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EXHIBIT K.3
SHAREHOLDER
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COMMUNICATIONS CORPORATION
OFFERING COORDINATOR/INFORMATION AGENT AGREEMENT
This document will constitute the agreement between ALLIED CAPITAL
CORPORATION ("the FUND"), with its principal executive offices at 0000 X
Xxxxxx, X.X.-0xx Xxxxx, Xxxxxxxxxx, XX 00000 and SHAREHOLDER COMMUNICATIONS
CORPORATION ("SCC"), with its principal executive offices at 00 Xxxxx Xxxxxx,
Xxx Xxxx, XX 00000, relating to a Rights Offering (the "OFFER") of the Fund.
The services to be provided by SCC will be as follows:
I. OFFERING COORDINATOR
As the "offering coordinator", SCC will provide several services to the
FUND in connection with the OFFER, which will include, but may not be limited
to:
A. Coordinating and maintaining contact with those registered
broker/dealers who will directly solicit shareholders, who are
their customers, and serve as the intermediary between the issuer
and each such broker/dealer.
B. Distributing relevant offering material to all syndicate
departments, including prospectus and any solicitation
agreements.
C. Offering input as to the feasibility of the offering's general
structure including pricing, market timing, transferability,
oversubscription allotments, offering extensions and solicitation
payouts.
D. Assisting in drafting all documents including letters to
shareholders, warning letters, exercise forms, solicitation
agreements and any broker related soliciting summaries.
E. Providing extensive reporting beginning one week prior to
expiration or any extensions thereafter, which will measure
shareholder participation and the offering's general progress.
This reporting will be based solely on previously established
contacts within the reorganization departments of participating
broker/dealers.
II. INFORMATION AGENT
A. INDIVIDUAL HOLDERS OF RECORD AND BENEFICIAL OWNERS
1. Target Group. SCC estimates that it may call between
1000 to 1,600 of the approximately 7,600 outstanding
beneficial and record shareholders. The estimate number
is subject to adjustment and SCC may actually call more
or less shareholders depending on the response to the
OFFER or at the FUND's direction.
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SHAREHOLDER
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COMMUNICATIONS CORPORATION
2. Telephone Number Lookups. SCC will obtain the needed
telephone numbers from various types of telephone
directories.
3. Initial Telephone Calls to Provide Information. SCC will
begin telephone calls to the target group as soon as
practical. Most calls will be made during 10:00 A.M. to
9:00 P.M. on business days and only during 10:00 A.M. to
5:00 P.M. on Saturdays. No calls will be received by any
shareholder after 9:00 P.M. on any day, in any time zone,
unless specifically requested by the shareholder. SCC
will maintain "800" lines for shareholders to call with
questions about the OFFER. The "800" lines will be
staffed Monday through Friday between 9:00 a.m. and
9:00 p.m.
4. Remails. SCC will coordinate remails of offering
materials to the shareholders who advise us that they
have discarded or misplaced the originally mailed
materials.
5. Reminder/Extension Mailing. SCC will help to coordinate
any targeted or broad-based reminder mailing at the
request of the FUND. SCC will mail only materials
supplied by the FUND or approved by the Fund in advance
in writing.
B. BANK/BROKER SERVICING
SCC will contact all banks, brokers and other nominee
shareholders ("intermediaries") holding stock as shown on
appropriate portions of the shareholder lists to ascertain
quantities of offering materials needed for forwarding to
beneficial owners.
SCC will deliver offering materials by messenger to New York City
based intermediaries and by Federal Express or other means to
non-New York City based intermediaries. SCC will also follow-up
by telephone with each intermediary to ensure receipt of the
offering materials and to confirm timely remailing of materials
to the beneficial owners.
SCC will maintain frequent contact with intermediaries to monitor
shareholder response and to ensure that all liaison procedures
are proceeding satisfactorily. In addition, SCC will contact
beneficial holders directly, if possible, and do whatever may be
appropriate or necessary to provide information regarding the
OFFER to this group.
SCC will, as frequently as practicable, report to the Fund with
response from intermediaries.
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SHAREHOLDER
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COMMUNICATIONS CORPORATION
III. PROJECT FEES
In consideration for acting as Offering Coordinator, SCC will
receive a flat project fee of $35,000 which is not tied in any way to
the performance of the offering. In consideration for acting as
Information Agent, SCC will receive a project fee of $5,000. The fees
are payable by Allied Capital Corporation for both services.
IV. ESTIMATED EXPENSES (Offering Coordinator)
SCC will be reimbursed by the FUND for its reasonable
out-of-pocket expenses incurred provided that SCC submits to the
FUND an expense report, itemizing such expenses and providing copies
of all supporting bills in respect of such expenses. If the actual
expenses incurred are less than the portion of the estimated high
range expenses paid in advance by the FUND, the FUND will receive
from SCC a check payable in the amount of the difference at the time
that SCC sends its final invoice for the second half of the project
fee.
