Exhibit 99.h
UNDERWRITING AGREEMENT
GLADSTONE CAPITAL CORPORATION
7,700,000 SHARES
COMMON STOCK
($0.001 PAR VALUE)
, 2001
UBS Warburg LLC
First Union Securities, Inc.
Xxxxxxxxx Xxxxxxxx, Inc.
BB&T Capital Markets/Xxxxx & Xxxxxxxxxxxx, Inc.
Xxxxxx, Xxxxx Xxxxx, Incorporated
as Managing Underwriters
c/o UBS WARBURG LLC
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Ladies and Gentlemen:
Gladstone Capital Corporation, a Maryland corporation (the
"Company"), proposes to issue and sell to the underwriters named in Schedule A
annexed hereto (the Underwriters) an aggregate of 7,700,000 shares (the "Firm
Shares") of Common Stock, $0.001 par value (the "Common Stock"), of the Company.
In addition, solely for the purpose of covering over-allotments, the Company
proposes to grant to the Underwriters the option to purchase from the Company up
to an additional 1,155,000 shares of Common Stock (the "Additional Shares"). The
Firm Shares and the Additional Shares are hereinafter collectively sometimes
referred to as the "Shares." The Shares are described in the Prospectus which is
referred to below.
The Company has filed, in accordance with the provisions of
the Securities Act of 1933, as amended, and the rules and regulations thereunder
(collectively called the "Securities Act"), and the Investment Company Act of
1940, as amended, and the rules and regulations thereunder (collectively called
the "Investment Company Act"), with the Securities and Exchange Commission (the
"Commission") a registration statement on Form N-2, (File No. 333-63700 )
including a prospectus, relating to the Shares. The Company has furnished to
you, for use by the Underwriters and by dealers, copies of one or more
preliminary prospectuses (each of these being herein called a "Preliminary
Prospectus") relating to the Shares. Except
where the context otherwise requires, the registration statement, as amended
when it becomes effective, including all documents filed as a part thereof, and
including any information contained in a prospectus subsequently filed with the
Commission pursuant to Rule 497(h) under the Securities Act and deemed to be
part of the registration statement at the time of effectiveness pursuant to Rule
430(A) under the Securities Act and also including any registration statement
filed pursuant to Rule 462(b) under the Securities Act, is herein called the
Registration Statement, and the prospectus, in the form filed by the Company
with the Commission pursuant to Rule 497(h) under the Securities Act on or
before the second business day after the date hereof (or such earlier time as
may be required under the Securities Act) or, if no such filing is required, the
form of final prospectus included in the Registration Statement at the time it
became effective, is herein called the Prospectus.
The Company and the Underwriters agree as follows:
1. SALE AND PURCHASE. Upon the basis of the warranties and
representations and subject to the terms and conditions herein set forth, the
Company agrees to sell to the respective Underwriters and each of the
Underwriters, severally and not jointly, agrees to purchase from the Company the
respective number of Firm Shares (subject to such adjustment as you may
determine to avoid fractional shares) which bears the same proportion to the
number of Firm Shares to be sold by the Company, as the number of Firm Shares
set forth opposite the name of such Underwriter in Schedule A annexed hereto
bears to the total number of Firm Shares to be sold by the Company, in each case
at a purchase price of $ _____ per Share. The Company is advised by you that the
Underwriters intend (i) to make a public offering of their respective portions
of the Firm Shares as soon after the effective date of the Registration
Statement as in your judgment is advisable and (ii) initially to offer the Firm
Shares upon the terms set forth in the Prospectus.
It is understood that up to 200,000 Firm Shares will initially
be reserved by the several Underwriters for offer and sale upon the terms and
conditions set forth in the Prospectus under the caption "Underwriting" to
directors, officers and employees of the Company and certain associated persons
and entities at a price equal to $_____ per share less the sales load payable
with respect to the shares offered to the public; provided that under no
circumstances will any Underwriter be liable to the Company for any action taken
or omitted in good faith in connection with such offering to such persons. It is
further understood that any of such Firm Shares which are not purchased by such
persons will be offered by the Underwriters to the public upon the terms and
conditions set forth in the Prospectus at the public offering price.
In addition, the Company hereby grants to the several
Underwriters the option to purchase, and upon the basis of the warranties and
representations and subject to the terms and conditions herein set forth, the
Underwriters shall have the right to purchase, severally and not jointly, from
the Company ratably in accordance with the number of Firm Shares to be purchased
by each of them (subject to such adjustment as you shall determine to avoid
fractional shares), all or a portion of the Additional Shares as may be
necessary to cover over-allotments made in connection with the offering of the
Firm Shares, at the same purchase price per share to be paid by the Underwriters
to the Company for the Firm Shares. This option may be exercised by you
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on behalf of the several Underwriters at any time (but not more than once) on or
before the thirtieth day following the date hereof, by written notice to the
Company. Such notice shall set forth the aggregate number of Additional Shares
as to which the option is being exercised, and the date and time when the
Additional Shares are to be delivered (such date and time being herein referred
to as the additional time of purchase); PROVIDED, HOWEVER, that the additional
time of purchase shall not be earlier than the time of purchase (as defined
below) nor earlier than the second business day after the date on which the
option shall have been exercised nor later than the tenth business day after the
date on which the option shall have been exercised. The number of Additional
Shares to be sold to each Underwriter shall be the number which bears the same
proportion to the aggregate number of Additional Shares being purchased as the
number of Firm Shares set forth opposite the name of such Underwriter on
Schedule A hereto bears to the total number of Firm Shares (subject, in each
case, to such adjustment as you may determine to eliminate fractional shares).
No Additional Shares shall be sold or delivered unless the Firm Shares
previously have been, or simultaneously are, sold and delivered. As used herein
"business day" shall mean a day on which the New York Stock Exchange is open for
trading.
2. PAYMENT AND DELIVERY. Payment of the purchase price for
the Firm Shares shall be made to the Company by Federal Funds wire transfer,
against delivery of the certificates for the Firm Shares to you through the
facilities of the Depository Trust Company (DTC) for the respective accounts
of the Underwriters. Such payment and delivery shall be made at 10:00 A.M.,
New York City time, on , 2001 (unless another time shall be agreed to
by you and the Company or unless postponed in accordance with the provisions
of Section 8 hereof). The time at which such payment and delivery are
actually made is hereinafter sometimes called the time of purchase.
Certificates for the Firm Shares shall be delivered to you in definitive form
in such names and in such denominations as you shall specify no later than
the second business day preceding the time of purchase. For the purpose of
expediting the checking of the certificates for the Firm Shares by you, the
Company agrees to make such certificates available to you for such purpose at
least one full business day preceding the time of purchase.
Payment of the purchase price for the Additional Shares shall
be made at the additional time of purchase in the same manner and at the same
office as the payment for the Firm Shares. Certificates for the Additional
Shares shall be delivered to you in definitive form in such names and in such
denominations as you shall specify no later than the second business day
preceding the additional time of purchase. For the purpose of expediting the
checking of the certificates for the Additional Shares by you, the Company
agrees to make such certificates available to you at the office of DTC or its
designated custodian for such purpose at least one full business day preceding
the additional time of purchase.
The documents to be delivered at the time of purchase and any
additional time of purchase by or on behalf of the parties hereto pursuant to
Section 6 hereof, including the cross receipt for the shares and any additional
documents requested by the Underwriters pursuant to Section 6(j) hereof, will be
delivered at the offices of Xxxxxx Godward LLP, One Freedom Square, Reston Town
Center, 00000 Xxxxxxx Xxxxx, Xxxxxx, XX 00000 and the Shares will be delivered
at the office of DTC or its designated custodian.
