Exhibit
2.h
GLADSTONE
CAPITAL CORPORATION
2,000,000 Common Shares
Underwriting Agreement
April 27, 2007
Robert W. Baird & Co. Incorporated
Ferris, Baker Watts, Incorporated
As Representatives of the
several Underwriters
listed on Schedule I
hereto
c/o Ferris, Baker Watts, Incorporated
100 Light Street
Baltimore, MD 21202
Ladies and Gentlemen:
Gladstone Capital
Corporation, a Maryland corporation (the “Company”), proposes, subject to the
terms and conditions stated herein, to issue and sell to the several
Underwriters named in Schedule I hereto (the “Underwriters”), an
aggregate of 2,000,000 shares (the “Firm Shares”) of its common stock, par
value $.001 per share (the “Common Shares”).
In addition, the Company has agreed to sell to the Underwriters, upon
the terms and conditions stated herein, up to an additional 300,000 Common
Shares (the “Additional Shares”) to cover over-allotments by the Underwriters,
if any. The Firm Shares and the
Additional Shares are collectively referred to in this Agreement as the
“Shares.” Robert W. Baird & Co.
Incorporated and Ferris, Baker Watts, Incorporated are acting as the joint
book-running representatives of the several Underwriters and in such capacity
are referred to in this Agreement as the “Representatives.”
The Company has entered
into an Amended and Restated Investment Advisory and Management Agreement,
dated as of October 1, 2006 (the “Investment Advisory Agreement”), with
Gladstone Management Corporation, a Delaware corporation registered as an
investment adviser (the “Adviser”) under the Investment Advisers Act of 1940,
as amended, and the rules and regulations thereunder (collectively, the
“Advisers Act”). The Company has entered
into an Administration Agreement, dated as of October 1, 2006 (the
“Administration Agreement”), with Gladstone Administration, LLC, a Delaware
limited liability company (the “Administrator”).
1. REPRESENTATIONS AND WARRANTIES. The
Company and the Adviser jointly and severally represent and warrant to, and
agree with, each Underwriter as of the date hereof, as of the Closing Date
(defined below) and as of the Date of Delivery (defined below) as follows:
(a) Compliance
with Registration Requirements.
(i) The
Company has prepared and filed with the Securities and Exchange Commission (the
“Commission”) in accordance with the provisions of the Securities Act of 1933,
as amended, and the rules and regulations of the Commission thereunder
(collectively, the “1933 Act”), a registration statement
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(Registration No. 333-100385) on Form N-2
with respect to the Shares, including a base prospectus (the “Base
Prospectus”), and such amendments or post-effective amendments to such
registration statement as may have been required to the date of this Agreement,
which has been prepared by the Company pursuant to and in conformity with the
requirements of the 1933 Act. The
Commission has declared effective such registration statement and any
post-effective amendments thereto.
Copies of such registration statement, including any amendments thereto,
each related preliminary prospectus (meeting the requirements of Rule 430,
430A, 430B or 430C of the 1933 Act) contained therein, and the exhibits,
financial statements and schedules thereto have heretofore been made available
by the Company to the Underwriters. A
final prospectus containing information permitted to be omitted at the time of
effectiveness by Rule 430A, 430B or 430C of the 1933 Act will be filed promptly
by the Company with the Commission in accordance with Rule 497 of the 1933
Act. The term “Registration Statement”
as used herein means the registration statement on Form N-2 (File No.
333-100385) at the later of the time it or any post-effective amendment thereto
became effective (or any part thereof is deemed effective under Rule
430B(f)(2)) (the “Effective Date”), including financial statements, all
exhibits and all documents incorporated by reference therein and, if
applicable, the information deemed to be included by Rule 430A, 430B or 430C of
the 1933 Act, and shall include any registration statement filed pursuant to
Rule 462(b) of the 1933 Act. The term
“Prospectus” as used herein means, together with the Base Prospectus, (i) the
final prospectus supplement with respect to this offering, as first filed with
the Commission pursuant to Rule 497 of the 1933 Act (the “Prospectus
Supplement”), or (ii) if no such filing is required, the form of final
prospectus included in the Registration Statement at the Effective Date,
including, in each case, the documents incorporated by reference therein. The term “Preliminary Prospectus” as used
herein shall mean a preliminary prospectus as contemplated by Rule 430, 430A,
430B or 430C of the 1933 Act included at any time in the Registration
Statement, including the Base Prospectus and any preliminary prospectus
supplement with respect to this offering (the “Preliminary Prospectus
Supplement”), and including in each case the documents incorporated by
reference therein. The Preliminary
Prospectus, together with the information set forth in the oral pricing script
included on Schedule II hereto (which information the Underwriters have
informed the Company is being conveyed orally by the Underwriters to
prospective purchasers at or prior to the Underwriters’ confirmation of sales
of the Shares in the public offering) is hereinafter referred to as the
“Disclosure Package.” The Company filed
a Form N-54A “Notification of Election to be Subject to Sections 55 through 65
of the 1940 Act Filed Pursuant to Section 54(a) of the 1940 Act” (File No.
814-00237) with the Commission on August 23, 2001, under the Investment Company
Act of 1940, as amended, and the rules and regulations promulgated thereunder
(collectively, the “1940 Act”).
(ii) The
Company meets the requirements for use of Form N-2 under the 1933 Act. Neither the Commission nor any state or other
jurisdiction or other regulatory body has issued, or to the knowledge of the
Company, has threatened to issue, any stop order under the 1933 Act or other
order suspending the effectiveness of the Registration Statement (as amended or
supplemented) or preventing or suspending the use of any Preliminary
Prospectus, the Disclosure
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Package or the Prospectus or suspending the
qualification or registration of the Shares for offering or sale in any
jurisdiction nor instituted or, to the knowledge of the Company, threatened to
institute proceedings for any such purpose.
The Disclosure Package as of 9:30 a.m. Eastern time on the date hereof
(the “Initial Time of Sale”), the Registration Statement at each Effective
Date, and the Prospectus and any amendments or supplements thereto when they
are filed with the Commission or become effective, as the case may be, contain
or will contain, as the case may be, all statements which are required to be
stated therein by, and in all material respects conform or will conform, as the
case may be, to the requirements of the 1933 Act. Neither the Registration Statement nor any
amendment thereto, as of the applicable Effective Date, contains or will contain,
as the case may be, any untrue statement of a material fact or omits or will
omit to state any material fact required to be stated therein or necessary to
make the statements therein, not misleading.
