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EXHIBIT K.4
SUBSCRIPTION AGENCY AGREEMENT
Between
ALLIED CAPITAL CORPORATION
AND
AMERICAN STOCK TRANSFER & TRUST COMPANY
THIS AGREEMENT is made this 19th day of January, 1996, by and between Allied
Capital Corporation, a Maryland corporation, (the "Company") and American Stock
Transfer & Trust Company, a New York corporation ("AST").
NOW, THEREFORE, in consideration of the premises and the mutual agreements
herein set forth, the parties hereto agree as follows:
SECTION 1. Purpose of Agreement. This agreement sets forth the rights and
obligations of the Company and AST in connection with the provision of
subscription agency services for the Company by AST relating to the offering of
shares of common stock of the Company through the rights offering to existing
stockholders described in a registration statement filed with the Securities
and Exchange Commission on November 29, 1995, and as subsequently amended (the
"Registration Statement").
SECTION 2. Reliance on Prospectus.
(A) It is understood that terms of the prospectus that is a part
of the Registration Statement as declared effective by the
Securities and Exchange Commission (the "Prospectus") shall
govern the activities of AST in connection with the Offering
to the extent not covered by or inconsistent with any of the
terms of this Agreement.
(B) Terms not otherwise defined herein shall have the meaning
ascribed to them in the Prospectus.
SECTION 3. Appointment of Subscription Agent. The Company hereby appoints AST
to serve as the Company's Subscription Agent in connection with the rights
offering described in the Registration Statement (the "Offering") in accordance
with the terms set forth in this Agreement, and AST hereby accepts such
appointment.
SECTION 4. Issuing of Securities.
(A) The Company will provide to AST a form of subscription (the
"Subscription Form"), and AST will deliver such Subscription
Form to holders of record of shares of common stock of the
Company as of the close of business on January 22, 1996 (the
"Record Date") evidencing non-
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transferable subscription rights to purchase such shares,
together with a copy of the Prospectus, no later than four
business days following the date upon which the Registration
Statement is declared effective and in accordance with the
terms of the Prospectus.
(B) No physical rights will be issued; the Subscription Form will
evidence the number of shares available for purchase by each
stockholder of record as of the record date ("Record Date
Stockholder") in accordance with the terms of the Prospectus.
(C) The Company has authorized the issuance of the common stock
underlying the subscription rights with respect to the shares
of the Company's common stock to be offered ("Subscription
Rights"), and upon the valid exercise of such Subscription
Rights, the Company will instruct AST to issue such shares to
Record Date Stockholders in accordance with the terms of the
Prospectus.
SECTION 5. Duties of AST. AST will be responsible for providing certain
services required to effect the Offering, including but not necessarily limited
to:
(A) Mailing the Prospectus, the Subscription Form, and all other
necessary documents to all Record Date Stockholders whose
shares are held directly and not in nominee name.
(B) Accepting Subscription Forms, payment for shares and other
documentation pursuant to the Offering from all subscribing
stockholders, including both direct and nominee holders.
(C) Identifying and researching any problems arising in connection
with the Offering and communicating with all subscribing
stockholders or any other persons as necessary to cure such
problems.
(D) Allocating shares as necessary in connection with the Offering
and in accordance with the terms of the Prospectus.
(E) Refunding payments, as required, to subscribing stockholders,
in accordance with the terms of the Prospectus.
(F) Taking all reasonable steps necessary to obtain payments due
from subscribing stockholders including but not limited to the
sending of notices of payment due.
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(G) Sending confirmations of purchase to every subscribing
stockholder once the number of shares to be sold to each
subscribing stockholder has been determined.
(H) Reporting to the Company on a daily basis concerning responses
to the Offering and working with the Company's Information
Agent and Offering Coordinator, Shareholder Communications
Corporation, to assure the accuracy of the daily reports.
(I) Collecting all required paperwork from all subscribing
stockholders, including follow-up on Notices of Guaranteed
Delivery, Subscription Forms, payment for shares, and notices
of payment due.
(J) Providing an accounting of all offering proceeds (including
interest due on the segregated account described below) to the
Company following the conclusion of the Offer, allocation of
shares, and collection of all payments due.
(K) Issuing certificates to stockholders of record representing
purchases pursuant to the Offer; allocating shares to the
dividend reinvestment plan accounts of those who participated
the Offer and who are participants in the Company's dividend
reinvestment plan; and allocating to all street name accounts
the shares purchased by nominees pursuant to the Offer.
SECTION 6. Certain Terms of the Offering.
