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EXHIBIT H.3
5,750,000 SHARES
ALLIED CAPITAL CORPORATION
COMMON STOCK ($0.0001 PAR VALUE)
AGREEMENT BETWEEN
U.S. AND INTERNATIONAL UNDERWRITERS
June __, 1998
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June __, 1998
To each of the Underwriters named in Schedules I and II to the Underwriting
Agreement referred to below.
Dear Sirs:
We understand that Allied Capital Corporation (the "COMPANY") has
entered into an underwriting agreement (the "UNDERWRITING AGREEMENT") with
Xxxxxx Xxxxxxx & Co. Incorporated, NationsBanc Xxxxxxxxxx Securities LLC, The
Xxxxxxxx-Xxxxxxxx Company LLC and Xxxxx & Xxxxxxxxxxxx, Inc., acting as
representatives (the "U.S. REPRESENTATIVES") of the U.S. underwriters named in
Schedule I thereto (the "U.S. UNDERWRITERS") and Xxxxxx Xxxxxxx & Co.
International Limited, NationsBanc Xxxxxxxxxx Securities LLC, The
Xxxxxxxx-Xxxxxxxx Company LLC and Xxxxx & Xxxxxxxxxxxx, Inc., as representatives
(the "INTERNATIONAL REPRESENTATIVES") of the international underwriters named in
Schedule II thereto (the "INTERNATIONAL UNDERWRITERS" and, together with the
U.S. Underwriters, the "UNDERWRITERS"), pursuant to which the several
Underwriters have agreed to purchase from the Company an aggregate of 5,750,000
shares of common stock, $0.0001 par value per share of the Company ("COMMON
STOCK"). In addition, the Company has granted the U.S. Underwriters the option
to purchase up to 862,500 additional shares of Common Stock (the "ADDITIONAL
SHARES"). All shares of Common Stock to be purchased by the U.S. Underwriters
and the International Underwriters under the Underwriting Agreement, including
any Additional Shares, are herein called the "U.S. SHARES" and the
"INTERNATIONAL SHARES," respectively. The U.S. Shares and the International
Shares are collectively referred to herein as the "SHARES."
I.
The U.S. Underwriters, acting through the U.S. Representatives, and the
International Underwriters, acting through the International Representatives,
agree that, in order to provide an orderly marketing effort for the offering,
they will consult with each other as to the availability of the Shares for sale
to the public, from time to time until the earlier of (a) notice from the U.S.
Representatives to the U.S. Underwriters of the completion of the distribution
of the U.S. Shares and (b) notice from the International Representatives to the
International Underwriters
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of the completion of the distribution of the International Shares. From time to
time as mutually agreed among the U.S. Underwriters and the International
Underwriters, acting through Xxxxxx Xxxxxxx & Co. Incorporated and Xxxxxx
Xxxxxxx & Co. International Limited, respectively, the Underwriters may purchase
and sell among each other such number of Shares to be purchased pursuant to the
Underwriting Agreement as may be so mutually agreed.
The price and currency of settlement of any Shares so purchased or sold
shall be the public offering price, in United States dollars, less an amount not
greater than the selling concession. Settlement with respect to any Shares
transferred hereunder prior to the Closing Date (as defined in the Underwriting
Agreement) shall be made on the Closing Date, and in the case of purchases and
sales made thereafter, as promptly as practicable but in no event later than
three business days after the transfer date. Certificates representing the
Shares so purchased shall be delivered on the respective settlement dates. The
liability of the Underwriters under the Underwriting Agreement for payment of
the purchase price of the Shares purchased thereunder shall not be affected by
the provisions of this Agreement.
The obligations of each U.S. Underwriter in respect of any purchase or
sale of Shares under this Article I by the U.S. Underwriters shall be pro rata
in accordance with the proportion of the total number of U.S. Shares that such
U.S. Underwriter is obligated to purchase under the Underwriting Agreement. The
obligations of each International Underwriter in respect of any purchase or sale
of Shares under this Article I by the International Underwriters shall be pro
rata in accordance with the proportion of the total number of International
Shares that such International Underwriter is obligated to purchase under the
Underwriting Agreement.