Neither the Prospectus nor any amendment or supplement thereto contains
or will contain, as the case may be, any untrue statement of a material fact or
omits or will omit to state any material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading.
Neither the Disclosure Package nor any amendment or supplement thereto,
at the Initial Time of Sale, contains or will contain, as the case may be, any
untrue statement of a material fact or omits or will omit to state any material
fact required to be stated therein or necessary to make the statements therein,
in the light of the circumstances under which they were made, not
misleading. Notwithstanding the
foregoing, the Company makes no representation or warranty as to information
contained in or omitted from the Registration Statement, the Disclosure Package
or the Prospectus, or any such amendment or supplement, in reliance upon, and
in conformity with, written information furnished to the Company relating to
the Underwriter by or on behalf of the Underwriter expressly for use in the
preparation thereof (as provided in Section 9(b) hereof).
(iii) The
Incorporated Documents (defined below) at the time they became effective or at
the time they were filed with the Commission, complied in all material respects
with the requirements of the Securities Exchange Act of 1934, as amended, and
the rules and regulations adopted by the Commission thereunder (collectively,
the “Exchange Act”). During the period
when a prospectus (or in lieu thereof, the notice contemplated by Rule 173(a)
of the 1933 Act) relating to any of the Shares is required to be delivered
under the 1933 Act by any Underwriter or any dealer, any future documents
incorporated by reference or deemed incorporated by reference so filed, when
they are filed, will comply in all material respects with the requirements of
the Exchange Act. No such incorporated
document contained or will contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to
make the statements therein not misleading in light of the circumstances under
which they were made; and, when read together and with the other information in
each of the Disclosure Package and the Prospectus, at the Effective Date of the
Registration Statement, at the Initial Time of Sale and at the Closing Date
(and, if any Additional Shares are purchased, at the Date of Delivery), each
such incorporated document did not or will not, as the case may
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be, contain an untrue statement of a material
fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading, in the light of the
circumstances under which they were made. As used herein, the term
“Incorporated Documents” means the documents that are incorporated by reference
in the Registration Statement, the Prospectus, any Preliminary Prospectus, or
any amendment or supplement thereto during the period when a prospectus (or in
lieu thereof, the notice contemplated by Rule 173(a) of the 1933 Act) relating
to any of the Shares is required to be delivered under the 1933 Act by any
Underwriter or any dealer.
(b) No
Material Adverse Change. Except as otherwise disclosed in the Disclosure
Package and the Prospectus, subsequent to the respective dates as of which
information is given in the Disclosure Package and the Prospectus: (i) there
has been no material adverse change, or any development that could reasonably
be expected to result in a material adverse change, in the condition, financial
or otherwise, or in the earnings, net asset value, prospects, business or
operations, whether or not arising from transactions in the ordinary course of
business, of the Company and its subsidiaries, considered as one entity (any
such change or effect, where the context so requires is called a “Material
Adverse Change” or a “Material Adverse Effect”); (ii) the Company and its
subsidiaries, considered as one entity, have not incurred any material
liability or obligation, indirect, direct or contingent, not in the ordinary
course of business or entered into any material transaction or agreement not in
the ordinary course of business; and (iii) except for regular dividends on
the Common Shares in amounts per share consistent with past practice, there has
been no dividend or distribution of any kind declared, paid or made by the
Company or, except for dividends paid to the Company or other subsidiaries, any
of its subsidiaries on any class of capital stock or repurchase or redemption
by the Company or any of its subsidiaries of any class of capital stock.
(c) Good
Standing of the Company. The Company has been duly formed and is existing
as a corporation under and by virtue of the laws of the State of Maryland and
is in good standing with the State Department of Assessments and Taxation of
Maryland (the “SDAT”), with all requisite corporate power and authority to own,
lease and license its properties, and conduct its business as currently carried
on and described in the Prospectus. The Company is duly qualified to do
business as a foreign corporation and is in good standing under the laws of
each jurisdiction which requires such qualification except where the failure to
be so qualified would not have a material adverse effect on the condition
(financial or otherwise), earnings, business or properties of the Company and
its Subsidiaries (as defined below), taken as a whole, whether or not arising
from transactions in the ordinary course of business.
(d) Subsidiaries
of the Company. As of December 31, 2006, the Company did not own, directly
or indirectly, any shares of stock or any other equity or long-term debt
securities of any corporation or other entity other than those corporations or
other entities described in the Disclosure Package and the Prospectus under the
caption “Portfolio Companies” (each a “Portfolio Company” and collectively, the
“Portfolio Companies”) and the subsidiaries listed in Item 27 of the
Registration Statement. Except as otherwise disclosed in the Disclosure Package
and the Prospectus, the Company does not control
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(as such term is defined in Section 2(a)(9)
of the 1940 Act) any of the Portfolio Companies.
(e) Good
Standing of the Company’s Subsidiaries. Each of the Company’s subsidiaries
has been duly organized and is validly existing as a limited partnership,
limited liability company or corporation in good standing under the laws of its
state of organization, with all requisite power and authority to own and lease
its properties, and conduct its business as described in the Disclosure Package
and the Prospectus. Each subsidiary has qualified to do business and is in good
standing as a foreign limited partnership, limited liability company or
corporation in every jurisdiction in which the ownership or leasing of its
properties or the nature or conduct of its business, as described in the
Disclosure Package and the Prospectus, requires such qualification except where
the failure to be so qualified would not have a Material Adverse Effect. All the
outstanding shares of capital stock, limited liability company interests or
partnership interests of each subsidiary of the Company, as the case may be,
have been duly and validly authorized and issued and are fully paid and
nonassessable, and, except as otherwise set forth in the Disclosure Package
and/or the Prospectus, all such interests are owned by the Company either
directly or through wholly owned subsidiaries free and clear of any perfected
security interest or any other security interests, claims, liens or
encumbrances. No such equity interest in
any subsidiary was issued in violation of the preemptive or any similar right
of any security holder of such subsidiary.
(f) Authorization
and Description of Common Shares.
The authorized, issued and outstanding capital stock of the Company is
as set forth in the Prospectus and the Disclosure Package as of the date
thereof under the caption “Capitalization” and “Consolidated Selected Financial
Data.” The Common Shares (including the
Shares) conform in all material respects to the description thereof contained
in the Prospectus and the Disclosure Package.