SCC's expenses are estimated as set forth below and the estimates
are based largely on data provided to SCC by the FUND. In the
course of the OFFER the expenses and expense categories may
change due to changes in the OFFER schedule or due to events beyond
SCC's control, such as delays in receiving offering material and
related items. In the event of significant change or new expenses
not originally contemplated, SCC will notify the FUND by phone
and/or by letter for approval of such expenses.
Estimated Expenses Low Range High Range
------------------ --------- ----------
Distribution Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $2,500 $ 4,000
Telephone # look up
1,800 to 2,200 @ $.50 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 900 1,100
Outgoing telephone 1,000 to 1,600
initial outgoing telephone calls @ $3.25 . . . . . . . . . . . . . . . . . . . . . . . . . 3,250 5,200
Incoming "800" calls
220 to 450 @ $3.25 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 715 1,462
Miscellaneous, data processing, postage, deliveries
Federal Express and mailgrams . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 500 1,000
------ -------
Total Estimated Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $7,865 $12,762
====== =======
V. PERFORMANCE
SCC will use its best efforts to achieve the goals of the FUND
but SCC is not guaranteeing a minimum success rate. SCC's Project
Fee as outlined in Section III or Expenses as outlined in Section IV
are not contingent on success or failure of the OFFER.
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SHAREHOLDER
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COMMUNICATIONS CORPORATION
SCC's strategies revolve around a telephone information campaign.
The purpose of the telephone information campaign is to raise the
overall awareness among shareholders of the OFFER and help
shareholders better understand the transaction. This in turn may
result in a higher overall response.
VI. COMPLIANCE
The FUND will be responsible for compliance with any regulations
required by the Securities and Exchange Commission, National
Association of Securities Dealers or any applicable federal or state
agencies.
In rendering the services contemplated by this Agreement, SCC
agrees not to make any representations, oral or written, to any
shareholders or prospective shareholders of the FUND or any
broker/dealer that are not contained in the FUND's Prospectus, unless
previously authorized to do so in writing by the FUND.
Further, in the role of "offering coordinator", SCC will not
undertake any broker/dealer activities including but not limited to
executing securities transactions, soliciting shareholders in an
effort to exercise rights, or offer advice to shareholders regarding
their decisions to exercise or reject rights.
VII. PAYMENT
Payment for one half the project fees ($20,000) and one half the
estimated high range expenses ($6,381) for a total of $26,381 will
be made at the signing of this contract. The balance, if any, will
be paid by the FUND due thirty days after SCC sends its final
invoice.
VIII. MISCELLANEOUS
SCC will hold in confidence and will not use nor disclose to
third parties information we receive from the FUND, or information
developed by SCC based upon such information we receive, except for
information which was public at the time of disclosure or becomes
part of the public domain without disclosure by SCC or information
which we learn from a third party which does not have an obligation
of confidentiality to the FUND.
In the event the project is cancelled for an indefinite period
of time after the signing of this contract and before the expiration
of the OFFER, SCC will be reimbursed by the FUND for any expenses
incurred and not less than 50% of the project fees.
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SHAREHOLDER
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COMMUNICATIONS CORPORATION
The FUND agrees to indemnify, hold harmless, reimburse and
defend SCC, and its officers, agents and employees, against all
claims or threatened claims, costs, expenses, liabilities,
obligations, losses or damages (including reasonable legal fees and
expenses) of any nature, incurred by or imposed upon SCC, or any of
its officers, agents or employees, which results, arises out of or is
based upon services rendered to the FUND in accordance with the
provisions of to this AGREEMENT, provided that such services are
rendered to the FUND without any negligence, willful misconduct, bad
faith or reckless disregard on the part of SCC, or its officers,
agents and employees.
SCC agrees to indemnify, hold harmless, reimburse and defend
Allied Capital Corporation and its officers, agents and employees,
against all claims or threatened claims, costs, liabilities,
obligations, losses or damages (including reasonable legal fees and
expenses) of any nature, incurred by or imposed upon the Fund or any
of its officers, agents or employees which results, arises out of or
is based upon services rendered to the Fund by SCC, provided that
such services are rendered to the Fund with negligence, willful
misconduct, bad faith or reckless disregard on the part of SCC or its
officers, agents or employees.
This agreement will be governed by and construed in accordance with the
laws of the State of New York. This AGREEMENT sets forth the entire
AGREEMENT between SCC and the FUND with respect to the agreement herein and
cannot be modified except in writing by both parties.
IN WITNESS WHEREOF, the parties have signed this
AGREEMENT this 18th day of January 1996.
ALLIED CAPITAL CORPORATION SHAREHOLDER COMMUNICATIONS
CORPORATION
By /s/ XXXXXXX X. XXXXXXX By /s/ XXXXXX X. XXXXXXX
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Xxxxxxx X. Xxxxxxx Xxxxxx X. Xxxxxxx
Vice President Senior Account Executive
