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EXHIBIT H.2
1,150,000 SHARES
ALLIED CAPITAL CORPORATION
COMMON STOCK, $0.0001 PAR VALUE PER SHARE
AGREEMENT AMONG INTERNATIONAL UNDERWRITERS
Exhibit A - Underwriting Agreement
Exhibit B - Agreement Between U.S. and International Underwriters
Exhibit C - International Dealer Agreement
June __, 1998
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Xxxxxx Xxxxxxx & Co. International Limited
NationsBanc Xxxxxxxxxx Securities LLC
The Xxxxxxxx-Xxxxxxxx Company LLC
Xxxxx & Xxxxxxxxxxxx, Inc.
c/o Morgan Xxxxxxx & Co. International Limited
00 Xxxxx Xxxxxx
Xxxxxx Xxxxx
Xxxxxx X00 0XX
England
Dear Sirs:
We understand that Allied Capital Corporation, a Maryland corporation
(the "COMPANY"), proposes to issue and sell to the several Underwriters (as
defined below) an aggregate of 5,750,000 shares (the "FIRM SHARES") of its
common stock, $0.0001 par value per share ("COMMON STOCK") pursuant to an
underwriting agreement (the "UNDERWRITING AGREEMENT"), substantially in the form
attached hereto as Exhibit A, with you as representatives (the "INTERNATIONAL
REPRESENTATIVES") of the international underwriters named in Schedule II thereto
(the "INTERNATIONAL UNDERWRITERS"), and Xxxxxx Xxxxxxx & Co. Incorporated,
NationsBanc Xxxxxxxxxx Securities LLC, The Xxxxxxxx-Xxxxxxxx Company LLC, and
Xxxxx & Xxxxxxxxxxxx, Inc. as representatives (the "U.S. REPRESENTATIVES") of
the U.S. underwriters named in Schedule I thereto (the "U.S. UNDERWRITERS"). The
International Underwriters and the U.S. Underwriters are hereinafter
collectively referred to as the Underwriters.
Of such Firm Shares 1,150,000 shares are to be offered outside the
United States and Canada by the International Underwriters (the "INTERNATIONAL
SHARES") and 4,600,000 shares are to be offered by the U.S. Underwriters in the
United States and Canada (the "U.S. FIRM SHARES").
In addition, the several U.S. Underwriters will have an option to
purchase from the Company an additional 862,500 shares (the "ADDITIONAL SHARES")
to provide for over-allotments. The term "U.S. SHARES" shall mean the U.S. Firm
Shares and the Additional Shares. The U.S. Shares and the International Shares
are hereinafter collectively referred to as the "SHARES".
We further understand that the Company has filed with the U.S.
Securities and Exchange Commission (the "COMMISSION") a registration statement
including a U.S. prospectus and an international prospectus relating to the
Shares.
I.
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We hereby confirm our agreement with you that the International Shares
shall be purchased by you and the other several International Underwriters,
including ourselves, pursuant to the terms of and as set forth in the
Underwriting Agreement. We further understand that the International
Representatives propose to enter into an agreement with the U.S. Representatives
(the "AGREEMENT BETWEEN U.S. AND INTERNATIONAL UNDERWRITERS"), substantially in
the form attached hereto as Exhibit B, pursuant to Article I of which, and
subject to the conditions thereof, the several International Underwriters,
including ourselves, could become obligated to purchase Shares from, or sell
Shares to, the U.S. Underwriters.
