the holders of the Senior Indebtedness to the extent of payments made to the holders of the Senior Indebtedness out of the distributive
share of such subordinated debt securities.
By
reason of this subordination, in the event of a distribution of our assets upon our insolvency, certain of our senior creditors may recover
more, ratably, than holders of any subordinated debt securities or the holders of any indenture securities that are not Senior Indebtedness.
The indenture provides that these subordination provisions will not apply to money and securities held in trust under the defeasance
provisions of the indenture.
Senior
Indebtedness is defined in the indenture as the principal of (and premium, if any) and unpaid interest on:
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our
indebtedness (including indebtedness of others guaranteed by us), whenever created, incurred, assumed or guaranteed, for money borrowed,
that we have designated as “Senior Indebtedness” for purposes of the indenture and in accordance with the terms of the
indenture (including any indenture securities designated as Senior Indebtedness), and |
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renewals,
extensions, modifications and refinancings of any of this indebtedness. |
If
this prospectus is being delivered in connection with the offering of a series of indenture securities denominated as subordinated debt
securities, the accompanying prospectus supplement will set forth the approximate amount of our Senior Indebtedness and of our other
Indebtedness outstanding as of a recent date.
Secured
Indebtedness and Ranking
Certain
of our indebtedness, including certain series of indenture securities, may be secured. The prospectus supplement for each series of indenture
securities will describe the terms of any security interest for such series and will indicate the approximate amount of our secured indebtedness
as of a recent date. Any unsecured indenture securities will effectively rank junior to any secured indebtedness, including any secured
indenture securities, that we incur in the future to the extent of the value of the assets securing such future secured indebtedness.
The debt securities, whether secured or unsecured, of the Company will rank structurally junior to all existing and future indebtedness
(including trade payables) incurred by our subsidiaries, financing vehicles or similar facilities.
In
the event of our bankruptcy, liquidation, reorganization or other winding up, any of our assets that secure secured debt will be available
to pay obligations on unsecured debt securities only after all indebtedness under such secured debt has been repaid in full from such
assets. We advise you that there may not be sufficient assets remaining to pay amounts due on any or all unsecured debt securities then
outstanding after fulfillment of this obligation. As a result, the holders of unsecured indenture securities may recover less, ratably,
than holders of any of our secured indebtedness.
The
Trustee under the Indenture
U.S.
Bank National Association will serve as the trustee under the indenture.
Certain
Considerations Relating to Foreign Currencies
Debt
securities denominated or payable in foreign currencies may entail significant risks. These risks include the possibility of significant
fluctuations in the foreign currency markets, the imposition or modification of foreign exchange controls and potential illiquidity in
the secondary market. These risks will vary depending upon the currency or currencies involved and will be more fully described in the
applicable prospectus supplement.
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Long Term Debt, Title [Text Block] |
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DEBT SECURITIES
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Long Term Debt, Structuring [Text Block] |
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Indenture
Provisions — Subordination
Upon
any distribution of our assets upon our dissolution, winding up, liquidation or reorganization, the payment of the principal of (and
premium, if any) and interest, if any, on any indenture securities denominated as subordinated debt securities is to be subordinated
to the extent provided in the indenture in right of payment to the prior payment in full of all Senior Indebtedness (as defined below),
but our obligation to you to make payment of the principal of (and premium, if any) and interest, if any, on such subordinated debt securities
will not otherwise be affected. In addition, no payment on account of principal (or premium, if any), sinking fund or interest, if any,
may be made on such subordinated debt securities at any time unless full payment of all amounts due in respect of the principal (and
premium, if any), sinking fund and interest on Senior Indebtedness has been made or duly provided for in money or money’s worth.
