EXHIBIT 2f.10
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ALLIED CAPITAL CORPORATION
NOTE AGREEMENT
Dated as of October 15, 2001
Re: $150,000,000 7.16% Senior Notes, due October 15, 2006
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TABLE OF CONTENTS
SECTION HEADING PAGE
SECTION 1. DESCRIPTION OF NOTES AND COMMITMENT....................................................1
Section 1.1. Description of Notes...................................................................1
Section 1.2. Commitment, Closing Date...............................................................1
SECTION 2. PAYMENT OF NOTES.......................................................................2
Section 2.1. Required Payments......................................................................2
Section 2.2. Optional Prepayment with Premium.......................................................2
Section 2.3. Notice of Optional Prepayments.........................................................2
Section 2.4. Application of Prepayments.............................................................3
Section 2.5. Direct Payment.........................................................................3
SECTION 3. REPRESENTATIONS........................................................................3
Section 3.1. Representations of the Company.........................................................3
Section 3.2. Representations of the Purchasers......................................................3
SECTION 4. CLOSING CONDITIONS.....................................................................5
Section 4.1. Conditions.............................................................................5
Section 4.2. Waiver of Conditions...................................................................6
SECTION 5. COVENANTS..............................................................................6
Section 5.1. Corporate Existence, Etc...............................................................6
Section 5.2. Insurance..............................................................................6
Section 5.3. Taxes, Claims for Labor and Materials, Compliance with Laws............................6
Section 5.4. Maintenance, Etc.......................................................................7
Section 5.5. Nature of Business.....................................................................7
Section 5.6. Capital Maintenance....................................................................7
Section 5.7. Interest Charges Coverage Ratio........................................................7
Section 5.8. Limitations on Debt; Interest Rate Swaps...............................................7
Section 5.9. Limitation on Liens....................................................................8
Section 5.10. Restricted Payments...................................................................10
Section 5.11. Mergers, Consolidations and Sales of Assets...........................................10
Section 5.12. Repurchase of Notes...................................................................12
Section 5.13. Transactions with Affiliates..........................................................13
Section 5.14. Termination of Pension Plans..........................................................13
Section 5.15. Reports and Rights of Inspection......................................................13
SECTION 6. EVENTS OF DEFAULT AND REMEDIES THEREFOR...............................................15
Section 6.1. Events of Default.....................................................................15
Section 6.2. Notice to Holders.....................................................................17
Section 6.3. Acceleration of Maturities............................................................17
Section 6.4. Rescission of Acceleration............................................................18
SECTION 7. AMENDMENTS, WAIVERS AND CONSENTS......................................................18
Section 7.1. Consent Required......................................................................18
Section 7.2. Solicitation of Holders...............................................................18
Section 7.3. Effect of Amendment or Waiver.........................................................19
SECTION 8. INTERPRETATION OF AGREEMENT; DEFINITIONS..............................................19
Section 8.1. Definitions...........................................................................19
Section 8.2. Accounting Principles.................................................................28
Section 8.3. Directly or Indirectly................................................................28
SECTION 9. MISCELLANEOUS.........................................................................28
Section 9.1. Registered Notes......................................................................28
Section 9.2. Exchange of Notes.....................................................................28
Section 9.3. Loss, Theft, Etc. of Notes............................................................29
Section 9.4. Expenses, Stamp Tax Indemnity.........................................................29
Section 9.5. Powers and Rights Not Waived; Remedies Cumulative.....................................29
Section 9.6. Notices...............................................................................30
Section 9.7. Successors and Assigns................................................................30
Section 9.8. Survival of Covenants and Representations.............................................30
Section 9.9. Severability..........................................................................30
Section 9.10. Governing Law.........................................................................30
Section 9.11. Captions..............................................................................30
Signature........................................................................................................31
Attachments to Note Agreement:
Schedule I - Names and Addresses of Purchasers
Exhibit A - Form of Note
Exhibit B - Representations and Warranties
Exhibit C - Form of Opinion of Special Counsel to the Purchaser
Exhibit D - Form of Opinion of Counsel to the Company
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ALLIED CAPITAL CORPORATION
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
NOTE AGREEMENT
Re: $150,000,000 7.16% Senior Notes, due October 15, 2006
Dated as of
October 15, 2001
To the Purchasers named
on Schedule I to this Agreement
Ladies and Gentlemen:
The undersigned, ALLIED CAPITAL CORPORATION (the "Company"), a Maryland
corporation, hereby agrees with the Purchasers named on Schedule I to this
Agreement (the "Purchasers") as follows:
SECTION 1. DESCRIPTION OF NOTES AND COMMITMENT.
Section 1.1. Description of Notes. The Company will authorize the
issue and sale of $150,000,000 7.16% Senior Notes, due October 15, 2006 (the
"Notes") (the Notes, such term to include any such notes issued in substitution
therefor pursuant to SECTION 9 of this Agreement). The Notes shall be
substantially in the form set out in Exhibit A with such changes therefrom, if
any, as may be approved by the Purchasers and the Company. The Notes are not
subject to prepayment or redemption at the option of the Company prior to their
expressed maturity dates except on the terms and conditions and in the amounts
and with the premium, if any, set forth in SECTION 2 of this Agreement.
Section 1.2. Applicable Interest Rates. The Notes shall bear interest
(computed on the basis of a 360-day year of twelve 30-day months) on the unpaid
principal balance thereof from the date of issuance at the rate of 7.16% per
annum, payable semiannually on April 15 and October 15 in each year, commencing
April 15, 2002, until such principal sum shall have become due and payable
(whether at maturity, upon notice of prepayment or otherwise) and to pay on
demand interest (so computed) on any overdue principal and premium (as provided
herein) and, to the extent permitted by applicable law, on any overdue interest,
from the due date thereof at a rate of 9.16%% per annum (whether by acceleration
or otherwise) until paid.
Section 1.3. Commitment, Closing Date. Subject to the terms and
conditions hereof and on the basis of the representations and warranties
hereinafter set forth, the Company agrees to
Allied Capital Corporation Note Agreement
issue and sell to each Purchaser, and such Purchaser agrees to purchase from the
Company, Notes in the principal amount set forth opposite such Purchaser's name
on Schedule I hereto at a price equal to the principal amount thereof on October
30, 2001 (the "Closing Date"); provided that the Closing Date may be postponed
to such other date (but not more than ten days after the originally scheduled
Closing Date) as shall mutually be agreed upon by the Company and the Purchasers
scheduled to purchase the Notes on the Closing Date. Delivery of the Notes will
be made at the offices of ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇. On the Closing Date, the Company will deliver to each Purchaser
the Notes to be purchased by such Purchaser in the form of a single Note (or
such greater number of Notes in denominations of at least $500,000 as such
Purchaser may request) dated the Closing Date and registered in such Purchaser's
name (or in the name of such Purchaser's nominee), against delivery by such
Purchaser to the Company or its order of immediately available funds in the
amount of the purchase price therefor by wire transfer via Fedwire of
immediately available funds for the account of the Company to Account Number
▇▇▇▇▇▇▇▇▇▇ at Bank of America, Bethesda, Maryland, (ABA #052-001-633).
SECTION 2. PAYMENT OF NOTES.
Section 2.1. Required Payments. The entire principal amount of the
Notes shall become due and payable on October 15, 2006.
Section 2.2. Optional Prepayment with Premium In addition to the
payments required by SECTION 2.1, upon compliance with SECTION 2.3 the Company
shall have the privilege, at any time and from time to time, of prepaying the
outstanding Notes, either in whole or in part (but if in part then in a minimum
principal amount of $1,000,000) by payment of the principal amount of the Notes,
or portion thereof to be prepaid, and accrued interest thereon to the date of
such prepayment, together with a premium equal to the Make-Whole Amount,
determined as of two Business Days prior to the date of such prepayment pursuant
to this SECTION 2.2.
Section 2.3. Notice of Optional Prepayments. The Company will give
notice of any prepayment of the Notes pursuant to SECTION 2.2 to each Holder
thereof not less than 30 days nor more than 60 days before the date fixed for
such optional prepayment specifying (i) such date, (ii) the principal amount and
the Holder's Notes to be prepaid on such date, (iii) that a premium may be
payable, (iv) the date when such premium will be calculated, (v) the estimated
premium and (vi) the accrued interest applicable to the prepayment. Notice of
prepayment having been so given, the aggregate principal amount of the Notes
specified in such notice, together with accrued interest thereon and the
premium, if any, payable with respect thereto shall become due and payable on
the prepayment date specified in said notice. Not later than two Business Days
prior to the prepayment date specified in such notice, the Company shall provide
each Holder of a Note written notice of the premium, if any, payable in
connection with such prepayment and, whether or not any premium is payable, a
reasonably detailed computation of the Make-Whole Amount (which calculation
shall be reasonably satisfactory to each Holder of the Notes to be prepaid).
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Section 2.4. Application of Prepayments. All partial prepayments
pursuant to SECTION 2.2 shall be applied on all outstanding Notes to be prepaid
ratably in accordance with the unpaid principal amounts thereof.
Section 2.5. Direct Payment. Notwithstanding anything to the contrary
contained in this Agreement or the Notes, in the case of any Note owned by any
Holder that is a Purchaser or any other Institutional Holder which has given
written notice to the Company requesting that the provisions of this SECTION 2.5
shall apply, the Company will punctually pay when due the principal thereof,
interest thereon and premium, if any, due with respect to said principal,
without any presentment thereof, directly to such Holder at its address set
forth in Schedule I hereto or such other address as such Holder may from time to
time designate in writing to the Company or, if a bank account with a United
States bank is so designated for such Holder on Schedule I hereto the Company
will make such payments in immediately available funds to such bank account,
marked for attention as indicated, or in such other manner or to such other
account in any United States bank as such Holder may from time to time direct in
writing.
SECTION 3. REPRESENTATIONS.
Section 3.1. Representations of the Company. The Company represents
and warrants that all representations and warranties set forth in Exhibit B are
true and correct as of the date hereof and are incorporated herein by reference
with the same force and effect as though herein set forth in full.
Section 3.2. Representations of the Purchasers. Each Purchaser
represents, and in entering into this Agreement the Company understands, that
such Purchaser is acquiring the Notes in a private placement for the purpose of
investment and not with a view to the distribution thereof, and that such
Purchaser has no present intention of selling, negotiating or otherwise
disposing of the Notes; it being understood, however, that the disposition of
such Purchaser's property shall at all times be and remain within its control.
Each Purchaser represents that it is an institutional "accredited investor"
within the meaning of Rule 501 of Regulation D as promulgated under the
Securities Act and at least one of the following statements is an accurate
representation as to each source of funds (a "Source") to be used by it to pay
the purchase price of the Notes to be purchased by it hereunder:
(a) the Source is an "insurance company general account"
within the meaning of Department of Labor Prohibited Transaction
Exemption ("PTE") 95-60 (issued July 12, 1995) and there is no employee
benefit plan, treating as a single plan all plans maintained by the same
employer (or affiliate thereof as defined in Section V(a)(1) of PTE
95-60) or employee organization, with respect to which the amount of the
general account reserves and liabilities for all contracts held by or on
behalf of such plan exceeds ten percent (10%) of the total reserves and
liabilities of such general account (exclusive of separate account
liabilities) plus surplus, as set forth in the NAIC Annual Statement
filed with such Purchaser's state of domicile; or
(b) the Source is either (i) an insurance company pooled
separate account, within the meaning of ▇▇▇ ▇▇-▇ (▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇,
▇▇▇▇), ▇▇ (▇▇) a bank collective
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Allied Capital Corporation Note Agreement
investment fund, within the meaning of the PTE 91-38 (issued July 12,
1991) and, except as such Purchaser has disclosed to the Company in
writing pursuant to this paragraph (b), no employee benefit plan or
group of plans maintained by the same employer or employee organization
beneficially owns more than 10% of all assets allocated to such pooled
separate account or collective investment fund; or
(c) the Source constitutes assets of an "investment fund"
(within the meaning of Part V of the QPAM Exemption) managed by a
"qualified professional asset manager" or "QPAM" (within the meaning of
Part V of the QPAM Exemption), no employee benefit plan's assets that
are included in such investment fund, when combined with the assets of
all other employee benefit plans established or maintained by the same
employer or by an affiliate (within the meaning of Section V(c)(1) of
the QPAM Exemption) of such employer or by the same employee
organization and managed by such QPAM, exceed 20% of the total client
assets managed by such QPAM, the conditions of Part I(c) and (g) of the
QPAM Exemption are satisfied, neither the QPAM nor a person controlling
or controlled by the QPAM (applying the definition of "control" in
Section V(e) of the QPAM Exemption) owns a 5% or more interest in the
Company and (i) the identity of such QPAM and (ii) the names of all
employee benefit plans whose assets are included in such investment fund
have been disclosed to the Company in writing pursuant to this paragraph
(c); or
(d) the Source is a governmental plan; or
(e) the Source is one or more employee benefit plans, or a
separate account or trust fund comprised of one or more employee benefit
plans, each of which has been identified to the Company in writing
pursuant to this paragraph (e); or
(f) the Source does not include assets of any employee
benefit plan, other than a plan exempt from the coverage of ERISA.