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3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
represents and warrants to each of the Underwriters that:
(a) the Company has not received, and has no notice of, any
order of the Commission preventing or suspending the use of any Preliminary
Prospectus, or instituting proceedings for that purpose, and when the
Registration Statement becomes effective, the Registration Statement and the
Prospectus will fully comply in all material respects with the provisions of the
Securities Act, and the Registration Statement will not contain an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not misleading, and
the Prospectus will not contain an untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading; any statutes, regulations, contracts or other documents that are
required to be described in the Registration Statement or the Prospectus or to
be filed as exhibits to the Registration Statement have been so described or
filed; PROVIDED, HOWEVER, that the Company makes no warranty or representation
with respect to any statement contained in the Registration Statement or the
Prospectus in reliance upon and in conformity with information concerning the
Underwriters and furnished in writing by or on behalf of any Underwriter through
you to the Company expressly for use in the Registration Statement or the
Prospectus; and the Company has not distributed any offering material in
connection with the offering or sale of the Shares other than the Registration
Statement, the Preliminary Prospectus, the Prospectus or any other materials, if
any, permitted by the Securities Act;
(b) as of the date of this Agreement, the Company's
capitalization conforms to the description thereof in the Prospectus and has
been duly authorized and all of the issued and outstanding shares of capital
stock including Common Stock of the Company have been duly and validly
authorized and issued and are fully paid and non-assessable, have been issued in
compliance with all federal and state securities laws and were not issued in
violation of any preemptive right, resale right, right of first refusal or
similar right;
Except as disclosed in the Prospectus and the financial
statements of the Company and related notes thereto included in the Prospectus,
neither the Company nor the Subsidiaries (as hereinafter defined) has
outstanding any options or warrants to purchase, or any preemptive rights or
other rights to subscribe for or to purchase any securities or obligations
convertible into, or any contracts or commitments to issue or sell, shares of
their respective capital stock or any such options, rights, convertible
securities or obligations. The description of the Company's stock option and
other stock plans or arrangements, and the options or other rights granted
thereunder, as set forth in the Prospectus, accurately and fairly presents in
all material respects the information required to be shown with respect to such
plans, arrangements, options and rights;
(c) the Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State of
Maryland, with full power and
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authority to own, lease and operate its properties and conduct its business as
described in the Registration Statement;
(d) the Company is duly qualified to do business as a foreign
corporation in good standing in each jurisdiction where the ownership or leasing
of its properties or the conduct of its business requires such qualification,
except where the failure to so qualify would not have a material adverse effect
on the business, properties, financial condition or results of operation of the
Company and its Subsidiaries (as hereinafter defined) taken as a whole (a
"Material Adverse Effect"). The Company has no subsidiaries (as defined in the
Rules and Regulations) other than Gladstone Advisers, Inc., a Virginia
corporation (the "Subsidiary"); other than the Subsidiary, the Company does not
own, directly or indirectly, any shares of stock or any other equity or
long-term debt securities of any corporation or have any equity interest in any
firm, partnership, joint venture, association or other entity; complete and
correct copies of the certificates of incorporation and of the by-laws of the
Company and the Subsidiary and all amendments thereto have been delivered to
you, and except as set forth in the exhibits to the Registration Statement no
changes therein will be made subsequent to the date hereof and prior to the time
of closing or, if later, the additional time of purchase; the Subsidiary has
been duly incorporated and is validly existing as a corporation in good standing
under the laws of the Commonwealth of Virginia, with full power and authority to
own, lease and operate its properties and to conduct its business as described
in the Registration Statement; the Subsidiary is duly qualified to do business
as a foreign corporation, partnership, or limited liability company, as the case
may be, in good standing in each jurisdiction where the ownership or leasing of
the properties or the conduct of its business requires such qualification,
except where the failure to so qualify would not have a Material Adverse Effect;
all of the outstanding shares of capital stock of the Subsidiary have been duly
authorized and validly issued, are fully paid and non-assessable and (except as
otherwise described in this Section 3(d)) are owned by the Company subject to no
security interest, other encumbrance or adverse claims; no other equity
interests, options, warrants or other rights to purchase, agreements or other
obligations to issue or other rights to convert any obligation into shares of
capital stock or equity interests in the Subsidiary are outstanding.
(e) the Company and the Subsidiary are in compliance in all
material respects with the laws, orders, rules, regulations and directives
issued or administered by such jurisdictions;
(f) neither the Company nor the Subsidiary is in breach of, or
in default under (nor has any event occurred which with notice, lapse of time,
or both would result in any breach of, or constitute a default under), its
respective charter or bylaws or in the performance or observance of any
obligation, agreement, covenant or condition contained in any indenture,
mortgage, deed of trust, bank loan or credit agreement or other evidence of
indebtedness, or any lease, contract or other agreement or instrument to which
the Company or the Subsidiary is a party or by which either of them or any of
their properties is bound, and the execution, delivery and performance of this
Agreement, the issuance and sale of the Shares and the consummation of the
transactions contemplated hereby will not conflict with,
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or result in any breach of or constitute a default under (nor constitute any
event which with notice, lapse of time, or both would result in any breach of,
or constitute a default under), any provisions of the charter or bylaws, of the
Company or the Subsidiary or under any provision of any license, indenture,
mortgage, deed of trust, bank loan or credit agreement or other evidence of
indebtedness, or any lease, contract or other agreement or instrument to which
the Company or the Subsidiary is a party or by which either of them or their
respective properties may be bound or affected, or under any federal, state,
local or foreign law, regulation or rule or any decree, judgment or order
applicable to the Company or the Subsidiary;
(g) this Agreement has been duly authorized, executed and
delivered by the Company and is a legal, valid and binding agreement of the
Company enforceable in accordance with its terms;
(h) the capital stock of the Company, including the Shares,
conforms in all material respects to the description thereof contained in the
Registration Statement and Prospectus and the certificates for the Shares are in
due and proper form and the holders of the Shares will not be subject to
personal liability by reason of being such holders;
(i) the Shares have been duly and validly authorized and, when
issued and delivered against payment therefor as provided herein, will be duly
and validly issued and fully paid and non-assessable;
(j) no approval, authorization, consent or order of or filing
with any national, state or local governmental or regulatory commission, board,
body, authority or agency is required in connection with the issuance and sale
of the Shares or the consummation by the Company of the transaction as
contemplated hereby other than registration of the Shares under the Securities
Act and any necessary qualification under the securities or blue sky laws of the
various jurisdictions in which the Shares are being offered by the Underwriters
or under the rules and regulations of the National Association of Securities
Dealers, Inc. (NASD);
(k) no person has the right, contractual or otherwise, to
cause the Company to register pursuant to the Securities Act or the Investment
Company Act any shares of capital stock of the Company upon the issue and sale
of the Shares to the Underwriters hereunder or otherwise;
(l) Ernst and Young LLP, whose report on the consolidated
financial statements of the Company and the Subsidiary is filed with the
Commission as part of the Registration Statement and Prospectus, are independent
public accountants as required by the Securities Act;
(m) neither the Company nor the Subsidiary has any debt
outstanding;
(n) each of the Company and the Subsidiary has all necessary
licenses, authorizations, consents, orders and approvals and has made all
necessary filings required
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under any federal, state, local or foreign law, regulation or rule, and has
obtained all necessary authorizations, consents, orders and approvals from other
persons, in order to conduct its respective business; neither the Company nor
