1
EXHIBIT H.4
1,150,000 SHARES
ALLIED CAPITAL CORPORATION
COMMON STOCK, $0.0001 PAR VALUE PER ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇▇ DEALER AGREEMENT
June __, 1998
2
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. International Limited
NationsBanc ▇▇▇▇▇▇▇▇▇▇ Securities LLC
The ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ Company LLC
▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇▇▇▇, Inc.
c/o Morgan ▇▇▇▇▇▇▇ & Co. International Limited
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇ ▇▇▇
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") with you as representatives (the
"INTERNATIONAL REPRESENTATIVES") of the international underwriters named in
Schedule II thereto (the "INTERNATIONAL UNDERWRITERS"), and with ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
& Co. Incorporated, NationsBanc ▇▇▇▇▇▇▇▇▇▇ Securities LLC, The ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇
Company LLC and ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇▇▇▇, Inc., as representatives (the "U.S.
REPRESENTATIVES") of the U.S. underwriters named in Schedule I thereto (the
"U.S. UNDERWRITERS"). The Firm Shares to be sold to the several U.S.
Underwriters and to the several International Underwriters shall hereinafter be
referred to, respectively, as the U.S. Firm Shares and the International Shares.
The International Underwriters and the U.S. Underwriters are hereinafter
collectively referred to as the Underwriters.
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 acknowledge receipt of the Prospectus dated June __, 1998 (hereinafter
called the international prospectus) relating to the offering of the
International Shares.
We understand that the International Underwriters are severally offering,
through you, certain of the Shares for sale to certain dealers at the offering
price
3
of U.S. $_____ less a concession not in excess of U.S. $_____(1) under the
offering price, and that any International Underwriter may allow, and dealers
may reallow, a concession not in excess of U.S. $_____(2) under the offering
price to other International Underwriters or to other dealers who enter into an
agreement in this form.
We hereby agree with you as follows with respect to any purchase of Shares
from you or from any other International Underwriter or from any dealer at a
concession from the offering price.
In purchasing Shares, we will rely only on the international prospectus
and on no other statements whatsoever, written or oral.
I.
We understand that no action has been or will be taken in any jurisdiction
by the International Underwriters or the Company that would permit a public
offering of the Shares, or possession or distribution of the international
prospectus, in preliminary or final form, in any jurisdiction where, or in any
circumstances in which, action for that purpose is required, other than the
United States. We agree that we will comply with all applicable laws and
regulations, and make or obtain all necessary filings, consents or approvals, in
each jurisdiction in which we purchase, offer, sell or deliver Shares
(including, without limitation, any applicable requirements relating to the
delivery of the international prospectus, in preliminary or final form), in each
case at our own expense. In connection with sales of and offers to sell Shares
made by us, we will either furnish to each person to whom any such sale or offer
is made a copy of the then current international prospectus (in preliminary or
final form and as then amended or supplemented if the Company shall have
furnished any amendments or supplements thereto), or inform such person that
such international prospectus will be made available upon request and we will
keep an accurate record of the names and addresses of all persons to whom we
give copies of the registration statement relating to the offering of the
Shares, the international prospectus, in preliminary or final form, or any
amendment or supplement thereto, and, when furnished with any subsequent
amendment to such registration statement, any subsequent prospectus or any
medium outlining changes in the registration statement or any prospectus,
----------
(1) Insert amount of selling concession.
(2) Insert amount of reallowance.
2
4
we will upon request of the International Representatives, promptly forward
copies thereof to such persons or inform such persons that such amendment,
subsequent prospectus or other medium will be made available upon request.
We will not give any information or make any representation other than as
contained in the international prospectus, or act for the Company, any
International Underwriter or you.
We represent and agree that, except for (x) sales between the U.S.
Underwriters and the International Underwriters pursuant to Article I of the
Agreement Between U.S. and International Underwriters of even date herewith
(hereinafter called the Agreement Between U.S. and International Underwriters)
and (y) stabilization transactions contemplated in Article IV of the Agreement
Between U.S. and International Underwriters conducted through the U.S.