If any Purchaser or any subsequent transferee of the Notes indicates that such
Purchaser or such transferee is relying on any representation contained in
paragraphs (b), (c) or (e) above, the Company shall deliver on the date of
Closing and on the date of any applicable transfer a certificate, which shall
either state that (i) it is neither a party in interest nor a "disqualified
person" (as defined in Section 4975(e)(2) of the Code), with respect to any plan
identified pursuant to paragraphs (b) or (e) above, or (ii) with respect to any
plan, identified pursuant to paragraph (c) above, neither it nor any "affiliate"
(as defined in Section V(c) of the QPAM Exemption) has at such time, and during
the immediately preceding one year, exercised the authority to appoint or
terminate said QPAM as manager of any plan identified in writing pursuant to
paragraph (c) above or to negotiate the terms of said QPAM's management
agreement on behalf of any such identified plan.
As used in this SECTION 3.2, the terms "employee benefit plan,"
"governmental plan," "party in interest" and "separate account" shall have the
respective meanings assigned to such terms in Section 3 of ERISA.
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Allied Capital Corporation Note Agreement
SECTION 4. CLOSING CONDITIONS.
Section 4.1. Conditions. The obligation of each Purchaser to purchase
the Notes on the Closing Date shall be subject to the performance by the Company
of its agreements hereunder which by the terms hereof are to be performed at or
prior to the time of delivery of the Notes and to the following further
conditions precedent:
(a) Closing Certificates. On the Closing Date such Purchaser
shall have received a certificate dated the Closing Date, signed by the
President or an Executive Vice President or a Managing Director or a
Principal of the Company, the truth and accuracy of which shall be a
condition to such Purchaser's obligation to purchase the Notes proposed
to be sold to such Purchaser on the Closing Date and to the effect that
(i) the representations and warranties of the Company set forth in
Exhibit B hereto are true and correct on and with respect to the Closing
Date, (ii) the Company has performed all of its obligations hereunder
which are to be performed on or prior to the Closing Date, and (iii) no
Default or Event of Default has occurred and is continuing.
(b) Legal Opinions. Such Purchaser shall have received from
▇▇▇▇▇▇▇ and ▇▇▇▇▇▇, who are acting as special counsel to the Purchasers
in this transaction, and from ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP, counsel
for the Company, their respective opinions dated the Closing Date, in
form and substance satisfactory to such Purchaser, and covering the
matters set forth in Exhibits C and D, respectively, hereto.
(c) Purchase Permitted By Applicable Law, Etc. On the
Closing Date, each purchase of Notes shall (a) be permitted by the laws
and regulations of each jurisdiction to which such Purchaser is subject,
without recourse to provisions (such as Section 1405(a)(8) of the New
York Insurance Law) permitting limited investments by insurance
companies without restriction as to the character of the particular
investment, (b) not violate any applicable law or regulation (including,
without limitation, Regulation U, T or X of the Board of Governors of
the Federal Reserve System) and (c) not subject any Purchaser to any
tax, penalty or liability under or pursuant to any applicable law or
regulation, which law or regulation was not in effect on the date
hereof. If requested by any Purchaser, such Purchaser shall have
received an officer's certificate certifying as to such matters of fact
as such Purchaser may reasonably specify to enable such Purchaser to
determine whether such purchase is so permitted.
(d) Sale of Other Notes. The Company shall have consummated
the sale of the entire principal amount of the Notes scheduled to be
sold on the Closing Date as specified in Schedule I.
(e) Private Placement Number. A Private Placement Number
issued by S&P's CUSIP Service Bureau (in cooperation with the Securities
Valuation Office of the National Association of Insurance Commissioners)
shall have been obtained for the Notes.
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Allied Capital Corporation Note Agreement
(f) Satisfactory Proceedings. All proceedings taken in
connection with the transactions contemplated by this Agreement, and all
documents necessary to the consummation thereof, shall be satisfactory
in form and substance to such Purchaser and such Purchaser's special
counsel, and such Purchaser shall have received a copy (executed or
certified as may be appropriate) of all legal documents or proceedings
taken in connection with the consummation of said transactions.
Section 4.2. Waiver of Conditions. If on the Closing Date the Company
fails to tender to any Purchaser the Notes to be issued to such Purchaser on
such date or if the conditions specified in SECTION 4.1 have not been fulfilled,
such Purchaser may thereupon elect to be relieved of all further obligations
under this Agreement. Without limiting the foregoing, if the conditions
specified in SECTION 4.1 have not been fulfilled, such Purchaser may waive
compliance by the Company with any such condition to such extent as such
Purchaser may in its sole discretion determine. Nothing in this SECTION 4.2
shall operate to relieve the Company of any of its obligations hereunder or to
waive any Purchaser's rights against the Company.
SECTION 5. COVENANTS.
From and after the Closing Date and continuing so long as any amount
remains unpaid on any Note:
Section 5.1. Corporate Existence, Etc. The Company will preserve and
keep in full force and effect, and will cause each Consolidated Subsidiary to
keep in full force and effect, its corporate existence and all registrations,
licenses, permits and governmental approvals necessary to the proper conduct of
its business except, in the case of a Consolidated Subsidiary, where the failure
to do so would not have a Material Adverse Effect; provided, however, that the
foregoing shall not prevent any transaction permitted by SECTION 5.11.
Section 5.2. Insurance. The Company will maintain, and will cause
each Consolidated Subsidiary to maintain, insurance coverage by financially
sound and reputable insurers in such forms and amounts and against such risks as
are customary for corporations of established reputation engaged in the same or
a similar business and owning and operating similar properties.
Section 5.3. Taxes, Claims for Labor and Materials, Compliance with
Laws. The Company will promptly pay and discharge, and will cause each
Consolidated Subsidiary to pay and discharge, all lawful taxes, assessments and
governmental charges or levies imposed upon the Company or such Consolidated
Subsidiary, respectively, or upon or in respect of all or any part of the
property or business of the Company or such Consolidated Subsidiary, all trade
accounts payable in accordance with usual and customary business terms, and all
claims for work, labor or materials, which if unpaid might become a Lien upon
any property of the Company or such Consolidated Subsidiary; provided, however,
that the Company or such Consolidated Subsidiary shall not be required to pay
any such tax, assessment, charge, levy, account payable or claim if (i) the
validity, applicability or amount thereof is being contested in good faith by
appropriate actions or proceedings which will prevent the forfeiture or sale of
any property of the Company or such Consolidated Subsidiary or any material
interference with the
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Allied Capital Corporation Note Agreement
use thereof by the Company or such Consolidated Subsidiary, and (ii) the Company
or such Consolidated Subsidiary shall set aside on its books, reserves deemed by
it to be adequate with respect thereto. The Company will promptly comply and
will cause each Consolidated Subsidiary to promptly comply with all laws,
ordinances or governmental rules and regulations to which it is subject
including, without limitation, the Occupational Safety and Health Act of 1970,
as amended, ERISA and all laws, ordinances, governmental rules and regulations
relating to environmental protection in all applicable jurisdictions, the
violation of which could have a Material Adverse Effect or would result in any
Lien not permitted under SECTION 5.9.
Section 5.4. Maintenance, Etc. The Company will maintain, preserve
and keep, and will cause each Consolidated Subsidiary to maintain, preserve and
keep, its properties which are used in the conduct of its business (whether
owned in fee or a leasehold interest) in good repair and working order, ordinary
wear and tear excepted, and from time to time will make all necessary repairs,
replacements and renewals as the Company may determine to be appropriate to the
conduct of its business.
Section 5.5. Nature of Business. Neither the Company nor any
Consolidated Subsidiary will engage in any business if, as a result, the general
nature of the business, taken on a consolidated basis, which would then be
engaged in by the Company and its Consolidated Subsidiaries would be
substantially changed from the general nature of the business engaged in by the
Company and its Consolidated Subsidiaries on the date of this Agreement as
described in the Memorandum.
Section 5.6. Capital Maintenance. The Company shall at all times
maintain Consolidated Shareholders Equity in an amount not less than (i)
$845,000,000 plus (ii) 75% of the Net Proceeds of all Equity Issuances effected
by the Company or any of its Consolidated Subsidiaries at any time after March
31, 2001 (excluding the Net Proceeds of any Equity Issuance by a Consolidated
Subsidiary to a Consolidated Subsidiary or to the Company).
Section 5.7. Interest Charges Coverage Ratio. The Company shall
maintain the ratio of Adjusted EBIT to Interest Expense of the Company and its
Consolidated Subsidiaries, determined on a consolidated basis as of the last day
of each fiscal quarter for the period of four consecutive fiscal quarters ending
on such day, at not less than 1.8 to 1.
Section 5.8. Limitations on Debt; Interest Rate Swaps. (a) The
Company will have on the last day of each quarterly fiscal period a ratio of
Consolidated Debt to Consolidated Shareholders' Equity not exceeding 1.5 to 1.
(b) The Company will not at any time permit the aggregate
principal amount of Priority Debt to exceed 25% of Consolidated
Shareholders' Equity.
(c) The Company will not at any time permit the Asset
Coverage Ratio to be less than 2 to 1.
(d) The Company will not permit any Consolidated Subsidiary
to enter into any Subsidiary Bank Guaranty or Subsidiary Existing Note
Guaranty, unless the
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Allied Capital Corporation Note Agreement
Company shall first furnish to each Holder of the Notes (i) an
unconditional Subsidiary Note Guaranty, (ii) an Intercreditor Agreement,
and (iii) an opinion of counsel to the effect that such Subsidiary Note
Guaranty has been duly authorized, executed and delivered by such
Consolidated Subsidiary and constitutes the legal, valid and binding
obligation of such Consolidated Subsidiary, enforceable against such
Consolidated Subsidiary in accordance with the terms thereof, and
covering such other matters as the Holders of 51% or more of the
principal amount of the Notes at the time outstanding may reasonably
request.
(e) The Company will not and will not permit any
Consolidated Subsidiary to enter into any Interest Rate Swap except in
the ordinary course of business pursuant to transactions that are
entered into for bona fide purposes of managing the Company's interest
rate risk and not for speculation.
Section 5.9. Limitation on Liens. The Company will not, and will not
permit any Consolidated Subsidiary to, create or incur, or suffer to be incurred
or to exist, any Lien on its or their property or assets, whether now owned or
hereafter acquired, or upon any income or profits therefrom, or transfer any
property for the purpose of subjecting the same to the payment of obligations in
priority to the payment of its or their general creditors, or acquire or agree
to acquire any property or assets upon conditional sales agreements or other
title retention devices, except:
(a) Liens for property taxes and assessments or governmental
charges or levies and Liens securing claims or demands of mechanics and
materialmen, provided payment thereof is not at the time required by
SECTION 5.3;
(b) Liens of or resulting from any judgment or award, the
time for the appeal or petition for rehearing of which shall not have
expired, or in respect of which the Company or a Consolidated Subsidiary
shall at any time in good faith be prosecuting an appeal or proceeding
for a review and in respect of which a stay of execution pending such
appeal or proceeding for review shall have been secured;
(c) Liens incidental to the conduct of business or the
ownership of properties and assets (including Liens in connection with
the making of loans to customers, worker's compensation, unemployment
insurance and other like laws, warehousemen's and attorneys' liens and
statutory landlords' liens) and Liens to secure the performance of bids,
tenders or trade contracts, or to secure statutory obligations, surety
or appeal bonds or other Liens of like general nature incurred in the
ordinary course of business and not in connection with (i) the borrowing
of money or (ii) obligations pursuant to ERISA, provided in each case,
the obligation secured is not overdue or, if overdue, is being contested
in good faith by appropriate actions or proceedings;
(d) minor survey exceptions or minor encumbrances, easements
or reservations, or rights of others for rights-of-way, utilities and
other similar purposes, or zoning or other restrictions as to the use of
real properties, which are necessary for the conduct of the activities
of the Company and its Consolidated Subsidiaries or which
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Allied Capital Corporation Note Agreement
customarily exist on properties of corporations engaged in similar
activities and similarly situated and which do not in any event
materially impair their use in the operation of the business of the
Company and its Consolidated Subsidiaries;
(e) Liens securing Indebtedness of a Consolidated Subsidiary
to the Company or to another Wholly-owned Consolidated Subsidiary;
(f) Liens incurred after the Closing Date given to secure
the payment of the purchase price or cost of construction incurred in
connection with the acquisition of, or improvements to, fixed assets
useful and intended to be used in carrying on the business of the
Company or a Consolidated Subsidiary, including Liens existing on such
assets at the time of acquisition thereof or at the time of acquisition
by the Company or a Consolidated Subsidiary of any business entity then
owning such assets, whether or not such existing Liens were given to
secure the payment of the purchase price of the assets to which they
attach so long as they were not incurred, extended or renewed in
contemplation of such acquisition, provided that (i) the Lien shall
attach solely to the assets acquired or purchased, (ii) the Lien (other
than Liens that are existing on such assets at the time of acquisition
thereof and that are permitted as aforesaid) shall have been created or
incurred within 180 days of the date of acquisition of such fixed
assets, except in the case of construction or acquisition of
improvements to real estate, the land on which such improvements are
located shall not be required to have been acquired within such 180
period; (iii) at the time of acquisition of such assets, the aggregate
amount remaining unpaid on all Indebtedness secured by Liens on such
assets whether or not assumed by the Company or a Consolidated
Subsidiary shall not exceed an amount equal to 80% (or 100% in the case
of Capitalized Leases) of the lesser of the total purchase price or fair
market value at the time of acquisition of such assets (as determined in
good faith by the Board of Directors of the Company), and (iv) all
Indebtedness secured by such Liens shall be permitted hereunder; and
(g) Liens securing Indebtedness (including Liens in
existence on the Closing Date and securing the Indebtedness described on
Annex B to Exhibit B) so long as the aggregate Indebtedness secured by
all such Liens is permitted within the limitations of SECTIONS 5.7 AND
5.8.
