] SHARES ALLIED CAPITAL CORPORATION COMMON STOCK, $0.0001 PAR VALUE PER SHARE UNDERWRITING AGREEMENT
Exhibit h
[ ] SHARES
ALLIED CAPITAL CORPORATION
COMMON STOCK, $0.0001 PAR VALUE PER SHARE
[ ], 200
[Name and Address of Underwriter]
Ladies and Gentlemen:
Allied Capital Corporation, a Maryland corporation (the “COMPANY”), proposes to issue and sell
to [ ] (the “UNDERWRITER”), an aggregate of [ ] shares of its common stock, $0.0001 par value per
share (the “FIRM SHARES”).
The Company also proposes to issue and sell to the Underwriter not more than an additional [ ]
shares of its common stock, $0.0001 par value per share (the “ADDITIONAL SHARES”), if and to the
extent that the Underwriter shall have determined to exercise the right to purchase such shares of
common stock granted in Section 2 hereof. The Firm Shares and the Additional Shares are
hereinafter collectively referred to as the “SHARES.” The shares of common stock, $0.0001 par
value per share, of the Company to be outstanding after giving effect to the sales contemplated
hereby, are hereinafter referred to as the “COMMON STOCK.”
The Company has filed with the Securities and Exchange Commission (the “COMMISSION”) a
registration statement on Form N-2 (No. 333-150006) relating to the Shares. The registration
statement, as it may have heretofore been amended at the time it became effective, including the
information (if any) deemed to be part of the registration statement at the time of effectiveness
pursuant to Rule 430C and Rule 497 under the Securities Act of 1933, as amended (the “SECURITIES
ACT”) and the rules and regulations promulgated thereunder (the “RULES AND REGULATIONS”), is
hereinafter referred to as the “REGISTRATION STATEMENT;” the prospectus, dated as of [ ], 200 , included in the Registration Statement at the time it became effective on [ ], 200 (including the
information, if any, deemed to be part of the Registration Statement at the time of effectiveness
pursuant to Rule 430C and Rule 497 under the Securities Act) is hereinafter referred to as the
“BASE PROSPECTUS;” the prospectus supplement dated [ ], 200 , filed with the Commission pursuant
to Rule 497 under the Securities Act is hereinafter referred to as the “PRE-PRICING PROSPECTUS
SUPPLEMENT” (and together with the Base Prospectus, the “PRE-PRICING PROSPECTUS”); the prospectus
supplement to be filed with the Commission pursuant to Rule
497 after the execution and delivery of this Agreement is hereinafter referred to as the
“PROSPECTUS SUPPLEMENT” (and together with the Base Prospectus, the “PROSPECTUS”).
1. REPRESENTATIONS AND WARRANTIES. The Company represents and warrants to and agrees with the
Underwriter that:
(a) The Registration Statement has become effective; no stop order suspending the
effectiveness of the Registration Statement is in effect, and, to the Company’s knowledge, no
proceedings for such purpose are pending before or threatened by the Commission.
(b) The Company meets the requirements for use of Form N-2 under the Securities Act and the
Rules and Regulations thereunder. The Registration Statement, when it became effective, and the
Pre-Pricing Prospectus, when considered together with certain information relating to the pricing
of the Shares of Common Stock omitted from the Pre-Pricing Prospectus that will be set forth in the
Prospectus Supplement (the “PRICING INFORMATION”), as of ___:00 p.m. (New York time) on [ ], 200___
(the “APPLICABLE TIME”), complied in all material respects with, and the Prospectus, as of the date
of the Prospectus Supplement, will comply in all material respects with, the requirements of the
Securities Act as applicable to business development companies and with the applicable Rules and
Regulations of the Commission thereunder; the Registration Statement, when it became effective, and
any supplement or amendment thereto, as of its effective date, did not and will not contain any
untrue statement of a material fact or omit to state a material fact required to be stated therein
or necessary to make the statements therein not misleading; the Pre-Pricing Prospectus, when
considered together with the Pricing Information, as of the Applicable Time, and the Prospectus, as
of the date of the Prospectus Supplement, and any supplement thereto, as of its date, did not and
will not contain any untrue statement of a material fact or omit to state a material fact necessary
to make the statements therein, in the light of the circumstances under which they were made, not
misleading; except that the representations and warranties set forth in this paragraph do not apply
to statements or omissions in the Registration Statement, the Pre-Pricing Prospectus or the
Prospectus, or any amendment or supplement thereto, based upon information relating to the
Underwriter furnished to the Company in writing by the Underwriter expressly for use therein. No
statement of material fact included in the Prospectus has been omitted from the Pre-Pricing
Prospectus, when considered together with the Pricing Information, and no statement of material
fact included in the Pre-Pricing Prospectus, when considered together with the Pricing Information,
that is required to be included in the Prospectus will be omitted therefrom. If, subsequent to the
date of this Agreement, the Company and the Underwriter determine that the Pre-Pricing Prospectus,
when considered together with the Pricing Information, includes an untrue statement of a material
fact or omitted a statement of material fact necessary to make the information therein, in the
light of the circumstances under which it was made, not misleading and agree to provide an
opportunity to purchasers of the Shares to terminate their old purchase contracts and enter into
new purchase contracts, then “Pre-Pricing Prospectus” and “Pricing Information” will also refer to
the information available to purchasers at the time of entry into the new purchase contract.
(c) The Company has been duly incorporated, is validly existing as a corporation in good
standing under the laws of the jurisdiction of its incorporation, has the corporate power and
authority to own its property and to conduct its business as described in the Registration
Statement, the Pre-Pricing Prospectus and Prospectus and is duly qualified to transact business and
is in good standing in each jurisdiction in which the conduct of its business or its ownership or
leasing of property requires such qualification, except to the extent that the failure to be so
qualified or be in good standing would not have a material adverse effect on the Company and its
subsidiaries, A.C. Finance LLC (“AC Finance”), Allied Capital REIT, Inc. (“ALLIED REIT”) and A.C.
Corporation (“AC CORP,” AC Finance, Allied REIT and AC Corp, each a “SUBSIDIARY,” and collectively,
the “SUBSIDIARIES”), taken as a whole. None of the Company’s Subsidiaries are a significant
subsidiary of the Company within the meaning of Rule 1-02(w) of Regulation S-X under the Securities
Act.