Representatives as part of the distribution of the Shares, (a) we are not
purchasing and have not purchased and will not purchase any Shares for the
account of any United States or Canadian Person and (b) we have not offered or
sold, and will not offer or sell, directly or indirectly, any Shares or
distribute any prospectus relating to the Shares, in the United States or Canada
or to any United States or Canadian Person and any dealer to whom we may sell
any Shares will represent that it is not purchasing any Shares for the account
of any United States or Canadian Person and will agree that it will not offer or
resell any Shares directly or indirectly in the United States or Canada or to
any United States or Canadian Person or to any other dealer who does not so
represent and agree. "UNITED STATES OR CANADIAN PERSON" shall mean any national
or resident of the United States or Canada, or any corporation, pension,
profit-sharing or other trust or other entity organized under the laws of the
United States or Canada or of any political subdivision thereof (other than a
branch located outside the United States and Canada of any United States or
Canadian Person), and shall include any United States or Canadian branch of a
person who is otherwise not a United States or Canadian Person. "UNITED STATES"
shall mean the United States of America, its territories, its possessions and
all areas subject to its jurisdiction. Our agreement set forth in this paragraph
shall terminate upon the earlier of (a) notice from you to such effect and (b)
30 days after the date of the initial offering of the Shares, unless you have
given notice that the distribution of the Shares has not yet been completed. If
such latter notice is given, the agreement set forth in this paragraph shall
survive until the earlier of (x) the notice of termination referred to in (a)
above and (y) 30 days after the date of any notice that the distribution of the
Shares has not yet been completed.
We further represent that we have not offered or sold, and agree not to
offer or sell, directly or indirectly, in Japan or to or for the account of any
resident thereof, any of the Shares acquired in connection with the distribution
3
5
contemplated hereby, except for offers or sales to Japanese International
Underwriters or dealers and except pursuant to any exemption from the
registration requirements of the Securities and Exchange Law and otherwise in
compliance with applicable provisions of Japanese law. We further agree to send
to any dealer who purchases from us any of such Shares a notice stating in
substance that, by purchasing such Shares, such dealer represents and agrees
that it has not offered or sold, and will not offer or sell, any of such Shares,
directly or indirectly, in Japan or to or for the account of any resident
thereof, except for offers or sales to Japanese International Underwriters or
dealers and except pursuant to any exemption from the registration requirements
of the Securities and Exchange Law and otherwise in compliance with applicable
provisions of Japanese law, and that such dealer will send to any other dealer
to whom it sells any of such Shares a notice containing substantially the same
statement as is contained in this sentence.
We further represent and agree that (i) we have not offered or sold and,
prior to the date six months after the closing date for the sale of the Firm
Shares to the Underwriters, will not offer or sell, any Shares to persons in the
United Kingdom except to persons whose ordinary activities involve them in
acquiring, holding, managing or disposing of investments (as principal or agent)
for the purposes of their businesses or otherwise in circumstances which have
not resulted and will not result in an offer to the public in the United Kingdom
within the meaning of the Public Offers of Securities Regulations 1995; (ii) we
have complied and will comply with all applicable provisions of the Financial
Services ▇▇▇ ▇▇▇▇ with respect to anything done by us in relation to the Shares
in, from or otherwise involving the United Kingdom; and (iii) we have only
issued or passed on and will only issue or pass on in the United Kingdom any
document received by us in connection with the offering of the Shares to a
person who is of a kind described in Article 11(3) of the Financial Services ▇▇▇
▇▇▇▇ (Investment Advertisements) (Exemptions) Order 1996 or is a person to whom
such document may otherwise lawfully be issued or passed on.
We represent that we are a foreign bank or dealer not eligible for
membership in the U.S. National Association of Securities Dealers, Inc.