The Company will not, and will not permit any Consolidated Subsidiary
to, directly or indirectly, create, incur, assume or permit to exist (upon the
happening of a contingency or otherwise) any Lien on or with respect to any
property which secures Debt outstanding under the Bank Credit Agreement or the
Existing Note Agreements, unless the Company makes, or causes to be made,
effective provision whereby the Notes will be equally and ratably secured with
any and all other obligations thereby secured; provided that such security is
granted pursuant to an agreement reasonably satisfactory to the Holders of 51%
or more of the principal amount of the Notes at the time outstanding.
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Section 5.10. Restricted Payments. The Company will not except as
hereinafter provided:
(a) Declare or pay any dividends, either in cash or
property, on any shares of its capital stock of any class (except
dividends or other distributions payable solely in shares of capital
stock of the Company);
(b) Directly or indirectly, or through any Subsidiary,
purchase, redeem or retire any shares of its capital stock of any class
or any warrants, rights or options to purchase or acquire any shares of
its capital stock (other than in exchange for or out of the net cash
proceeds to the Company from the substantially concurrent issue or sale
of other shares of capital stock of the Company or warrants, rights or
options to purchase or acquire any shares of its capital stock); or
(c) Make any other payment or distribution, either directly
or indirectly or through any Subsidiary, in respect of its capital
stock;
(such declarations or payments of dividends, purchases, redemptions or
retirements of capital stock and warrants, rights or options and all such other
payments or distributions being herein collectively called "Restricted
Payments"), if after giving effect thereto (i) an Event of Default described in
paragraph (a) or (b) of SECTION 6.1 shall exist, (ii) as the result of an
occurrence of any other Event of Default described in SECTION 6.1 the Notes
shall have been accelerated under SECTION 6.3 or (iii) the Company would not be
in compliance with the limitations of SECTION 5.8.
The Company will not declare any regular quarterly dividend which
constitutes a Restricted Payment payable more than 60 days after the date of
declaration thereof; provided that any year-end extra dividend which constitutes
a Restricted Payment shall not be payable more than 120 days after the date of
declaration thereof.
For the purposes of this SECTION 5.10, the amount of any Restricted
Payment declared, paid or distributed in property shall be deemed to be the
greater of the book value or fair market value (as determined in good faith by
the Board of Directors of the Company) of such property at the time of the
making of the Restricted Payment in question.
Section 5.11. Mergers, Consolidations and Sales of Assets. (a) The
Company will not, and will not permit any Consolidated Subsidiary to,
consolidate with or be a party to a merger with any other Person or dispose of
all or a substantial part of the assets of the Company and its Consolidated
Subsidiaries; provided that:
(1) any Consolidated Subsidiary may merge or consolidate
with or into, sell, lease or otherwise dispose of all or a substantial
part of its assets to the Company or any Wholly-owned Subsidiary so long
as (A) (i) in any merger or consolidation involving the Company, the
Company shall be the surviving or continuing corporation and (ii) in any
merger or consolidation involving a Wholly-owned Subsidiary (and not the
Company), a Wholly-owned Subsidiary shall be the surviving or continuing
corporation, and (B) at the time of such consolidation or merger and
immediately after giving effect thereto, no Default or Event of Default
would exist;
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Allied Capital Corporation Note Agreement
(2) the Company may consolidate or merge with or into any
other corporation if (i) the corporation which results from such
consolidation or merger (the "surviving corporation") is organized under
the laws of any state of the United States or the District of Columbia,
(ii) the due and punctual payment of the principal of and premium, if
any, and interest on all of the Notes, according to their tenor, and the
due and punctual performance and observation of all of the covenants in
the Notes and this Agreement, to be performed or observed by the Company
are expressly assumed in writing by the surviving corporation and the
surviving corporation shall furnish to the holders of the Notes an
opinion of counsel reasonably satisfactory to the Holder or Holders of
51% or more of the principal amount of the Notes at the time outstanding
to the effect that the instrument of assumption has been duly
authorized, executed and delivered and constitutes the legal, valid and
binding contract and agreement of the surviving corporation enforceable
in accordance with its terms, except as enforcement of such terms may be
limited by bankruptcy, insolvency, reorganization, moratorium and
similar laws affecting the enforcement of creditors' rights generally
and by general equitable principles, and (iii) at the time of such
consolidation or merger and immediately after giving effect thereto and
to the incurrence of any Debt assumed or incurred in connection
therewith, (x) the aggregate amount of outstanding Consolidated Debt and
Priority Debt of the surviving corporation would be permitted by the
terms of SECTION 5.8 as of the last day of the fiscal quarter
immediately preceding the date of such consolidation or merger, and (y)
no Default or Event of Default would exist; and
(3) the Company and any Consolidated Subsidiary may, sell,
transfer or otherwise dispose of all or any part of its Investments in
the ordinary course of business including, without limitation, in
securitization transactions.
(b) The Company will not permit any Consolidated Subsidiary
to issue any Voting Stock of such Consolidated Subsidiary except to satisfy the
rights of minority shareholders to receive issuances of stock which are
non-dilutive to the Company and/or any Consolidated Subsidiary; provided that
the foregoing restrictions do not apply to issuances to the Company or to a
Wholly-owned Subsidiary or the issuance of directors' qualifying shares.
(c) The Company will not sell, transfer or otherwise dispose
of stock or Debt of any Consolidated Subsidiary (except issuance of directors'
qualifying shares and sales, transfers and dispositions of all the stock of a
special purpose Consolidated Subsidiary for consideration if (x) substantially
all the assets of such Consolidated Subsidiary constitute Investments and (y)
the sale, transfer or disposition of all such Investments for substantially the
same consideration would be permitted by SECTION 5.11(a)(3)) and will not permit
any Consolidated Subsidiary to sell, transfer or otherwise dispose of stock
(otherwise than by purchase or redemption of preferred stock) of a Consolidated
Subsidiary or Debt of any other Consolidated Subsidiary (except issuances to the
Company or to a Wholly-owned Subsidiary or issuance of directors' qualifying
shares); provided that the foregoing restrictions do not apply if the following
conditions are met:
(1) all shares of stock and all Debt of such Consolidated
Subsidiary held by the Company and its Subsidiaries shall be sold
simultaneously;
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(2) in the opinion of the Company's Board of Directors:
(i) such sale of stock or Debt is in the best
interests of the Company; and
(ii) the consideration paid for such stock and Debt
is deemed adequate and satisfactory.
(3) the Consolidated Subsidiary being disposed of shall not
have any continuing investment in the Company or any Consolidated
Subsidiary that is not being disposed of simultaneously; and
(4) such sale or disposition does not involve a substantial
part of assets of the Company and its Consolidated Subsidiaries.
As used in this SECTION 5.11, a sale of assets will be deemed a
"substantial part" of the assets of the Company and its Consolidated
Subsidiaries if (i) the Book Value of such assets sold in a given fiscal year
(except those sold in the ordinary course of business) exceeds 15% of the
Consolidated Total Assets of the Company and its Consolidated Subsidiaries
determined at the close of the immediately preceding fiscal year, or (ii) the
operations of such assets sold (except those sold in the ordinary course of
business) generated 15% or more of the consolidated operating profit of the
Company and its Consolidated Subsidiaries during the immediately preceding
fiscal year; provided, however, that for purposes of the foregoing calculation,
there shall not be included any assets if a portion of the proceeds of such
assets equal to the aggregate Book Value thereof immediately prior to such sale
was or is applied within 365 days of the date of sale of such assets to either
(A) the acquisition of Investments useful and intended to be used in the
operation of the business of the Company and its Consolidated Subsidiaries and
having a fair market value (as determined in good faith by the Board of
Directors of the Company) at least equal to the Book Value of the assets so
disposed of, or (B) the prepayment at any applicable prepayment premium, on a
pro rata basis, of Senior Funded Debt of the Company. It is understood and
agreed by the Company that any such proceeds paid and applied to the prepayment
of the Notes as hereinabove provided shall be prepaid as and to the extent
provided in SECTION 2.2.
Section 5.12. Repurchase of Notes. Neither the Company nor any
Consolidated Subsidiary or Affiliate, directly or indirectly, may repurchase or
make any offer to repurchase any Notes unless an offer has been made to
repurchase Notes, pro rata, from all holders of the Notes at the same time and
upon the same terms. In case the Company repurchases or otherwise acquires any
Notes, such Notes shall immediately thereafter be canceled and no Notes shall be
issued in substitution therefor. Without limiting the foregoing, upon the
repurchase or other acquisition of any Notes by the Company, any Consolidated
Subsidiary or any Affiliate, such Notes shall no longer be outstanding for
purposes of any section of this Agreement relating to the taking by the holders
of the Notes of any actions with respect hereto, including without limitation,
SECTION 6.3, SECTION 6.4 and SECTION 7.1.
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Allied Capital Corporation Note Agreement
Section 5.13. Transactions with Affiliates. The Company will not, and
will not permit any Consolidated Subsidiary to, enter into or be a party to any
transaction or arrangement with any Affiliate (including, without limitation,
the purchase from, sale to or exchange of property with, or the rendering of any
service by or for, any Affiliate), except transactions in the ordinary course of
and pursuant to the reasonable requirements of the Company's or such
Consolidated Subsidiary's business and upon fair and reasonable terms no less
favorable to the Company or such Consolidated Subsidiary than would be obtained
in a comparable arm's-length transaction with a Person other than an Affiliate.
Section 5.14. Termination of Pension Plans. The Company will not, and
will not permit any Consolidated Subsidiary to, withdraw from any Multiemployer
Plan to which it may hereafter contribute or permit any employee benefit plan
hereafter maintained by it to be terminated if such withdrawal or termination
could result in withdrawal liability (as described in Part 1 of Subtitle E of
Title IV of ERISA) or the imposition of a Lien on any property of the Company or
any Consolidated Subsidiary pursuant to Section 4068 of ERISA.
Section 5.15. Reports and Rights of Inspection. The Company will keep,
and will cause each Consolidated Subsidiary to keep, proper books of record and
account in which full and correct entries will be made of all dealings or
transactions of, or in relation to, the business and affairs of the Company or
such Consolidated Subsidiary, in accordance with GAAP consistently applied
(except for changes disclosed in the financial statements furnished to the
Holders pursuant to this SECTION 5.15 and concurred with by the independent
public accountants referred to in SECTION 5.15(b) hereof), and will furnish to
each Institutional Holder of the then outstanding Notes (in duplicate if so
specified below or otherwise requested):
(a) Quarterly Statements. As soon as available and in any
event within 45 days after the end of each quarterly fiscal period
(except the last) of each fiscal year, copies of:
(1) consolidated balance sheets of the Company and
its Consolidated Subsidiaries as of the close of such quarterly
fiscal period, setting forth in comparative form the
consolidated figures for the fiscal year then most recently
ended,
(2) consolidated statements of operations of the
Company and its Consolidated Subsidiaries for such quarterly
fiscal period and for the portion of the fiscal year ending with
such quarterly fiscal period, in each case setting forth in
comparative form the consolidated figures for the corresponding
periods of the preceding fiscal year, and
(3) consolidated statements of changes in net assets
of the Company and its Consolidated Subsidiaries for the portion
of the fiscal year ending with such quarterly fiscal period,
setting forth in comparative form the consolidated figures for
the corresponding period of the preceding fiscal year,
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all in reasonable detail and certified as complete and correct by a
Senior Financial Officer of the Company;
(b) Annual Statements. As soon as available and in any event
within 90 days after the close of each fiscal year, copies of:
(1) consolidated and consolidating balance sheets of
the Company and its Consolidated Subsidiaries as of the close of
such fiscal year,
(2) consolidated statements of operations, changes
in net assets and cash flows, and consolidating statements of
operations and cash flows, and
(3) consolidated statement of investments
setting forth in comparative form the consolidated figures for the
preceding fiscal year (except in the case of such statement of
investments) and in each case all in reasonable detail and accompanied
by a report thereon of a firm of independent public accountants of
recognized national standing selected by the Company to the effect that
the consolidated financial statements present fairly, in all material
respects, the consolidated financial position of the Company and its
Consolidated Subsidiaries as of the end of the fiscal year being
reported on and the consolidated results of their operations, changes in
net assets and cash flows for said year in conformity with GAAP and that
the examination of such accountants in connection with such financial
statements has been conducted in accordance with generally accepted
auditing standards and included such tests of the accounting records and
such other auditing procedures as said accountants deemed necessary in
the circumstances;
(c) Audit Reports. Promptly upon receipt thereof, one copy
of each interim or special audit made by independent accountants of the
books of the Company or any Consolidated Subsidiary and any management
letter received from such accountants;
(d) SEC and Other Reports. Promptly upon their becoming
available, one copy of each financial statement, report, notice, press
releases or proxy statement sent by the Company to stockholders
generally and of each regular or periodic report, and any registration
statement or prospectus filed by the Company with any securities
exchange or the Securities and Exchange Commission or any successor
agency, and copies of any orders in any proceedings to which the Company
or any Consolidated Subsidiary is a party, issued by any governmental
agency, Federal or state, having jurisdiction over the Company or any of
its Consolidated Subsidiaries;
(e) ERISA Reports. Promptly upon the occurrence thereof,
written notice of (i) a Reportable Event with respect to any Plan
hereafter maintained by the Company or any ERISA Affiliate; (ii) the
institution of any steps by the Company, any ERISA Affiliate, the PBGC
or any other person to terminate any such Plan; (iii) the institution of
any steps by the Company or any ERISA Affiliate to withdraw from any
such Plan; (iv) a non-exempt "prohibited transaction" within the meaning
of Section 406 of ERISA in
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connection with any such Plan; (v) any material contingent liability of
the Company or any Consolidated Subsidiary with respect to any
post-retirement welfare liability hereafter existing; or (vi) the taking
of any action by, or the threatening of the taking of any action by, the
Internal Revenue Service, the Department of Labor or the PBGC with
respect to any of the foregoing;
(f) Officer's Certificates. Within the periods provided in
paragraphs (a) and (b) above, a certificate of a Senior Financial
Officer of the Company stating that such officer has reviewed the
provisions of this Agreement and setting forth: (i) the information and
computations (in sufficient detail) required in order to establish
whether the Company was in compliance with the requirements of SECTION
5.6 through SECTION 5.11 at the end of the period covered by the
financial statements then being furnished and (ii) whether there existed
as of the date of such financial statements and whether, to the best of
such officer's knowledge, there exists on the date of the certificate or
existed at any time during the period covered by such financial
statements any Default or Event of Default and, if any such condition or
event exists on the date of the certificate, specifying the nature and
period of existence thereof and the action the Company is taking and
proposes to take with respect thereto;
(g) Accountant's Certificates. Within the period provided in
paragraph (b) above, a certificate of the accountants who render an
opinion with respect to such financial statements acknowledging that the
Company was in compliance with the financial covenants of SECTION 5.6,
SECTION 5.7 and SECTION 5.8(a), (b) and (c), and setting forth the
procedures used to make such determination; and
(h) Requested Information. With reasonable promptness, such
other data and information as any Holder or any such Institutional
Holder may reasonably request.