In
the event that, notwithstanding the foregoing, any payment by us is received by the trustee in respect of subordinated debt securities
or by the holders of any of such subordinated debt securities, upon our dissolution, winding up, liquidation or reorganization before
all Senior Indebtedness is paid in full, the payment or distribution received by the trustee in respect of such subordinated debt securities
or by the holders of any such subordinated debt securities must be paid over to the holders of the Senior Indebtedness or on their behalf
for application to the payment of all the Senior Indebtedness remaining unpaid until all the Senior Indebtedness has been paid in full,
after giving effect to any concurrent payment or distribution to the holders of the Senior Indebtedness. Subject to the payment in full
of all Senior Indebtedness upon this distribution by us, the holders of such subordinated debt securities will be subrogated to the rights
of the holders of the Senior Indebtedness to the extent of payments made to the holders of the Senior Indebtedness out of the distributive
share of such subordinated debt securities.
By
reason of this subordination, in the event of a distribution of our assets upon our insolvency, certain of our senior creditors may recover
more, ratably, than holders of any subordinated debt securities or the holders of any indenture securities that are not Senior Indebtedness.
The indenture provides that these subordination provisions will not apply to money and securities held in trust under the defeasance
provisions of the indenture.
Senior
Indebtedness is defined in the indenture as the principal of (and premium, if any) and unpaid interest on:
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our
indebtedness (including indebtedness of others guaranteed by us), whenever created, incurred, assumed or guaranteed, for money borrowed,
that we have designated as “Senior Indebtedness” for purposes of the indenture and in accordance with the terms of the
indenture (including any indenture securities designated as Senior Indebtedness), and |
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renewals,
extensions, modifications and refinancings of any of this indebtedness. |
If
this prospectus is being delivered in connection with the offering of a series of indenture securities denominated as subordinated debt
securities, the accompanying prospectus supplement will set forth the approximate amount of our Senior Indebtedness and of our other
Indebtedness outstanding as of a recent date.
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Long Term Debt, Dividends and Covenants [Text Block] |
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Events
of Default
You
will have rights if an Event of Default occurs in respect of the debt securities of your series and is not cured, as described later
in this subsection.
The
term “Event of Default” in respect of the debt securities of your series means any of the following:
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do not pay the principal of, or any premium on, a debt security of the series within five days of its due date; |
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do not pay interest on a debt security of the series within 30 days of its due date; |
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we
do not deposit any sinking fund payment in respect of debt securities of the series within five days of its due date; |
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we
remain in breach of a covenant in respect of debt securities of the series for 60 days after we receive a written notice of default
stating we are in breach (the notice must be sent by either the trustee or holders of at least 25% of the principal amount of the
outstanding debt securities of the series); |
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we
file for bankruptcy or certain other events of bankruptcy, insolvency or reorganization occur and remain undischarged or unstayed
for a period of 90 days; |
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the
series of debt securities has an asset coverage, as such term is defined in the 1940 Act, of less than 100 per centum on the last
business day of each of twenty-four consecutive calendar months, giving effect to any exemptive relief granted to the Company by
the SEC; or |
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any
other Event of Default in respect of debt securities of the series described in the prospectus supplement occurs. |
An
Event of Default for a particular series of debt securities does not necessarily constitute an Event of Default for any other series
of debt securities issued under the same or any other indenture. The trustee may withhold notice to the holders of debt securities of
any default, except in the payment of principal, premium, interest, or sinking or purchase fund installment, if it in good faith considers
the withholding of notice to be in the interest of the holders.
Remedies
if an Event of Default Occurs
If
an Event of Default has occurred and is continuing, the trustee or the holders of not less than 25% in principal amount of the outstanding
debt securities of the affected series may (and the trustee shall at the request of such holders) declare the entire principal amount
of all the debt securities of that series to be due and immediately payable. This is called a declaration of acceleration of maturity.
A declaration of acceleration of maturity may be canceled by the holders of a majority in principal amount of the outstanding debt securities
of the affected series if (1) we have deposited with the trustee all amounts due and owing with respect to the securities (other than
principal that has become due solely by reason of such acceleration) and certain other amounts, and (2) any other Events of Default have
been cured or waived.
Except
in cases of default, where the trustee has some special duties, the trustee is not required to take any action under the indenture at
the request of any holders unless the holders offer the trustee reasonable protection from expenses and liability (called an “indemnity”).
