EXHIBIT 99.2h.1
FORM OF UNDERWRITING AGREEMENT
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[________] SHARES
ALLIED CAPITAL CORPORATION
COMMON STOCK, $0.0001 PAR VALUE PER SHARE
UNDERWRITING AGREEMENT
DATED [DATE]
[NAME OF UNDERWRITER]
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[_______] Shares
ALLIED CAPITAL CORPORATION
Common Stock, $0.0001 Par Value Per Share
UNDERWRITING AGREEMENT
[DATE]
[Name of Underwriter]
[Address]
Ladies and Gentlemen:
Allied Capital Corporation, a Maryland corporation (the "COMPANY"),
proposes to issue and sell to [NAME OF UNDERWRITER] (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-_______) relating to
the Shares. The registration statement as amended at the time it becomes
effective, including the information (if any) deemed to be part of the
registration statement at the time of effectiveness pursuant to Rule 430A and
Rule 497 under the Securities Act of 1933, as amended (the "SECURITIES ACT"), is
hereinafter referred to as the "REGISTRATION STATEMENT;" the prospectus (as
described in Rule 497 under the Securities Act) in the form first used to
confirm sales of Shares is hereinafter referred to as the "DISTRIBUTED
PROSPECTUS;" the prospectus included in the Registration Statement at the time
of its effectiveness (including the information, if any, deemed to be a part of
the Registration Statement at the time of effectiveness pursuant to Rule 430A
and Rule 497 under the Securities Act) is hereinafter referred to as the "FILED
PROSPECTUS;" and the Distributed Prospectus and the Filed Prospectus, together
with the Statement of Additional Information incorporated by reference therein,
are hereinafter referred to collectively as 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 no proceedings for such purpose are pending before or threatened by
the Commission.
(b)(i) 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, did not contain and, as amended or
supplemented, if applicable, 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, (ii)
the Registration Statement and the Prospectus and any amendment or
supplement thereto will comply in all material respects with the
Securities Act and with the provisions of the Investment Company Act of
1940, as amended (the "INVESTMENT COMPANY ACT") applicable to business
development companies and with the applicable rules and regulations of
the Commission thereunder, respectively and (iii) the Prospectus does not
contain and, as amended or supplemented, if applicable, 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 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.
(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
and the 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, Allied Capital REIT, Inc. ("Allied REIT"), and Allied
Investment Corporation ("Allied Investment," Allied REIT and Allied
Investment, each a "Subsidiary", and collectively, the "Subsidiaries"),
taken as a whole.
(d) Each Subsidiary of the Company has been duly incorporated or
formed, is validly existing as a corporation or a limited liability
company, as applicable, is in good standing under the laws of the
jurisdiction of its incorporation or formation, as applicable, has the
power and authority to own its property and to conduct its business, in
each case as described in the 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
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all liens, encumbrances, equities or claims, except with respect to the
employee-owned shares of preferred stock of Allied REIT, and the
Preferred Stock of Allied Investment owned by the U.S. Small Business
Administration (the "SBA").
(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 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 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, nor has the Company
received any notification that the Commission or the New York Stock
Exchange 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 or by-laws 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 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 charter
documents, (ii) in violation of its certificate of formation or limited
company agreement or (iii) in default with respect to any material
provision of any lease, loan agreement, franchise, license, permit or
other contract
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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 or in the aggregate are material to the Company and
its subsidiaries taken as a whole.
(l) 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 Prospectus (exclusive of any amendments or
supplements thereto subsequent to the date of this Agreement).
(m) There are no legal or governmental proceedings pending or
threatened to which the Company or any of its Subsidiaries is a party or
to which any of the properties of the Company or any of its Subsidiaries
is subject that are required to be described in the Registration
Statement or the Prospectus and are not so described or any statutes,
regulations, contracts or other documents that are required to be
described in the Registration Statement or the Prospectus or to be filed
as exhibits to the Registration Statement that are not described or filed
as required.
(n) Each preliminary prospectus filed as part of the registration
statement as originally filed or as part of any amendment thereto, or
filed pursuant to Rule 497 under the Securities Act, complied when so
filed in all material respects with the Securities Act and the applicable
rules and regulations of the Commission thereunder.