the Subsidiary is in violation of, or in default under, any such license,
authorization, consent, order or approval or any federal, state, local or
foreign law, regulation or rule or any decree, order or judgment applicable to
the Company or the Subsidiary the effect of which could have a Material Adverse
Effect;
(o) all legal or governmental proceedings, contracts, leases
or documents of a character required to be described in the Registration
Statement or the Prospectus or to be filed as an exhibit to the Registration
Statement have been so described or filed as required;
(p) there are no actions, suits, claims, investigations or
proceedings pending or threatened to which the Company or the Subsidiary or any
of their respective officers is a party or of which any of their respective
properties is subject at law or in equity, or before or by any federal, state,
local or foreign governmental or regulatory commission, board, body, authority
or agency which could result in a judgment, decree or order having a Material
Adverse Effect or which could adversely affect the consummation of the
transaction contemplated hereby;
(q) the audited financial statements included in the
Registration Statement and the Prospectus present fairly the consolidated
financial position of the Company and the Subsidiary as of the date indicated;
such financial statements have been prepared in conformity with generally
accepted accounting principles applied on a consistent basis during the periods
involved;
(r) except as set forth in and contemplated by the
Registration Statement and Prospectus, subsequent to the respective dates as of
which information is given in the Registration Statement and the Prospectus,
there has not been (i) any material adverse change, or any development which, in
the Company's reasonable judgment, is likely to cause a material adverse change,
in the business, properties or assets described or referred to in the
Registration Statement, or the results of operations, condition (financial or
otherwise), business or operations of the Company and the Subsidiary taken as a
whole, (ii) any transaction which is material to the Company or the Subsidiary,
except transactions in the ordinary course of business, (iii) any obligation,
direct or contingent, which is material to the Company and the Subsidiary taken
as a whole, incurred by the Company or the Subsidiary, except obligations
incurred in the ordinary course of business, (iv) any change in the capital
stock or outstanding indebtedness of the Company or the Subsidiary or (v) any
dividend or distribution of any kind declared, paid or made on the capital stock
of the Company. Neither the Company nor the Subsidiary has any material
contingent obligation which is not disclosed in the Registration Statement;
(s) the Company has obtained the agreement of each of its
directors and officers not to sell, offer to sell, contract to sell, hypothecate
grant any option to sell or otherwise dispose of, directly or indirectly, any
shares of Common Stock or securities
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convertible into or exchangeable for Common Stock or warrants or other rights to
purchase Common Stock for a period of 180 days after the date of the Prospectus;
(t) the Company has duly elected to be treated by the
Commission under the Investment Company Act as a business development company,
such election is effective and all required action has been taken by the Company
under the Securities Act and the Investment Company Act to make the public
offering and consummate the sale of the Shares as provided in this Agreement;
the provisions of the corporate charter and bylaws of the Company and the
Subsidiary and the investment objectives, policies and restrictions described in
the Prospectus comply with the requirements of the Investment Company Act;
(u) the operations of the Company and the Subsidiary are in
compliance in all material respects with the provisions of the Investment
Company Act applicable to business development companies and the rules and
regulations of the Commission thereunder;
(v) the Company intends to direct the investment of the
proceeds of the Offering (as defined in the Prospectus) in such a manner as to
comply with the requirements of Subchapter M of the Internal Revenue Code of
1986, as amended (the "Code") so as to retain its status as a "regulated
investment company" ("RIC") under the Code;
(w) the Company has duly authorized, executed and delivered
the non-binding commitments relating to the loans as described in the Prospectus
under the caption "Prospective Portfolio Companies";
(x) the Company is eligible to use Form N-2 for registration
of the Shares;
(y) neither the Company nor the Subsidiary nor any of their
respective officers, directors or any of their affiliated persons has taken or
will take, directly or indirectly, any action designed or intended to stabilize
or manipulate the price of any security of the Company, or which caused or
resulted in, or which might in the future reasonably be expected to cause or
result in, stabilization or manipulation of the price of any security of the
Company;
(z) the Company and the Subsidiary have filed all Federal,
State, local and foreign tax returns which have been required to be filed by any
of them to the extent that such tax returns have become due, except where the
failure to file such tax returns could not be reasonably expected to have,
individually or in the aggregate, a Material Adverse Effect. All tax
liabilities, if any, of the Company and the Subsidiary have been adequately
provided for in the financial statements of the Company, and the Company does
not know of any actual or proposed additional material tax assessments;
(aa) neither the Company nor the Subsidiary is aware that (i)
any executive, key employee or significant group of employees of the Company or
any of the Subsidiary plans to terminate employment with the Company or the
Subsidiary or (ii) any
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such executive or key employee is subject to any noncompete, nondisclosure,
confidentiality, employment, consulting or similar agreement that would be
violated by the present or proposed business activities of the Company or the
Subsidiary. Neither the Company nor the Subsidiary has or expects to have any
liability for any prohibited transaction or funding deficiency or any complete
or partial withdrawal liability with respect to any pension, profit sharing or
other plan which is subject to the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), to which the Company or the Subsidiary makes or ever
has made a contribution and in which any employee of the Company or the
Subsidiary is or has ever been a participant. With respect to plans, the Company
and the Subsidiary are in compliance in all material respects with all
applicable provisions of ERISA;
(bb) the Company and the Subsidiary are insured by insurers of
recognized financial responsibility against such losses and risks and in such
amount as are customary in the businesses in which they are engaged or propose
to engage after giving effect to the transactions described in the Prospectus;
and neither the Company nor the Subsidiary has any reason to believe that it
will not be able to renew such insurance coverage as and when such coverage
expires or to obtain similar coverage from similar insurers as may be necessary
to continue their business at a cost that would not have a Material Adverse
Effect;
(cc) to the Company's knowledge, neither the Company, the
Subsidiary, nor any director, officer, agent or employee acting on behalf of the
Company or the Subsidiary has (i) used any corporate funds for any unlawful
contribution, gift, entertainment or other unlawful expense relating to
political activity, (ii) made any direct or indirect unlawful payment to any
foreign or domestic government official or employee from corporate funds, (iii)
violated or is in violation of any provision of the Foreign Corrupt Practices
Act of 1977 or (iv) made any bribe, rebate, payoff, influence payment, kickback
or other unlawful payment;
(dd) the Company maintains a system of internal accounting
controls sufficient to provide reasonable assurances that (i) transactions are
executed in accordance with management's general or specific authorization, (ii)
transactions are recorded as necessary to permit the preparation of financial
statements in conformity with generally accepted accounting principles and to
maintain accountability for assets, (iii) access to assets is permitted only in
accordance with management's general or specific authorization and (iv) the
recorded accountability for assets is compared with existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences;
(ee) to the Company's knowledge, neither the Company, the
Subsidiary nor any employee or agent of the Company or the Subsidiary has made
any payment of funds of the Company or the Subsidiary or received or retained
any funds in violation of any law, rule or regulation, which payment, receipt or
retention of funds is of a character required to be disclosed in the Prospectus;
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(ff) each certificate signed by any officer of the Company and
delivered to the Underwriters or counsel for the Underwriters in connection with
this Agreement or the transactions contemplated hereby shall be deemed to be a
representation and warranty by the Company as to the matters covered thereby;
(gg) by virtue of its election as a "business development
company" the Company is not, and upon the sale of the Shares as herein
contemplated will not be an investment company which is required to register as
such under the Investment Company Act; and
(hh) to the Company's knowledge, there are no affiliations or
associations between any member of the NASD and any of the Company's officers,
directors or 5% or greater securityholders, except as set forth in the
Registration Statement.