All issued and outstanding Common Shares of the Company have been duly
authorized and validly issued and are fully paid and non-assessable, and have been
offered and sold or exchanged by the Company in compliance with all applicable
laws (including, without limitation, federal and state securities laws). None
of the outstanding Common Shares of the Company was issued in violation of the
preemptive or other similar rights of any security holder of the Company. No
shares of preferred stock of the Company have been designated, offered, sold or
issued, and no shares of preferred stock are currently outstanding. The
description of the Company’s stock option, stock bonus and other stock plans or
arrangements, if any, and the options or other rights granted thereunder, set
forth in the Prospectus and the Disclosure Package accurately and fairly
presents the information required to be shown with respect to such plans,
arrangements, options and rights. All stock option, stock bonus and other
stock-based compensation plans, or arrangements comply in all material respects
with the provisions of the 1940 Act. The Shares to be purchased by the
Underwriter from the Company have been duly authorized for issuance and sale to
the Underwriter pursuant to this Agreement and, when issued and delivered by
the Company pursuant to this Agreement against payment of the consideration set
forth herein, will be validly issued, fully paid and non-assessable. The certificates representing the Shares
being sold by the Company are in valid and sufficient form.
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(g) Portfolio
Companies. The Company has duly authorized, executed and delivered and
currently is a party to or payee with respect to the promissory notes and other
agreements evidencing the investments described in the Disclosure Package and
the Prospectus under the caption “Portfolio Companies” (each a “Portfolio
Company Agreement”). Except as otherwise disclosed in the Disclosure Package
and the Prospectus, and to the Company’s knowledge, each Portfolio Company is
current, in all material respects with all its obligations under the applicable
Portfolio Company Agreements, no event of default (or a default which with the
giving of notice or the passage of time would become an event of default) has
occurred under such agreements, except to the extent that any such failure to
be current in its obligations and any such default would not reasonably be
expected to result in a Material Adverse Change.
(h) Authorization
of this Agreement. The Company and the Adviser have full legal right, power
and authority to enter into and perform this Agreement and to consummate the
transactions contemplated herein, including the issuance, sale and delivery of
the Shares as provided herein. The
Company’s and the Adviser’s execution and delivery of this Agreement and the
performance by the Company and the Adviser of their obligations under this
Agreement have been duly and validly authorized by the Company and the Adviser
and this Agreement has been duly executed and delivered by the Company and the
Adviser, and constitutes a valid and legally binding agreement of the Company
and the Adviser, enforceable against the Company and the Adviser in accordance
with its terms, except to the extent enforceability may be limited by (i) the
application of bankruptcy, reorganization, insolvency and other laws affecting
creditors’ rights generally and (ii) equitable principles being applied at the
discretion of a court before which any proceeding may be brought, and except as
rights to indemnity and contribution hereunder may be limited by federal or
state securities laws.
(i) BDC
Election. The Company has elected to be regulated as a business development
company under the 1940 Act and has filed with the Commission, pursuant to
Section 54(a) of the 1940 Act, a duly completed and executed Form N-54A (the
“Company BDC Election”); the Company has not filed with the Commission any
notice of withdrawal of the Company BDC Election pursuant to Section 54(c) of
the 1940 Act; the Company BDC Election remains in full force and effect, and,
to the Company’s actual knowledge, no order of suspension or revocation of such
election under the 1940 Act has been issued or proceedings therefore initiated
or threatened by the Commission. The
operations of the Company are in compliance with the provisions of the 1940 Act
applicable to business development companies and the rules and regulations of
the Commission thereunder applicable to business development companies, except
where such non-compliance would not reasonably be expected to result in a
Material Adverse Effect.
(j) Non-Contravention
of Existing Instruments; No Further Authorizations or Approvals Required. Neither the Company nor any subsidiary is in
violation of or default under its (i) charter, articles or certificate of
incorporation, by-laws, or similar organizational documents; (ii) under any
indenture, mortgage, loan or credit agreement, note, contract, franchise, lease
or other instrument, including any Portfolio Company Agreement, the Investment
Advisory Agreement and the Administration Agreement, to which the Company or
any of its subsidiaries is a party or bound or to which any of the
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property or assets of the Company or any of
its subsidiaries is subject; or (iii) any statute, law, rule, regulation,
judgment, order or decree of any court, regulatory body, administrative agency,
governmental body, arbitrator or other authority having jurisdiction over the
Company or such subsidiary or any of its properties, as applicable, except for
such violations or defaults as would not, individually or in the aggregate,
have a Material Adverse Effect. The
issue and sale of the Shares and the Company’s execution, delivery and performance
of this Agreement (i) have been duly authorized by all necessary corporate
action, have been effected in accordance with Sections 15(c) and 23(b) of the
1940 Act and will not result in any violation of the provisions of the charter,
articles or certificate of incorporation or by-laws of the Company or similar
organizational documents of any subsidiary, (ii) will not conflict with or
constitute a breach of, or default under, or result in the creation or
imposition of any lien, charge or encumbrance upon any property or assets of
the Company or any of its subsidiaries pursuant to, or require the consent of
any other party to, any existing instrument, except for such conflicts,
breaches, defaults, liens, charges or encumbrances as would not, individually or
in the aggregate, result in a Material Adverse Effect and (iii) will not result
in any violation of any law, administrative regulation or administrative or
court decree applicable to the Company or any subsidiary, except for such
violations that would not reasonably be expected to result in a Material
Adverse Effect. No consent, approval, authorization or other order of, or
registration or filing with, any court or other governmental or regulatory
authority or agency, is required for the Company’s execution, delivery and
performance of this Agreement or consummation of the transactions contemplated
hereby and by the Prospectus and the Disclosure Package, except such as have
already been obtained or made under the 1933 Act and the 1940 Act and such as
may be required under any applicable state securities or blue sky laws or from
the National Association of Securities Dealers, Inc. (the “NASD”).
(k) Registration
Rights. No holders of securities of
the Company have rights to the registration of such securities under the
Registration Statement.
(l) Preparation
of the Financial Statements. The
financial statements filed with the Commission as a part of the Registration
Statement and included in the Prospectus and the Disclosure Package present
fairly in all material respects the consolidated financial position of the
Company as of and at the dates indicated and the consolidated results of its
operations, consolidated changes in its stockholders’ equity and its
consolidated cash flows for the periods specified. Such financial statements
have been prepared in conformity with accounting principles generally accepted
in the United States (“GAAP”) applied on a consistent basis throughout the
periods involved, except as may be expressly stated in the related notes thereto.
No other financial statements or supporting schedules are required to be
included in the Registration Statement.