(o) The operations of the Company and Allied Investment are in
compliance in all material respects with the provisions of 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.
(p) 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.
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(q) 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.
(r) 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, the Investment Company Act, and the
rules and regulations of the Commission thereunder, respectively, to make
the public offering and consummate the sale of the Shares as provided in
this Agreement.
(s) The Company owns or possesses or has 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.
(t) 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 Prospectus, other than as described
therein.
(u) During the past fiscal year, the Company and Allied Investment
have been organized and operated, and currently are organized and
operated, in conformance with the requirements of the Investment Company
Act applicable to business development companies and 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 and Allied Investment will permit each of them
to continue to meet the requirements for qualification as a business
development company under the Investment Company Act and 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.
(v) As of ________, the only Subsidiary that constitutes a significant
Subsidiary as defined under Rule 405 of the Securities Act is Allied
Investment.
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(w) Xxxxxx Xxxxxxxx LLP, who have certified financial statements of
the Company and its Subsidiaries, are independent public accountants as
required by the Securities Act and the Exchange Act and the rules and
regulations of the Commission thereunder.
(x) The consolidated financial statements of the Company and its
Subsidiaries, together with related notes, as set forth in the
Registration Statement present fairly the consolidated financial position
and the results of operations of the Company and the 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, 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 Prospectus
and the financial information set forth under "Recent Developments" in
the Prospectus presents fairly the information shown therein and has been
compiled on a basis consistent with the financial statements presented
therein.
(y) 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.
(z) The Shares have been listed 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
and warranties herein contained, but subject to the conditions hereinafter
stated, agrees to purchase from the Company the Firm Shares at $[______] per
share ("PURCHASE PRICE").
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[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 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 [________] days after the date
of this Agreement, 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 [________] 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.]
[The Company hereby agrees that, without the prior written consent of the
Underwriter, which may not be unreasonably withheld, it will not, during the
period commencing on the date hereof and ending on [DATE], (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
or otherwise transfer or dispose of, directly or indirectly, 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 by the Underwriter of any share of Common Stock pursuant to the
Underwriting 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 or other plan of the Company existing as of the date of
the Underwriting Agreement, (C) any issuances upon exercise, conversion or
exchange of any securities or obligations outstanding on the date of the
Underwriting Agreement, and (D) an additional issuance of equity securities
aggregating not more than $[____________].]
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 Underwriting Agreement has been executed and delivered as in its judgment
is advisable.
The Company is further advised by you that the Shares are to be offered
to the public initially at $[______] a share (the "Public Offering Price") and
to certain dealers selected by you at a price that represents a concession not
in excess of $[____] a share under the Public Offering Price and that the
Underwriter may allow, and such dealers may reallow, a concession, not in excess
of $[____]a share, to certain brokers and dealers.
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
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against delivery of such Firm Shares for the account of the Underwriter at
[______] a.m., [_______] time, on [DATE], or at such other time on the same or
such other date, not later than [______] a.m., [_______] time, on [DATE], as
shall be designated in writing by you. 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 [____]
a.m. [_______] 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 [______] a.m., [_______] time, [____] 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 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 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.
5. CONDITIONS TO THE UNDERWRITER'S OBLIGATIONS. The obligations of
the Company to sell the Shares to the Underwriter and the obligation of the
Underwriter to purchase and pay for the Shares on the Closing Date are subject
to the following conditions:
(a) Subsequent to the execution and delivery of this Agreement and
prior to the Closing Date, 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 Prospectus (exclusive of any amendments or supplements thereto
subsequent to the date of this Agreement) 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 a
certificate, dated the Closing Date 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 and warranties of the Company contained
in this Agreement are true and correct as of the date of this Agreement
and the Closing Date 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
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hereunder on or before the Closing Date.
The officer signing and delivering such certificate may rely upon the
best of his or her knowledge as to proceedings threatened.
(c) 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.