Without limiting the foregoing, the Company will permit each
Institutional Holder of the then outstanding Notes (or such Persons as such
Holder may designate), to visit and inspect, under the Company's guidance, any
of the properties of the Company or any Consolidated Subsidiary, to examine all
of their books of account, records, reports and other papers, to make copies and
extracts therefrom and to discuss their respective affairs, finances and
accounts with their respective officers, employees, and independent public
accountants (and by this provision the Company authorizes said accountants to
discuss with such Holder the finances and affairs of the Company and its
Consolidated Subsidiaries) all at such reasonable times and as often as may be
reasonably requested. Any visitation shall be at the sole expense of such
Institutional Holder, unless a Default or Event of Default shall have occurred
and be continuing or the Holder of any Note or of any other evidence of
Indebtedness of the Company or any Consolidated Subsidiary gives any written
notice or takes any other action with respect to a claimed default, in which
case, any such visitation or inspection shall be at the sole expense of the
Company.
SECTION 6. EVENTS OF DEFAULT AND REMEDIES THEREFOR.
Section 6.1. Events of Default. Any one or more of the following
shall constitute an "Event of Default" as such term is used herein:
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Allied Capital Corporation Note Agreement
(a) Default shall occur in the payment of interest on any
Note when the same shall have become due and such default shall continue
for more than five Business Days; or
(b) Default shall occur in the making of any payment of the
principal of any Note or premium, if any, thereon at the expressed or
any accelerated maturity date or at any date fixed for prepayment; or
(c) Default shall be made in the payment when due (whether
by lapse of time, by declaration, by call for redemption or otherwise)
of the principal of or interest on any Consolidated Debt (other than the
Notes) of the Company or any Consolidated Subsidiary having an aggregate
unpaid principal amount in excess of $15,000,000 and such default shall
continue beyond the period of grace, if any, allowed with respect
thereto; or
(d) Default or the happening of any event shall occur under
any indenture, agreement or other instrument under which Consolidated
Debt of the Company or any Consolidated Subsidiary having an aggregate
unpaid principal amount in excess of $15,000,000 may be issued and such
default or event shall continue for a period of time sufficient to
permit the acceleration of the maturity of such Consolidated Debt or the
Company or a Consolidated Subsidiary has become obligated to purchase
such Consolidated Debt or one or more Persons have the right to require
the Company or any Consolidated Subsidiary to purchase such Consolidated
Debt; or
(e) Default shall occur in the observance or performance of
any covenant or agreement contained in SECTION 5.6 through SECTION 5.11
and such default shall continue for more than five Business Days; or
(f) Default shall occur in the observance or performance of
any other provision of this Agreement which is not remedied within 30
days after the earlier of (i) the day on which a Senior Financial
Officer first obtains actual personal knowledge of such default, or (ii)
the day on which written notice thereof is given to the Company by the
Holder of any Note; or
(g) Any representation or warranty made by the Company
herein, or made by the Company in any statement or certificate furnished
by the Company in connection with the consummation of the issuance and
delivery of the Notes or furnished by the Company pursuant hereto, is
untrue in any material respect as of the date of the issuance or making
thereof; or
(h) Final judgment or final judgments for the payment of
money aggregating in excess of $15,000,000 is or are outstanding against
the Company or any Material Subsidiary or against any property or assets
of the Company or any Material Subsidiary and any such final judgment or
final judgments have remained unpaid, unvacated, unbonded or unstayed by
appeal or otherwise for a period of 60 days from the date of its entry;
or
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(i) A custodian, liquidator, receiver or similar official is
appointed for the Company or any Material Subsidiary or for the major
part of its property and is not discharged within 60 days after such
appointment; or
(j) The Company or any Material Subsidiary becomes insolvent
or bankrupt, is generally not paying its debts as they become due or
makes an assignment for the benefit of creditors, or the Company or any
Material Subsidiary applies for or consents to the appointment of a
custodian, liquidator, trustee or receiver for the Company or such
Material Subsidiary or for the major part of its property; or
(k) Bankruptcy, reorganization, arrangement or insolvency
proceedings, or other proceedings for relief under any bankruptcy or
similar law or laws for the relief of debtors, are instituted by or
against the Company or any Material Subsidiary and, if instituted
against the Company or such Material Subsidiary, are consented to or are
not dismissed within 60 days after such institution.
Section 6.2. Notice to Holders. When any Event of Default described
in the foregoing SECTION 6.1 has occurred, or if the Holder of any Note or of
any other evidence of Debt of the Company gives any notice or takes any other
action with respect to a claimed default, the Company agrees to give notice
within three Business Days of such event to all holders of the Notes then
outstanding.
Section 6.3. Acceleration of Maturities. When any Event of Default
described in paragraph (a) or (b) of SECTION 6.1 has happened and is continuing,
any Holder of any Note may declare the entire principal and all interest accrued
on such Holder's Notes to be and such Notes shall thereupon become, forthwith
due and payable, without any presentment, demand, protest or other notice of any
kind, all of which are hereby waived. When any Event of Default described in
paragraphs (a) through (i), inclusive, of SECTION 6.1 has happened and is
continuing, the Holder or Holders of 51% or more of the principal amount of
Notes at the time outstanding may, by notice to the Company, declare the entire
principal and all interest accrued on all Notes to be, and all Notes shall
thereupon become, forthwith due and payable, without any presentment, demand,
protest or other notice of any kind, all of which are hereby expressly waived.
When any Event of Default described in paragraph (j) or (k) of SECTION 6.1 has
occurred, then all outstanding Notes shall immediately become due and payable
without presentment, demand or notice of any kind. Upon any Note becoming due
and payable as a result of any Event of Default as aforesaid, the Company will
forthwith pay to the Holder of such Note the entire principal and interest
accrued on such Note and (to the extent permitted by applicable law) an amount
as liquidated damages for the loss of the bargain evidenced hereby (and not as a
penalty) equal to the applicable Make-Whole Amount which the Company would be
obligated to pay if the Notes were being prepaid pursuant to SECTION 2.2,
determined as of the date on which such Note shall so become due and payable. No
course of dealing on the part of the Holder or Holders of any Notes nor any
delay or failure on the part of any Holder of Notes to exercise any right shall
operate as a waiver of such right or otherwise prejudice such Holder's rights,
powers and remedies. The Company further agrees, to the extent permitted by law,
to pay to the Holder or Holders of the Notes all costs and expenses incurred by
them in the collection of any Notes upon any default hereunder or thereon,
including
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reasonable compensation to such Holder's or Holders' attorneys for all services
rendered in connection therewith.
Section 6.4. Rescission of Acceleration. The provisions of
SECTION 6.3 are subject to the condition that if the principal of and accrued
interest on all or any outstanding Notes have been declared immediately due and
payable by reason of the occurrence of any Event of Default described in
paragraphs (a) through (i), inclusive, of SECTION 6.1, the holders of 66-2/3% in
aggregate principal amount of the Notes then outstanding may, by written
instrument filed with the Company, rescind and annul such declaration and the
consequences thereof, provided that at the time such declaration is annulled and
rescinded:
(a) no judgment or decree has been entered for the payment
of any monies due pursuant to the Notes or this Agreement;
(b) all arrears of interest upon all the Notes and all other
sums payable under the Notes and under this Agreement (except any
principal, interest or premium on the Notes which has become due and
payable solely by reason of such declaration under SECTION 6.3) shall
have been duly paid; and
(c) each and every other Default and Event of Default shall
have been made good, cured or waived pursuant to SECTION 7.1;
and provided further, that no such rescission and annulment shall extend to or
affect any subsequent Default or Event of Default or impair any right consequent
thereto.
SECTION 7. AMENDMENTS, WAIVERS AND CONSENTS.
Section 7.1. Consent Required. Any term, covenant, agreement or
condition of this Agreement may, with the consent of the Company, be amended or
compliance therewith may be waived (either generally or in a particular instance
and either retroactively or prospectively), if the Company has obtained the
consent in writing of the Holders of at least 51% in aggregate principal amount
of outstanding Notes; provided that without the written consent of the Holders
of all of the Notes then outstanding, no such amendment or waiver shall be
effective (i) which will change the time of payment of the principal of or the
interest on any Note, change the principal amount thereof, reduce the rate of
interest thereon or change the method of computation of the Make-Whole Amount,
or (ii) which will change any of the provisions with respect to optional
prepayments or (iii) which will change the percentage of holders of the Notes
required to consent to any such amendment or waiver of any of the provisions of
this SECTION 7 or SECTION 6.
Section 7.2. Solicitation of Holders. So long as there are any Notes
outstanding, the Company will not solicit, request or negotiate for or with
respect to any proposed waiver or amendment of any of the provisions of this
Agreement or the Notes unless each Holder of Notes (irrespective of the amount
of Notes then owned by it) shall be informed thereof by the Company and shall be
afforded the opportunity of considering the same and shall be supplied by the
Company with sufficient information to enable it to make an informed decision
with respect thereto. The Company will not, directly or indirectly, pay or cause
to be paid any remuneration,
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whether by way of supplemental or additional interest, fee or otherwise, to any
Holder of Notes as consideration for or as an inducement to entering into by any
Holder of Notes of any waiver or amendment of any of the terms and provisions of
this Agreement or the Notes unless such remuneration is concurrently paid on the
same terms, ratably to each Holder of Notes then outstanding even if such Holder
did not consent to such waiver or amendment.
Section 7.3. Effect of Amendment or Waiver. Any such amendment or
waiver shall apply equally to all of the Holders of the Notes and shall be
binding upon them, upon each future Holder of any Note and upon the Company,
whether or not such Note shall have been marked to indicate such amendment or
waiver. No such amendment or waiver shall extend to or affect any obligation not
expressly amended or waived or impair any right consequent thereon.
SECTION 8. INTERPRETATION OF AGREEMENT; DEFINITIONS.
Section 8.1. Definitions. Unless the context otherwise requires, the
terms hereinafter set forth when used herein shall have the following meanings
and the following definitions shall be equally applicable to both the singular
and plural forms of any of the terms herein defined:
"Adjusted EBIT" means, for any period with respect to the Company and
its Consolidated Subsidiaries on a consolidated basis, income after deduction of
all expenses and other proper charges other than taxes and Interest Expense, all
as determined in accordance with GAAP.
"Affiliate" shall mean any Person (other than a Consolidated Subsidiary)
which (i) directly or indirectly, or through one or more intermediaries
controls, or is controlled by, or is under common control with, the Company,
(ii) which beneficially owns or holds 5% or more of any class of the Voting
Stock of the Company or (iii) 5% or more of the Voting Stock (or in the case of
a Person which is not a corporation, 5% or more of the equity interest) of which
is beneficially owned by the Company or a Subsidiary. The term "control" means
the possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a Person, whether through the
ownership of Voting Stock, by contract or otherwise, other than by investment
advisory contracts entered into in the ordinary course of business of the
Company or a Subsidiary of the Company.
"Asset Coverage Ratio" shall mean on a consolidated basis for the
Company and its Consolidated Subsidiaries the ratio which the value of total
assets, less all liabilities and indebtedness not represented by senior
securities (all as determined pursuant to the Investment Company Act and any
orders of the Securities and Exchange Commission issued to the Company
thereunder), bears to the aggregate amount of senior securities representing
indebtedness of the Company and its Consolidated Subsidiaries
"Bank Credit Agreement" means the Second Amended and Restated Credit
Agreement between the Banks and the Company dated as of August 3, 2001, as
amended from time to time, pursuant to which the Banks have extended credit to
the Company, and any renewals, extensions or replacements thereof.
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"Banks" means the banks or financial institutions which are party to the
Bank Credit Agreement from time to time.
"Book Value" means, with respect to any asset at any time, the value
thereof as the same would be reflected on a consolidated balance sheet of the
Company and its Consolidated Subsidiaries as at such time prepared in accordance
with GAAP.
"Business Day" shall mean (a) for the purposes of computation of the
Make-Whole Amount only, any day of the week (excluding Saturday or Sunday) on
which banks in New York, New York are not obligated by law to close and (b) for
the purposes of any other provision of this Agreement any day of the week
(excluding Saturday or Sunday) on which banks in Washington, D.C. or New York,
New York are not obligated by law to close.