The consolidated selected financial data included in the Prospectus and
the Disclosure Package present fairly in all material respects the information
shown therein and has been compiled on a basis consistent with the consolidated
financial statements included or incorporated by reference in the Registration
Statement. All disclosures contained in
the Registration Statement, the Disclosure Package or the Prospectus regarding
“non-GAAP financial measures” (as such term is defined by the rules and
regulations of the Commission) comply with Regulation G under the Exchange Act
and Item 10 of Regulation S-K of the 1933 Act, to the extent applicable.
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(m) Absence
of Proceedings. No action, suit or
proceeding by or before any court or governmental agency, authority or body or
any arbitrator involving the Company or any of its Subsidiaries or its or their
property is, except as set forth in or contemplated in the Disclosure Package
and the Prospectus, pending or, to the knowledge of the Company, threatened
that (i) could reasonably be expected to have a Material Adverse Effect on the
performance of this Agreement or the consummation of any of the transactions
contemplated hereby or (ii) could reasonably be expected to have a Material
Adverse Effect.
(n) Independent
Registered Public Accounting Firm. PricewaterhouseCoopers LLP, who has
audited the financial statements and schedules of the Company and its
consolidated subsidiaries and the assessment of the Company’s management of the
Company’s internal control over financial reporting included in the
Registration Statement, the Disclosure Package and the Prospectus, are, and
were during the periods covered by its reports, an independent registered
public accounting firm within the meaning of the 1933 Act, the Exchange Act and
the respective rules and regulations of the Commission thereunder.
(o) Tax
Law Compliance. The Company and each
of its subsidiaries have filed all foreign, federal, state and local tax
returns that are required to be filed or have requested extensions thereof,
except in any case in which the failure so to file would not have a Material
Adverse Effect, except as set forth in or contemplated in the Prospectus and
has paid all taxes required to be paid by it and any other assessment, fine or
penalty levied against it, to the extent that any of the foregoing is due and
payable, except for any such assessment, fine or penalty that is currently
being contested in good faith or as would not have a Material Adverse Effect,
except as set forth in or contemplated in the Prospectus. There are no transfer taxes or other similar
fees or charges under federal law or the laws of any state, or any political
subdivision thereof, required to be paid in connection with the execution and
delivery of this Agreement or the issuance by the Company or sale by the
Company of the Shares that have not been or will not be paid.
(p) Insurance. The Company is insured by insurers of
recognized financial responsibility against such losses and risks and in such
amounts as are prudent and customary in the businesses in which they are
engaged; all policies of insurance insuring the Company or any of its subsidiaries
or their respective businesses, assets, employees, officers, and directors are
in full force and effect; the Company and its subsidiaries are in compliance
with the terms of such policies and instruments in all material respects; and
there are no claims by the Company or any of its subsidiaries under any such
policy or instrument as to which any insurance company is denying liability or
defending under a reservation of rights clause except such as would not have a
Material Adverse Effect; and neither the Company nor any such subsidiary has
any reason to believe that it will not be able to renew its existing insurance
coverage as and when such coverage expires or to obtain similar coverage from
similar insurers as may be necessary to continue its business at an increase in
cost that would not have a Material Adverse Effect, except as set forth in or
contemplated in the Disclosure Package and the Prospectus.
(q) All
Necessary Permits. The Company, its
subsidiaries and the Adviser possess all licenses, certificates, permits and
other authorizations issued by the
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appropriate federal, state or foreign
regulatory authorities necessary to conduct their respective businesses except
such licenses, certificates, permits and authorizations the failure to possess
would not, individually or in the aggregate, have a Material Adverse Effect,
and neither the Company, any of its subsidiaries, nor the Adviser has received
any notice of proceedings relating to the revocation or modification of any
such certificate, authorization or permit which, singly or in the aggregate, if
the subject of an unfavorable decision, ruling or finding, would have a
Material Adverse Effect, except as set forth in or contemplated in the
Disclosure Package and the Prospectus.
(r) No
Price Stabilization or Manipulation. The Company has not taken, directly or
indirectly, any action designed to or that would constitute or that might
reasonably be expected to cause or result in, under the Exchange Act or
otherwise, stabilization or manipulation of the price of any security of the
Company to facilitate the sale or resale of the Shares.
(s) Compliance
with Environmental Law. The Company
and its subsidiaries are (i) in compliance with any and all applicable foreign,
federal, state and local laws and regulations relating to the protection of
human health and safety, access for disabled persons, the environment or
hazardous or toxic substances or wastes, pollutants or contaminants
(“Environmental Laws”), (ii) have received and are in compliance with all
permits, licenses or other approvals required of them under applicable
Environmental Laws to conduct their respective businesses and (iii) have not
received notice of any actual or potential liability under any Environmental
Laws, except where such non-compliance with Environmental Laws, failure to
receive required permits, licenses or other approvals, or liability would not,
individually or in the aggregate, have a Material Adverse Effect, except as set
forth in or contemplated in the Prospectus. Except as set forth in the
Prospectus, neither the Company nor any of the subsidiaries has been named as a
“potentially responsible party” under the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as amended.
(t) Investment
Advisory Agreement. The terms of the Investment Advisory Agreement,
including compensation terms, comply in all material respects with all
applicable provisions of the 1940 Act and the Advisers Act and the approvals by
the board of directors and the Company’s stockholders, as applicable, of the
Investment Advisory Agreement have been obtained in accordance with the
requirements of Section 15 of the 1940 Act applicable to companies that have
elected to be regulated as business development companies under the 1940 Act.
(u) ERISA
Compliance. The Company and the Adviser are in compliance in all material
respects with all currently applicable provisions of the Employee Retirement
Income Security Act of 1974, as amended, including the regulations and
published interpretations thereunder (herein called “ERISA”); no “reportable
event” (as defined in ERISA) has occurred with respect to any “pension plan”
(as defined in Section 3(2) ERISA) for which the Company or any subsidiary
would have any liability; the Company and its subsidiaries have not incurred
and do not expect to incur liability under (i) Title IV of ERISA with respect
to termination of, or withdrawal from, any “pension plan” or (ii) Sections 412
or 4971 of the Internal Revenue Code of 1986, as amended (the “Code”); and
each “pension plan” for which the
Company or any subsidiary would have any liability that is intended to be
qualified under Section 401(a) of the Code is so
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qualified in all material respects and
nothing has occurred, whether by action or by failure to act, that would
reasonably be expected to cause the loss of such qualification.
