<PAGE> 1
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement / / Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
ALLIED CAPITAL CORPORATION
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
- --------------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
- --------------------------------------------------------------------------------
/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the form or schedule and the date of its filing.
(1) Amount previously paid:
- --------------------------------------------------------------------------------
(2) Form, schedule or registration statement no.:
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(3) Filing party:
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(4) Date filed: April 2, 1996
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<PAGE> 2
ALLIED CAPITAL CORPORATION
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To the Stockholders:
The 1996 Annual Meeting of Stockholders of Allied Capital Corporation (the
"Company") will be held at the Strathmore Hall Arts Center, 10701 Rockville
Pike, North Bethesda, Maryland on May 6, 1996 at 10:00 a.m. for the following
purposes:
1. To elect eight directors of the Company to serve
until the next annual meeting of stockholders or
until their successors are elected and qualified.
2. To ratify the selection of Matthews, Carter and Boyce
to serve as independent public accountants for the
Company for the year ending December 31, 1996.
3. To transact such other business as may properly come
before the meeting.
The Board of Directors of the Company has fixed the close of business on March
20, 1996 as the record date for the determination of stockholders entitled to
notice of, and to vote at, the meeting and any adjournment thereof. The
Company's stock transfer books will not be closed.
By order of the Board of Directors
/s/ THOMAS R. SALLEY
Thomas R. Salley
Secretary
April 1, 1996
================================================================================
VOTING YOUR PROXY IS IMPORTANT
THIS IS AN IMPORTANT MEETING. TO ENSURE PROPER REPRESENTATION AT THE MEETING,
YOU ARE REQUESTED TO COMPLETE, DATE, SIGN AND RETURN THE PROXY CARD IN THE
ENCLOSED ENVELOPE PROVIDED FOR THAT PURPOSE. STOCKHOLDERS WHO EXECUTE A PROXY
CARD MAY ATTEND THE MEETING AND VOTE THEIR SHARES IN PERSON.
================================================================================
<PAGE> 3
ALLIED CAPITAL CORPORATION
C/O ALLIED CAPITAL ADVISERS, INC.
1666 K STREET, NW, NINTH FLOOR
WASHINGTON, DC 20006
PROXY STATEMENT
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Allied Capital Corporation (the "Company")
for use at the Company's 1996 Annual Meeting of Stockholders (the "Meeting") to
be held on May 6, 1996 at 10:00 a.m. at the Strathmore Hall Arts Center, 10701
Rockville Pike, North Bethesda, Maryland, and at any adjournment thereof. This
Proxy Statement, the accompanying proxy card and the Company's Annual Report to
Stockholders for the year ended December 31, 1995 are first being sent to
stockholders on or about April 1, 1996.
If the accompanying proxy card is properly signed and dated and is received in
time for the Meeting, those shares held of record by you (e.g., those shares
registered directly in your name) will be voted as specified on that proxy
card. If no instructions are given on that proxy card, the shares covered
thereby will be voted FOR the election of the nominees as directors and FOR the
other matters listed in the accompanying Notice of Annual Meeting of
Stockholders. Stockholders of record may revoke a proxy at any time before it
is exercised by so notifying the Secretary of the Company in writing at the
above address, by submitting a properly executed, later-dated proxy or by
voting in person at the Meeting. Any stockholder of record attending the
Meeting may vote in person whether or not he or she has previously executed and
returned a proxy card. If your shares are held for your account by a broker,
bank or other institution or nominee ("Broker Shares"), you may vote such
shares at the Meeting only if you obtain proper written authority from your
institution or nominee that you present at the Meeting.
VOTING
On March 20, 1996, there were 6,891,836 shares of the Company's common stock
outstanding. The stockholders entitled to vote at the Meeting are those of
record on that date. Each share of the Company's common stock is entitled to
one vote.
A majority of the shares entitled to vote at the Meeting constitutes a quorum.