If reasonable indemnity is provided, the holders of a majority in principal amount of the outstanding debt securities of the relevant
series may direct the time, method and place of conducting any lawsuit or other formal legal action seeking any remedy available to the
trustee. The trustee may refuse to follow those directions in certain circumstances. No delay or omission in exercising any right or
remedy will be treated as a waiver of that right, remedy or Event of Default.
Before
you are allowed to bypass your trustee and bring your own lawsuit or other formal legal action or take other steps to enforce your rights
or protect your interests relating to the debt securities, the following must occur:
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you
must give the trustee written notice that an Event of Default with respect to the relevant series of debt securities has occurred
and remains uncured; |
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the
holders of at least 25% in principal amount of all outstanding debt securities of the relevant series must make a written request
that the trustee take action because of the default and must offer reasonable indemnity, security or both to the trustee against
the costs, expenses and other liabilities of taking that action; |
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the
trustee must not have taken action for 60 days after receipt of the above notice and offer of indemnity and/or security; and |
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the
holders of a majority in principal amount of the outstanding debt securities of that series must not have given the trustee a direction
inconsistent with the above notice during that 60-day period. |
However,
you are entitled at any time to bring a lawsuit for the payment of money due on your debt securities on or after the due date.
Book-entry
and other indirect holders should consult their banks or brokers for information on how to give notice or direction to or make a request
of the trustee and how to declare or cancel an acceleration of maturity.
Each
year, we will furnish to each trustee a written statement of certain of our officers certifying that to their knowledge we are in compliance
with the indenture and the debt securities, or else specifying any default.
Waiver
of Default
Holders
of a majority in principal amount of the outstanding debt securities of the affected series may waive any past defaults other than:
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the
payment of principal, any premium or interest; or |
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in
respect of a covenant that cannot be modified or amended without the consent of each holder. |
Merger
or Consolidation
Under
the terms of the indenture, we are generally permitted to consolidate or merge with another entity. We are also permitted to sell all
or substantially all of our assets to another entity. However, we may not take any of these actions unless all the following conditions
are met:
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where
we merge out of existence or sell substantially all our assets, the resulting entity or transferee must agree to be legally responsible
for our obligations under the debt securities; |
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the
merger or sale of assets must not cause a default on the debt securities and we must not already be in default (unless the merger
or sale would cure the default). For purposes of this no-default test, a default would include an Event of Default that has occurred
and has not been cured, as described under “Events of Default” above. A default for this purpose would also include any
event that would be an Event of Default if the requirements for giving us a notice of default or our default having to exist for
a specific period of time were disregarded; |
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we
must deliver certain certificates and documents to the trustee; and |
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we
must satisfy any other requirements specified in the prospectus supplement relating to a particular series of debt securities. |
Modification
or Waiver
There
are three types of changes we can make to the indenture and the debt securities issued thereunder.
Changes
Requiring Your Approval
First,
there are changes that we cannot make to your debt securities without your specific approval. The following is a list of those types
of changes:
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change
the stated maturity of the principal of or interest on a debt security or the terms of any sinking fund with respect to any security; |
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reduce
any amounts due on a debt security; |
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reduce
the amount of principal payable upon acceleration of the maturity of an original issue discount or indexed security following a default
or upon the redemption thereof or the amount thereof provable in a bankruptcy proceeding; |
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adversely
affect any right of repayment at the holder’s option; |
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change
the place or currency of payment on a debt security (except as otherwise described in the prospectus or prospectus supplement); |
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impair
your right to sue for payment; |
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adversely
affect any right to convert or exchange a debt security in accordance with its terms; |
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modify
the subordination provisions in the indenture in a manner that is adverse to outstanding holders of the debt securities; |
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reduce
the percentage of holders of debt securities whose consent is needed to modify or amend the indenture; |
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reduce
the percentage of holders of debt securities whose consent is needed to waive compliance with certain provisions of the indenture
or to waive certain defaults; |
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modify
any other aspect of the provisions of the indenture dealing with supplemental indentures with the consent of holders, waiver of past
defaults, changes to the quorum or voting requirements or the waiver of certain covenants; and |
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change
any obligation we have to pay additional amounts. |
Changes
Not Requiring Approval
The
second type of change does not require any vote by the holders of the debt securities. This type is limited to clarifications, establishment
of the form or terms of new securities of any series as permitted by the indenture and certain other changes that would not adversely
affect holders of the outstanding debt securities in any material respect. We also do not need any approval to make any change that affects
only debt securities to be issued under the indenture after the change takes effect.