"Capitalized Lease" shall mean any lease the obligation for Rentals with
respect to which is required to be capitalized on a consolidated balance sheet
of the lessee and its subsidiaries in accordance with GAAP.
"Capitalized Rentals" of any Person shall mean as of the date of any
determination thereof the amount at which the aggregate Rentals due and to
become due under all Capitalized Leases under which such Person is a lessee
would be reflected as a liability on a consolidated balance sheet of such
Person.
"Code" shall mean the Internal Revenue Code of 1986, as amended and the
rules and regulations promulgated thereunder.
"Consolidated Debt" shall mean as of the date of any determination
thereof, the aggregate unpaid amount of all Debt of the Company and its
Consolidated Subsidiaries determined on a consolidated basis in accordance with
GAAP.
"Consolidated Shareholders' Equity" as of the date of determination
thereof, shall mean the total shareholders' equity of the Company and its
Consolidated Subsidiaries as the same would appear on a consolidated balance
sheet of the Company and its Consolidated Subsidiaries prepared as of such date
in accordance with GAAP, including, in any case, common stock of the Company
(valued at cost) held in the Allied Capital Corporation Deferred Compensation
Trust and Permitted Preferred Stock of the Company and its Consolidated
Subsidiaries but excluding any stock, common or preferred, not both issued and
outstanding.
"Consolidated Subsidiary" shall mean any Subsidiary which is required to
be consolidated on financial statements of the Company prepared in accordance
with GAAP.
"Consolidated Total Assets" shall mean total assets of the Company and
its Consolidated Subsidiaries on a consolidated basis.
"Debt" means, with respect to any Person, without duplication,
(a) its liabilities for borrowed money;
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Allied Capital Corporation Note Agreement
(b) its liabilities for the deferred purchase price of
property acquired by such Person (excluding accounts payable arising in
the ordinary course of business but including, without limitation, all
liabilities created or arising under any conditional sale or other title
retention agreement with respect to any such property);
(c) its Capitalized Rentals;
(d) all liabilities for borrowed money secured by any Lien
with respect to any property owned by such Person (whether or not it has
assumed or otherwise become liable for such liabilities); and
(e) any Guaranty of such Person with respect to liabilities
of a type described in any of clauses (a) through (d) hereof.
Debt of any Person shall include all obligations of such Person of the character
described in clauses (a) through (e) to the extent such Person remains legally
liable in respect thereof notwithstanding that any such obligation is deemed to
be extinguished under GAAP.
"Default" shall mean any event or condition the occurrence of which
would, with the lapse of time or the giving of notice, or both, constitute an
Event of Default.
"Equity Issuance" means any issuance or sale by a Person of its capital
stock or other similar equity security, or any warrants, options or similar
rights to acquire, or securities convertible into or exchangeable for, such
capital stock or other similar equity security.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended, and any successor statute of similar import, together with the
regulations thereunder, in each case as in effect from time to time. References
to sections of ERISA shall be construed to also refer to any successor sections.
"ERISA Affiliate" shall mean any corporation, trade or business that is,
along with the Company, a member of a controlled group of corporations or a
controlled group of trades or businesses, as described in section 414(b) and
414(c), respectively, of the Code or Section 4001 of ERISA.
"Event of Default" shall have the meaning set forth in SECTION 6.1.
"Existing Notes" means the notes issued by the Company pursuant to the
Existing Note Agreements.
"Existing Note Agreements" means (i) the Note Agreement dated as of
April 30, 1998, among the Company and the Purchasers named therein, pursuant to
which the Company has issued its $140,000,000 7.055% Senior Notes, Series A, due
May 30, 2003, its $30,000,000 7.168% Senior Notes, Series B, due May 30, 2005,
and its $10,000,000 9.530% Senior Notes, Series C, due May 30, 2005, and any
replacement or renewal thereof, (ii) the Note Agreement dated as of May 1, 1999
among the Company and the Purchasers named therein, pursuant to
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Allied Capital Corporation Note Agreement
which the Company has issued its $112,000,000 7.39% Senior Notes, Series A due
May 1, 2004 and $25,000,000 7.49% Senior Notes, Series B due May 1, 2006 and any
replacement or renewal thereof, (iii) the Note Agreement dated as of November
15, 1999 among the Company and the Purchasers named therein, pursuant to which
the Company has issued its $102,000,000 8.51% Senior Notes due November 15,
2004, (iv) the Note Agreement dated October 15, 2000 among the Company and the
Purchasers named therein, pursuant to which the Company has issued $115,000,000
8.54% Senior Notes, Series A due October 15, 2005 and $10,000,000 Floating Rate
Senior Notes, Series B due October 15, 2005 and (v) the Note Agreement dated as
of August 31, 2000 between the Company and Intrepid Funding Master Trust, a
Delaware statutory business trust, pursuant to which the Company has issued its
$75,000,000 Auction Rate Reset Senior Notes, Series A, due December 2, 2002.
"GAAP" shall mean generally accepted accounting principles at the time
in the United States.
"Guaranties" by any Person shall mean all obligations (other than
endorsements in the ordinary course of business of negotiable instruments for
deposit or collection) of such Person guaranteeing, or in effect guaranteeing,
any Indebtedness, dividend or other obligation of any other Person (the "primary
obligor") in any manner, whether directly or indirectly, including, without
limitation, all obligations incurred through an agreement, contingent or
otherwise, by such Person: (i) to purchase such Indebtedness or obligation or
any property or assets constituting security therefor, (ii) to advance or supply
funds (x) for the purchase or payment of such Indebtedness or obligation, (y) to
maintain working capital or other balance sheet condition or otherwise to
advance or make available funds for the purchase or payment of such Indebtedness
or obligation, (iii) to lease property or to purchase Securities or other
property or services primarily for the purpose of assuring the owner of such
Indebtedness or obligation of the ability of the primary obligor to make payment
of the Indebtedness or obligation, or (iv) otherwise to assure the owner of the
Indebtedness or obligation of the primary obligor against loss in respect
thereof. For the purposes of all computations made under this Agreement, a
Guaranty in respect of any Indebtedness for borrowed money shall be deemed to be
Indebtedness equal to the principal amount of such Indebtedness for borrowed
money which has been guaranteed, and a Guaranty in respect of any other
obligation or liability or any dividend shall be deemed to be Indebtedness equal
to the maximum aggregate amount of such obligation, liability or dividend.
"Holder" shall mean any Person which is, at the time of reference, the
registered Holder of any Note.
"Indebtedness" with respect to any Person means, at any time, without
duplication,
(a) its liabilities for borrowed money and its redemption
obligations in respect of mandatorily redeemable preferred stock;
(b) its liabilities for the deferred purchase price of
property acquired by such Person (excluding accounts payable arising in
the ordinary course of business but
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Allied Capital Corporation Note Agreement
including all liabilities created or arising under any conditional sale
or other title retention agreement with respect to any such property);
(c) all liabilities appearing on its balance sheet in
accordance with GAAP in respect of Capitalized Leases;
(d) all liabilities for borrowed money secured by any Lien
with respect to any property owned by such Person (whether or not it has
assumed or otherwise become liable for such liabilities);
(e) all its liabilities in respect of unreimbursed drawings
under letters of credit or instruments serving a similar function issued
or accepted for its account by banks and other financial institutions
(whether or not representing obligations for borrowed money);
(f) Interest Rate Swaps of such Person; and
(g) any Guaranty of such Person with respect to liabilities
of a type described in any of clauses (a) through (f) hereof.
Indebtedness of any Person shall include all obligations of such Person
of the character described in clauses (a) through (g) to the extent such Person
remains legally liable in respect thereof notwithstanding that any such
obligation is deemed to be extinguished under GAAP.
"Institutional Holder" shall mean any insurance company, bank, savings
and loan association, trust company, investment company, charitable foundation,
employee benefit plan (as defined in ERISA) or other institutional investor or
financial institution which is not principally engaged, or as one of its
important activities, in the business of making small business investments of
the type made by the Company.
"Intercreditor Agreement" means an intercreditor agreement pursuant to
which the Banks, the Holders of the Existing Notes and the Holders of the Notes
have agreed to share payments made by any Consolidated Subsidiary under a
Subsidiary Existing Note Guaranty, a Subsidiary Note Guaranty or a Subsidiary
Bank Guaranty on an equal and ratable basis.
"Interest Expense" means, with respect to a Person and for any period,
the total consolidated interest expense (including, without limitation,
capitalized interest expense and interest expense attributable to Capitalized
Leases) of such Person and in any event shall include all interest expense with
respect to any Debt in respect of which such Person is wholly or partially
liable.
"Interest Rate Swap" means a currency swap, an interest rate swap or
other currency or interest rate hedge entered into by the Company or a
Consolidated Subsidiary. For the purposes of this Agreement, the amount of the
obligation under any Interest Rate Swap shall be the amount determined in
respect thereof as of the end of the then most recently ended fiscal quarter of
such Person, based on the assumption that such Interest Rate Swap had terminated
at the end of such fiscal quarter, and in making such determination, if any
agreement relating to such
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Allied Capital Corporation Note Agreement
Interest Rate Swap provides for the netting of amounts payable by and to such
Person thereunder or if any such agreement provides for the simultaneous payment
of amounts by and to such Person, then in each such case, the amount of such
obligation shall be the net amount so determined.
"Investment Company Act" shall mean the Investment Company Act of 1940,
as amended, and all rules and regulations promulgated thereunder.
"Investments" shall mean all investments, in cash or by delivery of
property made, directly or indirectly in any Person, whether by acquisition of
shares of capital stock, Indebtedness or other obligations or Securities or by
loan, advance, capital contribution or otherwise.
"Lien" shall mean any interest in property securing an obligation owed
to, or a claim by, a Person other than the owner of the property, whether such
interest is based on the common law, statute or contract, and including but not
limited to the security interest lien arising from a mortgage, encumbrance,
pledge, conditional sale or trust receipt or a lease, consignment or bailment
for security purposes. The term "Lien" shall include reservations, exceptions,
encroachments, easements, rights-of-way, covenants, conditions, restrictions,
leases and other title exceptions and encumbrances (including, with respect to
stock, stockholder agreements, voting trust agreements, buy-back agreements and
all similar arrangements) affecting property. For the purposes of this
Agreement, the Company or any Consolidated Subsidiary shall be deemed to be the
owner of any property which it has acquired or holds subject to a conditional
sale agreement, Capitalized Lease or other arrangement pursuant to which title
to the property has been retained by or vested in some other Person for security
purposes and such retention or vesting shall constitute a Lien.
"Make-Whole Amount" means, with respect to a Note, an amount equal to
the excess, if any, of the Discounted Value of the Remaining Scheduled Payments
with respect to the Called Principal of the Note over the amount of such Called
Principal, provided that the Make-Whole Amount may in no event be less than
zero. For the purposes of determining the Make-Whole Amount, the following terms
have the following meanings:
"Called Principal" means the principal of any Note that is to be
prepaid pursuant to SECTION 2.2 or has become or is declared to be
immediately due and payable pursuant to SECTION 6.3, as the context
requires.
"Discounted Value" means, with respect to the Called Principal
of a Note, the amount obtained by discounting all Remaining Scheduled
Payments with respect to such Called Principal from their respective
scheduled due dates to the Settlement Date with respect to such Called
Principal, in accordance with accepted financial practice and at a
discount factor (applied on the same periodic basis as that on which
interest on the Notes is payable) equal to the Reinvestment Yield with
respect to such Called Principal.
"Reinvestment Yield" means, with respect to the Called Principal
of a Note, 0.50% over the yield to maturity implied by (i) the yields
reported, as of 10:00 A.M.
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Allied Capital Corporation Note Agreement
(New York City time) on the second Business Day preceding the Settlement
Date with respect to such Called Principal, on the display designated as
"PX-1" of the Bloomberg Financial Markets Services Screen (or such other
display as may replace PX-1 of the Bloomberg Financial Markets Services
Screen) for actively traded on-the-run U.S. Treasury securities having a
maturity equal to the Remaining Average Life of such Called Principal as
of such Settlement Date, or (ii) if such yields are not reported as of
such time or the yields reported as of such time are not ascertainable
(including by way of interpolation), the Treasury Constant Maturity
Series Yields reported, for the latest day for which such yields have
been so reported as of the second Business Day preceding the Settlement
Date with respect to such Called Principal, in Federal Reserve
Statistical Release H.15 (519) (or any comparable successor publication)
for actively traded on-the-run U.S. Treasury securities having a
constant maturity equal to the Remaining Average Life of such Called
Principal as of such Settlement Date. Such implied yield will be
determined, if necessary, by (a) converting U.S. Treasury ▇▇▇▇
quotations to bond-equivalent yields in accordance with accepted
financial practice and (b) interpolating linearly between (1) the
actively traded on-the-run U.S. Treasury security with the maturity
closest to and greater than the Remaining Average Life and (2) the
actively traded on-the-run U.S. Treasury security with the maturity
closest to and less than the Remaining Average Life.
"Remaining Average Life" means, with respect to any Called
Principal, the number of years (calculated to the nearest one-twelfth
year) obtained by dividing (i) such Called Principal into (ii) the sum
of the products obtained by multiplying (a) the principal component of
each Remaining Scheduled Payment with respect to such Called Principal
by (b) the number of years (calculated to the nearest one-twelfth year)
that will elapse between the Settlement Date with respect to such Called
Principal and the scheduled due date of such Remaining Scheduled
Payment.