II.
Each of the Underwriters represents that it is a member in good
standing of the U.S. National Association of Securities Dealers, Inc. (the
"NASD") or that it is a foreign bank or dealer not eligible for membership in
the NASD. In making sales of Shares, if it is such a member, such Underwriter
agrees to comply with all applicable rules of the NASD, including, without
limitation, the NASD's Interpretation with Respect to Free-Riding and
Withholding (IM-2110-1) and NASD Rule 2740, or, if it is such a foreign bank or
dealer, such Underwriter agrees to comply with such Interpretation and NASD
Rules 2730, 2740 and 2750 as though it were such a member and NASD Rule 2420 as
it applies to a nonmember broker or dealer in a foreign country.
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III.
Each U.S. Underwriter represents and agrees that, except for (x) sales
between the U.S. Underwriters and the International Underwriters pursuant to
Article I of this Agreement and (y) stabilization transactions, contemplated in
Article IV of this Agreement, conducted through the U.S. Representatives as part
of the distribution of the Shares, (a) it is not purchasing any Shares for the
account of anyone other than a United States or Canadian Person and (b) it has
not offered or sold, and will not offer or sell, directly or indirectly, any
Shares or distribute any prospectus relating to the Shares outside the United
States or Canada or to anyone other than a United States or Canadian Person, and
any dealer to whom it may sell any Shares will represent that it is not
purchasing any Shares for the account of anyone other than a United States or
Canadian Person and will agree that it will not offer or resell any Shares
directly or indirectly outside the United States or Canada or to anyone other
than a United States or Canadian Person or to any other dealer who does not so
represent and agree.
Each International Underwriter represents and agrees that, except for
(x) sales between the U.S. Underwriters and the International Underwriters
pursuant to Article I of this Agreement and (y) stabilization transactions,
contemplated in Article IV of this Agreement, conducted through the U.S.
Representatives as part of the distribution of the Shares, (a) it is not
purchasing any Shares for the account of any United States or Canadian Person
and (b) it has not offered or sold, and will not offer or sell, directly or
indirectly, any Shares or distribute any prospectus relating to the Shares in
the United States or Canada or to any United States or Canadian Person, and any
dealer to whom it may sell any Shares will represent that it is not purchasing
any Shares for the account of any United States or Canadian Person and will
agree that it will not offer or resell any Shares directly or indirectly in the
United States or Canada or to any United States or Canadian Person or to any
other dealer who does not so represent and agree.
With respect to any Underwriter that is a U.S. Underwriter and an
International Underwriter, the foregoing representations and agreements (i) made
by it in its capacity as a U.S. Underwriter shall apply only to it in its
capacity as a U.S. Underwriter and (ii) made by it in its capacity as an
International Underwriter shall apply only to it in its capacity as an
International Underwriter. In addition, notwithstanding the foregoing
representations and agreements, if an Underwriter (including its affiliates) is
both a U.S. Underwriter and an International Underwriter, then the U.S.
Underwriter and its corresponding International Underwriter may, with the
consent of Xxxxxx Xxxxxxx & Co. Incorporated, transfer between themselves at
cost any Shares allocated to them for direct sale by the U.S. Representatives or
the International Representatives so long as any Shares so transferred are
treated as U.S. Shares while held by the U.S.
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Underwriter and International Shares while held by the International Underwriter
for purposes of the foregoing representations and agreements.
"UNITED STATES OR CANADIAN PERSON" shall mean any national or resident
of the United States or Canada, or any corporation, pension, profit-sharing or
other trust or other entity organized under the laws of the United States or
Canada or of any political subdivision thereof (other than a branch located
outside the United States and Canada of any United States or Canadian Person),
and shall include any United States or Canadian branch of a person who is
otherwise not a United States or Canadian Person. "UNITED STATES" shall mean the
United States of America, its territories, its possessions and all areas subject
to its jurisdiction.
The agreements of the Underwriters set forth in the first and second
paragraphs of this Article III shall terminate upon the earlier of (a) the
mutual agreement of the U.S. Representatives and the International
Representatives and (b) 30 days after the date hereof, unless the U.S.