(hereinafter called the NASD), and we agree not to offer to sell or sell any
Shares in, or to persons who are nationals or residents of, the United States,
except for offers and Shares referred to in clause (x) of the third paragraph of
this Article I. In making sales of Shares, we agree to comply with the NASD's
Interpretation with Respect to Free-Riding and Withholding (IM-2110-1) and NASD
Rules 2730, 2740 and 2750 as though we were a member in good standing of the
NASD and NASD Rule 2420 as it applies to a non-member broker or dealer in a
foreign country.
4
6
We agree that we will not, during the period continuing until the
International Representatives shall have notified us of the completion of the
distribution of the Shares, for our own account or the account of a customer,
offer, bid for, buy, sell, deal, trade in or attempt to induce any person to bid
for or buy any Covered Security, except (a) as provided in the Agreement Among
International Underwriters, the ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated Master
Agreement Among Underwriters, the Agreement between U.S. and International
Underwriters, this Agreement, the ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Master Dealer Agreement
or the Underwriting Agreement, (b) in brokerage transactions on unsolicited
orders which have not resulted from activities on our part in connection with
the solicitation of purchases and which are executed by us in the ordinary
course of our brokerage business, (c) in market making transactions on Nasdaq or
any similar market or quotation system executed by us in the ordinary course of
our business so long as our bids and purchases are made consistent with the
pricing restrictions set forth in Rule 103 of Regulation M of the U.S.
Securities and Exchange Commission ("REGULATION M") and the volumes of such
transactions are consistent with our past practice as a market maker, (d) in
basket transactions that meet the standards set forth in Rule 101(b)(6) of
Regulation M, (e) that we may convert, exchange or exercise any security owned
by us prior to the commencement of this restriction and that we may sell any
security obtained upon any such conversion, exchange or exercise, (f) that we
may deliver securities owned by us upon the exercise of any option written by us
as permitted by the provisions set forth herein, (g) that on or after the date
of the initial public offering of the Shares, we may execute covered writing
transactions for the accounts of customers in options to acquire Common Stock,
when such transactions are covered by Shares and (h) that we may engage in
principal purchases or sales with the intent of offsetting the market risk of
principal positions in over-the-counter derivatives on solicited orders that
were executed by us prior to the commencement of this restriction, and on
unsolicited orders that were executed by us at any time, so long as such orders
were executed by us in the ordinary course of our principal over-the-counter
derivatives business. "COVERED SECURITY" means (a) the Common Stock and (b) any
securities convertible into or exercisable or exchangeable for the Common Stock.
An opening uncovered writing transaction in options to acquire Common
Stock for our account or for the account of a customer shall be deemed, for
purposes of this Article I, to be a sale of Common Stock which is not
unsolicited. The term "opening uncovered writing transaction in options to
acquire" as used above means a transaction where the seller intends to become a
writer of an option to purchase any Common Stock which he does not own. An
opening uncovered purchase transaction in options to sell Common Stock for our
account or for the account of a customer shall be deemed, for purposes of this
paragraph, to be a sale of Common Stock which is not unsolicited. The term
"opening uncovered
5
7
purchase transaction in options to sell" as used above means a transaction where
the purchaser intends to become an owner of an option to sell Common Stock which
he does not own.
We represent that we have not participated, since we were invited to
participate in the offering of the Shares, in any transaction prohibited by this
Article I and that we have at all times complied and agree that we will at all
times comply with the provisions of Regulation M applicable to this offering.
We agree to indemnify and hold harmless the Company, each Underwriter and
each person controlling the Company or any Underwriter from and against any and
all losses, claims, damages and liabilities (including fees and disbursements of
counsel) arising from any breach by us of any of the provisions of this Article
I.
II.
Shares purchased by us at a concession from the offering price shall be
promptly offered upon the terms set forth in the international prospectus or for
sale at a concession not in excess of the reallowance under the offering price
to any International Underwriter or to any other dealer who enters into an
agreement with you in this form with respect to this offering that, among other
things, sets forth such dealer's agreement that it is not purchasing Shares for
the account of any United States or Canadian Persons and that it will not offer
or resell Shares in the United States and Canada. Prior to offering Shares to
any dealer at the public offering price less the reallowance, you must either
ascertain that such dealer has entered into such an agreement or assure that
such dealer will enter into such an agreement.