(d) Each Subsidiary of the Company has been duly incorporated or organized, is validly
existing as a corporation, is in good standing under the laws of the jurisdiction of its
incorporation or organization, as applicable, has the corporate power and authority as applicable
to own its property and to conduct its business, in each case as described in the Registration
Statement, Pre-Pricing Prospectus and Prospectus, and is duly qualified to transact business and is
in good standing in each jurisdiction in which the conduct of its business or its ownership or
leasing of property requires such qualification, except to the extent that the failure to be so
qualified or be in good standing would not have a material adverse effect on the Company and its
Subsidiaries, taken as a whole; all of the issued shares of capital stock of each Subsidiary of the
Company have been duly and validly authorized and issued, are fully paid and non-assessable and are
owned directly by the Company, free and clear of all liens, encumbrances, equities or claims,
except with respect to the shares of preferred stock of Allied REIT owned by its employees or
former employees (or persons related to such employees or former employees).
(e) This Agreement has been duly authorized, executed and delivered by the Company.
(f) The authorized capital stock of the Company conforms as to legal matters to the
description thereof contained in the Registration Statement, the Pre-Pricing Prospectus and the
Prospectus.
(g) The shares of Common Stock outstanding prior to the issuance of the Shares have been duly
authorized and are validly issued, fully paid and non-assessable.
(h) The Shares have been duly authorized and, when issued and delivered in accordance with the
terms of this Agreement, will be validly issued, fully paid and non-assessable, and the issuance of
such Shares will not be subject to any preemptive or similar rights.
(i) The Common Stock is registered pursuant to Section 12(b) of the Securities Exchange Act of
1934, as amended (the “EXCHANGE ACT”), and is listed on the New York Stock Exchange and the Nasdaq
Global Select Market, and the Company has taken no action designed to, or likely to have the effect
of, terminating the registration of the Common Stock
under the Exchange Act or delisting the Common Stock from the New York Stock Exchange or the Nasdaq
Global Select Market, nor has the Company received any notification that the
Commission, the New
York Stock Exchange, or the Nasdaq Global Select Market is contemplating terminating such
registration or listing.
(j) The execution and delivery by the Company of, and the performance by the Company of its
obligations under, this Agreement will not contravene any provision of applicable law or the
certificate of incorporation, by-laws or other organizational document of the Company or any
Subsidiary of the Company or any agreement or other instrument binding upon the Company or any of
its Subsidiaries that is material to the Company and its Subsidiaries, taken as a whole, or any
judgment, regulation, order, writ or decree of any governmental body, agency or court having
jurisdiction over the Company or any Subsidiary, and no consent, approval, authorization or order
of, or qualification or filing with, any governmental body or agency is required for the
performance by the Company of its obligations under this Agreement, except such as may be required
by the securities or Blue Sky laws of the various states, the rules and regulations of FINRA or the
securities laws of any jurisdiction outside of the United States in connection with the offer and
sale of the Shares.
(k) Neither the Company nor any of its Subsidiaries is (i) in violation of its certificate of
incorporation or bylaws or other organizational documents, (ii) in default with respect to any
material provision of any lease, loan agreement, franchise, license, permit or other contract
obligation to which it is a party; and there does not exist any statement of facts which
constitutes an event of default as defined in such documents or which, with notice or lapse of time
or both, would constitute such an event of default, in each case, except for defaults which neither
singly nor in the aggregate are material to the Company and its Subsidiaries taken as a whole.
(l) Since the respective dates of which information was given in the Registration Statement,
the Pre-Pricing Prospectus and the Prospectus, there has not occurred any material adverse change,
or any development involving a prospective material adverse change, in the condition, financial or
otherwise, or in the earnings, business or operations of the Company and its Subsidiaries, taken as
a whole, from that set forth in the Registration Statement, Pre-Pricing Prospectus or Prospectus.
(m) Except as disclosed in the Registration Statement, the Pre-Pricing Prospectus and the
Prospectus, there are no legal or governmental actions, suits or proceedings pending or, to the
Company’s knowledge, threatened to which the Company or any of its Subsidiaries is a party or to
which any of the officers or directors of, or any of the properties of the Company or any
of its Subsidiaries is subject that are required to be described in the Registration Statement, the
Pre-Pricing Prospectus and Prospectus and are not so described or any statutes, regulations,
contracts or other documents that are required to be described in the Registration Statement, the
Pre-Pricing Prospectus or Prospectus or to be filed as exhibits to the Registration Statement that
are not described or filed as required.
(n) The operations of the Company are in compliance in all material respects with the
provisions of the Investment Company Act of 1940, as amended (the “INVESTMENT
COMPANY ACT”) applicable to business development companies and the rules and regulations of the
Commission thereunder, except as will not result, singly or in the aggregate, in a material adverse
effect on the Company and its Subsidiaries, taken as a whole.
(o) To the best of its knowledge, the Company and its Subsidiaries (i) are in compliance with
any and all applicable foreign, federal, state and local laws and regulations relating to the
protection of human health and safety, the environment or hazardous or toxic substances or wastes,
pollutants or contaminants (“ENVIRONMENTAL LAWS”), (ii) have received all permits, licenses or
other approvals required of them under applicable Environmental Laws to conduct their respective
businesses and (iii) are in compliance with all terms and conditions of any such permit, license or
approval, except where such noncompliance with Environmental Laws, failure to receive required
permits, licenses or other approvals or failure to comply with the terms and conditions of such
permits, licenses or approvals would not, singly or in the aggregate, have a material adverse
effect on the Company and its Subsidiaries, taken as a whole.
(p) There are no contracts, agreements or understandings between the Company and any person
granting such person the right to require the Company to file a registration statement under the
Securities Act with respect to any securities of the Company or to require the Company to include
such securities with the Shares registered pursuant to the Registration Statement.
(q) The Company has elected to be regulated as a business development company under the
Investment Company Act and has not withdrawn that election, and the Commission has not ordered that
such election be withdrawn nor to the best of the Company’s knowledge have proceedings to
effectuate such withdrawal been initiated or threatened by the Commission. All required action has
or will have been taken by the Company under the Securities Act and the rules and regulations of
the Commission thereunder to make the public offering and consummate the sale of the Shares as
provided in this Agreement.