"Remaining Scheduled Payments" means, with respect to the Called
Principal of a Note, all payments of such Called Principal and interest
thereon that would be due after the Settlement Date with respect to such
Called Principal if no payment of such Called Principal were made prior
to its scheduled due date, provided that if such Settlement Date is not
a date on which interest payments are due to be made under the terms of
the Notes, then the amount of the next succeeding scheduled interest
payment will be reduced by the amount of interest accrued to such
Settlement Date and required to be paid on such Settlement Date pursuant
to or SECTION 2.2 or SECTION 6.3.
"Settlement Date" means, with respect to the Called Principal of
a Note, the date on which such Called Principal is to be prepaid
pursuant to SECTION 2.2 or has become or is declared to be immediately
due and payable pursuant to SECTION 6.3, as the context requires.
"Material Adverse Effect" means a material adverse effect on (a) the
business, operations, affairs, financial condition, assets or properties of the
Company and its Consolidated Subsidiaries taken as a whole, or (b) the ability
of the Company to perform its obligations under this Agreement and the Notes, or
(c) the validity or enforceability of this Agreement or the Notes.
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Allied Capital Corporation Note Agreement
"Material Subsidiary" shall mean any Consolidated Subsidiary which has
total assets having a value (determined in accordance with the market valuation
method pursuant to GAAP) greater than or equal to $40,000,000.
"Memorandum" is described in paragraph 5 of Exhibit B hereto.
"Multiemployer Plan" shall have the same meaning as in ERISA.
"Net Proceeds" means, with respect to an Equity Issuance by a Person,
the aggregate amount of all cash received by such Person in respect of such
Equity Issuance net of investment banking fees, legal fees, accountants fees,
underwriting discounts and commissions and other customary fees and expenses
actually incurred by such Person in connection with such Equity Issuance.
"Notes" shall have the meaning set forth in SECTION 1.1.
"PBGC" means the Pension Benefit Guaranty Corporation and any entity
succeeding to any or all of its functions under ERISA.
"Permitted Preferred Stock" means (i) preferred stock that is issued
from time to time by a Subsidiary to the SBA having an aggregate stated value
not exceeding $7,000,000 at any one time outstanding or (ii) preferred stock
that is issued from time to time by a Subsidiary for the purpose of qualifying
such Subsidiary as a real estate investment trust under Sections 856 through 860
of the Code and having an aggregate stated value not exceeding $500,000 at any
one time outstanding, provided that in any event Permitted Preferred Stock shall
not include any Voting Stock.
"Person" shall mean an individual, partnership, limited liability
company, corporation, trust or unincorporated organization, and a government or
agency or political subdivision thereof.
"Plan" means a "pension plan," as such term is defined in ERISA,
established or maintained by the Company or any ERISA Affiliate or as to which
the Company or any ERISA Affiliate contributed or is a member or otherwise may
have any liability.
"Priority Debt" means the sum of (i) all Debt of the Company and its
Consolidated Subsidiaries secured by a Lien, and (ii) all unsecured Debt of
Consolidated Subsidiaries (excluding in each case, Debt owing to the Company or
another Consolidated Subsidiary).
"Purchaser" shall have the meaning set forth in SECTION 1.1.
"QPAM Exemption" means Prohibited Transaction Class Exemption 84-14
issued by the United States Department of Labor.
"Rentals" shall mean and include as of the date of any determination
thereof all fixed payments (including as such all payments which the lessee is
obligated to make to the lessor on
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Allied Capital Corporation Note Agreement
termination of the lease or surrender of the property) payable by the Company or
any Consolidated Subsidiary, as lessee or sublessee under a lease of real or
personal property, but shall be exclusive of any amounts required to be paid by
the Company or any Consolidated Subsidiary (whether or not designated as rents
or additional rents) on account of maintenance, repairs, insurance, taxes and
similar charges. Fixed rents under any so-called "percentage leases" shall be
computed solely on the basis of the minimum rents, if any, required to be paid
by the lessee regardless of sales volume or gross revenues.
"Reportable Event" shall have the same meaning as in ERISA.
"SBA" shall mean the United States Small Business Administration.
"Securities Act" means the Securities Act of 1933, as amended from time
to time or any successor legislation.
"Security" shall have the same meaning as in Section 2(1) of the
Securities Act.
"Senior Financial Officer" means the chief financial officer, chief
operating officer, principal accounting officer, treasurer or controller of the
Company.
"Senior Funded Debt" means any Debt of the Company which is classified
as long term debt in accordance with GAAP (including, without limitation, the
Bank Credit Agreement) other than Subordinated Debt.
"Subordinated Debt" means all unsecured Debt of the Company which shall
contain or have applicable thereto subordination provisions providing for the
subordination thereof to other Debt of the Company (including, without
limitation, the obligations of the Company under the Notes).
"Subsidiary" with respect to any Person shall mean (i) any corporation,
partnership, association or other business entity at least 50% of the
outstanding shares of Voting Stock or similar interests of which are owned,
directly or indirectly, by such Person (including, without limitation, any
limited partnership in which such Person, directly or indirectly, shall have at
least a 50% vote on matters as to which limited partners may vote), (ii) any
general or limited partnership of which such Person shall be a general partner
or as to which such Person otherwise shall have unlimited liability, (iii) any
general or limited partnership a general partner of which can be changed or
removed by such Person (other than removals that could be accomplished by
voluntary withdrawal of such general partner only), or (iv) any general or
limited partnership in which (x) the amount represented by such Person's capital
account shall be equal to at least 50% of the aggregate amount represented by
the total of all partners' capital accounts or (y) such Person shall be
allocated at least 50% of the profit (or loss) or distributable cash of the
partnership; provided, however, that the term "Subsidiary", when used in this
Agreement without reference to any particular Person, shall mean a Subsidiary of
the Company.
"Subsidiary Bank Guaranty" means any agreement pursuant to which a
Consolidated Subsidiary has guaranteed the Debt of the Company under the Bank
Credit Agreement.
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Allied Capital Corporation Note Agreement
"Subsidiary Existing Note Guaranty" means any agreement pursuant to
which a Consolidated Subsidiary has guaranteed the Debt of the Company under the
Existing Notes.
"Subsidiary Note Guaranty" means any agreement pursuant to which a
Consolidated Subsidiary has guaranteed the Debt of the Company under the Notes.
"Voting Stock" shall mean Securities of any class or classes, the
holders of which are ordinarily, in the absence of contingencies, entitled to
elect a majority of the corporate directors (or Persons performing similar
functions).
"Wholly-owned" when used in connection with any Subsidiary shall mean a
Subsidiary of which all of the issued and outstanding shares of stock (except
shares required as directors' qualifying shares and Permitted Preferred Stock)
shall be owned by the Company and/or one or more of its Wholly-owned
Subsidiaries.
Section 8.2. Accounting Principles. Where the character or amount of
any asset or liability or item of income or expense is required to be determined
or any consolidation or other accounting computation is required to be made for
the purposes of this Agreement, the same shall be done in accordance with GAAP,
to the extent applicable, except where such principles are inconsistent with the
requirements of this Agreement.
Section 8.3. Directly or Indirectly. Where any provision in this
Agreement refers to action to be taken by any Person, or which such Person is
prohibited from taking, such provision shall be applicable whether the action in
question is taken directly or indirectly by such Person.
SECTION 9. MISCELLANEOUS.
Section 9.1. Registered Notes. The Company shall cause to be kept at
the principal office of the Company a register for the registration and transfer
of the Notes (hereinafter called the "Note Register") and the Company will
register or transfer or cause to be registered or transferred as hereinafter
provided any Note issued pursuant to this Agreement.
At any time and from time to time the Holder of any Note may transfer
such Note to another Institutional Holder upon surrender thereof at the
principal office of the Company duly endorsed or accompanied by a written
instrument of transfer duly executed by the Holder of such Note or its attorney
duly authorized in writing.
The Person in whose name any registered Note shall be registered shall
be deemed and treated as the owner and Holder thereof for all purposes of this
Agreement. Payment of or on account of the principal, premium, if any, and
interest on any registered Note shall be made to or upon the written order of
such registered Holder.
Section 9.2. Exchange of Notes. At any time and from time to time,
upon not less than ten days' notice to that effect given by the Holder of any
Note initially delivered or of any Note substituted therefor pursuant to SECTION
9.1, this SECTION 9.2 or SECTION 9.3, and, upon surrender of such Note at its
office, the Company will deliver in exchange therefor, without expense to such
Holder, except as
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Allied Capital Corporation Note Agreement
set forth below, a Note for the same aggregate principal amount as the then
unpaid principal amount of the Note so surrendered, or Notes in the denomination
of $500,000 or any amount in excess thereof as such Holder shall specify, dated
as of the date to which interest has been paid on the Note so surrendered or, if
such surrender is prior to the payment of any interest thereon, then dated as of
the date of issue, registered in the name of such one or more Institutional
Holders as may be designated by such Holder, and otherwise of the same form and
tenor as the Notes so surrendered for exchange. The Company may require the
payment of a sum sufficient to cover any stamp tax or governmental charge
imposed upon such exchange or transfer.
Section 9.3. Loss, Theft, Etc. of Notes. Upon receipt of evidence
satisfactory to the Company of the loss, theft, mutilation or destruction of any
Note, and in the case of any such loss, theft or destruction upon delivery of a
bond of indemnity in such form and amount as shall be reasonably satisfactory to
the Company, or in the event of such mutilation upon surrender and cancellation
of the Note, the Company will make and deliver without expense to the Holder
thereof, a new Note, of like tenor, in lieu of such lost, stolen, destroyed or
mutilated Note. If the Purchaser or any subsequent Institutional Holder is the
owner of any such lost, stolen or destroyed Note, then the affidavit of an
authorized officer of such owner, setting forth the fact of loss, theft or
destruction and of its ownership of such Note at the time of such loss, theft or
destruction shall be accepted as satisfactory evidence thereof and no further
indemnity shall be required as a condition to the execution and delivery of a
new Note other than the written agreement of such owner to indemnify the
Company.
Section 9.4. Expenses, Stamp Tax Indemnity. Whether or not the
transactions herein contemplated shall be consummated, the Company agrees to pay
directly all of the Purchasers' reasonable out-of-pocket expenses in connection
with the preparation, execution and delivery of this Agreement and the
transactions contemplated hereby, including but not limited to the reasonable
charges and disbursements of ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇, special counsel to the
Purchasers, duplicating and printing costs and charges for shipping the Notes,
adequately insured to each Purchaser's home office or at such other place as
such Purchaser may designate, the cost of obtaining a Private Placement Number
for the Notes from Standard & Poor's Corporation, and all such reasonable
expenses relating to any amendment, waivers or consents pursuant to the
provisions hereof, including, without limitation, any amendments, waivers, or
consents resulting from any work-out, renegotiation or restructuring relating to
the performance by the Company of its obligations under this Agreement and the
Notes. The Company also agrees that it will pay and save each Purchaser harmless
against any and all liability with respect to stamp and other taxes, if any,
which may be payable or which may be determined to be payable in connection with
the execution and delivery of this Agreement or the Notes, (other than as
specified in the last sentence of SECTION 9.2) whether or not any Notes are then
outstanding. The Company agrees to protect and indemnify each Purchaser against
any liability for any and all brokerage fees and commissions payable or claimed
to be payable to any Person in connection with the transactions contemplated by
this Agreement.
Section 9.5. Powers and Rights Not Waived; Remedies Cumulative. No
delay or failure on the part of the Holder of any Note in the exercise of any
power or right shall operate as a waiver thereof; nor shall any single or
partial exercise of the same preclude any other or further exercise thereof, or
the exercise of any other power or right, and the rights and remedies of the
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Allied Capital Corporation Note Agreement
Holder of any Note are cumulative to, and are not exclusive of, any rights or
remedies any such Holder would otherwise have.
Section 9.6. Notices. All communications provided for hereunder shall
be in writing and, if to a Holder, delivered or mailed prepaid by registered or
certified mail or overnight air courier, or by facsimile communication (with a
confirming copy of any such facsimile communication sent via overnight courier
service), in each case addressed to such Holder at its address appearing on
Schedule I to this Agreement or such other address as such Holder may designate
to the Company in writing, and if to the Company delivered or mailed by
registered or certified mail or overnight air courier, or by facsimile
communication, to the Company at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇., ▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇, Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ or to such other address as
the Company may in writing designate to the Holders; provided, however, that a
notice to a Holder by overnight air courier shall only be effective if delivered
to such Holder at a street address designated for such purpose in Schedule I,
and a notice to a Holder by facsimile communication shall only be effective if
made by confirmed transmission to such Holder at a telephone number designated
for such purpose in Schedule I, or, in either case, as such Holder may designate
to the Company in writing.
Section 9.7. Successors and Assigns. This Agreement shall be binding
upon the Company and its successors and assigns and shall inure to the benefit
of each Purchaser and to the benefit of its successors and assigns, including
each successive Holder.
Section 9.8. Survival of Covenants and Representations. All
covenants, representations and warranties made by the Company herein and in any
certificates delivered pursuant hereto, whether or not in connection with the
Closing Date, shall survive the closing and the delivery of this Agreement and
the Notes and shall terminate upon payment in full of all amounts due under the
Notes and this Agreement.
Section 9.9. Severability. Should any part of this Agreement for any
reason be declared invalid or unenforceable, such decision shall not affect the
validity or enforceability of any remaining portion, which remaining portion
shall remain in force and effect as if this Agreement had been executed with the
invalid or unenforceable portion thereof eliminated and it is hereby declared
the intention of the parties hereto that they would have executed the remaining
portion of this Agreement without including therein any such part, parts or
portion which may, for any reason, be hereafter declared invalid or
unenforceable.