We agree to advise you from time to time upon request, prior to the
termination of this Agreement, of the number of Shares remaining unsold which
were purchased by us from you or from any other International Underwriter or
dealer at a concession from the offering price and, on your request, we will
resell to you any such Shares remaining unsold at the purchase price thereof if,
in your opinion, such Shares are needed to make delivery against sales made to
others.
If prior to the termination of this Agreement (or prior to such earlier
date as you have determined) a U.S. Representative or International
Representative purchases or contracts to purchase in the open market or
otherwise any Shares which were purchased by us from you or from any other
International Underwriter or dealer at a concession from the offering price
(including any Shares represented by certificates which may have been issued on
transfer or in exchange for
6
8
certificates originally representing such Shares), and which Shares were
therefore not effectively placed for investment by us, we authorize you either
to charge our account with an amount equal to such concession which 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 any
commissions and any taxes on redelivery.
We have not offered or sold, and we will not offer or sell, directly or
indirectly, Shares that were purchased by us from you or from any other
International Underwriter or dealer at a concession from the offering price
(including any Shares represented by certificates which may have been issued on
transfer or in exchange for certificates originally representing such Shares) to
any person at less than the offering price, other than to (i) U.S. Underwriters
pursuant to Article I of the Agreement Between U.S. and International
Underwriters or (ii) other International Underwriters or to dealers who have
entered into International Dealer Agreements with the International
Representatives (hereinafter called the International Dealer Agreements) and
then only in conformity with the provisions of Article I and at a price that is
not below the offering price less the maximum permissible reallowance to be
specified in the international prospectus. We agree that prior to offering
Shares to any dealer at the public offering price less the reallowance, we will
either ascertain that such dealer has entered into such an International Dealer
Agreement or make arrangements to assure that such dealer will enter into an
International Dealer Agreement.
We agree that without the consent of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. International
Limited, we will not sell to any account over which we exercise discretionary
authority any of the Shares.
III.
If we purchase any Shares from you hereunder, we agree that such purchases
will be evidenced by your written confirmation and will be subject to the terms
and conditions set forth in the confirmation and in the international
prospectus.
Shares purchased by us from you in connection with our participation as
dealer in the offering shall be paid for in full at (i) the offering price, (ii)
such price less the applicable concession or (iii) the price set forth or
indicated in the pricing wire, as you shall advise, in Federal or other funds
immediately available in New York City in the manner, at such time and on such
day as you may advise us against delivery of the Shares. If we are called upon
to pay the offering price for the Shares purchased by us, the applicable
concession will be paid to us, less
7
9
any amounts charged to our account pursuant to Article II above, after
termination of this Agreement. Unless we promptly give you written instruction
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.
We authorize the International Representatives as principals to advance,
or to arrange the advance of, funds to us to cover any delay in the receipt of
funds necessary for payment for the Shares to be purchased by us and to charge,
or to arrange for the charging of, interest on such funds at current rates.
IV.
You will advise us of the date and time of termination of this Agreement
or of any designated provisions hereof. This Agreement shall in any event
terminate 30 days after the date of the initial offering of the Shares 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,
and provided further that the provisions of Article I hereof shall survive any
termination of this Agreement.
V.
We agree that you, as International Representatives, have full authority
to take such action as may seem advisable to you in respect of all matters
pertaining to the offering of the Shares. Neither you, as International
Representatives, nor any of the International Underwriters shall be under any
liability to us for any act or omission, except in respect of obligations
expressly assumed in this Agreement.
All communications to you relating to the subject matter of this Agreement
shall be addressed to the Syndicate Department, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co.
International Limited, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ Wharf, ▇▇▇▇▇▇ ▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇,
and any notices to us shall be deemed to have been duly given if mailed or
telegraphed to us at the address shown below.
VI.
GOVERNING LAW
8
10
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,
______________________________________
______________________________________
______________________________________
(ADDRESS)
By:___________________________________
9