(r) The Company and each Subsidiary own or possess or have obtained all governmental licenses,
permits, consents, orders, approvals and other authorizations, whether international or domestic,
necessary to carry on its business as contemplated, except to the extent that the failure to own or
possess or have obtained such authorizations would not have a material adverse effect on the
Company and its Subsidiaries, taken as a whole, and neither the Company nor any Subsidiary has
received any notice of proceedings relating to the revocation or modification of, or noncompliance
with, any such license, permit, consent, order, approval or other authorization, which, if the
subject of an unfavorable decision, ruling or finding, would have a material adverse effect on the
Company and its Subsidiaries, taken as a whole.
(s) There are no material restrictions, limitations or regulations with respect to the ability
of the Company or its Subsidiaries to invest its assets as described in the Registration Statement,
Pre-Pricing Prospectus or Prospectus, other than as described therein.
(t) During the past fiscal year, the Company has been organized and operated, and currently is
organized and operated, in conformance with the requirements to be taxed as a
regulated investment company under Subchapter M of the Internal Revenue Code of 1986, as amended
(the “CODE”). The method of operation of the Company will permit it to continue to meet the
requirements for taxation as a regulated investment company under Subchapter M of
the Code. Allied
REIT is organized and operated in conformance with the requirements to be taxed as a real estate
investment trust under Subchapter M of
the Code, and its method of operation will permit it to
continue to meet the requirements for taxation as a real estate investment trust under Subchapter M
of the Code.
(u) KPMG LLP, who has certified financial statements of the Company and its Subsidiaries, is
an independent registered public accounting firm as required by the Securities Act and the Exchange
Act and the rules and regulations of the Commission thereunder.
(v) The consolidated financial statements of the Company and its Subsidiaries, together with
related notes, as set forth in the Registration Statement, Pre-Pricing Prospectus and Prospectus
present fairly the consolidated financial position and the results of operations of the Company and
its Subsidiaries at the indicated dates and for the indicated periods; such financial statements
have been prepared in accordance with United States generally accepted accounting principles
(“GAAP”), consistently applied throughout the periods presented except as noted in the notes
thereon, and all adjustments necessary for a fair presentation of results for such periods have
been made; and the selected financial information included in the Registration Statement,
Pre-Pricing Prospectus and Prospectus presents fairly the information shown therein and has been
compiled on a basis consistent with the financial statements presented therein.
(w) The Company and its Subsidiaries maintain a system of internal accounting controls
sufficient to provide reasonable assurance that (i) transactions are executed with management’s
general or specific authorization, (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with GAAP and to maintain accountability for
assets, (iii) access to assets is permitted only in accordance with management’s general or
specific authorization and (iv) the recorded accountability for assets is compared with existing
assets at reasonable intervals and appropriate action is taken with respect to any differences.
Since the end of the Company’s most recent audited fiscal year, there has been (1), to the
knowledge of the Company, no material weakness in the Company’s internal control over financial
reporting (whether or not remediated) and (2) no change in the Company’s internal control over
financial reporting that has materially affected, or is reasonably likely to materially affect, the
Company’s internal control over financial reporting.
(x) The Company has, and, to the knowledge of the Company, all of the Company’s directors or
officers in their capacities as such have, complied in all material respects with any applicable
provision of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002 and the rules and regulations promulgated in connection
therewith (the “▇▇▇▇▇▇▇▇-▇▇▇▇▇ ACT”).
(y) The Company and its Subsidiaries employ disclosure controls and procedures that are
designed to ensure that information required to be disclosed by the Company in the reports that it
files or submits under the Exchange Act is recorded, processed, summarized and reported,
within the time periods specified in the Commission’s rules and forms, and is accumulated and
communicated to the Company’s management, including its principal executive officers or officers
and principal financial officer or officers, as appropriate to allow timely decisions regarding
disclosure.
(z) The Company has not taken and will not take, directly or indirectly, any action designed
to or which has constituted or which might reasonably be expected to cause or result, under the
Exchange Act or otherwise, in stabilization or manipulation of the price of any security of the
Company to facilitate the sale or resale of the Shares.
(aa) The Shares have been authorized for listing on the New York Stock Exchange, subject to
notice of issuance or sale of the Shares, as the case may be.
2. AGREEMENTS TO SELL AND PURCHASE. The Company hereby agrees to sell to the Underwriter, and
the Underwriter, upon the basis of the representations, warranties and covenants herein contained,
but subject to the conditions hereinafter stated, agree to purchase from the Company the Firm
Shares at $[ ] per share (“PURCHASE PRICE”).
On the basis of the representations and warranties contained in this Agreement, and subject to
its terms and conditions, the Company agrees to sell to the Underwriter the Additional Shares, and
the Underwriter shall have a one-time right to purchase from the Company up to [ ] Additional
Shares at the Purchase Price. If the Underwriter elects to exercise such option, the Underwriter
shall so notify the Company in writing not later than [ ], 200___, which notice shall specify the
number of Additional Shares to be purchased by the Underwriter and the date on which such shares
are to be purchased. Such date may be the same as the Closing Date (as defined below) but not
earlier than the Closing Date nor later than three (3) business days after the date of such notice.
Additional Shares may be purchased as provided in Section 4 hereof solely for the purpose of
covering over-allotments made in connection with the offering of the Firm Shares. On the day that
Additional Shares are to be purchased (the “OPTION CLOSING DATE”), the Underwriter agrees to
purchase the Additional Shares (subject to such adjustments to eliminate fractional shares as the
Underwriter may determine).