If a share is represented in person or by proxy for any purpose at the Meeting,
it is deemed to be present for quorum purposes. Abstentions and Broker Shares
that are voted on any matter at the Meeting are included in determining the
presence of a quorum for the transaction of business at the commencement of the
Meeting and on those matters for which the broker, nominee or fiduciary has
authority to vote. In the event that a quorum is not present at the Meeting,
or in the event that a quorum is present but sufficient votes to approve any of
the proposals are not received, the persons named as proxies may propose one or
more adjournments of the Meeting to permit further solicitation of proxies.
Any such adjournment will require the affirmative vote of a majority of the
shares represented at the Meeting in person or by proxy. The persons named as
proxies will vote those proxies for such adjournment unless marked to be voted
against any proposal for which an adjournment is sought to permit further
solicitation of proxies. A stockholder vote may be taken on one or more of the
proposals in this Proxy Statement prior to any such adjournment if sufficient
votes have been received for approval.
The eight nominees for election as directors who receive a plurality of the
affirmative votes cast at the Meeting in person or by proxy in the election of
directors will be so elected. Stockholders may not cumulate their votes.
Votes that are withheld, abstentions and Broker Shares that are not voted in
the election of directors will not be included in determining the number of
votes cast, and will have no effect on the election of directors.
<PAGE> 4
INFORMATION REGARDING THIS SOLICITATION
The expense of the Company's solicitation of proxies for the Meeting, including
the cost of preparing, printing and mailing this Proxy Statement and the
accompanying notice of the Meeting and proxy card will be borne by the Company.
The Company will request that brokers, nominees, fiduciaries and other persons
holding shares in their names for others forward this Proxy Statement and
certain accompanying material to their principals and request authority for the
execution of a proxy. The Company will reimburse such persons for their
expenses in so doing.
In addition to the solicitation of proxies by the use of the mails, proxies may
be solicited in person and by telephone, facsimile transmission or telegram by
directors or officers of the Company or by regular employees of Allied Capital
Advisers, Inc. ("Advisers"), without special compensation therefor, or by a
proxy solicitor. Advisers, the Company's investment adviser, has its offices at
1666 K Street, NW, Ninth Floor, Washington, DC 20006.
BENEFICIAL OWNERSHIP OF COMMON STOCK
As of March 20, 1996, there were 6,891,836 shares of common stock outstanding.
The Company knows of no person who owned beneficially more than five percent of
its shares at that date. The following table sets forth certain information
regarding the shares of the Company's common stock beneficially owned by: (i)
each of the Company's directors and named executive officers; and (ii) all
directors and executive officers as a group. Because the Company does not pay
cash compensation to its executive officers (other than directors' fees to
those of its officers who are also directors), the Company considers the "named
executive officers" to be its Chief Executive Officer and the four most highly
compensated executive officers of Advisers who are also officers of the
Company.
<TABLE>
<CAPTION>
Number of Shares
Name of Beneficial Owner Beneficially Owned Percentage of Class(1)
------------------------ ------------------ ----------------------
<S> <C> <C>
David Gladstone (2) 87,910 1.4%
George C. Williams (2) 77,430 1.2%
T. Murray Toomey (3) 20,354 *
Joseph A. Clorety III (3) 5,089 *
Guy T. Steuart II (3,5) 146,670 2.4%
Warren K. Montouri (3) 135,036 2.2%
G. Cabell Williams III (2) 128,182 2.0%
Michael I. Gallie (3) 3,533 *
Joan M. Sweeney (4) 23,464 *
John M. Scheurer 17,136 *
Directors and executive officers
as a group (12 in number) 713,228 10.9%
</TABLE>
- --------------------
* Less than 1%
(1) Based on a total of 6,891,836 shares of the Company's common stock
issued and outstanding as of March 20, 1996. For purposes of calculating
beneficial ownership by a particular person, these numbers assume that
shares of the Company's common stock issuable upon the exercise of stock
options held by such person which are exercisable within 60 days of March
20, 1996 are outstanding. The shares issuable are as follows: 53,896 for
Gladstone, 46,753 for Williams, 101,439 for Williams III, 23,464 for
Sweeney, 17,136 for Scheurer and 3,333 for each of Messrs. Toomey, Clorety,
Steuart, Montouri and Gallie; executive officers and directors as a group
hold stock options exercisable within 60 days of March 20, 1996 for shares
totaling 327,277 shares.