We authorize you (a) to execute and deliver the Underwriting Agreement
and the Agreement Between U.S. and International Underwriters on our behalf in
substantially the forms of Exhibits A and B hereto, respectively, and to make
representations and agreements on our behalf as set forth therein, (b) to vary
the offering terms of the International Shares in effect at any time, including
the offering price, the concession and the reallowance, (c) to agree to the
price at which the International Shares are to be purchased from the Company,
(d) to agree, on our behalf, to any addition to, change in or waiver of any
provision of the Underwriting Agreement (other than a change in the purchase
price of the International Shares and the respective numbers of International
Shares set forth opposite our names in Schedule II thereto) or of the Agreement
Between U.S. and International Underwriters (other than a change in the price at
which the International Underwriters purchase Shares pursuant to Article I
thereof) and (e) to take any other action as may seem advisable to you in
respect of the offering of the International Shares. The number of Shares set
forth opposite each Underwriter's name in Schedule I or in Schedule II of the
Underwriting Agreement (or such amount increased as provided in the Underwriting
Agreement) is hereinafter referred to as the Original Purchase Obligation of
such Underwriter, and the ratio that such Original Purchase Obligation of any
International Underwriter bears to the total number of International Shares,
expressed as a percentage, is hereinafter referred to as the International
Underwriting Percentage of such International Underwriter.
II.
We authorize you to act as the Lead Managers of the offering by the
International Underwriters of the International Shares outside of the United
States and Canada and to take such action as may seem advisable to you in
respect thereof. The offering of the International Shares is to be made as soon
after the registration statement filed with the Commission relating to the
Shares becomes
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effective (as then amended, the "REGISTRATION STATEMENT") as in your judgment
and the judgment of the U.S. Representatives is advisable, at the offering price
set forth in, and on the other terms and conditions as you shall determine in
accordance with, the Underwriting Agreement. The offering of the International
Shares is to be made on the terms and conditions to be set forth in the
Underwriting Agreement, the Agreement Between U.S. and International
Underwriters and in the prospectus first used to confirm sales of the
International Shares (the "INTERNATIONAL PROSPECTUS"), whether or not filed
pursuant to Rule 497 under the U.S. Securities Act of 1933, as amended (the
"ACT"). During the term of this Agreement, advertisement of the offering outside
of the United States and Canada will be made only by Xxxxxx Xxxxxxx & Co.
International Limited. Such advertisement will be made on behalf of the
International Underwriters on such dates and in such countries as Xxxxxx Xxxxxxx
& Co. International Limited shall determine.
We authorize Xxxxxx Xxxxxxx & Co. International Limited to determine
whether to purchase, and, if such determination is made, to purchase, any Shares
for the account of the International Underwriters pursuant to the Agreement
Between U.S. and International Underwriters. We further authorize Xxxxxx Xxxxxxx
& Co. International Limited to determine whether to sell, and, if such
determination is made, to sell, Shares for the account of the International
Underwriters pursuant to such Agreement.
We authorize Xxxxxx Xxxxxxx & Co. International Limited to offer or to
sell for our account to dealers selected by it (among whom may be included any
International Underwriter) such Shares purchased by us from the Company or
pursuant to the Agreement Between U.S. and International Underwriters as Xxxxxx
Xxxxxxx & Co. International Limited shall determine. Sales of Shares to dealers
shall be made for the account of each International Underwriter approximately in
the proportion that Shares of such International Underwriter held by Xxxxxx
Xxxxxxx & Co. International Limited for such sales bear to the total Shares so
held. Such sales shall be made pursuant to dealer agreements substantially in
the form attached as Exhibit C hereto.
We authorize Xxxxxx Xxxxxxx & Co. International Limited to offer or
sell for our account to certain persons (other than the persons to whom Shares
are sold pursuant to the terms of the immediately preceding paragraph) such
Shares purchased by us from the Company or pursuant to the Agreement Between
U.S. and International Underwriters as it shall determine at the offering price
set forth in the International Prospectus. Except for sales for the accounts of
International Underwriters designated by a purchaser, aggregate sales of Shares
to such persons shall be made for the accounts of the several International
Underwriters as nearly as practicable in their respective International
Underwriting Percentages.