4. CERTAIN COVENANTS OF THE COMPANY. The Company hereby
agrees:
(a) to furnish such information as may be required and
otherwise to cooperate in qualifying the Shares for offering and sale under the
securities or blue sky laws of such states as you may designate and to maintain
such qualifications in effect so long as required for the distribution of the
Shares; PROVIDED that the Company shall not be required to qualify as a foreign
corporation or to consent to the service of process under the laws of any such
state (except service of process with respect to the offering and sale of the
Shares); and to promptly advise you of the receipt by the Company of any
notification with respect to the suspension of the qualification of the Shares
for sale in any jurisdiction or the initiation or threatening of any proceeding
for such purpose;
(b) to make available to the Underwriters in New York City, as
soon as practicable after the Registration Statement becomes effective, and
thereafter from time to time to furnish to the Underwriters, as many copies of
the Prospectus (or of the Prospectus as amended or supplemented if the Company
shall have made any amendments or supplements thereto after the effective date
of the Registration Statement) as the Underwriters may reasonably request for
the purposes contemplated by the Securities Act; in case any Underwriter is
required to deliver a prospectus within the nine-month period referred to in
Section 10(a)(3) of the Securities Act in connection with the sale of the
Shares, the Company will prepare promptly upon request, but at the expense of
such Underwriter, such amendment or amendments to the Registration Statement and
such prospectuses as may be necessary to permit compliance with the requirements
of Section 10(a)(3) of the Securities Act;
(c) to advise you promptly (i) when the Registration Statement
has become effective and when any post-effective amendment thereto becomes
effective and (ii) if Rule 430A under the Securities Act is used, when the
Prospectus is filed with the Commission pursuant to Rule 497(h) under the
Securities Act (which the Company agrees to file in a timely manner under such
Rules);
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(d) to advise you promptly of any request by the Commission
for amendments or supplements to the Registration Statement or Prospectus or for
additional information with respect thereto, or of notice of the institution of
proceedings with respect thereto, or the entry of a stop order suspending the
effectiveness of the Registration Statement and, if the Commission should enter
a stop order suspending the effectiveness of the Registration Statement, to make
reasonable efforts to obtain the lifting or removal of such order as soon as
reasonably possible; to advise you promptly of any proposal to amend or
supplement the Registration Statement or Prospectus and to file no such
amendment or supplement to which you shall reasonably object in writing;
(e) to file promptly all reports and any definitive proxy or
information statement required to be filed by the Company with the Commission in
order to comply with the Securities Exchange Act of 1934, as amended, and the
rules and regulations thereunder (collectively, the "Exchange Act") subsequent
to the date of the Prospectus and for so long as the delivery of a prospectus is
required in connection with the offering or sale of the shares, and to promptly
notify you of such filing;
(f) if necessary or appropriate, to file a registration
statement pursuant to Rule 462(b) under the Securities Act;
(g) to furnish to you and, upon request, to each of the other
Underwriters for a period of three years from the date of this Agreement (i)
copies of any reports or other communications which the Company shall send to
its stockholders or shall from time to time publish or publicly disseminate,
(ii) copies of all annual, quarterly and current reports filed with the
Commission on Forms 10-K, 10-Q and 8-K, or such other similar form as may be
designated by the Commission, (iii) copies of documents or reports filed with
any national securities exchange on which any class of securities of the Company
is listed, and (iv) such other information as you may reasonably request
regarding the Company or the Subsidiary;
(h) to advise the Underwriters promptly of the happening of
any event known to the Company within the time during which a Prospectus
relating to the Shares is required to be delivered under the Securities Act
which, in the judgment of the Company, would require the making of any change in
the Prospectus then being used, or in the information incorporated therein by
reference, so that the Prospectus would not include an untrue statement of
material fact or omit to state a material fact necessary to make the statements
therein, in the light of the circumstances under which they are made, not
misleading, and, during such time, to prepare and furnish, at the Company's
expense, to the Underwriters promptly such amendments or supplements to such
Prospectus as may be necessary to reflect any such change and to furnish you a
copy of such proposed amendment or supplement before filing any such amendment
or supplement with the Commission;
(i) to make generally available to its security holders, and
to deliver to you, an earnings statement of the Company (which will satisfy the
provisions of Section 11(a) of the Securities Act) covering a period of twelve
months beginning after the effective date of the Registration Statement (as
defined in Rule 158(c) of the Securities Act) as soon
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as is reasonably practicable after the termination of such twelve-month period
but not later than eighteen months after the effective date of the Registration
Statement;
(j) to furnish to its shareholders as soon as practicable
after the end of each fiscal year an annual report (including a balance sheet
and statements of income, stockholders' equity and of cash flow of the Company
for such fiscal year, accompanied by a copy of the certificate or report thereon
of nationally recognized independent certified public accountants;
(k) to furnish to you four signed copies of the Registration
Statement, as initially filed with the Commission, and of all amendments thereto
(including all exhibits thereto) and sufficient conformed copies of the
foregoing (other than exhibits) for distribution of a copy to each of the other
Underwriters;
(l) to furnish to you as early as practicable prior to the
time of purchase and the additional time of purchase, as the case may be, but
not later than two business days prior thereto, a copy of the latest available
unaudited interim consolidated financial statements, if any, of the Company and
the Subsidiary which have been read by the Company's independent certified
public accountants, as stated in their letter to be furnished pursuant to
Section 6(c) hereof;
(m) to apply the net proceeds from the sale of the Shares in
the manner set forth under the caption "Use of Proceeds" in the Prospectus;
(n) to furnish to you, before filing with the Commission
subsequent to the effective date of the Registration Statement and during the
period referred to in paragraph (f) above, a copy of any document proposed to be
filed pursuant to Section 13, 14 or 15(d) of the Exchange Act;
(o) not to sell, offer or agree to sell, contract to sell,
grant any option to sell or otherwise dispose of, directly or indirectly, any
shares of Common Stock or securities convertible into or exchangeable or
exercisable for Common Stock or warrants or other rights to purchase Common
Stock or any other Securities of the Company that are substantially similar to
Common Stock or permit the registration under the Securities Act of any shares
of Common Stock, except for the registration of the Shares and the sales to the
Underwriters pursuant to this Agreement and except for issuances of Common Stock
upon the exercise of outstanding options, warrants and debentures, for a period
of 180 days after the date hereof, without the prior written consent of the UBS
Warburg;
(p) to use its best efforts to cause the Common Stock to be
listed for quotation on the Nasdaq National Market ("NASDAQ");
(q) during a period of five years from the effective date of
the Registration Statement, to use its best efforts to maintain its status as a
"business development company"; PROVIDED, HOWEVER, the Company may change the
nature of its business so as to cease to be, or to withdraw its election as, a
business development
12
company with the approval of the board of directors and a vote of stockholders
as required by Section 58 of the Investment Company Act or any successor
provision;
(r) to use its best efforts to qualify for and elect,
effective at or about the time of the completion of this offering, to be treated
as a regulated investment company under Subchapter M of the Internal Revenue
Code and to maintain such qualification and election in effect for each fiscal
year or part thereof during which it is a business development company under the
Investment Company Act; and
(s) to pay all expenses, fees and taxes (other than any
transfer taxes and fees and disbursements of counsel for the Underwriters except
as set forth under Section 5 hereof or (iii) , (iv) and (v) below) in connection
with (i) the preparation and filing of the Registration Statement, each
Preliminary Prospectus, the Prospectus, and any amendments or supplements
thereto, and the printing and furnishing of copies of each thereof to the
Underwriters and to dealers (including costs of mailing and shipment), (ii) the
issuance, sale and delivery of the Shares by the Company, (iii) the word
processing and/or printing of this Agreement, any Agreement Among Underwriters,
any dealer agreements, any Statements of Information, the Custody Agreement and
the Powers of Attorney and the reproduction and/or printing and furnishing of
copies of each thereof to the Underwriters and to dealers (including costs of
mailing and shipment), (iv) the qualification of the Shares for offering and
sale under state laws and the determination of their eligibility for investment
under state law as aforesaid (including the legal fees not to exceed $35,000 and
filing fees and other disbursements of counsel to the Underwriters) and the
printing and furnishing of copies of any blue sky surveys or legal investment
surveys to the Underwriters and to dealers, (v) any listing of the Shares on any
securities exchange or qualification of the Shares for quotation on NASDAQ and
any registration thereof under the Exchange Act, (vi) the filing for review of,
and the fees and disbursements of counsel for the Underwriters in connection
with, the public offering of the Shares by the National Association of
Securities Dealers, Inc. (the NASD), and (vii) the performance of the Company's
other obligations hereunder.