2
<PAGE> 5
(2) Director and executive officer
(3) Director
(4) Executive officer
(5) Includes 15,282 shares held directly by Mr. Steuart and 128,055 shares
held by a corporation for which Mr. Steuart serves as an executive officer
and of which he shares voting power.
ELECTION OF DIRECTORS
At the Meeting, stockholders will elect eight Directors, constituting the
entire membership of the Board of Directors of the Company, to serve until the
next Annual Meeting of Stockholders or until their successors have been elected
and qualified. All such nominees have consented to be named as such in this
Proxy Statement and to serve as directors if elected.
If they are elected as directors, it is expected that the Company will vote to
elect Messrs. Williams, Steuart, Clorety, Gallie, Montouri and Williams III to
be the directors of Allied Capital Financial Corporation, to elect Messrs.
Williams, Clorety, Gallie, Montouri, Toomey and Williams III to be the
directors of Allied Investment Corporation and to elect Messrs. Gladstone,
Williams, Williams III, Clorety, Gallie and Montouri to be the directors of
Allied Development Corporation, all of which are wholly owned subsidiaries of
the Company.
A stockholder using the enclosed form of proxy can vote for or withhold his or
her vote from any or all of the nominees. If the proxy card is properly
executed but unmarked, it is the intention of the persons named as proxies to
vote such proxy FOR the election of all the nominees named below. In the event
that any of the nominees should decline or be unable to serve as a director, it
is intended that the enclosed proxy will be voted for the election of such
person or persons as are nominated as replacements. The nominees, their ages
and principal occupations are as follows:
DAVID GLADSTONE (1,2)
Age 53. Chairman and Chief Executive Officer of the Company, Allied Capital
Corporation II, Allied Capital Commercial Corporation, Allied Capital
Lending Corporation and Advisers; Director, President and Chief Executive
Officer of Business Mortgage Investors, Inc. and Allied Capital Mortgage
Corporation; Director of The Riggs National Corporation; Trustee of The
George Washington University. He has held positions as an executive officer
of the Company and with Advisers, Allied Capital Corporation II, Allied
Capital Commercial Corporation, Allied Capital Lending Corporation, Business
Mortgage Investors, Inc. and Allied Capital Mortgage Corporation since the
later of 1976 or the inception of the relevant entity. He has served as a
director since 1976.
GEORGE C. WILLIAMS (1,2,5)
Age 69. Vice Chairman of the Board of the Company, Allied Capital
Corporation II, Allied Capital Commercial Corporation, Allied Capital
Lending Corporation and Advisers; Chairman of Business Mortgage Investors,
Inc. and Allied Capital Mortgage Corporation. He has held positions as an
executive officer of the Company since 1964 and with Advisers, Allied
Capital Corporation II, Allied Capital Commercial Corporation, Allied
Capital Lending Corporation, Business Mortgage Investors, Inc. and Allied
Capital Mortgage Corporation since the later of 1964 or the inception of the
relevant entity. He has served as a director since 1964.
T. MURRAY TOOMEY (1)
Age 72. Attorney at Law for more than the past five years; Director of The
National Capital Bank of Washington; Director of Federal Center Plaza
Corporation, and The Donohoe Companies, Inc.; Trustee of The Catholic
University of America. He has served as a director since 1959.
3
<PAGE> 6
JOSEPH A. CLORETY III (3,4)
Age 53. President of Clorety & Company, Inc. (registered investment
adviser) since 1987. He has served as a director since 1984.