(d) The Underwriter shall have received on the Closing Date an opinion
of Xxxxxxxxxx Xxxxxx & Xxxxxxx LLP, outside counsel for the Company,
dated the Closing Date, to the effect that:
(i) 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, in each case as described in the Registration
Statement and the Prospectus, and is duly qualified to
transact business and is in good standing in the District
of Columbia and the States of Illinois, New York and
[______];
(ii) Allied Investment has been duly incorporated, is validly
existing as a corporation, is 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, in each case as described in the
Registration Statement and the Prospectus, and is duly
qualified to transact business and is in good standing in
the District of Columbia and the State of California;
(iii) the authorized capital stock of the Company conforms as to
legal matters to the description thereof contained in the
Prospectus;
(iv) the shares of Common Stock outstanding immediately prior to
the issuance of the Shares have been duly authorized and
are validly issued, fully paid and non-assessable;
(v) all of the issued shares of capital stock of each
Subsidiary are owned of record directly by the Company, and
to such counsel's knowledge, are free and clear of all
liens, encumbrances, equities or claims, except with
respect to the employee-owned shares of preferred stock of
Allied REIT and the Preferred Stock of Allied Investment
owned by the SBA;
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(vi) the Shares have been duly authorized and, when issued and
delivered against payment therefor 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 under
provisions of applicable law or the certificate of
incorporation or bylaws of the Company or, to the best of
such counsel's knowledge, any agreement or other instrument
binding upon the Company or any of its Subsidiaries;
(vii) this Agreement has been duly authorized, executed and
delivered by the Company;
(viii) 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 or by-laws of the
Company or, to the best of such counsel's knowledge, 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, to the best of such
counsel's knowledge, any judgment, 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
National Association of Securities Dealers, Inc. or the
securities or Blue Sky laws of the various states or of any
foreign jurisdiction in connection with the offer and sale
of the Shares by the Underwriter;
(ix) the statements (A) in the Prospectus under the captions
"Certain Government Regulations," "Description of Capital
Stock," "Taxation" and "Underwriting," and (B) in the
Registration Statement in Item 29, in each case insofar as
such statements constitute summaries of the legal matters,
documents or proceedings referred to therein, fairly
present the information called for with respect to such
legal matters, documents and proceedings and fairly
summarize the matters referred to therein;
(x) to such counsel's knowledge, there are no legal or
governmental proceedings pending or threatened to which the
Company or any of its Subsidiaries is a party or to which
any of the properties of the Company or any of its
Subsidiaries is subject that are required to be described
in the Registration Statement or the Prospectus and are not
so described and to such counsel's knowledge, there are no
statutes, regulations, contracts or
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other documents that are required to be described in the
Registration Statement or the Prospectus or to be filed as
exhibits to the Registration Statement that are not
described or filed as required;
(xi) the Company has elected to be regulated as a business
development company under the provisions of the Investment
Company Act applicable to business development companies
and the Commission has not ordered that such election be
withdrawn nor to such counsel's knowledge have proceedings
to effectuate such withdrawal been initiated or threatened
by the Commission, and all action under the Securities Act
necessary to make the public offering and consummate the
sale of the Shares as provided in this Agreement has been
taken by the Company; and
(xii) the Registration Statement has become effective under the
Securities Act, and, to the best knowledge of such counsel,
no stop order suspending the effectiveness of the
Registration Statement has been issued and no proceedings
for that purpose have been instituted or are pending or
contemplated under the Securities Act, and such counsel (A)
is of the opinion that the Registration Statement and the
Prospectus (except for financial statements and schedules
and other financial and statistical data included therein
as to which such counsel need not express any opinion)
comply as to form in all material respects with the
Securities Act and the applicable rules and regulations of
the Commission thereunder, (B) has no reason to believe
that (except for financial statements and schedules and
other financial and statistical data as to which such
counsel need not express any belief) the Registration
Statement and the prospectus included therein at the time
the Registration Statement became effective contained any
untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary to
make the statements therein not misleading, (C) has no
reason to believe that (except for financial statements and
schedules and other financial and statistical data as to
which such counsel need not express any belief) the
Prospectus contains any untrue statement of a material fact
or omits to state 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 (D) is of the opinion that the Distributed Prospectus
is not materially different from the Filed Prospectus.