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Xxxxxx Xxxxxxx & Co. International Limited will advise us promptly as
to the number of Shares purchased by us that we shall retain for direct sale. At
any time prior to the termination of this Agreement, any Shares purchased by us
that are held by Xxxxxx Xxxxxxx & Co. International Limited for sale for our
account as set forth above but not sold may, upon our request and at Xxxxxx
Xxxxxxx & Co. International Limited's discretion, be released to us for direct
sale, and Shares so released to us shall no longer be deemed held for sale by
you.
From time to time prior to the termination of this Agreement, at Xxxxxx
Xxxxxxx & Co. International Limited's request, we will advise it of the number
of Shares remaining unsold that were retained by or released to us for direct
sale and of the number of Shares remaining unsold that were delivered to us
pursuant to Article III and, at Xxxxxx Xxxxxxx & Co. International Limited's
request, we will release to it any such Shares remaining unsold for sale by it
(i) for our account to dealers or certain other persons or (ii) if in its
opinion, such Shares are needed to make delivery against sales made pursuant to
Article III.
III.
We authorize Xxxxxx Xxxxxxx & Co. Incorporated to buy and sell for the
accounts of the several Underwriters, including the International Underwriters,
(i) Common Stock and (ii) any securities convertible into or exercisable or
exchangeable for the Common Stock in the open market or otherwise, for long or
short account, on such terms as it shall deem advisable and to over-allot in
arranging sales. Any shares of Common Stock or other securities that may have
been purchased by the U.S. Representatives for stabilizing purposes in
connection with the offering of the Shares prior to the execution of this
Agreement and the Agreement Between U.S. and International Underwriters shall be
treated as having been purchased pursuant to this paragraph and the Agreement
Between U.S. and International Underwriters for the accounts of the several
Underwriters. We authorize Xxxxxx Xxxxxxx & Co. International Limited to
over-allot in arranging sales. We recognize that the International Primary
Market Association (IPMA) limits will not be complied with in connection with
stabilization losses and expenses. Subject to the provisions of the Agreement
Between U.S. and International Underwriters, all such purchases, sales and
over-allotments for the International Underwriters as a group shall be for the
accounts of the several International Underwriters as nearly as practicable in
their respective International Underwriting Percentages. At no time shall our
net commitment pursuant to the foregoing authorization exceed 15% of our
Original Purchase Obligation, and, in determining our net commitment for short
account, there shall be subtracted any Shares that you have agreed to purchase
for our account pursuant to Article I of
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the Agreement Between U.S. and International Underwriters. On demand we will
take up and pay for any securities so purchased for our account and deliver
against payment any securities so sold or over-allotted for our account. The
International Representatives agree to notify us of the date of termination of
stabilization when so notified by Xxxxxx Xxxxxxx & Co. Incorporated pursuant to
the Agreement Between U.S. and International Underwriters.
If pursuant to the provisions of the preceding paragraph and prior to
the termination of this Agreement (or prior to such earlier date as the
International Representatives may have determined), the U.S. Representatives
purchase or contract to purchase in the open market or otherwise any Shares that
were retained by or released to us for direct sale, or any Shares that may have
been issued on transfer of or in exchange for such Shares, and which Shares were
therefore not effectively placed for investment by us, we authorize the
International Representatives either to charge our account with an amount equal
to the selling concession with respect thereto, which amount shall be credited
against the cost of such Shares, or to require us to repurchase such Shares at a
price equal to the total cost of such purchase, including commissions, if any,
and any taxes on redelivery.
IV.
On the Closing Date (as defined in the Underwriting Agreement), prior
to 8:45 A.M. (New York City time) we will deliver to Xxxxxx Xxxxxxx & Co.