GUY T. STEUART II (1,3)
Age 64. Director and President of Steuart Investment Company (manages,
operates, and leases real and personal property and holds stock in operating
subsidiaries engaged in various businesses) since 1960; Trustee Emeritus of
Washington and Lee University. He has served as a director since 1984.
WARREN K. MONTOURI (1,3,4)
Age 66. Investor since 1958; Director of NationsBank, N.A. He has served
as a director since 1986.
G. CABELL WILLIAMS III (2,5)
Age 41. President and Chief Operating Officer of the Company; Executive
Vice President of Allied Capital Corporation II, Allied Capital Commercial
Corporation, Allied Capital Lending Corporation, Business Mortgage
Investors, Inc. and Advisers; Director of Environmental Enterprises
Assistance Fund. He has held positions with the Company and with Advisers,
Allied Capital Corporation II, Allied Capital Commercial Corporation, Allied
Capital Lending Corporation and Business Mortgage Investors, Inc. since the
later of 1981 or the inception of the relevant entity. He has served as a
director since 1993.
MICHAEL I. GALLIE (1,4)
Age 49. Principal of The Millennium Group Inc. (financial and management
consulting firm) since 1991; President of Economic Development Finance
Corporation from 1987 to 1990; Trustee and Chairman of the Investment
Committee of the District of Columbia Retirement Board from 1991 to 1995.
He has served as a director since 1994.
- --------------------
(1) Member of the Executive Committee.
(2) Messrs. Gladstone, Williams and Williams III, as officers of the Company
and of the Company's investment adviser, are "interested persons" as
defined in the Investment Company Act of 1940.
(3) Member of the Compensation Committee.
(4) Member of the Audit Committee.
(5) George C. Williams is the father of G. Cabell Williams III.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE TO ELECT THE FOREGOING NOMINEES
TO SERVE AS DIRECTORS OF THE COMPANY.
MEETINGS OF THE BOARD OF DIRECTORS
The Board of Directors has established an Executive Committee, an Audit
Committee and a Compensation Committee. The Board has established no nominating
committee. During 1995, the Board of Directors held eight regular meetings and
five committee meetings. All directors attended at least 75% of the aggregate
number of meetings of the Board and of the committees on which they served.
The Executive Committee is intended, during intervals between meetings of the
Board of Directors, to exercise all powers of the Board in the management and
direction of the business and affairs of the Company, except where action by
the Board is required by statute, an order of the Securities and Exchange
Commission (the "Commission") or the Company's Articles of Incorporation or
By-Laws. The Executive Committee did not meet during 1995.
The Audit Committee recommends the selection of independent public accountants
for the Company, reviews with such independent public accountants the planning,
scope and results of their audit of the Company's financial statements and the
fees for services performed, reviews with the independent public accountants
the adequacy of internal control systems, reviews the quarterly and annual
financial statements of the Company and receives audit reports and financial
statements of the Company. The Audit Committee met four times during 1995.
The Compensation Committee determines and issues stock option grants for
officers of the Company under the Company's Stock Option Plan, which is the
only form of compensation paid by the Company to its officers for serving as
such. The Compensation Committee met once during 1995.
4
<PAGE> 7
COMPENSATION OF EXECUTIVE OFFICERS AND DIRECTORS
Under Commission rules applicable to business development companies, the
Company is required to set forth certain information regarding its three most
highly compensated executive officers who received compensation from the
Company in excess of $60,000 during 1995. However, the Company has no
employees and does not pay any cash compensation to any of its officers (other
than directors' fees to those of its officers who are also directors). All of
the Company's officers and staff are employed by Advisers, which pays all of
their cash compensation. The Company, from time to time, grants stock options
to its officers under the Company's Stock Option Plan. As described in
"Compensation of Directors" below, the Company also has granted stock options
to its non-officer directors under the Company's Stock Option Plan.