The Company hereby agrees that, without the prior written consent of the Underwriter, which
may not be unreasonably withheld, it will not, directly or indirectly, during the period commencing
on the date hereof and ending [ ] days hereafter (i) offer, pledge, sell, contract to sell, sell
any option or contract to purchase, purchase any option or contract to sell, grant any option,
right or warrant to purchase, lend, transfer or establish an open “put equivalent position” within
the meaning of Rule 16a-1(h) under the Exchange Act or otherwise transfer or dispose of, or
announce the offering of, or file any registration statement under the Securities Act in respect
of, any shares of Common Stock or any securities convertible into or exercisable or exchangeable
for Common Stock or (ii) enter into any swap or other arrangement that transfers to another, in
whole or in part, any of the economic consequences of ownership of the Common Stock, whether any
such transaction described in clause (i) or (ii) above is to be settled by delivery of Common Stock
or such other securities, in cash or otherwise. The foregoing sentence shall not apply to (A) the
sale to the Underwriter of any share of Common Stock pursuant to the
Agreement, (B) any issuance of shares of Common Stock, options, or other securities or rights
pursuant to any employee or director compensation, option, savings, benefit, dividend reinvestment
or other plan of the Company existing as of the date of the Agreement, (C) any issuances upon
exercise, conversion or exchange of any securities or obligations outstanding on the date of the
Agreement, and (D) additional issuances of securities through
privately negotiated transactions
that may or may not involve an underwriter, whether or not registered with the Commission,
aggregating not more than ______ in gross sales price.
3. PUBLIC OFFERING OF SHARES. The Company is advised by the Underwriter that it proposes to
make a public offering of Shares as soon after this Agreement has been executed and delivered as in
its judgment is advisable.
The Company is further advised by the Underwriter that the Shares are to be offered to the
public from time to time at prices to be determined.
4. PAYMENT AND DELIVERY. Payment for the Firm Shares shall be made to the Company by the wire
transfer of immediately available funds to the order of the Company against delivery of such Firm
Shares for the account of the Underwriter at ___:00 a.m., New York City time, on [ ], 200___, or at
such other time on the same or such other date, no later than five business days after the date of
this Agreement as the Underwriter and the Company may agree upon in writing. The time and date of
such payment are hereinafter referred to as the “CLOSING DATE.”
Payment for any Additional Shares shall be made to the Company by the wire transfer of
immediately available funds to the order of the Company against delivery of such Additional Shares
for the account of the Underwriter at ___:00 a.m., New York City time, on the date specified in the
notice described in Section 2 or at such other time on the same or on such other date, in any event
not later than ___:00 a.m., New York City time, three (3) business days following the date the
Underwriter provides the Company with notice pursuant to Section 2 of this Agreement, as shall be
designated in writing by the Underwriter. The time and date of such payment are hereinafter
referred to as the “OPTION CLOSING DATE.”
Certificates for the Firm Shares and the Additional Shares shall be in definitive form and
registered in such names and in such denominations as you shall request in writing not later than
one full business day prior to the Closing Date or the Option Closing Date, as the case may be.
The certificates evidencing the Firm Shares and the Additional Shares shall be delivered to you on
the Closing Date or the Option Closing Date, as the case may be, for the account of the
Underwriter, with any transfer taxes payable in connection with the transfer of the Shares to the
Underwriter duly paid, against payment of the Purchase Price therefor. The Firm Shares and
Additional Shares shall be delivered through the facilities of The Depository Trust Company.
5. CONDITIONS TO THE UNDERWRITER’S OBLIGATIONS. The obligations of the Company to sell the
Shares to the Underwriter and the obligations of the
Underwriter to purchase and pay for the Shares on the Closing Date and the Option Closing Date, as
the case may be, are subject to the following conditions:
(a) There shall not have occurred any change, or any development involving a prospective
change, in the condition, financial or otherwise, or in the earnings, business or operations of the
Company and its Subsidiaries, taken as a whole, from that set forth in the Pre-Pricing Prospectus,
together with the Pricing Information that, in your judgment, is material and
adverse and that
makes it, in your judgment, impracticable to market the Shares as contemplated hereby.
(b) The Underwriter shall have received on the Closing Date and the Option Closing Date, as
the case may be, a certificate, dated the Closing Date and the Option Closing Date, as the case may
be, and signed by an executive officer of the Company, to the effect set forth in Section 5(a)
above and to the effect that the representations, warranties and covenants of the Company contained
in this Agreement are true and correct as of the date of this Agreement and the Closing Date and
the Option Closing Date, as the case may be, and that the Company has complied with all of the
agreements and satisfied all of the conditions on its part to be performed or satisfied hereunder
on or before the Closing Date and the Option Closing Date, as the case may be.
The officer signing and delivering such certificate may rely upon the best of his or her
knowledge as to proceedings threatened.
(c) (i) No stop order suspending the effectiveness of the Registration Statement shall have
been issued and no proceedings for that purpose shall have been instituted or shall be pending or,
to the knowledge of the Company or you, shall be contemplated by the Commission and (ii) no
suspension of the qualification of the Shares for offering or sale in any jurisdiction has
occurred, or to the knowledge of the Company or you has been threatened.
(d) The Underwriter shall have received on the Closing Date and the Option Closing Date, as
the case may be, an opinion of ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP, outside counsel for the Company,
dated the Closing Date and the Option Closing Date, as the case may be, in the form set forth in
Exhibit B to this Agreement.
The opinion of ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP described in Section 5(d) above shall be
rendered to the Underwriter at the request of the Company and shall so state therein.
(e) The Underwriter shall have received on the Closing Date and the Option Closing Date, as
the case may be, an opinion of counsel for the Underwriter, dated the Closing Date and the Option
Closing Date, as the case may be, covering the matters referred to in paragraph four and section
(vi) of paragraph six of ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP’s Form of Disclosure Letter on Exhibit C,
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP and counsel to the Underwriter may state that their opinion and
belief are based upon their participation in the preparation of the Registration Statement,
Pre-Pricing Prospectus, the Pricing Information and Prospectus and any amendments or supplements
thereto and review and discussion of the contents thereof, but are without independent check or
except as specified.
(f) The Underwriter shall have received, on each of the date hereof, the Closing Date and the
Option Closing Date, as the case may be, a letter dated the date hereof, the Closing Date or the
Option Closing Date, as the case may be, in form and substance reasonably satisfactory to the
Underwriter, from KPMG LLP, an independent public accounting firm, containing statements and
information of the type ordinarily included in accountants’ “comfort letters” to underwriters with
respect to the financial statements and certain financial information contained
in the Registration
Statement, the Pre-Pricing Prospectus or the Prospectus; provided that the letter delivered on the
Closing Date shall use a “cut-off date” not earlier than the date hereof and, if applicable, the
letter delivered on the Option Closing Date shall use a “cut-off date” not more than three business
days prior to the Option Closing Date.