5. REIMBURSEMENT OF UNDERWRITERS' EXPENSES. If the Shares are
not delivered for any reason other than the termination of this Agreement
pursuant to the first two paragraphs of Section 8 hereof or the default by one
or more of the Underwriters in its or their respective obligations hereunder,
the Company shall, in addition to paying the amounts described in Section 4(s)
hereof, reimburse the Underwriters for all of their out-of-pocket expenses,
including the fees and disbursements of their counsel.
6. CONDITIONS OF UNDERWRITERS' OBLIGATIONS. The several
obligations of the Underwriters hereunder are subject to the accuracy of the
representations and warranties on the part of the Company on the date hereof and
at time of purchase (and the several obligations of the Underwriters at the
additional time of purchase are subject to the accuracy of the representations
and warranties on the part of the Company on the date hereof and at the time of
purchase (unless previously waived) and at the additional time of purchase, as
the case may be), the performance by the Company of its obligations hereunder
and to the following additional conditions precedent:
13
(a) The Company shall furnish to you at the time of purchase
and at the additional time of purchase, as the case may be, an opinion of (i)
Xxxxxx Godward LLP, counsel for the Company, addressed to the Underwriters, and
dated the time of purchase or the additional time of purchase, as the case may
be, with reproduced copies for each of the other Underwriters and in form
satisfactory to Xxxxxxxx & Xxxxxxxx, counsel for the Underwriters, in
substantially the form attached hereto as Exhibit 1 and (ii) Xxxxxxxxx Xxxxxx,
Esq., special counsel for the Company, addressed to Xxxxxx Godward LLP, and
dated the time of purchase or the additional time of purchase, as the case may
be, with reproduced copies for each of the other Underwriters and in form
satisfactory to Xxxxxxxx & Xxxxxxxx, in substantially the form attached hereto
as Exhibit 2, which opinion may be relied upon by the Underwriters with respect
to matters relating to the Investment Company Act of 1940.
(b) You shall have received from Ernst and Young LLP, letters
dated, respectively, the date of this Agreement and the time of purchase and
additional time of purchase, as the case may be, and addressed to the
Underwriters (with reproduced copies for each of the Underwriters) in the forms
heretofore approved by the UBS Warburg.
(c) You shall have received at the time of purchase and at the
additional time of purchase, as the case may be, the favorable opinion of
Xxxxxxxx & Xxxxxxxx, counsel for the Underwriters, dated the time of purchase or
the additional time of purchase, as the case may be, and in form reasonably
satisfactory to the Underwriters. In rendering such opinion, such counsel may
state that they express no opinion as to the laws of any jurisdiction other than
the Federal laws of the United States, the laws of the State of New York and the
General Corporation Law of the State of Maryland. With respect to all matters of
the law of the State of Maryland, such counsel shall be entitled to rely on the
opinion of local counsel and may state that their opinion is subject to the same
assumptions, qualifications and limitations with respect to such matters as are
contained in such opinion, provided their opinion states that both you and they
are justified in relying on such opinion for such matters. Such counsel may also
state that, insofar as such opinion involves factual matters, they have relied
upon certificates of officers of the Company and the Subsidiary, certificates of
public officials and other sources believed by such counsel to be responsible.
Such counsel shall also furnish you with a letter to the
effect that, in accordance with their understanding with you as to the scope of
their services, they reviewed the Registration Statement and the Prospectus,
participated in discussions with your representatives and those of the Company,
its counsel and its accountants, and advised you as to the requirements of the
Securities Act and the applicable rules and regulations thereunder; between the
date of the Prospectus and the time of delivery of the Shares, such counsel
participated in further discussions with your representatives and those of the
Company, its counsel and its accountants in which the contents of certain
portions of the Prospectus and related matters were discussed and reviewed
certain certificates of certain officers of the Company, an opinion addressed to
you from the Company's counsel and letters addressed to you from the Company's
14
independent accountants; on the basis of the information that such counsel
gained in the course of the performance of the services referred to above,
considered in the light of such counsel's understanding of the applicable law
and the experience such counsel have gained through their practice under the
Securities Act, they will confirm to you that, in such counsel's opinion, the
Registration Statement, and the Prospectus, as of the effective date of the
Registration Statement, appeared on their face to be appropriately responsive in
all material respects to the requirements of the Securities Act and the
applicable rules and regulations of the Commission thereunder; nothing that came
to such counsel's attention in the course of such review has caused such counsel
to believe that the Registration Statement, as of its effective date, contained
any untrue statement of a material fact or omitted to state any material fact
required to be stated therein or necessary to make the statements therein not
misleading; nothing that came to the attention of such counsel in the course of
the procedures described in the second clause of this paragraph has caused such
counsel to believe that the Prospectus, as of its date or as of such time of
delivery, contained or contains any untrue statement of a material fact or
omitted or omits to state any material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading; such counsel may state that the limitations inherent in
the independent verification of factual matters and the character of
determinations involved in the registration process are such that such counsel
does not assume any responsibility for the accuracy, completeness or fairness of
the statements contained in the Registration Statement or the Prospectus except
for those made under the captions "Description of our capital stock" and
"Underwriting" in the Prospectus insofar as they relate to provisions of
documents therein described; also, such counsel need express no opinion or
belief as to the financial statements or other financial data derived from
accounting records contained in the Registration Statement or the Prospectus;
finally, such counsel may assume that any Rule 462(b) Registration Statement was
filed with the Commission prior to the time that any confirmations of the sale
of any of the Shares were sent or given to investors.
(d) No amendment or supplement to the Registration Statement
or Prospectus shall be filed prior to the time the Registration Statement
becomes effective to which you reasonably object in writing.
(e) The Registration Statement shall become effective, or if
Rule 430A under the Securities Act is used, the Prospectus shall have been filed
with the Commission pursuant to Rule 497(h) under the Securities Act, at or
before 5:00 P.M., New York City time, on the date of this Agreement, unless a
later time (but not later than 5:00 P.M., New York City time, on the second full
business day after the date of this Agreement) shall be agreed to by the Company
and you in writing or by telephone, confirmed in writing; PROVIDED, HOWEVER,
that the Company and you and any group of Underwriters, including you, who have
agreed hereunder to purchase in the aggregate at least 50% of the Firm Shares
may from time to time agree on a later date.
(f) Prior to the time of purchase or the additional time of
purchase, as the case may be, (i) no stop order with respect to the
effectiveness of the Registration Statement shall have been issued under the
Securities Act or proceedings initiated under Section 8(d) or 8(e) of the
Securities Act; (ii) the Registration Statement and all amendments thereto, or
15
modifications thereof, if any, shall not contain an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading; and (iii) the
Prospectus and all amendments or supplements thereto, or modifications thereof,
if any, shall not contain an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they are made,
not misleading.
(g) Between the time of execution of this Agreement and the
time of purchase or the additional time of purchase, as the case may be, (i) no
material and unfavorable change, financial or otherwise (other than as referred
to in the Registration Statement and Prospectus), in the business, condition or
prospects of the Company and the Subsidiary taken as a whole shall occur or
become known and (ii) no transaction which is material and unfavorable to the
Company shall have been entered into by the Company or the Subsidiary.