Representatives or the International Representatives shall have given notice to
the other to the effect that the distribution of the Shares by the U.S.
Underwriters or the International Underwriters, as the case may be, has not yet
been completed. If such notice is given, the agreements set forth in such
preceding paragraphs shall survive until the earlier of (x) the mutual agreement
referred to in the preceding sentence and (y) 30 days after the date of any such
notice.
Each U.S. Underwriter represents that it has not offered or sold, and
agrees not to offer or sell, any Shares, directly or indirectly, in any province
or territory of Canada or to, or for the benefit of, any resident of any
province or territory of Canada in contravention of the securities laws thereof
and, without limiting the generality of the foregoing, represents that any offer
or sale of Shares in Canada will be made only pursuant to an exemption from the
requirement to file a prospectus in the province or territory of Canada in which
such offer or sale is made. Each U.S. Underwriter further agrees to send to any
dealer who purchases from it any of the Shares a notice stating in substance
that, by purchasing such Shares, such dealer represents and agrees that it has
not offered or sold, and will not offer or sell, directly or indirectly, any of
such Shares in any province or territory of Canada or to, or for the benefit of,
any resident of any province or territory of Canada in contravention of the
securities laws thereof and that any offer or sale of Shares in Canada will be
made only pursuant to an exemption from the requirement to file a prospectus in
the province or territory of Canada in which such offer or sale is made, and
that such dealer will deliver to any other dealer to whom it sells any of such
Shares a notice containing substantially the same statement as is contained in
this sentence.
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The Underwriters understand that no action has been or will be taken in
any jurisdiction by the Underwriters or the Company that would permit a public
offering of the Shares, or possession or distribution of the Prospectus (as
defined in the Underwriting Agreement), in preliminary or final form, in any
jurisdiction where, or in any circumstances in which, action for that purpose is
required, other than the United States.
Each International Underwriter agrees that it will comply with all
applicable laws and regulations, and make or obtain all necessary filings,
consents or approvals, in each jurisdiction in which it purchases, offers, sells
or delivers Shares (including, without limitation, any applicable requirements
relating to the delivery of the international prospectus, in preliminary or
final form), in each case at its own expense. In connection with sales of and
offers to sell Shares made by it, each International Underwriter will either
furnish to each person to whom any such sale or offer is made a copy of the then
current international prospectus (in preliminary or final form and as then
amended or supplemented if the Company shall have furnished any amendments or
supplements thereto), or inform such person that such international prospectus,
in preliminary or final form, will be made available upon request, and will keep
an accurate record of the names and addresses of all persons to whom it gives
copies of the registration statement relating to the offering of the Shares, the
international prospectus, in preliminary or final form, or any amendment or
supplement thereto, and, when furnished with any subsequent amendment to such
registration statement, any subsequent prospectus or any medium outlining
changes in the registration statement or any prospectus, will upon request of
the International Representatives, promptly forward copies thereof to such
persons or inform such persons that such amendment, subsequent prospectus or
other medium will be made available upon request.
Each International Underwriter further represents that it has not
offered or sold, and agrees not to offer or sell, directly or indirectly, in
Japan or to or for the account of any resident thereof, any of the Shares
acquired in connection with the distribution contemplated hereby, except for
offers or sales to Japanese International Underwriters or dealers and except
pursuant to any exemption from the registration requirements of the Securities
and Exchange Law and otherwise in compliance with applicable provisions of
Japanese law. Each International Underwriter further agrees to send to any
dealer who purchases from it any of the Shares a notice stating in substance
that, by purchasing such Shares, such dealer represents and agrees that it has
not offered or sold, and will not offer or sell, any of such Shares, directly or
indirectly, in Japan or to or for the account of any resident thereof except for
offers or sales to Japanese International Underwriters or dealers and except
pursuant to any exemption from the registration requirements of the Securities
and Exchange Law and otherwise in compliance
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with applicable provisions of Japanese law, and that such dealer will send to
any other dealer to whom it sells any of such Shares a notice containing
substantially the same statement as is contained in this sentence.