(A) The "Subscription Price" shall be determined according to the
formula described in the Prospectus, and will be provided to
AST on the Expiration Date. An Estimated Subscription Price
will be determined prior to the date on which Prospectuses are
delivered to shareholders according to the formula set forth
in the Prospectus. Subscribing stockholders will remit
payments for shares to be purchased pursuant to the Offering
based upon such Estimated Subscription Price. If the
Subscription Price is LESS than the Estimated Subscription
Price, AST will refund appropriate amounts to all subscribing
stockholders who paid other than pursuant to a Notice of
Guaranteed Delivery. If the Subscription Price is MORE than
the Estimated Subscription Price, then AST will issue notices
for payment due to all subscribing stockholders.
(B) If an exercising stockholder has not indicated the number of
Subscription Rights being exercised, or if the Subscription
Price payment forwarded by such stockholder to AST, after
notice of payment due is
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sent, is not sufficient to purchase the number of shares
subscribed for, AST will apply all payments actually received
by it toward the purchase of the greatest number of whole
shares which could be acquired by such stockholder upon
exercise of the Primary Subscription or Over-Subscription
Privilege. To the extent that the Subscription Price payment
exceeds the number of shares to be purchased on the
Subscription Form, the stockholder will be deemed to have
exercised his Over-Subscription Privilege to the extent that
additional whole shares may be purchased, and the excess
amount will be refunded to the stockholder.
(C) Funds received by AST in payment of the Subscription Price for
shares subscribed for pursuant to the Offering shall be held
in a segregated, interest-bearing account pending allocation
and eventual distribution to the Company. All interest and
gains earned on such funds shall be paid to the Company. If a
Subscription Rights holder exercising the Over-Subscription
Privilege is allocated less than all of the shares of common
stock which such holder subscribed for pursuant to the
Over-Subscription Privilege, AST, within ten business days of
the Confirmation Date, shall send via first class mail to such
stockholder the amount paid by such holder which was over and
above that which was required to be paid for the number of
shares that were subscribed for and purchased, without
interest or deduction.
(D) AST is authorized to accept only Subscription Forms (other
than those delivered in accordance with the procedure set
forth in the Prospectus for guaranteed deliveries) received
prior to 5:00 p.m., Eastern Standard Time, on the Expiration
Date.
(E) Subscription Rights, once exercised, are irrevocable.
However, amounts paid in connection with Subscription Rights
that have been exercised may be returned to exercising
stockholders if the Company is required to do so pursuant to
the terms of any of the undertakings it has made in the
Registration Statement.
SECTION 7. Delivery of Stock Certificates. Within ten business days
following the Confirmation Date, AST will issue certificates or otherwise
deliver the total number of shares subscribed for in the Offering according to
the terms of the Prospectus.
SECTION 8. Fractional Subscription Rights and Shares.
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(A) The Company will not issue fractional Subscription Rights nor
shall AST distribute Subscription Forms which evidence
fractional Subscription Rights. The number of Subscription
Rights issued to each holder will be rounded down to the
nearest whole number.
(B) The Company shall not issue fractional shares of common stock
to exercising Subscription Rights holders upon exercise and
acceptance of Subscription Rights. The number of shares of
common stock that each Subscription Rights holder shall be
entitled to purchase pursuant to the Over Subscription
Privilege shall be rounded up or down as required to reach the
nearest whole share.
SECTION 9. Reports. AST shall coordinate with the Company's Information
Agent and Offering Coordinator to provide daily reports by the Company during
the Subscription Period regarding the number of Subscription Rights exercised,
the number of shares purchased, the level of participation both in the Primary
Subscription and the Over-Subscription Privilege.
SECTION 10. Future Instructions and Interpretation.
(A) All questions as to the timeliness, validity, form and
eligibility of any exercise of Subscription Rights will be
resolved by the Company, whose determinations shall be final
and binding. The Company in its sole discretion may waive any
defect or irregularity, permit a defect or irregularity to be
corrected within such time as it may determine or reject the
purported exercise of any Subscription Right. Subscriptions
will not be deemed to have been received or accepted until all
irregularities have been cured or waived within such time as
the Company determines in its sole discretion. Neither the
Company nor AST shall be under any duty to give notification
of any defect or irregularity in connection with the
submission of Subscription Rights or incur any liability for
failure to give such notification.
(B) AST is hereby authorized and directed to accept instructions
with respect to the performance of its duties hereunder from
an authorized officer of the Company, and to apply to such
officers for advice or instructions in connection with its
duties, and it shall not be liable for any action taken or
omitted to be taken by it in good faith in accordance with
instructions of any such officer.
SECTION 11. Compensation of AST.The Company agrees to pay AST compensation
in the amount of thirty-five thousand dollars ($35,000) for all services
rendered by it hereunder and for its
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reasonable out-of-pocket expenses, including but not limited to disbursements
for printing, postage and delivery. Such fee and out-of-pocket expenses will be
paid following the conclusion of the Offering and upon written invoice.