(h) The Company will, at the time of purchase or additional
time of purchase, as the case may be, deliver to you a certificate of two of its
executive officers to the effect that the representations and warranties of the
Company as set forth in this Agreement are true and correct as of each such
date, that the Company shall perform such of its obligations under this
Agreement as are to be performed at or before the time of purchase and at or
before the additional time of purchase, as the case may be and the conditions
set forth in paragraphs (f) and (g) of this Section 6 have been met.
(i) You shall have received signed letters, dated the date of
this Agreement, from each of the directors and officers of the Company to the
effect that such persons shall not sell, offer or agree to sell, contract to
sell, grant any option to sell or otherwise dispose of, directly or indirectly,
any shares of Common Stock of the Company or securities convertible into or
exchangeable or exercisable for Common Stock or warrants or other rights to
purchase Common Stock or any other securities of the Company that are
substantially similar to the Common Stock for a period of 180 days after the
date of the Prospectus without UBS Warburg's prior written consent.
(j) The Company shall have furnished to you and your counsel
such other documents and certificates as to the accuracy and completeness of any
statement in the Registration Statement and the Prospectus as of the time of
purchase and the additional time of purchase, as the case may be, as you may
reasonably request.
(k) The Shares shall have been approved for listing for
quotation on NASDAQ, subject only to notice of issuance at or prior to the time
of purchase or the additional time of purchase, as the case may be.
7. EFFECTIVE DATE OF AGREEMENT; TERMINATION. This Agreement
shall become effective (i) if Rule 430A under the Securities Act is not used,
when you shall have received notification of the effectiveness of the
Registration Statement, or (ii) if Rule 430A under the Securities Act is used,
when the parties hereto have executed and delivered this Agreement.
16
The obligations of the several Underwriters hereunder shall be
subject to termination in the absolute discretion of you or any group of
Underwriters (which may include you) which has agreed to purchase in the
aggregate at least 50% of the Firm Shares, if, since the time of execution of
this Agreement or the respective dates as of which information is given in the
Registration Statement and Prospectus, there has been any material adverse and
unfavorable change, financial or otherwise (other than as referred to in the
Registration Statement and Prospectus), in the operations, business, condition
or prospects of the Company and the Subsidiary taken as a whole, which would, in
your judgment or in the judgment of such group of Underwriters, make it
impracticable to market the Shares, or, if, at any time prior to the time of
purchase or, with respect to the purchase of any Additional Shares, the
additional time of purchase, as the case may be, trading in securities on the
New York Stock Exchange, the American Stock Exchange or the NASDAQ National
Market shall have been suspended or limitations or minimum prices shall have
been established on the New York Stock Exchange, the American Stock Exchange or
the NASDAQ National Market or if a banking moratorium shall have been declared
either by the United States or New York State authorities, or if the United
States shall have declared war in accordance with its constitutional processes
or there shall have occurred any material outbreak or escalation of hostilities
or other national or international calamity or crisis of such magnitude in its
effect on the financial markets of the United States as, in your judgment or in
the judgment of such group of Underwriters, to make it impracticable to market
the Shares.
If you or any group of Underwriters elects to terminate this
Agreement as provided in this Section 7 the Company and each other Underwriter
shall be notified promptly by letter or facsimile.
If the sale to the Underwriters of the Shares, as contemplated
by this Agreement, is not carried out by the Underwriters for any reason
permitted under this Agreement or if such sale is not carried out because the
Company shall be unable to comply with any of the terms of this Agreement, the
Company shall not be under any obligation or liability under this Agreement
(except to the extent provided in Sections 4(s), 5 and 9 hereof), and the
Underwriters shall be under no obligation or liability to the Company under this
Agreement (except to the extent provided in Section 9 hereof) or to one another
hereunder.
8. INCREASE IN UNDERWRITERS' COMMITMENTS. Subject to Sections
6 and 7, if any Underwriter shall default in its obligation to take up and pay
for the Firm Shares to be purchased by it hereunder (otherwise than for reasons
sufficient to justify the termination of this Agreement under the provisions of
Section 7 hereof) and if the number of Firm Shares which all Underwriters so
defaulting shall have agreed but failed to take up and pay for does not exceed
10% of the total number of Firm Shares, the non-defaulting Underwriters shall
take up and pay for (in addition to the number of Firm Shares they are obligated
to purchase pursuant to Section 1 hereof) the number of Firm Shares agreed to be
purchased by all such defaulting Underwriters, as hereinafter provided. Such
Shares shall be taken up and paid for by such non-defaulting Underwriter or
Underwriters in such amount or amounts as you may designate with the consent of
each Underwriter so designated or, in the event no such designation is made,
such Shares shall be taken up and paid for by all non-defaulting Underwriters
pro rata in proportion to the
17
aggregate number of Firm Shares set opposite the names of such non-defaulting
Underwriters in Schedule A.
Without relieving any defaulting Underwriter from its
obligations hereunder, the Company agrees with the non-defaulting Underwriters
that they will not sell any Firm Shares hereunder unless all of the Firm Shares
are purchased by the Underwriters (or by substituted Underwriters selected by
you with the approval of the Company or selected by the Company with your
approval).
If a new Underwriter or Underwriters are substituted by the
Underwriters or by the Company for a defaulting Underwriter or Underwriters in
accordance with the foregoing provision, the Company or you shall have the right
to postpone the time of purchase for a period not exceeding five business days
in order that any necessary changes in the Registration Statement and Prospectus
and other documents may be effected.
The term Underwriter as used in this agreement shall refer to
and include any Underwriter substituted under this Section 8 with like effect as
if such substituted Underwriter had originally been named in Schedule A.
If the aggregate number of Shares which the defaulting
Underwriter or Underwriters agreed to purchase exceeds 10% of the total number
of Shares which all Underwriters agreed to purchase hereunder, and if neither
the non-defaulting Underwriters nor the Company shall make arrangements within
the five business day period stated above for the purchase of all the Shares
which the defaulting Underwriter or Underwriters agreed to purchase hereunder,
this Agreement shall be terminated without further act or deed and without any
liability on the part of the Company to any non-defaulting Underwriter and
without any liability on the part of any non-defaulting Underwriter to the
Company. Nothing in this paragraph, and no action taken hereunder, shall relieve
any defaulting Underwriter from liability in respect of any default of such
Underwriter under this Agreement.
9. INDEMNITY AND CONTRIBUTION.
(a) The Company agrees to indemnify, defend and hold harmless
each Underwriter, its partners, directors and officers, and any person who
controls any Underwriter within the meaning of Section 15 of the Securities Act
or Section 20 of the Exchange Act, and the successors and assigns of all of the
foregoing persons from and against any loss, damage, expense, liability or claim
(including the reasonable cost of investigation) which, jointly or severally,
any such Underwriter or any such person may incur under the Securities Act, the
Exchange Act, the common law or otherwise, insofar as such loss, damage,
expense, liability or claim arises out of or is based upon any untrue statement
or alleged untrue statement of a material fact contained in the Registration
Statement (or in the Registration Statement as amended by any post-effective
amendment thereof by the Company) or in a Prospectus (the term Prospectus for
the purpose of this Section 9 being deemed to include any Preliminary
Prospectus, the Prospectus and the Prospectus as amended or supplemented by the
Company), or arises out of or is based upon any omission or alleged omission to
state a material fact required to be stated in either such
18
Registration Statement or Prospectus or necessary to make the statements made
not misleading, except insofar as any such loss, damage, expense, liability or
claim arises out of or is based upon any untrue statement or alleged untrue
statement of a material fact contained in and in conformity with information
furnished in writing by or on behalf of any Underwriter through you to the
Company expressly for use with reference to such Underwriter in such
Registration Statement or such Prospectus or arises out of or is based upon any
omission or alleged omission to state a material fact in connection with such
information required to be stated in such Registration Statement or Prospectus
or necessary to make such information not misleading.