Each International Underwriter further represents and agrees that (i)
it has not offered or sold and, prior to the date six months after the Closing
Date, will not offer or sell, any Shares to persons in the United Kingdom except
to persons whose ordinary activities involve them in acquiring, holding,
managing or disposing of investments (as principal or agent) for the purposes of
their businesses or otherwise in circumstances which have not resulted and will
not result in an offer to the public in the United Kingdom within the meaning of
the Public Offers of Securities Regulations 1995; (ii) it has complied and will
comply with all applicable provisions of the Financial Services Xxx 0000 with
respect to anything done by it in relation to the Shares in, from or otherwise
involving the United Kingdom; and (iii) it has only issued or passed on and will
only issue or pass on in the United Kingdom any document received by it in
connection with the offering of the Shares to a person who is of a kind
described in Article 11(3) of the Financial Services Xxx 0000 (Investment
Advertisements) (Exemptions) Order 1996 or is a person to whom such document may
otherwise lawfully be issued or passed on.
Each International Underwriter agrees to indemnify and hold harmless
each Underwriter and each person controlling any Underwriter from and against
any and all losses, claims, damages and liabilities (including fees and
disbursements of counsel) arising from any breach by it of any of the provisions
of paragraphs eight, nine and ten of this Article III.
IV.
The overall direction and planning of the stabilization transactions
contemplated herein shall be the responsibility of the U.S. Representatives and
the International Representatives, which will consult with one another on a
continuous basis so that such stabilization transactions shall be conducted in
accordance with such direction and planning as is mutually agreed upon.
All stabilization transactions shall be conducted only by Xxxxxx
Xxxxxxx & Co. Incorporated and shall be conducted in compliance with any
applicable laws and regulations. Xxxxxx Xxxxxxx & Co. Incorporated agrees to
notify the International Representatives of the date of termination of
stabilization. Each Underwriter agrees to file with Xxxxxx Xxxxxxx & Co.
Incorporated any reports required of such Underwriter pursuant to Rule 17a-2
under the U.S. Securities Exchange Act of 1934 and authorizes Xxxxxx Xxxxxxx &
Co. Incorporated to file
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with the U.S. Securities and Exchange Commission any reports required by such
Rule on behalf of such Underwriter.
The International Primary Market Association (IPMA) limits will not be
complied with in connection with stabilization losses and expenses. All
stabilization transactions shall be for the respective accounts of the several
Underwriters and shall be allocated between the U.S. Underwriters and the
International Underwriters in the respective proportions that the number of U.S.
Shares and International Shares purchased pursuant to the Underwriting Agreement
bears to the total number of Shares purchased. In no event shall the net
commitment of any Underwriter, for either long or short account, resulting from
such stabilization transactions and from the over-allotments referred to in
Article V, exceed 15% of the total number of Shares that such Underwriter is
obligated to purchase under the Underwriting Agreement; provided that the net
commitment of any Underwriter for short account shall be calculated (x) in the
case of any U.S. Underwriter, after giving effect to the purchase of (i) any
Shares that the U.S. Representatives have agreed to purchase for the account of
such U.S. Underwriter pursuant to Article I of this Agreement and (ii) the
maximum number of Additional Shares that such U.S. Underwriter is entitled to
purchase under the Underwriting Agreement and (y) in the case of any
International Underwriter, after giving effect to the purchase of any Shares
that the International Representatives have agreed to purchase for the account
of such International Underwriter pursuant to Article I of this Agreement.
Each U.S. Underwriter represents that it has not offered or sold, and
agrees that it will not offer or sell, directly or indirectly, Shares to any
person at less than the public offering price, other than to (i) the
International Underwriters pursuant to Article I hereof or (ii) other U.S.
Underwriters or to dealers who have entered into the Master Dealer Agreement
with Xxxxxx Xxxxxxx & Co. Incorporated and who have received a pricing wire from
the U.S. Representatives with respect to this offering that, among other things,
sets forth such dealer"s agreement that it is not purchasing Shares for the
account of any persons other than United States or Canadian Persons and that it
will not offer or resell Shares outside the United States and Canada. Such sales
to U.S. dealers and other U.S. Underwriters shall be made in conformity with the
provisions of Article II and at a price that is not below the public offering
price less the maximum permissible reallowance to be specified in the
Prospectus. Each U.S. Underwriter agrees that prior to offering Shares to any
dealer at the public offering price less the reallowance, it will either
ascertain that such dealer has entered into such Master Dealer Agreement and
received such a pricing wire or make arrangements to ensure that such dealer
will enter into such Master Dealer Agreement and receive such a pricing wire.