(v) Compliance
with the Sarbanes-Oxley Act of 2002. Except with respect to certain
non-timely filings of reports required by Section 16 of the Exchange Act by certain
of the Company’s directors and executive officers, there is and has been no
material failure on the part of the Company and any of the Company’s directors
or officers, in their capacities as such, to comply with any provision of the
Sarbanes-Oxley Act of 2002 and the rules and regulations promulgated in
connection thereunder (the “Sarbanes-Oxley Act”).
(w) Accuracy
and Completeness of Exhibits. There
are no contracts or documents that are required to be described in the
Registration Statement, the Prospectus or the Disclosure Package or to be filed
as exhibits thereto by the 1933 Act, the 1940 Act or by the rules and
regulations thereunder that have not been so described and filed as
required. All descriptions of contracts
or documents described in the Registration Statement, the Prospectus and the
Disclosure Package are accurate and complete in all material respects. Notwithstanding the foregoing, as of the date
hereof, the Company has not filed certain contracts and documents as exhibits
to the Registration Statement, although all such exhibits will be filed by
post-effective amendment pursuant to Rule 462(d) under the 1933 Act within
twenty-four (24) hours of the execution of this Agreement.
(x) Advertisements. Any advertising, sales literature or other
promotional material (including “prospectus wrappers,” “broker kits,” “road
show slides” and “road show scripts” and “electronic road show presentations”)
authorized in writing by or prepared by the Company used in connection with the
public offering of the Shares (collectively, “Sales Material”) does not contain
an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein in
light of the circumstances under which they were made not misleading. Moreover, all Sales Material complied and
will comply in all material respects with the applicable requirements of the
1933 Act, the 1940 Act, and the rules and interpretations of the National
Association of Securities Dealers, Inc. (the “NASD”) (except that this
representation and warranty does not apply to statements in or omissions from
the Sales Material made in reliance upon and in conformity with information
relating to any Underwriter furnished to the Company by or on behalf of any
Underwriter through you expressly for use therein).
(y) Subchapter
M. The Company is currently organized and operates in compliance in all
material respects with the requirements to be taxed as, and has duly elected to
be taxed as (which election has not been revoked), a regulated investment
company under Subchapter M of the Internal Revenue Code of 1986, as amended
(“Subchapter M of the Code” and the “Code,” respectively). The Company intends to direct the investment
of the net proceeds received by it from the sale of the Shares in the manner
specified in the Registration Statement under the caption “Use of Proceeds” and
in such a manner as to continue to comply with the requirements of Subchapter M
of the Code.
10
(h) Additional Documents. At the Closing Date and the Date of Delivery,
counsel to the Underwriters shall have been furnished with such documents and
opinions as they may reasonably require for the purpose of enabling them to
pass upon the issuance and sale of the Shares as herein contemplated, or in
order to evidence the accuracy of any of the representations or warranties, or
the fulfillment of any of the conditions, herein contained; and all proceedings
taken by the Company in connection with the issuance and sale of the Shares as
herein contemplated shall be reasonably satisfactory in form and substance to
the Representatives and counsel to the Underwriters.
If any of the
conditions specified in this Section 7 shall not have been fulfilled when and
as provided in this Agreement, or if any of the opinions and certificates
mentioned above or elsewhere in this Agreement shall not be reasonably
satisfactory in form and substance to the Representatives and counsel for the
Underwriters, this Agreement and all obligations of the Underwriters hereunder
may be canceled at, or at any time prior to, the Closing Date by the
Representatives. Notice of such cancellation shall be given to the Company in
writing or by telephone or facsimile confirmed in writing.
The documents
required to be delivered by this Section 7 shall be delivered to the office of
Bass, Berry & Sims PLC, counsel for the Underwriters, at 100 Peabody Place,
Suite 900, Memphis, Tennessee 38103, on the Closing Date and any Date of
Delivery, as applicable.
8. REIMBURSEMENT OF UNDERWRITERS’ EXPENSES.
If the sale of the Shares provided for herein is not consummated because any
condition to the obligations of the Underwriters set forth in Section 7 hereof
is not satisfied, because of any termination pursuant to Section 11 hereof or
because of any refusal, inability or failure on the part of the Company or the
Adviser to perform any agreement herein or comply with any provision hereof
other than by reason of a default by any of the Underwriters, the Company will
reimburse the Underwriters severally through Robert W. Baird & Co.
Incorporated and Ferris, Baker Watts, Incorporated on demand for all
out-of-pocket expenses (including reasonable fees and disbursements of counsel)
that shall have been incurred by them in connection with the proposed purchase
and sale of the Shares.
9. INDEMNIFICATION AND CONTRIBUTION.
(a) The Company and the
Adviser jointly and severally agree to indemnify and hold harmless each
Underwriter, the directors, officers, employees and agents of each Underwriter
and each person who controls any Underwriter within the meaning of either the
1933 Act or the Exchange Act against any and all losses, claims, damages or
liabilities, joint or several, to which they or any of them may become subject
under the 1933 Act, the Exchange Act or other federal or state statutory law or
regulation, at common law or otherwise, insofar as such losses, claims, damages
or liabilities (or actions in respect thereof) arise out of or are based upon
any untrue statement or alleged untrue statement of a material fact contained
in the Registration Statement (or any amendment thereto), including any
information deemed to be a part thereof, or in any Preliminary Prospectus, the
Disclosure Package or the Prospectus, or in any amendment or supplement to any
of the foregoing, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary
23
to make the
statements therein not misleading, and agrees to reimburse each such
indemnified party, as incurred, for any legal or other expenses reasonably
incurred by them in connection with investigating, defending and/or settling
any such loss, claim, damage, liability or action; provided, however, that the
Company and the Adviser will not be liable in any such case to the extent that
any such loss, claim, damage or liability arises out of or is based upon any
such untrue statement or alleged untrue statement or omission or alleged
omission made therein in reliance upon and in conformity with written
information furnished to the Company by or on behalf of any Underwriter through
the Representatives specifically for inclusion therein. This indemnity
agreement will be in addition to any liability that the Company and the Adviser
may otherwise have.
(b) Each Underwriter
severally and not jointly agrees to indemnify and hold harmless the Company and
the Adviser, each director of the Company, each officer who signs the
Registration Statement, and each person who controls the Company and the
Adviser within the meaning of either the 1933 Act or the Exchange Act, to the
same extent as the foregoing indemnity from the Company and the Adviser to each
Underwriter, but only with reference to written information relating to such
Underwriter furnished to the Company by or on behalf of such Underwriter
through the Representatives specifically for inclusion in the documents
referred to in the foregoing indemnity. The Company and Adviser acknowledge
that (i) the public offering price and underwriting discount figures appearing
on the cover page and under the caption “Underwriting” in the Prospectus
Supplement; and (ii) the concession and reallowance figures appearing under the
caption “Underwriting” in the Prospectus Supplement constitute the only
information furnished in writing by or on behalf of the several Underwriters
for inclusion in the Prospectus Supplement or the Base Prospectus.