If any action, suit or proceeding (together, a "Proceeding")
is brought against an Underwriter or any such person in respect of which
indemnity may be sought against the Company pursuant to the foregoing paragraph,
such Underwriter or such person shall promptly notify the Company in writing of
the institution of such Proceeding and the Company shall assume the defense of
such Proceeding, including the employment of counsel reasonably satisfactory to
such indemnified party and payment of all fees and expenses; PROVIDED, HOWEVER,
that the omission to so notify the Company shall not relieve the Company from
any liability which the Company may have to any Underwriter or any such person
or otherwise. Such Underwriter or such controlling person shall have the right
to employ its or their own counsel in any such case, but the fees and expenses
of such counsel shall be at the expense of such Underwriter or of such person
unless the employment of such counsel shall have been authorized in writing by
the Company in connection with the defense of such Proceeding or the Company
shall not have, within a reasonable period of time in light of the
circumstances, employed counsel to have charge of the defense of such Proceeding
or such indemnified party or parties shall have reasonably concluded that there
may be defenses available to it or them which are different from, additional to
or in conflict with those available to the Company (in which case the Company
shall not have the right to direct the defense of such Proceeding on behalf of
the indemnified party or parties), in any of which events such fees and expenses
shall be borne by the Company and paid as incurred (it being understood,
however, that the Company shall not be liable for the expenses of more than one
separate counsel (in addition to any local counsel) in any one Proceeding or
series of related Proceedings in the same jurisdiction representing the
indemnified parties who are parties to such Proceeding). The Company shall not
be liable for any settlement of any such Proceeding effected without its written
consent but if settled with the written consent of the Company, the Company
agrees to indemnify and hold harmless any Underwriter and any such person from
and against any loss or liability by reason of such settlement. Notwithstanding
the foregoing sentence, if at any time an indemnified party shall have requested
an indemnifying party to reimburse the indemnified party for fees and expenses
of counsel as contemplated by the second sentence of this paragraph, then the
indemnifying party agrees that it shall be liable for any settlement of any
Proceeding effected without its written consent if (i) such settlement is
entered into more than 60 business days after receipt by such indemnifying party
of the aforesaid request, (ii) such indemnifying party shall not have reimbursed
the indemnified party in accordance with such request prior to the date of such
settlement and (iii) such indemnified party shall have given the indemnifying
party at least 30 days' prior notice of its intention to settle. No indemnifying
party shall, without the prior written consent of the indemnified party, effect
any settlement of any pending or threatened Proceeding
19
in respect of which any indemnified party is or could have been a party and
indemnity could have been sought hereunder by such indemnified party, unless
such settlement includes an unconditional release of such indemnified party from
all liability on claims that are the subject matter of such Proceeding and does
not include an admission of fault, culpability or a failure to act, by or on
behalf of such indemnified party.
(b) Each Underwriter severally agrees to indemnify, defend and
hold harmless the Company, its directors and officers and any person who
controls the Company within the meaning of Section 15 of the Securities Act, or
Section 20 of the Exchange Act from and against any loss, damage, expense,
liability or claim (including the reasonable cost of investigation) which,
jointly or severally, the Company or any such person may incur under the
Securities Act, the Exchange Act, the common law or otherwise, insofar as such
loss, damage, expense, liability or claim arises out of or is based upon any
untrue statement or alleged untrue statement of a material fact contained in and
in conformity with information furnished in writing by or on behalf of such
Underwriter through you to the Company expressly for use with reference to such
Underwriter in the Registration Statement (or in the Registration Statement as
amended by or on behalf of any post-effective amendment thereof by the Company)
or in a Prospectus, or arises out of or is based upon any omission or alleged
omission to state a material fact in connection with such information required
to be stated in such Registration Statement or Prospectus or necessary to make
such information not misleading.
If any Proceeding is brought against the Company or any such
person in respect of which indemnity may be sought against any Underwriter
pursuant to the foregoing paragraph, the Company or such person shall promptly
notify such Underwriter in writing of the institution of such Proceeding and
such Underwriter shall assume the defense of such Proceeding, including the
employment of counsel reasonably satisfactory to such indemnified party and
payment of all fees and expenses, PROVIDED, HOWEVER, that the omission to so
notify such Underwriter shall not relieve such Underwriter, from any liability
which such Underwriter may have to the Company or any such person or otherwise.
The Company or such person shall have the right to employ its own counsel in any
such case, but the fees and expenses of such counsel shall be at the expense of
the Company or such person unless the employment of such counsel shall have been
authorized in writing by such Underwriter in connection with the defense of such
Proceeding or such Underwriter shall not have employed counsel to have charge of
the defense of such Proceeding or such indemnified party or parties shall have
reasonably concluded that there may be defenses available to it or them which
are different from or additional to or in conflict with those available to such
Underwriter (in which case such Underwriter shall not have the right to direct
the defense of such Proceeding on behalf of the indemnified party or parties,
but such Underwriter may employ counsel and participate in the defense thereof
but the fees and expenses of such counsel shall be at the expense of such
Underwriter), in any of which events such fees and expenses shall be borne by
such Underwriter and paid as incurred (it being understood, however, that such
Underwriter shall not be liable for the expenses of more than one separate
counsel (in addition to any local counsel) in any one Proceeding or series of
related Proceedings in the same jurisdiction representing the indemnified
parties who are parties to such Proceeding). No Underwriter shall be liable for
any settlement of any such Proceeding effected without the
20
written consent of such Underwriter but if settled with the written consent of
such Underwriter, such Underwriter agrees to indemnify and hold harmless the
Company and any such person from and against any loss or liability by reason of
such settlement. Notwithstanding the foregoing sentence, if at any time an
indemnified party shall have requested an indemnifying party to reimburse the
indemnified party for fees and expenses of counsel as contemplated by the second
sentence of this paragraph, then the indemnifying party agrees that it shall be
liable for any settlement of any Proceeding effected without its written consent
if (i) such settlement is entered into more than 60 business days after receipt
by such indemnifying party of the aforesaid request, (ii) such indemnifying
party shall not have reimbursed the indemnified party in accordance with such
request prior to the date of such settlement and (iii) such indemnified party
shall have given the indemnifying party at least 30 days' prior notice of its
intention to settle. No indemnifying party shall, without the prior written
consent of the indemnified party, effect any settlement of any pending or
threatened Proceeding in respect of which any indemnified party is or could have
been a party and indemnity could have been sought hereunder by such indemnified
party, unless such settlement includes an unconditional release of such
indemnified party from all liability on claims that are the subject matter of
such Proceeding.