(e) The Underwriter shall have received on the Closing Date an opinion
of counsel for the Underwriter, dated the Closing Date, covering the
matters referred to in Sections 5(c)(vi), 5(c)(vii), 5(c)(ix) (but only
as to the statements in the Prospectus under "Description of Capital
Stock" and "Underwriters") and 5(c)(xii) above. With respect to Section
5(c)(xii) above, Xxxxxxxxxx Xxxxxx & Xxxxxxx LLP and counsel to the
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Underwriter may state that their opinion and belief are based upon their
participation in the preparation of the Registration Statement 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. The opinion of Xxxxxxxxxx, Xxxxxx & Xxxxxxx LLP
described in Section 5(c) above shall be rendered to the Underwriter at
the request of the Company and shall so state therein.
(f) The Underwriter shall have received, on each of the date hereof
and the Closing Date, a letter dated the date hereof or the Closing Date,
as the case may be, in form and substance satisfactory to the
Underwriter, from Xxxxxx Xxxxxxxx LLP, independent public accountants,
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 and the Prospectus; provided that the letter
delivered on the Closing Date shall use a "cut-off date" not earlier than
the date hereof.
[(g) The "lock-up" agreements, each substantially in the form of
Exhibit A hereto, between you and the Company and certain of its
executive officers relating to sales and certain other dispositions of
shares of Common Stock or certain other securities, delivered to you 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.]
6. COVENANTS OF THE COMPANY. In further consideration of the agreements
of the Underwriter herein contained, the Company covenants with the Underwriter
as follows:
(a) The Company will 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 will also advise you promptly of
any request of the Commission for amendment or supplement of the
Registration Statement or of 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
in [________________], without charge, prior to [______] a.m., [_______]
time, on the business day next succeeding the date of this Agreement, or
as soon as practicable, and during the period
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mentioned in Section 6(c) below, as many copies of the Distributed
Prospectus, the Statement of Additional Information and any supplements
and amendments thereto or to the Registration Statement as you may
reasonably request.
(c) Before amending or supplementing the Registration Statement 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, 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 as in the opinion of counsel for the Underwriter 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, in the opinion of counsel for the underwriter, 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) 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.
(f) To make generally available to the Company's security holders and
to you as soon as practicable an earning statement covering the
twelve-month period ending [Date], that satisfies the provisions of
Section 11(a) of the Securities Act and the rules and regulations of the
Commission thereunder.
(g) To use its best efforts to maintain its qualification, and the
qualification of Allied Investment as, a regulated investment companies
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.
(h) The Company will comply with all registration filing and reporting
requirements of the Exchange Act and the New York Stock Exchange.
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(i) 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, any preliminary prospectus,
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(d) 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 the
National Association of Securities Dealers, Inc., (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 its costs and expenses, including
fees and disbursements of its counsel, stock transfer taxes payable on
resale of any of the Shares by it and any advertising expenses connected
with any offers it may make.
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 the Underwriter within the meaning
of the Securities Act and the Exchange Act against any loss, claim,
damage, liability or expense, as incurred, to which the
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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 430A 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 any preliminary prospectus 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; or (iii) in whole or in part upon any
inaccuracy in the representations and warranties of the Company contained
herein; or (iv) in whole or in part upon any failure of the Company to
perform its obligations hereunder or under law; or (v) any act or failure
to act or any alleged act or failure to act by the Underwriter in
connection with, or relating in any manner to, the Common Stock or the
offering contemplated hereby, and which is included as part of or
referred to in any loss, claim, damage, liability or action arising out
of or based upon any matter covered by clause (i) or (ii) above, provided
that the Company shall not be liable under this clause (v) to the extent
that a court of competent jurisdiction shall have determined by a final
judgment that such loss, claim, damage, liability or action resulted
directly from any such acts or failures to act undertaken or omitted to
be taken by the Underwriter through its gross negligence or willful
misconduct; and to reimburse the Underwriter and each such controlling
person for any and all expenses (including the fees and disbursements of
counsel chosen by the Underwriter) as such expenses are reasonably
incurred by the 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 to the extent, but only to the extent, arising out
of or 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 the Underwriter expressly
for use in the Registration Statement, any preliminary prospectus 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
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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 Underwriter),
insofar as such loss, claim, damage, liability or expense (or actions in
respect thereof as contemplated below) arises out of or is based upon any
untrue or alleged untrue statement of a material fact contained in the
Registration Statement, any preliminary prospectus or the Prospectus (or
any amendment or supplement thereto), or arises out of or is based upon
the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein
not misleading, in each case to the extent, but only to the extent, that
such untrue statement or alleged untrue statement or omission or alleged
omission was made in the Registration Statement, any preliminary
prospectus, the Prospectus (or any amendment or supplement thereto), in
reliance upon and in conformity with written information furnished to the
Company by the 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, any preliminary
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 Supplement
dated [DATE]; 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 than under the indemnity agreement
contained in this Section 7 or 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
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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 (the 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 and (ii) such indemnifying
party shall not have reimbursed the indemnified party in accordance with
such request prior to the date of such settlement. 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.