(g) The “lock-up” agreements, each substantially in the form of Exhibit A hereto, between the
Underwriter and certain executive officers of the Company relating to sales and certain other
dispositions of shares of Common Stock or certain other securities, delivered to the Underwriter on
or before the date hereof, shall be in full force and effect on the Closing Date.
(h) The obligation of the Underwriter to purchase Additional Shares hereunder is subject to
the delivery to the Underwriter on the Option Closing Date of such documents as it may reasonably
request with respect to the good standing of the Company, the due authorization and issuance of the
Additional Shares and other matters related to the issuance of the Additional Shares.
(i) All filings with the Commission required by Rule 497 of the Securities Act to have been
filed by the Closing Date or the Option Closing Date, as the case may be, should have been made
within the applicable time period prescribed for such filing by Rule 497;
(j) The Shares shall have been approved for listing on the NYSE, subject only to notice of
issuance at or prior to the Closing Date or the Option Closing Date, as the case may be.
6. COVENANTS. In further consideration of the agreements of the Underwriter herein contained,
the Company covenants with the Underwriter as follows:
(a) The Company will (i) advise you promptly of the issuance by the Commission of any stop
order suspending the effectiveness of the Registration Statement or of the institution of any
proceedings for that purpose, or of any notification of the suspension of qualification of the
Shares for sale in any jurisdiction or the initiation or threatening of any proceedings for that
purpose, and if the Commission should enter a stop order suspending effectiveness of the
Registration Statement, the Company will make every effort to obtain the lifting or removal of such
order as soon as possible and (ii) will also advise you promptly of any request of the Commission
for amendment or supplement of the Registration Statement, the Pre-Pricing Prospectus, the Pricing
Information, or the Prospectus, or for additional information.
(b) To furnish to you, without charge, signed copies of the Registration Statement (including
exhibits thereto) and to furnish to you, without charge, prior to ___:00 a.m., New York City time,
on the business day next succeeding the date of this Agreement, or as soon as practicable
thereafter, and during the period mentioned in Section 6(c) below, as many copies of each of the
Pre-Pricing Prospectus and the Prospectus and any supplements and amendments thereto or to the
Registration Statement, including all exhibits filed therewith, as you may reasonably request.
(c) Before amending or supplementing the Registration Statement, Pre-Pricing Prospectus or the
Prospectus, to furnish to you a copy of each such proposed amendment or supplement and not to file
any such proposed amendment or supplement to which you reasonably object in writing within two
business days after receipt, and to file with the Commission within the applicable period specified
in Rule 497 under the Securities Act any prospectus required to be filed pursuant to such Rule.
(d) If, during such period after the first date of the public offering of the Shares the
Prospectus is required by law to be delivered in connection with sales by the Underwriter or a
dealer, any event shall occur or condition exist as a result of which it is necessary to amend or
supplement the Prospectus in order to make the statements therein, in the light of the
circumstances when the Prospectus is delivered to a purchaser, not misleading, or if it is
necessary to amend or supplement the Prospectus to comply with applicable law, forthwith to
prepare, file with the Commission and furnish, at its own expense, to the Underwriter and to the
dealers (whose names and addresses you will furnish to the Company) to which Shares may have been
sold by the Underwriter and to any other dealers upon request, either amendments or supplements to
the Prospectus so that the statements in the Prospectus as so amended or supplemented will not, in
the light of the circumstances when the Prospectus is delivered to a purchaser, be misleading or so
that the Prospectus, as amended or supplemented, will comply with law.
(e) If the Pre-Pricing Prospectus is being used or has been used to solicit offers to
buy the Shares at a time when the Prospectus is not yet available to prospective purchasers and any
event shall occur as a result of which, in the judgment of the Company or in the reasonable opinion
of the Underwriter, it becomes necessary to amend or supplement the Pre-Pricing Prospectus in order
to make the statements therein, in the light of the circumstances, not misleading, or if it is
necessary at any time to amend or supplement the Pre-Pricing Prospectus to comply with any law, the
Company promptly will prepare, file with the Commission (if required), and furnish to the
Underwriter and any dealers an appropriate amendment or supplement to the Pre-Pricing Prospectus so
that the Pre-Pricing Prospectus as so amended or supplemented will not, in the light of the
circumstances, be misleading, or so that the Pre-Pricing Prospectus, as amended or supplemented,
will comply with law.
(f) To endeavor to qualify the Shares for offer and sale under the securities or Blue Sky laws
of such jurisdictions as you shall reasonably request and will continue such qualifications in
effect so long as reasonably required for the distribution of the Shares and to promptly advise the
Underwriter of the receipt by the Company of any notification with respect to the suspension of the
qualification of the Shares for sale in any jurisdiction or the initiation, or threatening in
writing, of any proceeding for such purpose; provided, however, that such qualification does not
require the Company to qualify to do business, be subject to taxation or be subject to the
jurisdiction of courts in such jurisdiction. In the event of an issuance of any order suspending
such qualification, the Company shall use its best efforts to obtain the withdrawal thereof at the
earliest possible moment.
(g) To make generally available to the Company’s security holders and to you as soon as
practicable an earning statement for the purposes of and to provide the benefits
contemplated by
Section 11(a) of the Securities Act and the rules and regulations of the Commission thereunder.
(h) To use its best efforts to maintain its qualification as a regulated investment company
under Subchapter M of the Code, and to use its best efforts to maintain the qualification of Allied
REIT as a real estate investment trust under Subchapter M of the Code.
(i) The Company will comply with all registration filing and reporting requirements of the
Exchange Act and the New York Stock Exchange.