(c) Promptly after receipt
by an indemnified party under this Section 9 of notice of the commencement of
any action, such indemnified party will, if a claim in respect thereof is to be
made against the indemnifying party under this Section 9, notify the
indemnifying party in writing of the commencement thereof; but the failure so
to notify the indemnifying party (i) will not relieve it from liability under
paragraph (a) or (b) above unless and to the extent it did not otherwise learn
of such action and such failure results in the forfeiture by the indemnifying
party of substantial rights and defenses and (ii) will not, in any event,
relieve the indemnifying party from any obligations to any indemnified party
other than the indemnification obligation provided in paragraph (a) or (b)
above. The indemnifying party shall be entitled to appoint counsel of the
indemnifying party’s choice at the indemnifying party’s expense to represent
the indemnified party in any action for which indemnification is sought (in
which case the indemnifying party shall not thereafter be responsible for the
fees and expenses of any separate counsel retained by the indemnified party or
parties except as set forth below); provided, however, that such counsel shall
be reasonably satisfactory to the indemnified party. Notwithstanding the
indemnifying party’s election to appoint counsel to represent the indemnified
party in an action, the indemnified party shall have the right to employ
separate counsel (including local counsel), and the indemnifying party shall
bear the reasonable fees, costs and expenses of such separate counsel if (i) the
use of counsel chosen by the indemnifying party to represent the indemnified
party would present such counsel with a conflict of interest, (ii) the actual
or potential defendants in, or targets of, any such action include both the
indemnified party and the indemnifying party and the indemnified party shall
have reasonably concluded that there may be legal defenses
24
available to
it and/or other parties indemnified pursuant to this Agreement which are
different from or additional to those available to the indemnifying party,
(iii) the indemnifying party shall not have employed counsel satisfactory to
the indemnified party to represent the indemnified party within a reasonable
time after notice of the institution of such action or (iv) the indemnifying party
shall authorize the indemnified party to employ separate counsel at the expense
of the indemnifying party. An indemnifying party will not, without the prior
written consent of the indemnified parties, settle or compromise or consent to
the entry of any judgment with respect to any pending or threatened claim,
action, suit or proceeding in respect of which indemnification or contribution
may be sought hereunder (whether or not the indemnified parties are actual or
potential parties to such claim or action) unless such settlement, compromise
or consent includes an unconditional release of each indemnified party from all
liability arising out of such claim, action, suit or proceeding.
(d) In the event that the
indemnity provided in paragraph (a) or (b) of this Section 9 is unavailable to
or insufficient to hold harmless an indemnified party for any reason, the
Company, the Adviser and the Underwriters severally agree to contribute to the
aggregate losses, claims, damages and liabilities (including legal or other
expenses reasonably incurred in connection with investigating or defending
same) (collectively “Losses”) to which the Company, the Adviser and one or more
of the Underwriters may be subject in such proportion as is appropriate to
reflect the relative benefits received by the Company and the Adviser on the
one hand and by the Underwriters on the other from the offering of the Shares;
provided, however, that in no case shall any Underwriter (except as may be
provided in any agreement among underwriters relating to the offering of the
Shares) be responsible for any amount in excess of the underwriting discount or
commission applicable to the Shares purchased by such Underwriter hereunder. If
the allocation provided by the immediately preceding sentence is unavailable
for any reason, the Company, the Adviser and the Underwriters severally shall
contribute in such proportion as is appropriate to reflect not only such
relative benefits but also the relative fault of the Company and the Adviser on
the one hand and of the Underwriters on the other in connection with the
statements or omissions which resulted in such Losses as well as any other
relevant equitable considerations. Benefits received by the Company and the
Adviser shall be deemed to be equal to the total net proceeds from the offering
(before deducting expenses) received by it, and benefits received by the
Underwriters shall be deemed to be equal to the total underwriting discounts
and commissions, in each case as set forth on the cover page of the Prospectus.
Relative fault shall be determined by reference to, among other things, whether
any untrue or any alleged untrue statement of a material fact or the omission
or alleged omission to state a material fact relates to information provided by
the Company or by the Adviser on the one hand or the Underwriters on the other,
the intent of the parties and their relative knowledge, access to information
and opportunity to correct or prevent such untrue statement or omission. The
Company, the Adviser and the Underwriters agree that it would not be just and
equitable if contribution were determined by pro rata allocation or any other
method of allocation which does not take account of the equitable
considerations referred to above. Notwithstanding the provisions of this
paragraph (d), no person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the 1933 Act) shall be entitled to contribution
from any person who was not guilty of such fraudulent misrepresentation. For
purposes of this Section 9, each person who controls an Underwriter within the
meaning of either the Act or the Exchange Act and each director, officer,
employee and
25
agent of an
Underwriter shall have the same rights to contribution as such Underwriter, and
each person who controls the Company or the Adviser within the meaning of
either the 1933 Act or the Exchange Act, each officer of the Company who shall
have signed the Registration Statement and each director of the Company shall
have the same rights to contribution as the Company and the Adviser, subject in
each case to the applicable terms and conditions of this paragraph (d).
10. DEFAULT BY AN UNDERWRITER. If any
one or more Underwriters shall fail to purchase and pay for any of the Shares
agreed to be purchased by such Underwriter or Underwriters hereunder and such
failure to purchase shall constitute a default in the performance of its or
their obligations under this Agreement, the remaining Underwriters shall be
obligated severally to take up and pay for (in the respective proportions which
the amount of Shares set forth opposite their names in Schedule I hereto
bears to the aggregate amount of Shares set forth opposite the names of all the
nondefaulting Underwriters) the Shares which the defaulting Underwriter or Underwriters
agreed but failed to purchase; provided, however, that in the event that the
aggregate amount of Shares which the defaulting Underwriter or Underwriters
agreed but failed to purchase shall exceed 10% of the aggregate number of
Common Shares set forth in Schedule I hereto, the remaining Underwriters
shall have the right to purchase all, but shall not be under any obligation to
purchase any, of the Shares, and if such nondefaulting Underwriters do not
purchase all the Shares, this Agreement will terminate without liability to any
nondefaulting Underwriter or the Company or the Adviser. In the event of a
default by any Underwriter as set forth in this Section 10, the Closing Date
shall be postponed for such period, not exceeding five Business Days, as the
Representatives shall determine in order that the required changes in the
Registration Statement and the Prospectus or in any other documents or
arrangements may be effected. Nothing contained in this Agreement shall relieve
any defaulting Underwriter of its liability, if any, to the Company and any
nondefaulting Underwriter for damages occasioned by its default hereunder.