Changes
Requiring Majority Approval
Any
other change to the indenture and the debt securities would require the following approval:
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if
the change affects only one series of debt securities, it must be approved by the holders of a majority in principal amount of that
series; and |
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if
the change affects more than one series of debt securities issued under the same indenture, it must be approved by the holders of
a majority in principal amount of all of the series affected by the change, with all affected series voting together as one class
for this purpose. |
In
each case, the required approval must be given by written consent.
The
holders of a majority in principal amount of a series of debt securities issued under the indenture, voting together as one class for
this purpose, may waive our compliance with some of our covenants applicable to that series of debt securities. However, we cannot obtain
a waiver of a payment default or of any of the matters covered by the bullet points included above under “— Changes Requiring
Your Approval.”
Further
Details Concerning Voting
When
taking a vote, we will use the following rules to decide how much principal to attribute to a debt security:
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for
original issue discount securities, we will use the principal amount that would be due and payable on the voting date if the maturity
of these debt securities were accelerated to that date because of a default; |
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debt securities whose principal amount is not known (for example, because it is based on an index), we will use the principal face
amount at original issuance or a special rule for that debt security described in the prospectus supplement; and |
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for
debt securities denominated in one or more foreign currencies, we will use the U.S. dollar equivalent. |
Debt
securities will not be considered outstanding, and therefore not eligible to vote, if we have deposited or set aside in trust money for
their payment or redemption or if we, any other obligor, or any affiliate of us or any obligor own such debt securities. Debt securities
will also not be eligible to vote if they have been fully defeased as described later under “— Defeasance — Full Defeasance.”
We
will generally be entitled to set any day as a record date for the purpose of determining the holders of outstanding indenture securities
that are entitled to vote or take other action under the indenture. However, the record date may not be more than 30 days before the
date of the first solicitation of holders to vote on or take such action. If we set a record date for a vote or other action to be taken
by holders of one or more series, that vote or action may be taken only by persons who are holders of outstanding indenture securities
of those series on the record date and must be taken within eleven months following the record date.
Book-entry
and other indirect holders should consult their banks or brokers for information on how approval may be granted or denied if we seek
to change the indenture or the debt securities or request a waiver.
Defeasance
The
following provisions will be applicable to each series of debt securities unless we state in the applicable prospectus supplement that
the provisions of covenant defeasance and full defeasance will not be applicable to that series.
Covenant
Defeasance
Under
current U.S. federal tax law and the indenture, we can make the deposit described below and be released from some of the restrictive
covenants in the indenture under which the particular series was issued. This is called “covenant defeasance.” In that event,
you would lose the protection of those restrictive covenants but would gain the protection of having money and government securities
set aside in trust to repay your debt securities. If we achieved covenant defeasance and your debt securities were subordinated as described
under “— Indenture Provisions — Subordination” below, such subordination would not prevent the trustee under
the indenture from applying the funds available to it from the deposit described in the first bullet below to the payment of amounts
due in respect of such debt securities for the benefit of the subordinated debt holders. In order to achieve covenant defeasance, we
must do the following:
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we
must deposit in trust for the benefit of all holders of a series of debt securities a combination of cash (in such currency in which
such securities are then specified as payable at stated maturity) or government obligations applicable to such securities (determined
on the basis of the currency in which such securities are then specified as payable at stated maturity) that will generate enough
cash to make interest, principal and any other payments on the debt securities on their various due dates and any mandatory sinking
fund payments or analogous payments; |
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we
must deliver to the trustee a legal opinion of our counsel confirming that, under current U.S. federal income tax law, we may make
the above deposit without causing you to be taxed on the debt securities any differently than if we did not make the deposit; |
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we
must deliver to the trustee a legal opinion of our counsel stating that the above deposit does not require registration by us under
the 1940 Act, as amended, and a legal opinion and officers’ certificate stating that all conditions precedent to covenant defeasance
have been complied with; |
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defeasance
must not result in a breach or violation of, or result in a default under, of the indenture or any of our other material agreements
or instruments; |
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no
default or event of default with respect to such debt securities shall have occurred and be continuing and no defaults or events
of default related to bankruptcy, insolvency or reorganization shall occur during the next 90 days; and |
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satisfy
the conditions for covenant defeasance contained in any supplemental indentures. |
If
we accomplish covenant defeasance, you can still look to us for repayment of the debt securities if there were a shortfall in the trust
deposit or the trustee is prevented from making payment. For example, if one of the remaining Events of Default occurred (such as our
bankruptcy) and the debt securities became immediately due and payable, there might be such a shortfall. However, there is no assurance
that we would have sufficient funds to make payment of the shortfall.
