(EACH, A "SUBJECT
INVESTMENT") (A) WHO IS LISTED ON APPENDIX A HERETO, (B) TO WHOM THE CORPORATION
OR A WHOLLY-OWNED SUBSIDIARY OF THE CORPORATION IS CURRENTLY A LENDER OR IN
WHICH THE CORPORATION OR A SUBSIDIARY OF THE CORPORATION IS CURRENTLY AN
INVESTOR OTHER THAN AS A RESULT OF
THE OWNERSHIP OF PUBLICLY-TRADED SECURITIES
(INCLUDING WITHOUT LIMITATION THOSE PROSPECTIVE PORTFOLIO COMPANIES LISTED IN
THE FINAL PROSPECTUS FOR GLADSTONE CAPITAL CORPORATION) OR (C) WHERE THE
GLADSTONE FIRST LEARNED OF A LENDING OR INVESTING OPPORTUNITY WITH REGARD TO
SUCH PERSON FROM OR THROUGH THE CORPORATION OTHER THAN PURSUANT TO THE STRATEGIC
RELATIONSHIP AGREEMENT.
THE BOARD OF DIRECTORS SHALL NOT UNREASONABLY WITHHOLD
ITS CONSENT TO A TRANSACTION WHEREBY A SUBJECT PERSON WOULD PURCHASE A
CONTROLLING INTEREST IN A SUBJECT INVESTMENT.
(III)
GLADSTONE HAS CAREFULLY READ AND CONSIDERED THE PROVISIONS OF
THIS PARAGRAPH 3(C) AND, HAVING DONE SO, AGREES THAT THE RESTRICTIONS SET FORTH
IN THIS PARAGRAPH 3(C) (INCLUDING THE RESTRICTED PERIOD, SCOPE OF ACTIVITY TO BE
RESTRAINED AND THE GEOGRAPHICAL SCOPE) ARE FAIR AND REASONABLE AND ARE
REASONABLY REQUIRED FOR THE PROTECTION OF THE INTERESTS OF THE CORPORATION, ITS
OFFICERS, DIRECTORS, EMPLOYEES, CREDITORS AND SHAREHOLDERS.
GLADSTONE
UNDERSTANDS THAT THE RESTRICTIONS CONTAINED IN THIS PARAGRAPH 3(C) MAY LIMIT HIS
ABILITY TO ENGAGE IN A BUSINESS SIMILAR TO THE CORPORATION'S BUSINESS, BUT
ACKNOWLEDGES THAT HE WILL RECEIVE SUFFICIENTLY HIGH REMUNERATION AND OTHER
BENEFITS FROM THE CORPORATION HEREUNDER TO JUSTIFY SUCH RESTRICTIONS.
(IV)
DURING THE RESTRICTED PERIOD, GLADSTONE SHALL NOT, WHETHER FOR HIS
OWN ACCOUNT OR FOR THE ACCOUNT OF ANY OTHER PERSON (EXCLUDING THE CORPORATION),
INTENTIONALLY (I) SOLICIT, ENDEAVOR TO ENTICE OR INDUCE ANY EMPLOYEE OF THE
CORPORATION TO TERMINATE HIS EMPLOYMENT WITH THE CORPORATION OR ACCEPT
EMPLOYMENT WITH ANYONE ELSE OR (II) INTERFERE IN A SIMILAR MANNER WITH THE
BUSINESS OF THE CORPORATION, EXCEPT FOR THOSE EMPLOYEES WHO THE CORPORATION AND
GLADSTONE AGREE ARE EXEMPT FROM THE APPLICABILITY OF THIS PARAGRAPH AT THE TIME
OF HIRING.
(V)
IN THE EVENT THAT ANY PROVISION OF THIS PARAGRAPH 3(C) RELATING TO
THE RESTRICTED PERIOD OR THE AREAS OF RESTRICTION SHALL BE DECLARED BY A COURT
OF COMPETENT JURISDICTION TO EXCEED THE MAXIMUM TIME PERIOD OR AREAS SUCH COURT
DEEMS REASONABLE AND ENFORCEABLE, THE RESTRICTED PERIOD OR AREAS OF RESTRICTION
DEEMED REASONABLE AND ENFORCEABLE BY THE COURT SHALL BECOME AND THEREAFTER BE
THE MAXIMUM TIME PERIOD AND/OR AREAS.
(D)
STOCK OWNERSHIP. GLADSTONE AGREES THAT FROM THE
DATE HEREOF THROUGH 180 DAYS FOLLOWING THE DATE HEREOF, HE WILL NOT SELL, SIGN,
CONVEY, PLEDGE OR OTHERWISE DISPOSE OF 150,000 SHARES OF CORPORATION COMMON
STOCK, $0.01 PAR VALUE ("ACAS COMMON STOCK") THAT HE OWNS.
GLADSTONE SHALL BE
FREE TO SELL ANY SHARES OF ACAS COMMON STOCK THAT HE OWNS IN EXCESS OF SUCH
150,000 SHARES, PROVIDED THAT THE PROCEEDS OF SUCH SALES, NET OF REASONABLE AND
ACTUAL SELLING EXPENSES, ARE USED FIRST TO REPAY ANY LOANS FROM ACAS USED TO
PURCHASE SUCH SHARES OF ACAS COMMON STOCK.
(E)
INJUNCTIVE RELIEF.
GLADSTONE ACKNOWLEDGES THAT A
BREACH OF ANY OF THE COVENANTS