11. TERMINATION. This Agreement shall be
subject to termination in the absolute discretion of the Representatives, by
notice given to the Company prior to delivery of and payment for the Shares, if
at any time prior to such time (i) trading in any shares of the Company’s
capital stock shall have been suspended by the Commission or the NASDAQ or
trading in securities generally on the NASDAQ shall have been suspended or
limited or minimum prices shall have been established on the NASDAQ, (ii) a
banking moratorium shall have been declared either by federal or New York State
authorities or (iii) there shall have occurred any outbreak or escalation of
hostilities, declaration by the United States of a national emergency or war,
or other calamity or crisis the effect of which on financial markets is such as
to make it, in the sole judgment of the Representatives, impractical or
inadvisable to proceed with the offering or delivery of the Shares as
contemplated by the Prospectus.
12. REPRESENTATIONS AND INDEMNITIES TO SURVIVE.
The respective agreements, representations, warranties, indemnities and other
statements of the Company and the Adviser or the officers of the Company and of
the Underwriters set forth in or made pursuant to this Agreement will remain in
full force and effect, regardless of any investigation made by or on behalf of
any Underwriter or the Company, the Adviser or any of the officers, directors,
employees, agents or controlling persons referred to in Section 9 hereof, and
will survive delivery of and payment for the Shares. The provisions of Sections
8 and 9 hereof shall survive the termination or cancellation of this Agreement.
26
13. NOTICES. All communications
hereunder will be in writing and effective only on receipt, and, if sent to the
Company or the Adviser, will be mailed, delivered or telefaxed to Gladstone
Capital Corporation 1521 Westbranch Drive, Suite 200, McLean, Virginia 22102,
Fax number 703-287-5801, Attention: David Gladstone, Chairman and Chief
Executive Officer, with a copy to Cooley Godward Kronish LLP, One Freedom
Square, Reston Town Center, 11951 Freedom Drive, Reston, Virginia 20190, Fax
number 703-456-8100, Attention: Darren DeStefano, Esq. and if sent to the
Representatives, will be mailed, delivered or telefaxed to Robert W. Baird
& Co. Incorporated, 1751 Pinnacle Drive, Suite 1100, McLean VA 22102, Fax
Number: 703-821-5789, Attention: Mark C. Micklem, and Ferris, Baker Watts,
Incorporated, 100 Light Street, Baltimore, MD 21202, Fax number 410-659-4632,
Attention: Cliff Booth with a copy to Bass, Berry & Sims PLC, The Tower of
Peabody Place, 100 Peabody Place, Suite 900, Memphis, Tennessee 38103, Fax
number 901-543-5999, Attention: John A. Good, Esq.
14. NO FIDUCIARY DUTY. Notwithstanding any preexisting relationship,
advisory or otherwise, between the parties or any oral representations or
assurances previously or subsequently made by the Underwriters, the Company
acknowledges and agrees that: (a) nothing herein shall create a fiduciary or
agency relationship between the Company and the Underwriters; (b) the
Underwriters are not acting as advisors, expert or otherwise, to the Company in
connection with this offering, sale of the Shares or any other services the
Underwriters may be deemed to be providing hereunder, including, without
limitation, with respect to the public offering price of the Shares; (c) the
relationship between the Company and the Underwriters is entirely and solely
commercial, based on arms-length negotiations; (d) any duties and obligations
that the Underwriters may have to the Company shall be limited to those duties
and obligations specifically stated herein; and (e) notwithstanding anything in
this Underwriting Agreement to the contrary, the Company acknowledges that the
Underwriters may have financial interests in the success of the offering that
are not limited to the difference between the price to the public and the purchase
price paid to the Company by the Underwriters for the Shares and the
Underwriters have no obligation to disclose, or account to the Company for, any
of such additional financial interests.
The Company hereby waives and releases, to the fullest extent permitted
by law, any claims that the Company may have against the Underwriters with
respect to any breach or alleged breach of fiduciary duty.
15. SUCCESSORS. This Agreement will
inure to the benefit of and be binding upon the parties hereto and their respective
successors and the officers, directors, employees, agents and controlling
persons referred to in Section 9 hereof, and no other person will have any
right or obligation hereunder.
16. APPLICABLE LAW. This Agreement will
be governed by and construed in accordance with the laws of the State of New
York applicable to contracts made and to be performed within the State of New
York.
17. COUNTERPARTS. This Agreement may be
signed in one or more counterparts, each of which shall constitute an original
and all of which together shall constitute one and the same agreement.
18. HEADINGS. The section headings used
herein are for convenience only and shall not affect the construction hereof.
27
If the
foregoing is in accordance with your understanding of our agreement, please
sign and return to us the enclosed duplicate hereof, whereupon this letter and
your acceptance shall represent a binding agreement among the Company, the
Adviser and the several Underwriters.
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Very truly yours,
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Gladstone
Capital Corporation
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By:
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/s/ David
Gladstone
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Name:
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David Gladstone
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Title:
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Chairman and CEO
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Gladstone
Management Corporation
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By:
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/s/ George
Stelljes III
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Name:
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George Stelljes
III
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Title:
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President
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CONFIRMED AND ACCEPTED
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as of the date
first above mentioned by:
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Robert
W. Baird & Co. Incorporated
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Ferris,
Baker Watts, Incorporated
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For themselves
and on behalf of the several
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Underwriters
named in Schedule I hereto.
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Robert W. Baird & Co. Incorporated
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By:
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/s/ Mark C.
Micklem
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Name:
Mark C. Micklem
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Title:
Managing Director
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Ferris, Baker Watts, Incorporated
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By:
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/s/ Scott T.
Bass
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Name:
Scott T. Bass
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Title:
Vice President
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28
SCHEDULE
I
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Underwriters
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Number of
Firm Shares
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Robert W. Baird &
Co. Incorporated
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475,000
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Ferris, Baker Watts,
Incorporated
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300,000
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Oppenheimer & Co.
Inc.