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Each International Underwriter represents that it has not offered or
sold and agrees that it will not offer or sell, directly or indirectly, Shares
to any person at less than the public offering price, other than to (i) the U.S.
Underwriters pursuant to Article I hereof or (ii) other International
Underwriters or to dealers who have entered into International Dealer Agreements
(the "INTERNATIONAL DEALERS") with the International Representatives in the form
of Exhibit C to the Agreement Among International Underwriters. Such sales to
International Dealers and other International Underwriters shall be made in
conformity with the provisions of Article II and at a price that is not below
the public offering price less the maximum permissible reallowance to be
specified in the Prospectus. Each International Underwriter agrees that prior to
offering Shares to any dealer at the public offering price less the reallowance,
it will either ascertain that such dealer has entered into such an International
Dealer Agreement or make arrangements to ensure that such dealer will enter into
an International Dealer Agreement.
The agreements of the Underwriters set forth in the foregoing two
paragraphs shall terminate upon the earlier of (a) the mutual agreement of the
U.S. Representatives and the International Representatives and (b) 30 days after
the date hereof, unless the U.S. Representatives or the International
Representatives shall have given notice to the other to the effect that the
distribution of the Shares by the U.S. Underwriters or the International
Underwriters, as the case may be, has not yet been completed. If such notice is
given, the agreements set forth in such preceding paragraphs shall survive until
the earlier of (x) the mutual agreement referred to in the preceding sentence
and (y) 30 days after the date of any such notice.
Each Underwriter agrees that it will not, without the advance approval
of Xxxxxx Xxxxxxx & Co. Incorporated, for its own account or the account of a
customer, offer, bid for, buy, sell, deal, trade in or attempt to induce any
person to bid for or buy any Covered Security, except (a) as provided in the
Agreement Among International Underwriters, the Master Agreement Among
Underwriters, this Agreement, the Underwriting Agreement, the Master Dealer
Agreement or the International Dealer Agreement, (b) in brokerage transactions
on unsolicited orders which have not resulted from activities on its part in
connection with the solicitation of purchases and which are executed by it in
the ordinary course of its brokerage business, (c) in market making transactions
on Nasdaq or any similar market or quotation system executed by it in the
ordinary course of its business so long as its bids and purchases are made
consistent with the pricing restrictions set forth in Rule 103 of Regulation M
of the U.S. Securities and Exchange Commission ("REGULATION M") and the volumes
of such transactions are consistent with its past practice as a market maker,
(d) in basket transactions that meet the standards set forth in Rule 101(b)(6)
of Regulation M, (e) that it may convert, exchange or exercise any security
owned by it prior to the
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commencement of this restriction and that it may sell any security obtained upon
any such conversion, exchange or exercise, (f) that it may deliver securities
owned by it upon the exercise of any option written by it as permitted by the
provisions set forth herein, (g) that on or after the date of the initial public
offering of the Shares, it may execute covered writing transactions for the
accounts of customers in options to acquire Common Stock, when such transactions
are covered by Shares and (h) that it may engage in principal purchases or sales
with the intent of offsetting the market risk of principal positions in
over-the-counter derivatives on solicited orders that were executed by it prior
to the commencement of this restriction, and on unsolicited orders that were
executed by it at any time, so long as such orders were executed by it in the
ordinary course of its principal over-the-counter derivatives business. "COVERED
SECURITY" means (a) the Common Stock and (b) any securities convertible into or
exercisable or exchangeable for the Common Stock.