(j) Whether or not the transactions contemplated in this Agreement are consummated or this
Agreement is terminated, to pay or cause to be paid all expenses incident to the performance of its
obligations under this Agreement, including: (i) the fees, disbursements and expenses of the
Company’s counsel and the Company’s accountants in connection with the registration and delivery of
the Shares under the Securities Act and all other fees or expenses in connection with the
preparation and filing and distribution of the Registration Statement, the Pre-Pricing Prospectus,
and the Prospectus and amendments and supplements to any of the foregoing, including all printing
costs associated therewith, and the mailing and delivering of copies thereof to the Underwriter and
dealers, in the quantities hereinabove specified, (ii) all costs and expenses related to the
transfer and delivery of the Shares to the Underwriter, including any transfer or other taxes
payable thereon, if applicable, (iii) the cost of printing or producing any Blue Sky or Legal
Investment memorandum in connection with the offer and sale of the Shares under state securities
laws and all expenses in connection with the qualification of the Shares for offer and sale under
state securities laws as provided in Section 6(e) hereof, including filing fees and the reasonable
fees and disbursements of counsel for the Underwriter in connection with such qualification and in
connection with the Blue Sky or Legal Investment memorandum, (iv) all filing fees and the
reasonable fees and disbursements of counsel to the Underwriter incurred in connection with the
review and qualification of the offering of the Shares by FINRA, (v) all costs and expenses
incident to listing the Shares on the New York Stock Exchange, (vi) the cost of printing
certificates representing the Shares, (vii) the costs and charges of any transfer agent, registrar
or depositary, (viii) the costs and expenses of the Company relating to investor presentations on
any “road show” undertaken in connection with the marketing of the offering of the Shares,
including, without limitation, expenses associated with the production of road show slides and
graphics, fees and expenses of any consultants engaged in connection with the road show
presentations with the prior approval of the Company, travel and lodging expenses of the
representatives and officers of the Company and any such consultants, and the cost of any aircraft
chartered in connection with the road show, and (ix) all other costs and expenses incident to the
performance of the obligations of the Company hereunder for which provision is not otherwise made
in this Section. It is understood, however, that except as provided in this Section, Section 7 and
Section 8, the Underwriter will pay all of their costs and expenses, including fees and
disbursements of their counsel, stock transfer taxes payable on resale of any of the Shares by them
and any advertising expenses connected with any offers they may make. It is further understood
that, in accordance with Rule 2710(f)(2)(D) of the Conduct Rules of FINRA, in the event this
Agreement is terminated, the Underwriter will be reimbursed only for actual accountable out of
pocket expenses which it has incurred in connection with the transactions contemplated by this
Agreement.
(k) The Company shall apply the net proceeds from the sale of the Shares sold by it in the
manner described under the caption “Use of Proceeds” in the Prospectus.
Prior to the Closing Date, the Underwriter hereby agrees to comply with any applicable rules
and/or regulations of FINRA applicable to the offering of the Shares pursuant to this Agreement.
7. INDEMNIFICATION.
(a) Indemnification of the Underwriter. The Company agrees to indemnify and hold harmless the
Underwriter, its officers and employees, and each person, if any, who controls such Underwriter
within the meaning of the Securities Act and the Exchange Act against any loss, claim, damage,
liability or expense, as incurred, to which such Underwriter or such controlling person may become
subject, under the Securities Act, the Exchange Act or other federal or state statutory law or
regulation, or at common law or otherwise (including in settlement of any litigation, if such
settlement is effected with the written consent of the Company), insofar as such loss, claim,
damage, liability or expense (or actions in respect thereof as contemplated below) arises out of or
is based (i) upon any untrue statement or alleged untrue statement of a material fact contained in
the Registration Statement, or any amendment thereto, including any information deemed to be a part
thereof pursuant to Rule 497 and Rule 430C under the Securities Act, or the omission or alleged
omission therefrom of a material fact required to be stated therein necessary to make the
statements therein not misleading or (ii) upon any untrue statement or alleged untrue statement of
a material fact contained in the Pre-Pricing Prospectus, when considered together with the Pricing
Information, or the Prospectus (or any amendment or supplement thereto), or the omission or alleged
omission therefrom of a material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading; and to reimburse such
Underwriter and each such controlling person for any legal and other expense reasonably incurred
(including the fees and disbursements of counsel chosen by the Underwriter) reasonably incurred by
such Underwriter or such controlling person in connection with investigating, defending, settling,
compromising or paying any such loss, claim, damage, liability, expense or action; provided,
however, that the foregoing indemnity agreement shall not apply to any loss, claim, damage,
liability or expense based upon any untrue statement or alleged untrue statement or omission or
alleged omission made in reliance upon and in conformity with written information furnished to the
Company by such Underwriter expressly for use in the
Registration Statement, the Pre-Pricing Prospectus, Pricing Information or the Prospectus (or any
amendment or supplement thereto).
(b) Indemnification of the Company, its Directors and Officers. The Underwriter agrees to
indemnify and hold harmless the Company, each of its directors, each of its officers who signed the
Registration Statement and each person, if any, who controls the Company within the meaning of the
Securities Act or the Exchange Act, against any loss, claim, damage, liability or expense, as
incurred, to which the Company, or any such director, officer or controlling person may become
subject, under the Securities Act, the Exchange Act, or other federal or state statutory law or
regulation, or at common law or otherwise (including in settlement of any litigation, if such
settlement is effected with the written consent of such
Underwriter), insofar as such loss, claim,
damage, liability or expense (or actions in respect thereof as contemplated below) arises out of or
is based (i) upon any untrue statement or alleged untrue statement of a material fact contained in
the Registration Statement (or any amendment thereto), including any information deemed to be a
part thereof pursuant to Rule 497 and Rule 430C under the Securities Act, or the omission or
alleged omission therefrom of a material fact required to be stated therein or necessary to make
the statements therein not misleading, or (ii) upon any untrue statement or alleged untrue
statement of a material fact contained in the Pre-Pricing Prospectus, when considered together with
the Pricing Information, the Prospectus (or any amendment or supplement thereto) or the omission or
alleged omission therefrom of a material fact necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading, in each case to the extent
that such untrue statement or alleged untrue statement or omission or alleged omission was made in
the Registration Statement, the Pre-Pricing Prospectus, when considered together with the Pricing
Information, or the Prospectus (or any amendment or supplement thereto), in reliance upon and in
conformity with written information furnished to the Company by such Underwriter expressly for use
therein; and to reimburse the Company, or any such director, officer or controlling person for any
legal and other expense reasonably incurred by the Company, or any such director, officer or
controlling person in connection with investigating, defending, settling, compromising or paying
any such loss, claim, damage, liability, expense or action. The Company hereby acknowledges that
the only information that the Underwriter has furnished to the Company expressly for use in the
Registration Statement, the Pre-Pricing Prospectus or the Prospectus (or any amendment or
supplement thereto) are the statements set forth in the [ ], [ ], [ ],
[ ], [ ],
[ ], [ ]
and [ ] paragraphs under the caption “Underwriting” in the Prospectus; and the Underwriter confirms
that such statements are correct.