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500,000
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BB&T Capital
Markets, a division of Scott & Stringfellow, Inc
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315,000
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J.J.B. Hilliard, W.L.
Lyons, Inc.
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155,000
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Davenport & Company
LLC
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135,000
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Morgan Keegan &
Company, Inc.
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120,000
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Total
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2,000,000
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29
SCHEDULE
II
Members of the
Underwriter’s selling group orally communicated the following information to
their respective customers:
The Company
proposes to sell 2,000,000 shares of common stock to the Underwriters. The last
reported sale price of the Company’s common stock on the NASDAQ on April 26,
2007 was $24.52 per share.
The purchase price
for the common shares will be $23.0375 per share, which represents a price to
the public of $24.25 per share, less an underwriting discount of $1.2125 per
share.
30
SCHEDULE
III
Form of Lock-Up
Agreement
April 27, 2007
Robert W. Baird & Co. Incorporated
Ferris, Baker Watts, Incorporated
As Representatives of the
several Underwriters,
listed on Schedule I to
the Underwriting Agreement
c/o Ferris, Baker Watts, Incorporated
100 Light Street
Baltimore, MD 21202
Re: Proposed Public Offering
by Gladstone Capital Corporation
Ladies and Gentlemen:
This
letter is being delivered to you in connection with the proposed Underwriting
Agreement (the “Underwriting Agreement”) among Gladstone Capital Corporation, a
Maryland corporation (the “Company”), Gladstone Management Corporation, a
Delaware corporation (the “Adviser”) and the several underwriters listed on
Schedule I thereto (the “Underwriters”), relating to an underwritten public
offering (the “Public Offering”) of shares (the “Shares”) of the Company’s common
stock, $.001 par value per share (the “Common Stock”), pursuant to a
Registration Statement on Form N-2 (File No. 333-100385) (the “Registration
Statement”) filed with the Securities and Exchange Commission (the “SEC”).
In
consideration of the agreement by the Underwriters to continue their efforts in
connection with the offering of the Shares, and of other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the undersigned hereby agrees to the following:
(a) During the period
beginning on the date hereof and continuing to and including the 90th day after the date of the execution of the
Underwriting Agreement (the “Lock-Up Period”), the undersigned will not,
without the prior written consent of the Representatives, directly or
indirectly:
(i) offer, sell, contract
to sell, pledge, grant any option to purchase, make any short sale or otherwise
dispose of any shares of Common Stock, or any options or warrants to purchase
any shares of Common Stock, or any securities convertible into, exchangeable
for or that represent the right to receive shares of Common Stock, whether now
owned or hereinafter acquired, owned directly by the undersigned (including
holding as a custodian) or with respect to which the undersigned has beneficial
ownership within the rules and regulations of the SEC (collectively the “Undersigned’s
Shares”), or file or demand or request that the Company file any registration
statement under the Securities Act of 1933, as amended (the “1933 Act”), with
respect to any of the foregoing, or otherwise include any of the foregoing in
any registration statement filed by the Company under the 1933 Act; or
31
(ii) enter into any swap or
any other agreement or any transaction that transfers, in whole or in part,
directly or indirectly, the economic consequence of ownership of any Common
Stock;
whether any such
swap or transaction described in (i) or (ii) above is to be settled by delivery
of Common Stock, in cash or otherwise. Notwithstanding the foregoing, in the
event that either (x) during the last 15 calendar days plus 3 business days
before the Lock-Up Period expires, the Company issues an earnings release (or a
release regarding material news relating to the Company) or (y) prior to the
expiration of the Lock-Up Period, the Company announces that it will release
earnings results during the 16-day period beginning on the last day of the
Lock-Up Period, the restrictions imposed by this subparagraph shall continue to
apply until the expiration of the date that is 15 calendar days plus 3 business
days after the date of the earnings release or the material news or material
event occurs.
(b) The
restrictions set forth in Paragraph (a) above is expressly agreed to preclude
the undersigned from engaging in any hedging or other transaction which is
designed to or reasonably expected to lead to, or result in, a sale or
disposition of the Undersigned’s Shares even if such shares would be disposed
of by someone other than the undersigned.
Such prohibited hedging or other transactions would include without
limitation any short sale (whether or not against the box) or any purchase,
sale or grant of any right (including without limitation any put or call
option) with respect to any of the Undersigned’s Shares or with respect to any
security that includes, relates to, or derives any significant part of its
value from the Undersigned’s Shares.
(c) The undersigned further
represents and agrees that the undersigned has not taken and will not take,
directly or indirectly, any action which is designed to or which has
constituted or which might reasonably be expected to cause or result in
stabilization or manipulation of the price of any security of the Company to
facilitate the sale or resale of the Shares, or which has otherwise constituted
or will constitute any prohibited bid for or purchase of the Shares or any
related securities.
(d) Notwithstanding the
foregoing, the undersigned may transfer the Undersigned’s Shares (i) as a bona fide gift or gifts, provided that the
donee or donees thereof agree to be bound by the restrictions set forth herein,
(ii) to any trust for the direct or indirect benefit of the undersigned or the
immediate family of the undersigned, provided that the trustee of the trust
agrees to be bound by the restrictions set forth herein, and provided further
that any such transfer shall not involve a disposition for value, or (iii) with
the prior written consent of Ferris, Baker Watts, Incorporated and Robert W.
Baird & Co. Incorporated on behalf of the Underwriters. For purposes of this Lock-Up Agreement, “immediate
family” shall mean the undersigned’s spouse, children, grandchildren, parents
and siblings.
(e) The undersigned further
represents that the undersigned now has, and, except as contemplated by clause
(i), (ii), or (iii) in Paragraph (d) above, for the duration of this Lock-Up
Agreement will have, good and marketable title to the Undersigned’s Shares,
free and clear of all liens, encumbrances, and claims whatsoever with the
exception of a security interest in certain of the Undersigned’s Shares in
favor of the Company, which resulted from the purchase of such shares via
promissory note by the Undersigned. The
undersigned also agrees and consents to the entry of stop transfer instructions
with the Company’s transfer agent and registrar against the transfer of the
Undersigned’s Shares except in compliance with the foregoing restrictions.
32
This Agreement
shall lapse and become null and void if no Shares have been purchased and paid
for pursuant to the Underwriting Agreement by May 5, 2007.
The undersigned
understands that the Company and the Underwriters are relying upon this Lock-Up
Agreement in proceeding toward consummation of the offering.
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Very truly yours,
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Signature:
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Print Name:
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33