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
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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 Common Stock 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 or inaccuracies in the
representations and warranties herein which 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
Common Stock pursuant to this Agreement shall be deemed to be in the same
respective proportions as the total net proceeds from the offering of the
Common Stock pursuant to this Agreement (before deducting expenses) received by
the Company, and the total underwriting discount received by the Underwriter,
in each case as set forth on the front cover page of the Prospectus (or, if
Rule 434 under the Securities Act is used, the corresponding location on the
Term Sheet) 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 or any such
inaccurate or alleged inaccurate representation or warranty 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 the Underwriter in connection with the Common Stock
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
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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 the 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 with the meaning of the Securities Act and the Exchange Act
shall have the same rights to contribution as the Company.
9. TERMINATION. This Agreement shall be subject to termination by
notice given by you 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 National Association
of Securities Dealers, Inc., 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 (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 9(a)(i) through 9(a)(iv), such event, singly or
together with any other such event, makes it, in your judgment, impracticable to
market the Shares on the terms and in the manner contemplated in the Prospectus.
10. 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 any of the Underwriters merely by reason of
such purchase.
11. 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.
12. EFFECTIVENESS. This Agreement shall become effective upon the
execution and delivery hereof by the parties hereto.
13. 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.
14. APPLICABLE LAW. This Agreement shall be governed by and construed
in accordance with the internal laws of the State of New York.
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15. 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.
-20-
Very truly yours,
ALLIED CAPITAL CORPORATION
By:
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Name:
-------------------------
Title:
-------------------------
Accepted as of the date hereof:
[NAME OF UNDERWRITER]
By:
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Name:
-------------------------
Title:
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EXHIBIT A
[DATE]
[Name of Underwriter]
[Address]
Ladies and Gentlemen:
The undersigned understands that [Name of Underwriter] (the
"UNDERWRITER") proposes to enter into an Underwriting Agreement (the
"UNDERWRITING AGREEMENT") with Allied Capital Corporation, a Maryland
corporation (the "COMPANY") providing for the public offering (the "PUBLIC
OFFERING") by the Underwriter of [___________] shares (the "SHARES") of the
common stock, $0.0001 par value per share, of the Company (the "COMMON STOCK").
To induce the Underwriter to continue its efforts in connection with the
Public Offering, the undersigned hereby agrees that, without the prior written
consent of the Underwriter, which may not be unreasonably withheld, he or she
will not, during the period commencing on the date hereof and ending on [DATE],
(1) 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, or otherwise transfer or dispose of, directly or
indirectly, any shares of Common Stock or any securities convertible into or
exercisable or exchangeable for Common Stock, or (2) 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 (1) or (2) 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 of any Shares to the Underwriter
pursuant to the Underwriting Agreement or (b) transactions relating to shares of
Common Stock or other securities acquired in open market transactions after the
completion of the Public Offering.
Whether or not the Public Offering actually occurs depends on a number of
factors, including market conditions. Any Public Offering will only be made
pursuant to an Underwriting Agreement, the terms of which are subject to
negotiation between the Company and the Underwriter.
Very truly yours,
Name:
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