(c) Notifications and Other Indemnification Procedures. Promptly after receipt by an
indemnified party under this Section 7 of notice of the commencement of any action, such
indemnified party will, if a claim in respect thereof is to be made against an indemnifying party
under this Section 7, notify the indemnifying party in writing of the commencement thereof, but the
omission so to notify the indemnifying party will not relieve it from any liability which it may
have to any indemnified party for contribution or otherwise under the indemnity agreement contained
in this Section 7 to the extent it is not prejudiced as a proximate result of such failure. In case
any such action is brought against any indemnified party and such indemnified party seeks or
intends to seek indemnity from an indemnifying party, the indemnifying party will be entitled to
participate in, and, to the extent that it shall elect, jointly with all other indemnifying parties
similarly notified, by written notice delivered to the indemnified party promptly after receiving
the aforesaid notice from such indemnified party, to assume the defense thereof with counsel
reasonably satisfactory to such indemnified party; provided, however, if the defendants in any such
action include both the indemnified party and the indemnifying party and the indemnified party
shall have reasonably concluded that a conflict may arise between the positions of the indemnifying
party and the indemnified party in conducting the defense of any such action or that there may be
legal defenses available to it and/or other indemnified parties which are different from or
additional to those available to the indemnifying party, the indemnified party or parties shall
have the right to select separate counsel to assume such legal defenses and to otherwise
participate in the defense of such action on behalf of such indemnified party or parties. Upon
receipt of notice from the indemnifying party to such indemnified party of
such indemnifying
party’s election so to assume the defense of such action and approval by the indemnified party of
counsel, the indemnifying party will not be liable to such indemnified party under this Section 7
for any legal or other expenses subsequently incurred by such indemnified party in connection with
the defense thereof unless (i) the indemnified party shall have employed separate counsel in
accordance with the proviso to the next preceding sentence (it being understood, however, that the
indemnifying party shall not be liable for the expenses of more than one separate counsel (together
with local counsel), approved by the indemnifying party (an Underwriter in the case of Section 7(b)
and Section 8), representing the indemnified parties who are parties to such action) or (ii) the
indemnifying party shall not have employed counsel satisfactory to the indemnified party to
represent the indemnified party within a reasonable time after notice of commencement of the
action, in each of which cases the fees and expenses of counsel shall be at the expense of the
indemnifying party.
(d) Settlements. The indemnifying party under this Section 7 shall not be liable for any
settlement of any proceeding effected without its written consent, but if settled with such consent
or if there be a final judgment for the plaintiff, the indemnifying party agrees to indemnify the
indemnified party against any loss, claim, damage, liability or expense by reason of such
settlement or judgment. Notwithstanding the foregoing sentence, if at any time an indemnified
party shall have requested an indemnifying party to reimburse the indemnified party for fees and
expenses of counsel as contemplated by Section 7(c) hereof, the indemnifying party agrees that it
shall be liable for any settlement of any proceeding effected without its written consent if (i)
such settlement is entered into more than 30 days after receipt by such indemnifying party of the
aforesaid request, (ii) such indemnifying party shall not have reimbursed the indemnified party in
accordance with such request prior to the date of such settlement and (iii) such settlement does
not include a statement as to, or an admission of fault, culpability or a failure to act, by or on
behalf of any indemnified party. No indemnifying party shall, without the prior written consent of
the indemnified party, effect any settlement, compromise or consent to the entry of judgment in any
pending or threatened action, suit or proceeding in respect of which any indemnified party is or
could have been a party and indemnity was or could have been sought hereunder by such indemnified
party, unless such settlement, compromise or consent includes an unconditional release of such
indemnified party from all liability on claims that are the subject matter of such action, suit or
proceeding.
(e) Notwithstanding any other provision of this Section 7, no party shall be entitled to
indemnification under this Agreement in violation of Section 17(i) of the Investment Company Act.
8. CONTRIBUTION. If the indemnification provided for in Section 7 is for any reason held to
be unavailable to or otherwise insufficient to hold harmless an indemnified party in respect of any
losses, claims, damages, liabilities or expenses referred to therein, then each indemnifying party
shall contribute to the aggregate amount paid or payable by such indemnified party, as incurred, as
a result of any losses, claims, damages, liabilities or expenses referred to therein (i) in such
proportion as is appropriate to reflect the relative benefits received by the Company, on the one
hand, and the Underwriter, on the other hand, from the offering of the Shares pursuant to this
Agreement or (ii) if the allocation provided by clause (i) above is not permitted by applicable
law, in such proportion as is appropriate to reflect not only the relative
benefits referred to in
clause (i) above but also the relative fault of the Company, on the one hand, and the Underwriter,
on the other hand, in connection with the statements or omissions that resulted in such losses,
claims, damages, liabilities or expenses, as well as any other relevant equitable considerations.
The relative benefits received by the Company, on the one hand, and the Underwriter, on the other
hand, in connection with the offering of the Shares pursuant to this Agreement shall be deemed to
be in the same respective proportions as the total net proceeds from the offering of the Shares
pursuant to this Agreement (before deducting expenses) received by the Company, and the total
underwriting discount received by the Underwriter, as set forth on the front cover page of the
Prospectus bear to the aggregate Public Offering Price of the Shares as set forth on such cover.
The relative fault of the Company, on the one hand, and the Underwriter, on the other hand, shall
be determined by reference to, among other things, whether any such untrue or alleged untrue
statement of a material fact or omission or alleged omission to state a material fact relates to
information supplied by the Company, on the one hand, or the Underwriter, on the other hand, and
the parties’ relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission.