Full
Defeasance
If
there is a change in U.S. federal tax law or we obtain an IRS ruling, as described in the second bullet below, we can legally release
ourselves from all payment and other obligations on the debt securities of a particular series (called “full defeasance”)
if we put in place the following other arrangements for you to be repaid:
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we
must deposit in trust for the benefit of all holders of a series of debt securities a combination of cash (in such currency in which
such securities are then specified as payable at stated maturity) or government obligations applicable to such securities (determined
on the basis of the currency in which such securities are then specified as payable at stated maturity) that will generate enough
cash to make interest, principal and any other payments on the debt securities on their various due dates and any mandatory sinking
fund payments or analogous payments. |
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we
must deliver to the trustee a legal opinion confirming that there has been a change in current U.S. federal tax law or an IRS ruling
that allows us to make the above deposit without causing you to be taxed on the debt securities any differently than if we did not
make the deposit. Under current U.S. federal tax law, the deposit and our legal release from the debt securities would be treated
as though we paid you your share of the cash and notes or bonds at the time the cash and notes or bonds were deposited in trust in
exchange for your debt securities and you would recognize gain or loss on the debt securities at the time of the deposit. |
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we
must deliver to the trustee a legal opinion of our counsel stating that the above deposit does not require registration by us under
the 1940 Act, as amended, and a legal opinion and officers’ certificate stating that all conditions precedent to defeasance
have been complied with. |
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defeasance
must not result in a breach or violation of, or constitute a default under, of the indenture or any of our other material agreements
or instruments. |
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no
default or event of default with respect to such debt securities shall have occurred and be continuing and no defaults or events
of default related to bankruptcy, insolvency or reorganization shall occur during the next 90 days. |
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satisfy
the conditions for full defeasance contained in any supplemental indentures. |
If
we ever did accomplish full defeasance, as described above, you would have to rely solely on the trust deposit for repayment of the debt
securities. You could not look to us for repayment in the unlikely event of any shortfall. Conversely, the trust deposit would most likely
be protected from claims of our lenders and other creditors if we ever became bankrupt or insolvent. If your debt securities were subordinated
as described later under “— Indenture Provisions — Subordination”, such subordination would not prevent the trustee
under the indenture from applying the funds available to it from the deposit referred to in the first bullet of the preceding paragraph
to the payment of amounts due in respect of such debt securities for the benefit of the subordinated debt holders.