An opening uncovered writing transaction in options to acquire Common
Stock for an Underwriter"s account or for the account of a customer shall be
deemed, for purposes of this Article IV, to be a sale of Common Stock which is
not unsolicited. The term "opening uncovered writing transaction in options to
acquire" as used above means a transaction in which the seller intends to become
a writer of an option to purchase Common Stock which he does not own. An opening
uncovered purchase transaction in options to sell Common Stock for an
Underwriter"s account or for the account of a customer shall be deemed, for
purposes of this paragraph, to be a sale of Common Stock which is not
unsolicited. The term "opening uncovered purchase transaction in options to
sell" as used above means a transaction where the purchaser intends to become an
owner of an option to sell Common Stock which he does not own.
Each Underwriter represents that it has not participated, from the time
trading restrictions were imposed by Xxxxxx Xxxxxxx & Co. Incorporated or Xxxxxx
Xxxxxxx & Co. International Limited, in any transaction prohibited by this
Article IV and that it has at all times complied and agrees that it will at all
times comply with the provisions of Regulation M applicable to this offering.
V.
The overall direction and planning of any over-allotments to be made by
the Underwriters in arranging for sales of Shares, and the related transactions
required to cover such over-allotments, shall be the responsibility of the U.S.
Representatives. All profits and losses arising from such over-allotments
(excluding the excess, if any, of (i) the public selling price of any Additional
Shares and any Shares purchased pursuant to Article I of this Agreement over
(ii)
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the cost of such Additional Shares and such other Shares to the Underwriters
making such sales) shall be for the respective accounts of the several
Underwriters and shall be allocated between the U.S. Underwriters and the
International Underwriters in the respective proportions that the number of U.S.
Shares and International Shares purchased pursuant to the Underwriting Agreement
bears to the total number of Shares purchased.
VI.
Each of the Underwriters agrees that the expenses incurred in
connection with or attributable to the purchase, carrying or sale of the Shares,
including the fees and disbursements of counsel to the Underwriters, shall be
for the respective accounts of the several Underwriters and shall be allocated
between the U.S. Underwriters and the International Underwriters in the
respective proportions that the number of U.S. Shares and International Shares
purchased pursuant to the Underwriting Agreement bears to the total number of
Shares purchased.
VII.
Changes in the public offering price and in the concessions and
reallowances to dealers will be made only upon the mutual agreement of the
Underwriters during the period referred to in the first sentence of Article I
hereof.
VIII.
The Representatives will keep one another fully informed of the
progress of the offering of the Shares.
The agreements of the Underwriters contained in Article II, the sixth
through eleventh paragraphs of Article III, the last paragraph of Article IV,
Article V and Article VI shall remain operative and in full force and effect
regardless of (i) any termination of this Agreement, (ii) any termination of the
Underwriting Agreement, (iii) any investigation made by or on behalf of any
Underwriter or any person controlling any Underwriter or by or on behalf of the
Company, its officers or directors or any other person controlling the Company
and (iv) acceptance of and payment for any Shares.
IX.
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This Agreement may be signed in counterparts, which together shall
constitute one and the same instrument.
This Agreement shall be governed and construed in all respects in
accordance with the laws of the State of New York and United States federal law.
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IN WITNESS WHEREOF, this Agreement has been executed as of the date and
year first above written by the undersigned for themselves and for the
Underwriters as set forth above.
XXXXXX XXXXXXX & CO. INCORPORATED
NATIONSBANC XXXXXXXXXX SECURITIES LLC
THE XXXXXXXX-XXXXXXXX COMPANY LLC
XXXXX & XXXXXXXXXXXX, INC.
Acting severally on behalf of themselves
and the several U.S. Underwriters named in
Schedule I to the Underwriting Agreement
referred to herein.
By: XXXXXX XXXXXXX & CO. INCORPORATED
By:__________________________________
XXXXXX XXXXXXX & CO. INTERNATIONAL LIMITED
NATIONSBANC XXXXXXXXXX SECURITIES LLC
THE XXXXXXXX-XXXXXXXX COMPANY LLC
XXXXX & XXXXXXXXXXXX, INC.
Acting severally on behalf of themselves
and the several International Underwriters
named in Schedule II to the Underwriting
Agreement referred to herein.
By: XXXXXX XXXXXXX & CO.
INTERNATIONAL LIMITED
By:__________________________________
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