The amount paid or payable by a party as a result of the losses, claims, damages, liabilities
and expenses referred to above shall be deemed to include, subject to the limitations set forth in
Section 7(c), any legal or other fees or expenses reasonably incurred by such party in connection
with investigating or defending any action or claim. The provisions set forth in Section 7(c) with
respect to notice of commencement of any action shall apply if a claim for contribution is to be
made under this Section 8; provided, however, that no additional notice shall be required with
respect to any action for which notice has been given under Section 7(c) for purposes of
indemnification.
The Company and the Underwriter agree that it would not be just and equitable if contribution
pursuant to this Section 8 were determined by pro rata allocation or by any other method of
allocation which does not take account of the equitable considerations referred to in this Section
8.
Notwithstanding the provisions of this Section 8, the Underwriter shall not be required to
contribute any amount in excess of the underwriting commissions received by such Underwriter in
connection with the Shares underwritten by it and distributed to the public. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent misrepresentation.
For purposes of this Section 8, each officer and employee of the Underwriter and each person, if
any, who controls the Underwriter within the meaning of the Securities Act and the Exchange Act
shall have the same rights to contribution as such Underwriter, and each director of the Company,
each officer of the Company who signed the Registration Statement, and each person, if any, who
controls the Company within the meaning of the Securities Act and the Exchange Act shall have the
same rights to contribution as the Company.
Notwithstanding any other provision of this Section 8, no party shall be entitled to
indemnification under this Agreement in violation of Section 17(i) of the Investment Company Act.
9. REPRESENTATIONS, WARRANTIES AND COVENANTS TO SURVIVE DELIVERY. All representations,
warranties and covenants contained in this Agreement or in the certificates of officers of the
Company submitted pursuant hereto shall remain operative and in full force and effect as of the
date made, as of the Closing Date and as of the Option Closing date, regardless of any
investigation made by or on behalf of the Underwriter or any controlling person, or by or on behalf
of the Company, and shall survive delivery of and payment for the Shares.
10. ACKNOWLEDGEMENT. The Company acknowledges and agrees that (i) the sale through the
Underwriter of any Shares pursuant to this Agreement, including the determination of the price of
the Shares and any related compensation, discounts or commissions, is an arm’s-length commercial
transaction between the Company, on the one hand, and the Underwriter, on the other hand, (ii) in
connection with the offering of the Shares and the process leading to such transactions the
Underwriter will act solely as an agent and not as a fiduciary of the Company or its stockholders,
creditors, employees or any other party, (iii) the Underwriter will not assume an advisory or
fiduciary responsibility in favor of the Company with respect to the offering of Shares
contemplated hereby or the process leading thereto (irrespective of whether such Underwriter has
advised or is currently advising the Company on other matters) and the Underwriter will not have
any obligation to the Company with respect to the offering of Shares except the obligations
expressly set forth herein, (iv) the Underwriter and its respective affiliates may be engaged in a
broad range of transactions that involve interests that differ from those of the Company, and (v)
the Underwriter has not provided and will not provide any legal, accounting, regulatory or tax
advice with respect to the offering of the Shares and the Company has consulted and will consult
its own legal, accounting, regulatory and tax advisors to the extent it deemed appropriate.
11. TERMINATION. This Agreement shall be subject to termination by notice given by the
Underwriter to the Company, if (a) after the execution and delivery of this Agreement and prior to
the Closing Date (i) trading generally shall have been suspended or materially limited on or by, as
the case may be, any of the New York Stock Exchange, the American Stock Exchange, the Nasdaq
National Market, the Chicago Board of Options Exchange, the Chicago Mercantile Exchange or the
Chicago Board of Trade, (ii) trading of any securities of the Company shall have
been suspended on any exchange or in any over-the-counter market, (iii) a general moratorium on
commercial banking activities in New York shall have been declared by either Federal or New York
State authorities or there had occurred a material disruption in commercial banking or securities
settlement or clearance services or (iv) there shall have occurred any outbreak or escalation of
hostilities or any change in financial markets or any calamity or crisis that, in your judgment, is
material and adverse and (b) in the case of any of the events specified in clauses 11(a)(i) through
11(a)(iv), such event, singly or together with any other such event, makes it, in the Underwriter’s
judgment, impracticable to market the Shares on the terms and in the manner contemplated in the
Pre-Pricing Prospectus or Prospectus.
Any termination pursuant to this Section 11 shall be without liability on the part of (x) the
Company to the Underwriter, except that the Company shall be obligated to reimburse the expenses of
the Underwriter pursuant to subsection (j) of Section 6 hereof, (y) the Underwriter to
the Company,
or (z) of any party hereto to any other party except that the provisions of Section 7 and Section 8
shall at all times be effective and shall survive such termination.
12. SUCCESSORS. This Agreement will inure to the benefit of and be binding upon the parties
hereto and their respective successors, personal representatives and assigns, and to the benefit of
the officers and employees and controlling persons referred to in Section 7, and no other person
will have any right or obligation hereunder. The term “successors” shall not include any purchaser
of the Shares as such from the Underwriter merely by reason of such purchase.
13. PARTIAL UNENFORCEABILITY. If any section, paragraph or provision of this Agreement is for
any reason determined to be invalid or unenforceable, such determination shall not affect the
validity or enforceability of any other section, paragraph or provision hereof.
14. EFFECTIVENESS. This Agreement shall become effective upon the execution and delivery
hereof or thereof by the parties hereto.
15. COUNTERPARTS. This Agreement may be signed in two or more counterparts, each of which
shall be an original, with the same effect as if the signatures thereto and hereto were upon the
same instrument.
16. APPLICABLE LAW. This Agreement shall be governed by and construed in accordance with the
internal laws of the State of New York.
17. HEADINGS. The headings of the sections of this Agreement have been inserted for
convenience of reference only and shall not be deemed a part of this Agreement.
| Very truly yours, | ||||||
| ALLIED CAPITAL CORPORATION | ||||||
| By: | ||||||
| Name: | ||||||
| Title: | ||||||
| Accepted as of the date hereof: | ||||
| [UNDERWRITER] | ||||
By: |
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| Name: | ||||
| Title: | ||||
By: |
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| Name: | ||||
| Title: | ||||