International Limited, Federal or other funds immediately available in New York
City in the manner as you shall advise for (i) an amount equal to the offering
price less the selling concession in respect of the Shares to be purchased by
us, (ii) an amount equal to the offering price less the selling concession in
respect of such of the Shares to be purchased by us as shall have been retained
by or released to us for direct sale or (iii) the amount set forth or indicated
in a telex to us, as you shall advise. You will make payment to the Company
against delivery to you for our account of the Shares to be purchased by us and
you will deliver to us the Shares paid for by us which shall have been retained
by or released to us for direct sale. Unless we promptly give you written
instructions otherwise, if transactions in the Shares may be settled through the
facilities of The Depository Trust Company, payment for and delivery of Shares
purchased by us will be made through such facilities, if we are a member, or, if
we are not a member, settlement may be made through our ordinary correspondent
who is a member.
V.
We authorize you as Lead Managers to charge our account, as
compensation for your services in connection with this issue, including the
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purchase from the Company and the management of the offering, $____ a share for
each Share that we have agreed to purchase pursuant to the Underwriting
Agreement.
We authorize you to charge to our account (i) our International
Underwriting Percentage of all expenses incurred by you under the terms of this
Agreement or in connection with or attributable to the purchase, carrying and
sale of any securities pursuant to this Agreement (including all expenses, if
any, incurred for the account of the International Underwriters pursuant to the
Agreement Between U.S. and International Underwriters), and (ii) all transfer
taxes paid or payable on our behalf on purchases, sales or transfers made for
our account pursuant to this Agreement.
VI.
We authorize you to advance your own funds for our account, charging
interest rates prevailing from time to time, or to arrange loans for our account
for the purpose of carrying out the provisions of this Agreement or the
Agreement Between U.S. and International Underwriters and in connection
therewith to hold or pledge as security therefor all or any securities which you
may be holding for our account under this Agreement.
Out of payment received by you for Shares sold for our account which
have been paid for by us, you will remit to us promptly an amount equal to the
price paid by us for such Shares.
Xxxxxx Xxxxxxx & Co. International Limited and Xxxxxx Xxxxxxx & Co.
Incorporated may each deliver to us or transfer to our account from time to time
against payment, for carrying purposes only, any securities purchased by us or
for our account under this Agreement that it is holding for sale for our account
but that are not sold and paid for. We will transfer back to Xxxxxx Xxxxxxx &
Co. International Limited or Xxxxxx Xxxxxxx & Co. Incorporated against payment
any securities so transferred to us for carrying purposes at such times as it
may demand.
VII.
This Agreement shall terminate 30 days from the date hereof, unless
sooner terminated by you, provided that you may in your discretion extend this
Agreement for a further period or periods not exceeding an aggregate of 30 days.
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You may at your discretion on notice to us prior to the termination of this
Agreement alter any of the terms or conditions of offering determined pursuant
to Article II hereof or Article III of the Agreement Between U.S. and
International Underwriters, or terminate or suspend in whole or in part the
effectiveness of Article III hereof or paragraphs five through nine of Article
IV thereof. No termination or suspension pursuant to this paragraph shall affect
your or Xxxxxx Xxxxxxx & Co. Incorporated's authority under Article III to cover
any short or close any long position incurred under this Agreement prior to such
termination or suspension.
Upon termination of this Agreement, or prior thereto at your
discretion, Xxxxxx Xxxxxxx & Co. International Limited shall deliver to us or
transfer to our account any Shares purchased by us from the Company or pursuant
to the Agreement Between U.S. and International Underwriters and held by Xxxxxx
Xxxxxxx & Co. International Limited for sale for our account to dealers or
others but not sold and paid for and Xxxxxx Xxxxxxx & Co. Incorporated shall
deliver to us or transfer to our account any securities which are held by Xxxxxx
Xxxxxxx & Co. Incorporated for our account pursuant to Article III. If at the
termination of this Agreement, the aggregate amount of any securities (including
any Shares) so held and not sold and paid for does not exceed 15% of the
aggregate amount of the International Shares, Xxxxxx Xxxxxxx & Co. International
Limited and Xxxxxx Xxxxxxx & Co. Incorporated may each, in its discretion, sell
for the account of the several International Underwriters any such securities
(including any Shares) so held, at such price, on such terms and in such manner
as it may determine. As soon as practicable after termination of this Agreement
our account hereunder shall be settled and paid. Xxxxxx Xxxxxxx & Co.