STOCK OPTIONS
The following table sets forth, as to the Company's Chief Executive Officer and
the four most highly compensated officers of Advisers, who are also officers of
the Company, the details relating to option grants in 1995 and the potential
realizable value of each grant, as prescribed to be calculated by the
Commission.
OPTION GRANTS DURING 1995
<TABLE>
<CAPTION>
Potential realizable value
at assumed annual rates of
Number of Percent of stock price appreciation
securities total options Exercise over 10-year term (1)
underlying granted price per Expiration ---------------------
Name options granted in 1995 share date 5% 10%
---- --------------- ------- ----- ---- -- ---
<S> <C> <C> <C> <C> <C> <C>
David Gladstone 24,240 8.6% $12.375 02/03/05 $188,650 $478,075
George C. Williams 0 N/A N/A N/A N/A N/A
John M. Scheurer 8,080 2.9% $12.375 02/03/05 $ 62,883 $159,358
G. Cabell Williams III 40,400 14.3% $12.375 02/03/05 $314,416 $796,792
Joan M. Sweeney 8,080 2.9% $12.375 02/03/05 $ 62,883 $159,358
</TABLE>
- --------------------
(1) Potential realizable value is net of the option exercise price but
before any tax liabilities that may be incurred. These amounts represent
certain assumed rates of appreciation, as mandated by the Commission.
Actual gains, if any, on stock option exercises are dependent on the future
performance of the shares, overall market conditions, and the continued
employment of the option holder. The potential realizable value may not
necessarily be realized.
5
<PAGE> 8
COMPENSATION OF DIRECTORS
During 1995, each director received a fee of $1,000 for each meeting of the
Board of the Company and its wholly owned subsidiaries or each separate
committee meeting attended and $500 for each committee meeting attended on the
same day as a Board meeting. There is no duplication of directors' fees and
expenses even though some directors also take action on behalf of the Company's
wholly owned subsidiaries. Aggregate directors' fees for 1995 were $71,000.
In addition, on December 26, 1995 each non-officer director (Messrs. Clorety,
Steuart, Montouri, Toomey and Gallie) received a one-time grant of options to
purchase 10,000 shares at the then-current market price ($13.625) pursuant to
the Company's Stock Option Plan. The following table sets forth certain
details of compensation paid to directors during 1995, as well as compensation
paid for serving as a director of the two other investment companies with which
the Company may be deemed to be related.
<TABLE>
<CAPTION>
Pension or Total compensation
Aggregate retirement benefits from Company and
compensation accrued as part of related companies
Name and position from Company(1) Company expenses paid to directors(2)
----------------- -------------- ------------------- --------------------
<S> <C> <C> <C>
David Gladstone, Chairman of the $ 8,000 $0 $25,000
Board and Chief Executive Officer
George C. Williams, Vice Chairman $ 7,000 $0 $24,000
G. Cabell Williams III, President, $ 8,000 $0 $ 8,000
Chief Operating Officer and Director
Joseph A. Clorety III, Director $11,000 $0 $11,000
Guy T. Steuart II, Director $ 8,000 $0 $ 8,000
Warren K. Montouri, Director $10,000 $0 $10,000
T. Murray Toomey, Director $ 8,000 $0 $ 8,000
Michael I. Gallie, Director $11,000 $0 $11,000
</TABLE>
- --------------------
(1) Consists only of directors' fees.
(2) Includes amounts paid as compensation to directors by Allied Capital
Corporation II and Allied Capital Lending Corporation.
CERTAIN TRANSACTIONS
INVESTMENT ADVISORY AGREEMENT
The Company is a party to an investment advisory agreement with Advisers.
Pursuant to the investment advisory agreement, Advisers is entitled to be paid,
quarterly in arrears, a fee equal to 0.625% per quarter (2.5% per annum) of the
quarter-end value of the Company's consolidated total assets, less the value of
the shares of Allied Capital Lending Corporation owned by the Company,
consolidated interim investments, cash and cash equivalents plus 0.125% per
quarter (0.5% per annum) of the quarter-end value of the Company's consolidated
interim investments, cash and cash equivalents. For 1995, the Company incurred
$2,799,000 in investment advisory fees.