Section 9.10. Governing Law. This Agreement and the Notes issued and
sold hereunder shall be governed by and construed in accordance with New York
law.
Section 9.11. Captions. The descriptive headings of the various
Sections or parts of this Agreement are for convenience only and shall not
affect the meaning or construction of any of the provisions hereof.
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Allied Capital Corporation Note Agreement
The execution hereof by you shall constitute a contract between us for
the uses and purposes hereinabove set forth, and this Agreement may be executed
in any number of counterparts, each executed counterpart constituting an
original but all together only one agreement.
ALLIED CAPITAL CORPORATION
By /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Executive Vice President & Treasurer
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Allied Capital Corporation Note Agreement
Accepted as of October 15, 2001.
USG ANNUITY & LIFE COMPANY
By: ING Investment Management LLC, as Agent
By: /s/ ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Name: ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Vice President
EQUITABLE LIFE INSURANCE COMPANY OF IOWA
By: ING Investment Management LLC, as Agent
By: /s/ ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Name: ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Vice President
GOLDEN AMERICAN LIFE INSURANCE COMPANY
By: ING Investment Management LLC, as Agent
By: /s/ ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Name: ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Vice President
▇▇▇▇ ▇▇▇▇▇▇▇ LIFE INSURANCE COMPANY
By /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
Title: Managing Director
▇▇▇▇ ▇▇▇▇▇▇▇ VARIABLE LIFE INSURANCE COMPANY
By /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
Title: Authorized Signatory
INVESTORS PARTNER LIFE INSURANCE COMPANY
By /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
Title: Authorized Signatory
-32-
Allied Capital Corporation Note Agreement
Accepted as of October 15, 2001
THE LINCOLN NATIONAL LIFE INSURANCE COMPANY
By: Delaware Lincoln Investment Advisers, a
series of Delaware Management Business
Trust, Attorney-In-Fact
By /s/ ▇▇▇▇ ▇▇▇▇▇
Name: ▇▇▇▇ ▇▇▇▇▇
Title: Assistant Vice President
FIRST PENN-PACIFIC LIFE INSURANCE COMPANY
By: Delaware Lincoln Investment Advisers, a
series of Delaware Management Business
Trust, Attorney-In-Fact
By /s/ ▇▇▇▇ ▇▇▇▇▇
Name: ▇▇▇▇ ▇▇▇▇▇
Title: Assistant Vice President
WOODMEN OF THE WORLD LIFE INSURANCE SOCIETY
By /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Assistant Vice President
By /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Assistant Vice President
-33-
Allied Capital Corporation Note Agreement
Accepted as of October 15, 2001
FEDERATED MUTUAL INSURANCE COMPANY
By /s/ ▇▇▇▇ ▇. ▇▇▇▇
Name: ▇▇▇▇ ▇. ▇▇▇▇
Title: Vice-President
FEDERATED LIFE INSURANCE COMPANY
By /s/ ▇▇▇▇ ▇. ▇▇▇▇
Name: ▇▇▇▇ ▇. ▇▇▇▇
Title: Vice-President
TRUSTMARK LIFE INSURANCE COMPANY
By: Advantus Capital Management, Inc.
By /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President
MINNESOTA LIFE INSURANCE COMPANY
By: Advantus Capital Management, Inc.
By /s/ ▇▇▇ ▇. ▇▇ ▇▇▇▇▇▇▇
Name: ▇▇▇ ▇. ▇▇ ▇▇▇▇▇▇▇
Title: Vice President
-34-
Allied Capital Corporation Note Agreement
Accepted as of October 15, 2001.
NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY
By /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Title: Associate Vice President
NATIONWIDE LIFE INSURANCE COMPANY
By /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Title: Associate Vice President
PACIFIC LIFE INSURANCE COMPANY
By /s/ ▇▇▇▇▇ ▇. Patch
Name: ▇▇▇▇▇ ▇. Patch
Title: Assistant Vice President
By /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Assistant Secretary
KEYPORT BENEFIT LIFE INSURANCE COMPANY
By: ▇▇▇▇▇ ▇▇▇ & Farnham Incorporated, as
agent
By /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Senior Vice President
SECURITY FINANCIAL LIFE INSURANCE CO.
By /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice President
Chief Investment Officer
-35-
ALLIED CAPITAL CORPORATION
7.16% Senior Note,
Due October 15, 2006
No. R- October ___, 2001
$
ALLIED CAPITAL CORPORATION, a Maryland corporation (the "Company"), for
value received, hereby promises to pay to
or registered assigns
on the fifteenth day of October, 2006
the principal amount of
DOLLARS ($____________)
and to pay interest (computed on the basis of a 360-day year of twelve 30-day
months) on the principal amount from time to time remaining unpaid hereon at the
rate of 7.16% per annum from the date hereof until maturity, payable
semiannually on the fifteenth day of each April and October in each year
(commencing on the first of such dates after the date hereof) and at maturity.
The Company agrees to pay interest on overdue principal (including any overdue
required or optional prepayment of principal) and premium, if any, and (to the
extent legally enforceable) on any overdue installment of interest, at the rate
of 9.16% per annum after the due date, whether by acceleration or otherwise,
until paid. Both the principal hereof and interest hereon are payable at the
principal office of the Company in Washington, D.C. in coin or currency of the
United States of America which at the time of payment shall be legal tender for
the payment of public and private debts.
This Note is one of the 7.16% Senior Notes, due October 15, 2006 (the
"Notes") of the Company in the aggregate principal amount of $150,000,000 issued
under and pursuant to the terms and provisions of the Note Agreement, dated as
of October 15, 2001 (the "Note Agreement"), entered into by the Company with the
Purchasers named therein and this Note and the holder hereof are entitled with
the holders of all other Notes outstanding under the Note Agreement to all the
benefits provided for thereby or referred to therein to the extent provided in
the Note Agreement. Reference is hereby made to the Note Agreement for a
statement of such rights and benefits.
This Note and the other Notes outstanding under the Note Agreement may
be declared due prior to their expressed maturity dates in the events, on the
terms and in the manner and amounts as provided in the Note Agreement.
EXHIBIT A
(to Note Agreement)
Allied Capital Corporation Note Agreement
The Notes are not subject to prepayment or redemption at the option of
the Company prior to their expressed maturity dates except on the terms and
conditions and in the amounts and with the premium, if any, set forth in the
Note Agreement.
This Note is registered on the books of the Company and is transferable
only by surrender thereof at the principal office of the Company duly endorsed
or accompanied by a written instrument of transfer duly executed by the
registered holder of this Note or its attorney duly authorized in writing.
Payment of or on account of principal, premium, if any, and interest on this
Note shall be made only to or upon the order in writing of the registered
holder.
ALLIED CAPITAL CORPORATION
By
Name:
-------------------------
Title:
------------------------
A-2
REPRESENTATIONS AND WARRANTIES
The Company represents and warrants to each Purchaser as follows:
1. Subsidiaries. Annex A attached hereto states the name of each of
the Company's Consolidated Subsidiaries, its jurisdiction of incorporation and
the percentage of its Voting Stock owned by the Company and/or its Consolidated
Subsidiaries. The Company and each Consolidated Subsidiary has good and
marketable title to all of the shares it purports to own of the stock of each
Consolidated Subsidiary, free and clear in each case of any Lien. All such
shares have been duly issued and are fully paid and non-assessable. The Company
is a Business Development Company under the Investment Company Act.
2. Corporate Organization and Authority. Except where failure to be
qualified or authorized would not have a Material Adverse Effect, the Company
and each Consolidated Subsidiary,
(a) is a corporation duly organized, validly existing and in good
standing under the laws of its jurisdiction of incorporation;
(b) has all requisite power and authority and all necessary licenses
and permits to own and operate its properties and to carry on its business as
now conducted and as presently proposed to be conducted; and
(c) is duly licensed or qualified and is in good standing as a
foreign corporation in each jurisdiction wherein the nature of the business
transacted by it or the nature of the property owned or leased by it makes such
licensing or qualification necessary.
3. Financial Statements. (a) The consolidated balance sheet at
December 31, 2000 and 1999 and the consolidated statements of operations,
changes in net assets and cash flows of the Company for three years ended
December 31, 2000, each accompanied by a report thereon containing an opinion
unqualified as to scope limitations imposed by the Company and otherwise without
qualification except as therein noted, by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP, have been
prepared in accordance with GAAP consistently applied except as therein noted,
are correct and complete and present fairly the financial position of the
Company and its Consolidated Subsidiaries as of such dates and the results of
their operations for such periods. The unaudited consolidated balance sheet of
the Company and its Consolidated Subsidiaries as of June 30, 2001, and the
unaudited statements of operations, changes in net assets and cash flows for the
six month period ended on said date prepared by the Company have been prepared
in accordance with GAAP consistently applied, are correct and complete and
present fairly the financial position of the Company and its Consolidated
Subsidiaries as of such date and the results of their operations and changes in
their financial position for such period.
(b) Since December 31, 2000, there has been no change in the
condition, financial or otherwise, of the Company and its Consolidated
Subsidiaries as shown on the consolidated balance sheet as of such date except
changes in the ordinary course of business, none of which individually or in the
aggregate has been materially adverse.
EXHIBIT B
(to Note Agreement)
Allied Capital Corporation Note Agreement
4. Debt. Annex B attached hereto correctly describes all Debt
(including, without limitation, Debt held by the SBA) and Capitalized Leases of
the Company and its Consolidated Subsidiaries outstanding on September 30, 2001
since which date there has been no material change in the amounts, interest
rates, sinking funds, installment payments or maturities of the Indebtedness of
the Company or its Consolidated Subsidiaries.
5. Full Disclosure. The Company, through its agent, ▇▇▇▇▇▇▇ Lynch,
Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated, has delivered to each of the Purchasers a
copy of a Private Placement Memorandum, dated October, 2001 (the "Memorandum"),
relating to the transactions contemplated hereby. The Memorandum fairly
describes, in all material respects, the general nature of the business and
principal properties of the Company and its Consolidated Subsidiaries. Except as
disclosed in this Agreement, the Memorandum, the documents, certificates or
other writings delivered to the Purchasers by or on behalf of the Company in
connection with the transactions contemplated hereby and the financial
statements described in paragraph 3 hereof, taken as a whole, do not contain any
untrue statement of a material fact or omit to state any material fact necessary
to make the statements therein not misleading in light of the circumstances
under which they were made. Except as disclosed in the Memorandum or in one of
the documents, certificates or other writings identified therein, or in the
financial statements described in paragraph 3 hereof, since December 31, 2000,
there has been no change in the financial condition, operations, business,
properties or prospects of the Company or any Consolidated Subsidiary except
changes that individually or in the aggregate could not reasonably be expected
to materially affect adversely the properties, business, prospects, profits or
condition (financial or otherwise) of the Company and its Consolidated
Subsidiaries taken as a whole. There is no fact known to the Company that could
reasonably be expected to materially affect adversely the properties, business,
prospects, profits or condition (financial or otherwise) of the Company and its
Consolidated Subsidiaries that has not been set forth herein or in the
Memorandum or in the other documents, certificates and other writings delivered
to the Purchasers by or on behalf of the Company specifically for use in
connection with the transactions contemplated hereby, except matters of an
economic or regulatory nature generally affecting businesses of the type engaged
in by the Company.
6. Pending Litigation. There are no actions, suits or proceedings
pending or, to the knowledge of the Company, threatened against or affecting the
Company or any Consolidated Subsidiary in any court or before any governmental
authority or arbitration board or tribunal which involve the possibility of
materially and adversely affecting the properties, business, profits or
condition (financial or otherwise) of the Company and its Consolidated
Subsidiaries, taken as a whole.
7. Title to Properties. The Company and each Consolidated
Subsidiary has good and marketable title in fee simple (or its equivalent under
applicable law) to all material parcels of real property and has good title to
all the other material items of property it purports to own, including that
reflected in the most recent balance sheet referred to in paragraph 3 hereof,
except as sold or otherwise disposed of in the ordinary course of business and
except for Liens permitted by the Agreement. The Company and each Consolidated
Subsidiary has the right to, and does, enjoy peaceful and undisturbed possession
under all leases to which it is a party or under which it is a party. All such
leases are valid, subsisting and in full force and effect, none
B-2
Allied Capital Corporation Note Agreement
of such leases is in default and no event has occurred and is continuing, and no
condition exists which, after the passage of time or giving of notice or both
could become an event of default under any such lease.
8. Patents and Trademarks. The Company and each Consolidated
Subsidiary owns or possesses all the patents, trademarks, trade names, service
marks, copyrights, licenses, permits, registrations, consents (governmental or
other) and rights with respect to the foregoing necessary for the present and
planned future conduct of its business, without any known conflict with the
rights of others.
9. Sale is Legal and Authorized. The sale of the Notes to the
Purchasers, compliance by the Company with all of the provisions of the Notes
and compliance by the Company with all of the provisions of the Agreement --
(a) are within the corporate powers of the Company;
(b) will not violate any provisions of any law or any order of any
court or governmental authority or agency and will not conflict with or result
in any breach of any of the terms, conditions or provisions of, or constitute a
default under the Articles of Incorporation or By-laws of the Company or any
indenture or other agreement or instrument to which the Company is a party or by
which it may be bound or result in the imposition of any Liens or encumbrances
on any property of the Company; and
(c) have been duly authorized by proper corporate action on the part
of the Company (no action by the stockholders of the Company being required by
law, by the Articles of Incorporation or By-laws of the Company or otherwise),
the Agreement and the Notes have been executed and delivered by the Company and
upon payment of the purchase price of the Notes by the Purchaser, the Notes and
the Agreement constitute the legal, valid and binding obligations, contracts and
agreements of the Company enforceable in accordance with their terms.