International Limited may reserve from distribution such amount as it deems
advisable to cover possible additional amounts due from us. Determination by
Xxxxxx Xxxxxxx & Co. International Limited of amounts to be paid to or by us
shall be final and conclusive. Any of our funds in Xxxxxx Xxxxxxx & Co.
International Limited's or Xxxxxx Xxxxxxx & Co. Incorporated's hands may be held
with its general funds without accountability for interest.
Notwithstanding any settlement on the termination of this Agreement,
each International Underwriter agrees to pay its International Underwriting
Percentage of (i) all expenses incurred by you in investigating or defending
against any claim or proceeding which is asserted or instituted by any party
(including any governmental or regulatory body) other than an Underwriter
relating to the Registration Statement or the Prospectus (as defined in the
Underwriting Agreement) (or any amendment or supplement thereto) or any
preliminary prospectus and (ii) any liability, including attorneys' fees,
incurred by you in respect of any such claim or proceeding, whether such
liability shall be the result of a judgment or as a result of any settlement
agreed to by you, other than
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any such expense or liability as to which you receive indemnity payments
pursuant to the following paragraph, Article III of the Agreement Between U.S.
and International Underwriters or of the Underwriting Agreement.
We agree to indemnify and hold harmless each other Underwriter and each
person, if any, who controls any such Underwriter within the meaning of either
Section 15 of the Act or Section 20 of the U.S. Securities Exchange Act of 1934,
as amended, to the extent and upon the terms which we agree to indemnify and
hold harmless the Company, its directors, the officers of the Company who sign
the Registration Statement and any person controlling the Company as set forth
in the Underwriting Agreement.
Our agreements contained in the second through fourth paragraphs of
Article II and this Article VII shall remain operative and in full force and
effect regardless of any termination of this Agreement or the occurrence of any
of the events described in clauses (i) through (iii) of the last paragraph of
Section 7 of the Underwriting Agreement.
VIII.
We have examined the prospectus included in the Registration Statement
as amended to date and we are familiar with the terms of the securities being
offered and the other terms of offering which are to be reflected in the
International Prospectus. In addition, we confirm that the information relating
to us which has been furnished to the Company for use therein is correct. You
are authorized, with the approval of counsel for the Underwriters, to approve on
our behalf the International Prospectus and any further amendments or
supplements to the Registration Statement or the International Prospectus.
We represent that our commitment to purchase Shares hereunder and under
the Agreement Between U.S. and International Underwriters will not result in a
violation of any financial responsibility requirements of any laws, rules or
regulations applicable to us, including applicable rules of any securities
exchange.
IX.
If the Underwriting Agreement is terminated as permitted by the terms
thereof, our obligations hereunder shall immediately terminate except that (i)
our obligations as set forth in the last paragraph of Article VII shall remain
in full force and effect, (ii) we shall remain liable for our International
Underwriting
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Percentage of all expenses and for any purchases or sales which may have been
made for our account pursuant to the provisions of Article III, including any
taxes on any such purchases or sales and (iii) such termination shall not affect
any obligation of any defaulting International Underwriter.
In the event that any International Underwriter shall default in its
obligations (i) pursuant to the second paragraph of Article II or the first
paragraph of Article III, (ii) to pay amounts owed by it pursuant to Article V
or (iii) pursuant to the third or fourth paragraph of Article VII or the first
paragraph of this Article IX, we will assume our proportionate share (determined
on the basis of the International Underwriting Percentages of the non-defaulting
International Underwriters) of such obligations, but no such assumption shall
affect any obligation of any defaulting International Underwriter.