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Outstanding Securities [Table Text Block] |
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Title of
Class | |
Amount
Authorized | | |
Amount
Held by Us or for
Our Account | | |
Amount
Outstanding |
Common stock | |
| 100,000,000 | | |
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25,398,640 |
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Outstanding Security, Authorized [Shares] |
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100,000,000
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Outstanding Security, Held [Shares] |
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Outstanding Security, Not Held [Shares] |
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25,398,640
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Business Contact [Member] |
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Cover [Abstract] |
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Entity Address, Address Line One |
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640
Fifth Avenue
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Entity Address, Address Line Two |
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12th Floor
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Entity Address, City or Town |
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New
York
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Entity Address, State or Province |
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NY
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Entity Address, Postal Zip Code |
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10019
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Contact Personnel Name |
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Mark
D. Klein
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Common Stock 1 [Member] |
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Other Annual Expenses [Abstract] |
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Basis of Transaction Fees, Note [Text Block] |
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as a percentage of net assets attributable to common stock
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Capital Stock, Long-Term Debt, and Other Securities [Abstract] |
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Security Title [Text Block] |
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Common
Stock
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Security Dividends [Text Block] |
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Distributions
may be paid to the holders of our common stock if, as and when authorized by our Board of Directors and declared by us out of assets
legally available therefor.
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Security Voting Rights [Text Block] |
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Each
share of our common stock is entitled to one vote on all matters submitted to a vote of stockholders, including the election of directors.
Except as provided with respect to any other class or series of stock, the holders of our common stock will possess exclusive voting
power. There is no cumulative voting in the election of directors, which means that holders of a majority of the outstanding shares of
common stock can elect all of our directors, and holders of less than a majority of such shares will be unable to elect any director.
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Security Liquidation Rights [Text Block] |
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In
the event of our liquidation, dissolution or winding up, each share of our common stock would be entitled to share ratably in all of
our assets that are legally available for distribution after we pay all debts and other liabilities and subject to any preferential rights
of holders of our preferred stock, if any preferred stock is outstanding at such time.
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Security Preemptive and Other Rights [Text Block] |
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Shares
of our common stock have no preemptive, conversion or redemption rights and are freely transferable, except where their transfer is restricted
by federal and state securities laws or by contract.
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Warrants [Member] |
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Capital Stock, Long-Term Debt, and Other Securities [Abstract] |
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Other Security, Title [Text Block] |
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WARRANTS
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Other Security, Description [Text Block] |
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DESCRIPTION
OF OUR WARRANTS
The
following is a general description of the terms of the warrants we may issue from time to time. Particular terms of any warrants we offer
will be described in the prospectus supplement relating to such warrants.
We
may issue warrants to purchase shares of our common stock, preferred stock or debt securities. Such warrants may be issued independently
or together with shares of common stock, preferred stock or debt securities and may be attached or separate from such securities. We
will issue each series of warrants under a separate warrant agreement to be entered into between us and a warrant agent. The warrant
agent will act solely as our agent and will not assume any obligation or relationship of agency for or with holders or beneficial owners
of warrants.
A
prospectus supplement will describe the particular terms of any series of warrants we may issue, including the following:
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the
title of such warrants; |
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the
aggregate number of such warrants; |
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the
price or prices at which such warrants will be issued; |
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the
currency or currencies, including composite currencies, in which the price of such warrants may be payable; |
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if
applicable, the designation and terms of the securities with which the warrants are issued and the number of warrants issued with
each such security or each principal amount of such security; |
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in
the case of warrants to purchase debt securities, the principal amount of debt securities purchasable upon exercise of one warrant
and the price at which and the currency or currencies, including composite currencies, in which this principal amount of debt securities
may be purchased upon such exercise; |
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in
the case of warrants to purchase common stock or preferred stock, the number of shares of common stock or preferred stock purchasable
upon exercise of one warrant and the price at which and the currency or currencies, including composite currencies, in which these
shares may be purchased upon such exercise; |
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the
date on which the right to exercise such warrants shall commence and the date on which such right will expire; |
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whether
such warrants will be issued in registered form or bearer form; |
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if
applicable, the minimum or maximum amount of such warrants which may be exercised at any one time; |
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if
applicable, the date on and after which such warrants and the related securities will be separately transferable; |
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information
with respect to book-entry procedures, if any; |
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the
terms of the securities issuable upon exercise of the warrants; |
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if
applicable, a discussion of certain U.S. federal income tax considerations; and |
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any
other terms of such warrants, including terms, procedures and limitations relating to the exchange and exercise of such warrants. |
We
and the warrant agent may amend or supplement the warrant agreement for a series of warrants without the consent of the holders of the
warrants issued thereunder to effect changes that are not inconsistent with the provisions of the warrants and that do not materially
and adversely affect the interests of the holders of the warrants.