SECTION 12. Indemnification and Other Matters
(A) The Company agrees to indemnify AST for, and to hold it
harmless against, any loss, liability, or expense incurred
without negligence or bad faith on the part of AST for
anything done or omitted by AST in connection with the
acceptance and administration of this Agreement, including the
costs and expenses of defending against any claim of liability
in the premises, provided that AST shall have provided the
Company with notice of any such claim promptly after such
claim became known to AST, and provided further that the
Company shall have the right to assume the defense of any such
claim upon receipt of written notice thereof from AST. If the
Company assumes the defense of any such claim, AST shall be
entitled to participate in (but not control) the defense of
any such claim at its own expense. The Company shall not
indemnify AST with respect to any claim or action settled
without its consent, which consent shall not be unreasonably
withheld.
(B) AST agrees to indemnify the Company for, and to hold it
harmless against, any loss, liability, or expense incurred
without negligence or bad faith on the part of the Company
arising from anything done or omitted by the Company in
connection with the Company's performance of its obligations
and duties under this Agreement, including the costs and
expenses of defending against any claim of liability in the
premises, provided that the Company shall have provided AST
with notice of any such claim promptly after such claim became
known to the Company, and provided further that AST shall have
the right to assume the defense of any such claim upon receipt
of written notice thereof from the Company. If AST assumes the
defense of any such claim, the Company shall be entitled to
participate in (but not control) the defense of any such claim
at its own expense. AST shall not indemnify the Company with
respect to any claim or action settled without its consent,
which consent shall not be unreasonably withheld.
(C) AST shall be protected and shall incur no liability for or in
respect of any action taken, suffered or omitted by it in
connection with its administration of this Agreement in
reliance upon any Subscription Right,
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instrument of assignment or transfer, power of attorney,
endorsement, affidavit, letter, notice, direction, consent,
certificate statement or other paper or document reasonably
believed by it to be genuine and to be signed, executed and,
where necessary, verified or acknowledged by the proper person
or persons.
SECTION 13. Miscellaneous Matters. AST undertakes the duties and
obligations imposed by this Agreement upon the following terms and conditions,
by all of which the Company and the holders of Subscription Rights by their
acceptance thereof shall be bound:
(A) AST may consult with legal counsel (who may be, but is not
required to be, legal counsel for the Company), and the
opinion of such counsel shall be full and complete
authorization and protection to AST as to any actions taken or
omitted by it in good faith and in accordance with such
opinion.
(B) Whenever in the performance of its duties under this Agreement
AST shall deem it necessary or desirable that any fact or
matter be proved or established by the Company prior to taking
or suffering any action hereunder, such fact or matter (unless
other evidence in respect thereof be herein specifically
prescribed) may be deemed to be conclusively proved and
established by a certificate signed by an officer of the
Company and delivered to AST; and such certificate shall be
full authorization to AST for any action taken or omitted in
good faith by it under the provisions of this Agreement in
reliance upon such certificate.
(C) AST shall be liable hereunder only for its own negligence or
willful misconduct.
(D) AST shall not be liable for or by reason of any of the
statements of fact or recitals contained in this Agreement or
in the Prospectus or be required to verify the same, but all
such statements and recitals are and shall be deemed to have
been made by the Company only.
(E) The Company agrees that it will perform, execute, acknowledge
and deliver or cause to be performed, executed, acknowledged
and delivered all such further and other acts, instruments and
assurances as may reasonably be required by AST for the
carrying out or performing by AST of the provisions of this
Agreement.
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(F) Nothing herein shall preclude AST from acting in any other
capacity for the Company.
SECTION 14. Governing Law. This Agreement shall be governed by the laws
of the State of Maryland.
SECTION 15. Captions. The captions included in this Agreement are
included for convenience of reference only and in no way define or limit any of
the provisions hereof or otherwise affect the construction or effect.
SECTION 16. Counterparts. This Agreement may be executed in any number of
counterparts and each of such counterparts shall for all purposes be deemed to
be an original, but all such counterparts shall together constitute one and the
same instrument.
IN WITNESS WHEREOF the undersigned have caused this Subscription Agency
Agreement to be executed by their duly authorized representative as of the date
first above written.
ALLIED CAPITAL CORPORATION
By: /s/ XXXXXXX X. XXXXXXX
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Name: Xxxxxxx X. Xxxxxxx
Title: Vice President
AMERICAN STOCK TRANSFER & TRUST COMPANY
By: /s/ XXXXXXX XXXXXX
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Name: Xxxxxxx Xxxxxx, Esq.
Title: General Counsel
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