If any one or more of the Underwriters shall fail or refuse to purchase
any Shares which it or they have agreed to purchase under the Underwriting
Agreement, we agree, in the proportion which the number of Firm Shares set forth
opposite our name in Schedule II to the Underwriting Agreement bears to the
aggregate number of Firm Shares set forth opposite the names of all
non-defaulting Underwriters, or in such other proportions as you may specify, to
purchase the Shares which such defaulting Underwriter or Underwriters agreed but
failed or refused to purchase; provided that, in no event shall the Shares to be
purchased by any International Underwriter be increased pursuant to this Article
IX to an amount in excess of the maximum number of Shares which such
International Underwriter has agreed to purchase pursuant to the Underwriting
Agreement upon such a default or defaults, unless such International Underwriter
consents in writing to the increase. Xxxxxx Xxxxxxx & Co. International Limited
is authorized to arrange for the purchase by others (including itself and any
other International Underwriter) of any Shares not purchased by any defaulting
International Underwriter or by the other International Underwriters as provided
in this paragraph and in Section 9 of the Underwriting Agreement. If such
arrangements are made, the respective numbers of Shares to be purchased by the
remaining International Underwriters and such other person or persons, if any,
shall be taken as the basis for all rights and obligations hereunder. Any action
taken under this paragraph shall not relieve any defaulting International
Underwriter from liability in respect of any default of such International
Underwriter under the Underwriting Agreement or this Agreement.
Nothing herein contained shall constitute us partners with you or with
the other Underwriters and the obligations of ourselves and of each of the other
Underwriters are several and not joint. If for United States federal income tax
purposes the International Underwriters shall be deemed to constitute a
partnership, each International Underwriter elects to be excluded from the
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application of Subchapter K, Chapter 1, Subtitle A, of the United States
Internal Revenue Code, as amended.
You shall be under no liability to us for any act or omission except in
respect of obligations expressly assumed by you herein.
This Agreement is being executed by us and delivered to you in
duplicate. Upon your confirmation hereof and agreements in identical form with
each of the other Underwriters, this Agreement shall constitute a valid and
binding contract between us.
Your authority hereunder and under the Underwriting Agreement and the
Agreement Between U.S. and International Underwriters may be exercised by Xxxxxx
Xxxxxxx & Co. International Limited, NationsBanc Xxxxxxxxxx Securities LLC, The
Xxxxxxxx-Xxxxxxxx Company LLC and Xxxxx & Xxxxxxxxxxxx, Inc., jointly or by
Xxxxxx Xxxxxxx & Co. International Limited alone. The authority of the U.S.
Representatives hereunder and under the Agreement Between U.S. and International
Underwriters may be exercised by Xxxxxx Xxxxxxx & Co. Incorporated, NationsBanc
Xxxxxxxxxx Securities LLC, The Xxxxxxxx-Xxxxxxxx Company LLC and Xxxxx &
Xxxxxxxxxxxx, Inc., either jointly or alone.
This Agreement may be executed in two or more counterparts which
together shall constitute one and the same instrument. If this Agreement is
executed by or on behalf of any party hereto by a person acting under the power
of attorney given him by such party, such person hereby states that at the time
of execution hereof he has no notice of revocation of the power of attorney by
which he has executed this Agreement as such attorney.
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This Agreement shall be governed by and construed in accordance with
the laws of the State of New York and United States federal law.
Very truly yours,
XXXXXX XXXXXXX & CO.
INTERNATIONAL LIMITED
By:_________________________________________
Attorney-in-fact for each of the several
International Underwriters named in
Schedule II to the Underwriting
Agreement
Confirmed as of the date hereof
XXXXXX XXXXXXX & CO. INTERNATIONAL LIMITED
NATIONSBANC XXXXXXXXXX SECURITIES LLC
THE XXXXXXXX-XXXXXXXX COMPANY LLC
XXXXX & XXXXXXXXXXXX, INC.
By: XXXXXX XXXXXXX & CO. INTERNATIONAL LIMITED
By:_____________________________________
Name:
Title:
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