Each
warrant will entitle the holder to purchase for cash such common stock or preferred stock at the exercise price or such principal amount
of debt securities as shall in each case be set forth in, or be determinable as set forth in, the prospectus supplement relating to the
warrants offered thereby. Warrants may be exercised as set forth in the prospectus supplement beginning on the date specified therein
and continuing until the close of business on the expiration date set forth in the prospectus supplement. After the close of business
on the expiration date, unexercised warrants will become void.
Upon
receipt of payment and a warrant certificate properly completed and duly executed at the corporate trust office of the warrant agent
or any other office indicated in the prospectus supplement, we will, as soon as practicable, forward the securities purchasable upon
such exercise. If less than all of the warrants represented by such warrant certificate are exercised, a new warrant certificate will
be issued for the remaining warrants. If we so indicate in the applicable prospectus supplement, holders of the warrants may surrender
securities as all or part of the exercise price for warrants.
Prior
to exercising their warrants, holders of warrants will not have any of the rights of holders of the securities purchasable upon such
exercise, including, in the case of warrants to purchase debt securities, the right to receive principal, premium, if any, or interest
payments, on the debt securities purchasable upon exercise or to enforce covenants in the applicable indenture or, in the case of warrants
to purchase common stock or preferred stock, the right to receive dividends or other distributions, if any, or payments upon our liquidation,
dissolution or winding up or to exercise any voting rights.
Under
the 1940 Act, we may generally only offer warrants provided that (1) the warrants expire by their terms within ten years; (2) the exercise
or conversion price is not less than the current market value at the date of issuance; (3) our stockholders authorize the issuance of
such warrants, and our Board of Directors approves such issuance on the basis that the issuance is in the best interests of the Company
and its stockholders; and (4) if the warrants are accompanied by other securities, the warrants are not separately transferable unless
no class of such warrants and the securities accompanying them has been publicly distributed. The 1940 Act also provides that the amount
of our voting securities that would result from the exercise of all outstanding warrants at the time of issuance may not exceed 25% of
our outstanding voting securities. As of the date of this prospectus, our stockholders have not authorized any issuance of warrants beyond
those that would otherwise be permitted without stockholder approval under the 1940 Act.
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Warrants or Rights, Called Title |
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warrants
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Preferred Stock 1 [Member] |
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Capital Stock, Long-Term Debt, and Other Securities [Abstract] |
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Security Title [Text Block] |
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PREFERRED STOCK
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Security Dividends [Text Block] |
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the
rate and time at which, and the preferences and conditions under which, any dividends will be paid on shares of such series, as well
as whether such dividends are participating or non-participating;
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Security Voting Rights [Text Block] |
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the
voting powers, if any, of the holders of shares of such series;
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Security Liquidation Rights [Text Block] |
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the
rights and preferences, if any, of holders of shares of such series upon our liquidation, dissolution or winding up of our affairs;
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Security Liabilities [Text Block] |
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any
limitations on our ability to pay dividends or make distributions on, or acquire or redeem, other securities while shares of such
series are outstanding;
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Security Preemptive and Other Rights [Text Block] |
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any
other relative powers, preferences and participating, optional or special rights of shares of such series, and the qualifications,
limitations or restrictions thereof.