10. No Defaults. No Default or Event of Default has occurred and is
continuing. The Company is not in default in the payment of principal or
interest on any Debt and is not in default under any instrument or instruments
or agreements under and subject to which any Debt has been issued and no event
has occurred and is continuing under the provisions of any such instrument or
agreement which with the lapse of time or the giving of notice, or both, would
constitute an event of default thereunder.
11. Governmental Consent. No approval, consent or authorization of,
or registration, filing or declaration with or withholding of objection on the
part of, any regulatory body, state, Federal or local, is necessary in
connection with the execution and delivery by the Company of the Notes and the
Agreement or compliance by the Company with any of the provisions of the
Agreement or the Notes.
12. Taxes. All tax returns required to be filed by the Company or
any Consolidated Subsidiary in any jurisdiction have, in fact, been filed, and
all taxes, assessments, fees and other governmental charges upon the Company or
any Consolidated Subsidiary or upon any of their
B-3
Allied Capital Corporation Note Agreement
respective properties, income or franchises, which are shown to be due and
payable in such returns have been paid. For all taxable years ending on or
before December 31, 1997, the Federal income tax liability of the Company has
been satisfied and either the period of limitations on assessment of additional
Federal income tax has expired or the Company has entered into an agreement with
the Internal Revenue Service closing conclusively the total tax liability for
the taxable year. The Company does not know of any proposed additional tax
assessment against it for which adequate provision has not been made on its
accounts, and no material controversy in respect of additional Federal or state
income taxes due since said date is pending or to the knowledge of the Company
threatened. The provisions for taxes on the books of the Company and its
Consolidated Subsidiaries are adequate for all open years, and for its current
fiscal period.
13. Use of Proceeds. The net proceeds from the sale of the Notes
will be used by the Company for general corporate purposes. None of the
transactions contemplated in the Agreement (including, without limitation
thereof, the use of proceeds from the issuance of the Notes) will violate or
result in a violation of Section 7 of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), or any regulation issued pursuant thereto,
including, without limitation, Regulations U, T and X of the Board of Governors
of the Federal Reserve System, 12 C.F.R., Chapter II. The Company is not engaged
principally, or as one of its important activities, in the business of extending
credit for the purpose of purchasing or carrying any "margin stock" within the
meaning of said Regulation U. None of the proceeds from the sale of the Notes
will be used to purchase, or refinance any borrowing the proceeds of which were
used to purchase, any such margin stock.
14. Private Offering. Neither the Company, directly or indirectly,
nor any agent on its behalf has offered or will offer the Notes or has solicited
or will solicit an offer to acquire the Notes from or has otherwise approached
or negotiated or will approach or negotiate in respect of the Notes with any
Person other than such Purchaser and not more than 125 other institutional
investors, each of whom was offered a portion of the Notes at private sale for
investment. Neither the Company, directly or indirectly, nor any agent on its
behalf has offered or will offer the Notes or any similar Security or has
solicited or will solicit an offer to acquire the Notes or any similar Security
from any Person so as to bring the issuance and sale of the Notes within the
provisions of Section 5 of the Securities Act. When issued the Notes will not be
of the same class as Securities listed on a national securities exchange
registered under Section 6 of the Securities Exchange Act of 1934, as amended,
or quoted in a U.S. automated inter-dealer quotation system, and will not be
convertible or exchangeable into any such Securities.
15. ERISA. The consummation of the transactions provided for in the
Agreement and compliance by the Company with the provisions thereof and of the
Notes issued thereunder will not involve any non-exempt prohibited transaction
within the meaning of Section 406(a) of ERISA or Sections 4975(c)(1)(A)-(D) of
the Code. The Company and each ERISA Affiliate has fulfilled its obligations
under the minimum funding standards of ERISA and the Code with respect to each
Plan and is in compliance with the presently applicable provisions of ERISA and
the Code with respect to each Plan except for noncompliances which would not,
individually or in the aggregate, cause a Default or an Event of Default or have
a Material Adverse Effect. Neither the Company nor any ERISA Affiliate has any
contingent liability with respect to any
B-4
Allied Capital Corporation Note Agreement
post-retirement "welfare benefit plan" (as such term is defined in ERISA) except
as has been disclosed to the Purchaser. The representation by the Company in the
first sentence of this paragraph 15 is made in reliance upon and subject to the
accuracy of the representation in SECTION 3.2 as to the sources of the funds
used to pay the purchase price of the Notes to be purchased by each Purchaser.
16. Compliance with Law. Neither the Company nor any Consolidated
Subsidiary (a) is in violation of any law, ordinance, franchise, governmental
rule or regulation to which it is subject; or (b) has failed to obtain any
license, permit, registration, consent, franchise or other governmental
authorization necessary to the ownership of its property or to the conduct of
its business, which violation or failure to obtain would materially adversely
affect the business, profits, properties or condition (financial or otherwise)
of the Company and its Consolidated Subsidiaries, taken as a whole, or impair
the ability of the Company to perform its obligations contained in the
Agreements or the Notes. Neither the Company nor any Consolidated Subsidiary is
in default with respect to any order of any court or governmental authority or
arbitration board or tribunal.
17. Compliance with Environmental Laws. The Company is not in
violation of any applicable Federal, state, or local laws, statutes, rules,
regulations or ordinances relating to public health, safety or the environment,
including, without limitation, relating to releases, discharges, emissions or
disposals to air, water, land or ground water, to the withdrawal or use of
ground water, to the use, handling or disposal of polychlorinated biphenyls
(PCB's), asbestos or urea formaldehyde, to the treatment, storage, disposal or
management or hazardous substances (including, without limitation, petroleum,
crude oil or any fraction thereof, or other hydrocarbons), pollutants or
contaminants, or to exposure to toxic, hazardous or other controlled, prohibited
or regulated substances, which violation could have a material adverse effect on
the business, profits, properties or condition (financial or otherwise) of the
Company and its Consolidated Subsidiaries, taken as a whole. The Company does
not know of any liability or class of liability of the Company or any
Consolidated Subsidiary under the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended (42 U.S.C. Section 9601 et
seq.), or the Resource Conservation and Recovery Act of 1976, as amended (42
U.S.C. Section 6901 et seq.).
18. Foreign Assets Control Regulations, etc. Neither the sale of the
Notes by the Company hereunder nor its use of the proceeds thereof will violate
the Trading with the Enemy Act, as amended, or any of the foreign assets control
regulations of the United States Treasury Department (31 CFR, Subtitle B,
Chapter V, as amended) or any enabling legislation or executive order relating
thereto.
B-5
ALLIED CAPITAL CORPORATION
CONSOLIDATED SUBSIDIARIES OF THE COMPANY
PERCENTAGE OF VOTING STOCK OWNED BY
JURISDICTION OF COMPANY AND EACH OTHER CONSOLIDATED
NAME OF CONSOLIDATED SUBSIDIARY INCORPORATION SUBSIDIARY
Allied Investment Corporation Maryland 100%
Allied Investment Holdings LLC Delaware 100%
Allied Capital Holdings LLC Delaware 100%
Allied Capital REIT, Inc. Maryland 100%
Allied Capital Property LLC Delaware 100%
Allied Capital Equity LLC Delaware 100%
▇▇▇▇ ▇-▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇ 100%
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ LLC
A.C. Corporation Delaware 100%
Allied Capital BeteiligungsBeratung Republic of Germany 100%
GmbH
ANNEX A
(to Exhibit B)
Allied Capital Corporation Note Agreement
DESCRIPTION OF DEBT AND CAPITALIZED LEASES (AS OF SEPTEMBER 30, 2001)
DEBT OF COMPANY OBLIGOR
AND CONSOLIDATED SUBSIDIARIES BALANCE COMPANIES COLLATERAL
Revolving line of credit $207,000,000 ACC None
Unsecured long-term notes 544,000,000 ACC None
Auction Rate Reset Senior Note 80,783,665 ACC None
OPIC loan 5,700,000 ACC None
Guarantee of 50% of outstanding 50,513,820 ACC None
balances drawn on BLX's
$124,000,000 revolving line of
credit
DEBT OF
CONSOLIDATED SUBSIDIARIES
SBA debentures $87,000,000 AIC None
Mortgage loan 2,374,139 Allied Capital Office Building
Equity LLC
--------------------------------------------------------------------------------
ACC -- the Company
AIC -- Allied Investment Corporation
ANNEX B
(to Exhibit B)
DESCRIPTION OF SPECIAL COUNSEL'S CLOSING OPINION
The closing opinion of ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇, special counsel to the
Purchasers, called for by SECTION 4.1 of the Agreement, shall be dated the
Closing Date and addressed to the Purchasers, shall be satisfactory in form and
substance to the Purchasers and shall be to the effect that:
1. The Company is a corporation, validly existing and in
good standing under the laws of the State of Maryland and has the
corporate power and the corporate authority to execute and deliver the
Agreement; and the Company has the corporate power and the corporate
authority to issue the Notes.
2. The Agreement has been duly authorized by all necessary
corporate action on the part of the Company, has been duly executed and
delivered by the Company and constitutes the legal, valid and binding
obligation of the Company enforceable in accordance with its terms,
subject to bankruptcy, insolvency, fraudulent conveyance or similar laws
affecting creditors' rights generally, and general principles of equity
(regardless of whether the application of such principles is considered
in a proceeding in equity or at law).
3. The Notes have been duly authorized by all necessary
corporate action on the part of the Company, have been duly executed and
delivered by the Company and constitute the legal, valid and binding
obligations of the Company enforceable in accordance with their terms,
subject to bankruptcy, insolvency, fraudulent conveyance or similar laws
affecting creditors' rights generally, and general principles of equity
(regardless of whether the application of such principles is considered
in a proceeding in equity or at law).
4. The issuance, sale and delivery of the Notes under the
circumstances contemplated by the Agreement do not, under existing law,
require the registration of the Notes under the Securities Act of 1933,
as amended, or the qualification of an indenture under the Trust
Indenture Act of 1939, as amended.
The opinion of ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ shall also state that the opinion of
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, LLP is satisfactory in scope and form to ▇▇▇▇▇▇▇
and ▇▇▇▇▇▇ and that, in their opinion, the Purchaser is justified in relying
thereon.
In rendering the opinion set forth in paragraph 1 above, ▇▇▇▇▇▇▇ and
▇▇▇▇▇▇ may rely solely upon an examination of the Articles of Incorporation
certified by, and a certificate of good standing of the Company from, the
Secretary of State of the State of Maryland and the By-laws of the Company.
With respect to matters of fact upon which such opinion is based,
▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ may rely on appropriate certificates of public officials and
officers of the Company.
EXHIBIT C
(to Note Agreement)
DESCRIPTION OF CLOSING OPINION
OF COUNSEL FOR THE COMPANY
The closing opinion of ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, LLP, counsel for the
Company, which is called for by SECTION 4.1 of the Agreement, shall be dated the
Closing Date and addressed to the Purchasers purchasing Notes on the Closing
Date, shall be satisfactory in scope and form to the Purchasers and shall be to
the effect that:
1. The Company is a corporation, duly incorporated, validly
existing and in good standing under the laws of the State of Maryland
and has the full corporate power and the corporate authority to conduct
the activities in which it is now engaged.
2. The Company has the corporate power and the corporate
authority to execute and perform the Agreement and to issue the Notes.
3. The Agreement has been duly authorized by all necessary
corporate action on the part of the Company, has been duly executed and
delivered by the Company and constitutes the legal, valid and binding
obligation of the Company enforceable in accordance with its terms,
subject to bankruptcy, insolvency, fraudulent conveyance or similar laws
affecting creditors' rights generally, and general principles of equity
(regardless of whether the application of such principles is considered
in a proceeding in equity or at law).
4. The Notes have been duly authorized by all necessary
corporate action on the part of the Company, have been duly executed and
delivered by the Company and constitute the legal, valid and binding
obligations of the Company enforceable in accordance with their terms,
subject to bankruptcy, insolvency, fraudulent conveyance or similar laws
affecting creditors' rights generally, and general principles of equity
(regardless of whether the application of such principles is considered
in a proceeding in equity or at law).
5. No other approval, consent or withholding of objection
on the part of, or filing, registration or qualification with, any
governmental body, Federal or state, is necessary in connection with the
execution and delivery of the Agreement or the Notes.
6. The issuance and sale of the Notes and the execution,
delivery and performance by the Company of the Agreement do not conflict
with or result in any breach of any of the provisions of or constitute a
default under or result in the creation or imposition of any Lien upon
any of the property of the Company pursuant to the provisions of the
Articles of Incorporation or By-laws of the Company or any agreement or
other instrument known to such counsel to which the Company is a party
or by which the Company may be bound.
7. The issuance, sale and delivery of the Notes under the
circumstances contemplated by the Agreement do not, under existing law,
require the registration of the
EXHIBIT D
(to Note Agreement)
Notes under the Securities Act of 1933, as amended, or the qualification
of an indenture under the Trust Indenture Act of 1939, as amended.
In rendering the opinion set forth in paragraph 1 above, ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, LLP may rely solely upon an examination of the Charter of the
Company certified by, and a certificate of good standing of the Company from,
the State Department of Assessments and Taxation of the State of Maryland and
the By-laws of the Company.
The opinion of ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, LLP shall cover such other
matters relating to the sale of the Notes as the Purchaser may reasonably
request. With respect to matters of fact on which such opinion is based, such
counsel shall be entitled to rely on appropriate certificates of public
officials and officers of the Company.
D-2