(c) If the indemnification provided for in this Section 9 is
unavailable to an indemnified party under subsections (a) and (b) of this
Section 9 in respect of any losses, damage, expenses, liabilities or claims
referred to therein, then each applicable indemnifying party, in lieu of
indemnifying such indemnified party, shall contribute to the amount paid or
payable by such indemnified party as a result of such losses, damages, expenses,
liabilities or claims (i) in such proportion as is appropriate to reflect the
relative benefits received by the Company on the one hand and the Underwriters
on the other hand from the offering of the Shares or (ii) if the allocation
provided by clause (i) above is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits referred
to in clause (i) above but also the relative fault of the Company on the one
hand and of the Underwriters on the other in connection with the statements or
omissions which resulted in such losses, damages, expenses, liabilities or
claims, as well as any other relevant equitable considerations. The relative
benefits received by the Company on the one hand and the Underwriters on the
other shall be deemed to be in the same respective proportion as the total
proceeds from the offering (net of underwriting discounts and commissions but
before deducting expenses) received by the Company and the total underwriting
discounts and commissions received by the Underwriters, bear to the aggregate
public offering price is the shares. The relative fault of the Company on the
one hand and of the Underwriters on the other shall be determined by reference
to, among other things, whether the untrue statement or alleged untrue statement
of a material fact or omission or alleged omission relates to information
supplied by the Company or by the Underwriters and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The amount paid or payable by a party as a result of the
losses, damages, expenses, liabilities and claims referred to in this subsection
shall be deemed to include any legal or other fees or expenses reasonably
incurred by such party in connection with investigating, preparing to defend or
defending any claim or Proceeding.
21
(d) The Company and the Underwriters agree that it would not
be just and equitable if contribution pursuant to this Section 9 were determined
by pro rata allocation (even if the Underwriters were treated as one entity for
such purpose) or by any other method of allocation that does not take account of
the equitable considerations referred to in subsection (c) above.
Notwithstanding the provisions of this Section 9, no Underwriter shall be
required to contribute any amount in excess of the amount by which the total
price at which the Shares underwritten by such Underwriter and distributed to
the public were offered to the public exceeds the amount of any damage which
such Underwriter has otherwise been required to pay by reason of such untrue
statement or alleged untrue statement or omission or alleged omission. No person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any person who was
not guilty of such fraudulent misrepresentation. The Underwriters' obligations
to contribute pursuant to this Section 9 are several in proportion to their
respective underwriting commitments and not joint.
(e) The indemnity and contribution agreements contained in
this Section 9 and the covenants, warranties and representations of the Company
contained in this Agreement shall remain in full force and effect regardless of
any partners, investigation made by or on behalf of any Underwriter, its
directors and officers or any person (including each partner, officer or
director of such person) who controls any Underwriter within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act, or by or on
behalf of the Company, its directors or officers, or any person who controls the
Company within the meaning of Section 15 of the Securities Act or Section 20 of
the Exchange Act, are in addition to any liability which the Company or the
Underwriters, as the case may be, may have, and shall survive any termination of
this Agreement or the issuance and delivery of the Shares. The Company and each
Underwriter agree promptly to notify each other commencement of any Proceeding
against it and, in the case of the Company, against any of the Company's
officers or directors in connection with the issuance and sale of the Shares, or
in connection with the Registration Statement or Prospectus.
10. NOTICES. Except as otherwise herein provided, all
statements, requests, notices and agreements shall be in writing or by telegram
and, if to the Underwriters, shall be sufficient in all respects if delivered or
sent to UBS Warburg LLC, 000 Xxxx Xxxxxx, Xxx Xxxx, X.X. 00000-0000, Attention:
Syndicate Department, if to the Company, shall be sufficient in all respects if
delivered or sent to the Company at the offices of the Company at 0000 Xxxxxx
Xxxx., 0xx Xxxxx, Xx Xxxx, Xxxxxxxx 00000, Attention: Xxxxx Xxxxxxxxx.
11. GOVERNING LAW; CONSTRUCTION. This Agreement and any claim,
counterclaim or dispute of any kind or nature whatsoever arising out of or in
any way relating to this Agreement ("Claim"), directly or indirectly, shall be
governed by, and construed in accordance with, the laws of the State of New
York. The Section headings in this Agreement have been inserted as a matter of
convenience of reference and are not a part of this Agreement.
12. SUBMISSION TO JURISDICTION. Except as set forth below, no
Claim may be commenced, prosecuted or continued in any court other than the
courts of the State of New York
22
located in the City and County of New York or in the United States District
Court for the Southern District of New York, which courts shall have
jurisdiction over the adjudication of such matters, and the Company consents to
the jurisdiction of such courts and personal service with respect thereto. The
Company hereby consents to personal jurisdiction, service and venue in any court
in which any Claim arising out of or in any way relating to this Agreement is
brought by any third party against the Underwriters or any indemnified party.
Each of UBS Warburg LLC and the Company (on its behalf and, to the extent
permitted by applicable law, on behalf of its stockholders and affiliates)
waives all right to trial by jury in any action, proceeding or counterclaim
(whether based upon contract, tort or otherwise) in any way arising out of or
relating to this Agreement. The Company agrees that a final judgment in any such
action, proceeding or counterclaim brought in any such court shall be conclusive
and binding upon the Company and may be enforced in any other courts in the
jurisdiction of which the Company is or may be subject, by suit upon such
judgment.
13. PARTIES AT INTEREST. The Agreement herein set forth has
been and is made solely for the benefit of the Underwriters, the Company, and to
the extent provided in Section 9 hereof the controlling persons, directors and
officers referred to in such Section, and their respective successors, assigns,
heirs, pursuant representatives and executors and administrators. No other
person, partnership, association, corporation or other entity (including a
purchaser, as such purchaser, from any of the Underwriters) shall acquire or
have any right under or by virtue of this Agreement.
14. COUNTERPARTS. This Agreement may be signed by the parties
in one or more counterparts which together shall constitute one and the same
agreement among the parties.
15. SUCCESSORS AND ASSIGNS. This Agreement shall be binding
upon the Underwriters and the Company and their successors and assigns and any
successor or assign of any substantial portion of the Company's and any of the
Underwriters' respective businesses and/or assets.
16. MISCELLANEOUS. UBS Warburg LLC, an indirect, wholly owned
subsidiary of UBS AG, is not a bank and is separate from any affiliated bank,
including any U.S. branch or agency of UBS Warburg LLC. Because UBS Warburg LLC
is a separately organized entity, it is solely responsible for its own
contractual obligations and commitments, including obligations with respect to
sales and purchases of securities. Securities sold, offered or recommended by
UBS Warburg LLC are not deposits, are not insured by the Federal Deposit
Insurance Corporation, are not guaranteed by a branch or agency, and are not
otherwise an obligation or responsibility of a branch or agency.
A lending affiliate of UBS Warburg LLC may have lending
relationships with issuers of securities underwritten or privately placed by UBS
Warburg LLC. To the extent required under the securities laws, prospectuses and
other disclosure documents for securities underwritten or privately placed by
UBS Warburg LLC will disclose the existence of any such lending relationships
and whether the proceeds of the issue will be used to repay debts owed to
affiliates of UBS Warburg LLC.
23
If the foregoing correctly sets forth the understanding among
the Company and the Underwriters, please so indicate in the space provided below
for the purpose, whereupon this letter and your acceptance shall constitute a
binding agreement among the Company and the Underwriters, severally.
Very truly yours,
Gladstone Capital Corporation
By:
----------------------------------
Title:
24
Accepted and agreed to as of the date first above written, on
behalf of themselves and the other several Underwriters named in Schedule A
UBS Warburg LLC
First Union Securities, Inc.
Xxxxxxxxx Xxxxxxxx, Inc.
BB&T Capital Markets/Xxxxx & Xxxxxxxxxxxx, Inc.
Xxxxxx, Xxxxx Xxxxx, Incorporated
By: UBS WARBURG LLC
By: _________________________
Title:
By: _________________________
Title:
25
SCHEDULE A
NUMBER OF
UNDERWRITER FIRM SHARES
----------- -----------
UBS Warburg LLC
First Union Securities, Inc.
Xxxxxxxxx Xxxxxxxx, Inc.
BB&T Capital Markets/Xxxxx & Xxxxxxxxxxxx, Inc.
Xxxxxx, Xxxxx Xxxxx, Incorporated
---------
Total............. 7,700,000
---------
---------