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Preferred Stock Restrictions, Other [Text Block] |
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any
conditions or restrictions on our ability to issue additional shares of such series or other securities;
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Subscription Rights [Member] |
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Capital Stock, Long-Term Debt, and Other Securities [Abstract] |
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Other Security, Title [Text Block] |
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SUBSCRIPTION RIGHTS
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Other Security, Description [Text Block] |
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General
We
may issue subscription rights to our stockholders to purchase common stock. Subscription rights may be issued independently or together
with any other offered security and may or may not be transferable by the person purchasing or receiving the subscription rights. In
connection with a subscription rights offering to our stockholders, we would distribute certificates evidencing the subscription rights
and a prospectus supplement to our stockholders on the record date that we set for receiving subscription rights in such subscription
rights offering. We will not offer transferable subscription rights to our stockholders at a price equivalent to less than the then current
net asset value per share of common stock, excluding underwriting commissions, unless we first file a post-effective amendment that is
declared effective by the SEC with respect to such issuance and the common stock to be purchased in connection with the rights represents
no more than one-third of our outstanding common stock at the time such rights are issued (i.e., the right to purchase one new
share for a minimum of every three rights held). In connection with a subscription rights offering to our stockholders, we would distribute
certificates evidencing the subscription rights and a prospectus supplement to our stockholders on the record date that we set for receiving
subscription rights in such subscription rights offering. Our common stockholders will indirectly bear the expenses of such subscription
rights offerings, regardless of whether our common stockholders exercise any subscription rights.
The
applicable prospectus supplement would describe the following terms of subscription rights in respect of which this prospectus is being
delivered:
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the
period of time the offering would remain open (which shall be open a minimum number of days such that all record holders would be
eligible to participate in the offering and shall not be open longer than 120 days); |
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the
title of such subscription rights; |
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the
exercise price for such subscription rights (or method of calculation thereof); |
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the
ratio of the offering (which, in the case of transferable rights, will require a minimum of three shares to be held of record before
a person is entitled to purchase an additional share); |
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the
number of such subscription rights issued to each stockholder; |
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the
extent to which such subscription rights are transferable and the market on which they may be traded if they are transferable; |
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if
applicable, a discussion of certain U.S. federal income tax considerations applicable to the issuance or exercise of such subscription
rights; |
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the
date on which the right to exercise such subscription rights shall commence, and the date on which such right shall expire (subject
to any extension); |
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the
extent to which such subscription rights include an over-subscription privilege with respect to unsubscribed securities and the terms
of such over-subscription privilege; |
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any
termination right we may have in connection with such subscription rights offering; and |
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any
other terms of such subscription rights, including exercise, settlement and other procedures and limitations relating to the transfer
and exercise of such subscription rights. |
Exercise
of Subscription Rights
Each
subscription right would entitle the holder of the subscription right to purchase for cash such amount of shares of common stock at such
exercise price as shall in each case be set forth in, or be determinable as set forth in, the prospectus supplement relating to the subscription
rights offered thereby. Subscription rights may be exercised at any time up to the close of business on the expiration date for such
subscription rights set forth in the prospectus supplement. After the close of business on the expiration date, all unexercised subscription
rights would become void.
Subscription
rights may be exercised as set forth in the prospectus supplement relating to the subscription rights offered thereby. Upon receipt of
payment and the subscription rights certificate properly completed and duly executed at the corporate trust office of the subscription
rights agent or any other office indicated in the prospectus supplement we will forward, as soon as practicable, the shares of common
stock purchasable upon such exercise. To the extent permissible under applicable law, we may determine to offer any unsubscribed offered
securities directly to persons other than stockholders, to or through agents, underwriters or dealers or through a combination of such
methods, as set forth in the applicable prospectus supplement.
Dilutive
Effects
Any
stockholder who chooses not to participate in a rights offering should expect to own a smaller interest in us upon completion of such
rights offering. Any rights offering will dilute the ownership interest and voting power of stockholders who do not fully exercise their
subscription rights. Further, because the net proceeds per share from any rights offering may be lower than our then current net asset
value per share, the rights offering may reduce our net asset value per share. The amount of dilution that a stockholder will experience
could be substantial, particularly to the extent we engage in multiple rights offerings within a limited time period. In addition, the
market price of our common stock could be adversely affected while a rights offering is ongoing as a result of the possibility that a
significant number of additional shares may be issued upon completion of such rights offering. All of our stockholders will also indirectly
bear the expenses associated with any rights offering we may conduct, regardless of whether they elect to exercise any rights.
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Warrants or Rights, Called Title |
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subscription rights
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