Advisers was a wholly owned subsidiary of the Company from its inception in
1964 until the Company distributed its shares of Advisers to stockholders of
the Company in December 1990. Messrs. Toomey, Clorety, Steuart and Montouri
owned shares of Advisers from 1990 until 1994. Messrs. Gladstone, Williams and
Williams III continue to own shares of Advisers, and their beneficial ownership
of Advisers shares as of March 15, 1996 represented approximately 9.7%, 3.4%
and 3.6%, respectively, of Advisers' shares then outstanding or deemed to be
outstanding, including shares allocated to their respective Allied Employee
Stock Ownership Plan stock account through December 31, 1995. Mr. Gladstone,
the Company's Chairman and Chief Executive Officer and a nominee for
re-election as a director, is the Chairman and Chief Executive Officer of
Advisers; Mr. Williams, the Company's Vice Chairman and a nominee for re-
election as a director, is the Vice Chairman of Advisers; Mr. Williams III, the
6
<PAGE> 9
Company's President and Chief Operating Officer and a nominee for re-election
as a director, is an executive officer of Advisers. Each officer of the
Company is also an officer of Advisers.
INDEBTEDNESS OF MANAGEMENT
The following table sets forth certain information regarding indebtedness to
the Company in excess of $60,000 of any person serving as a director or
executive officer of the Company and of any nominee for election as a director
at any time since January 1, 1995. All of such indebtedness results from loans
made by the Company to enable officers to exercise stock options. The interest
rate charged generally reflects the applicable federal rate on the date of the
loan.
<TABLE>
<CAPTION>
Highest Amount Amount
Capacity in Outstanding Interest Outstanding
Name which Served in 1995 Rate at March 1, 1996
- ---- ------------ ------- ---- ----------------
<S> <C> <C> <C> <C>
David Gladstone Chairman of the Board & $200,000 5.34% $200,000
Chief Executive Officer
G. Cabell Williams, III Director, President & $ 37,475 8.32% $ 37,475
Chief Operating Officer $135,326 8.50% $135,326
$ 28,311 7.02% $ 28,311
</TABLE>
COMPLIANCE WITH REPORTING REQUIREMENTS OF SECTION 16(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
Pursuant to Section 16(a) of the Securities Exchange Act of 1934, the Company's
directors and executive officers, affiliated persons of the Company's
investment adviser, and any persons holding ten percent or more of the
Company's common stock are required to report their beneficial ownership and
any changes therein to the Commission, the National Association of Securities
Dealers, Inc. and the Company. Specific due dates for those reports have been
established, and the Company is required to report herein any failure to file
such reports by those due dates. Based on the Company's review of Forms 3, 4
and 5 filed by such persons, the Company has identified no deficiencies in the
filing of reports pursuant to Section 16(a) of the Securities Exchange Act of
1934 in its most recent fiscal year, except as to Robert E. Long, a director of
the Company's investment adviser who sold 631 shares of the Company in 1993 and
reported the transaction in 1995.
7
<PAGE> 10
RATIFICATION OF SELECTION OF INDEPENDENT PUBLIC ACCOUNTANTS
The disinterested members of the Board of Directors have selected Matthews,
Carter and Boyce as independent public accountants for the Company for the year
ending December 31, 1996. This selection is subject to ratification or
rejection by the stockholders of the Company.
If the stockholders ratify the selection of Matthews, Carter and Boyce as the
Company's independent public accountants, they will also be the independent
public accountants for the Company's subsidiaries, Allied Investment
Corporation, Allied Capital Financial Corporation and Allied Development
Corporation. This selection is subject to ratification or rejection by the
stockholders of the Company pursuant to an undertaking by the Company to the
Commission. Thus, stockholders who vote to ratify the selection of Matthews,
Carter and Boyce will, likewise, be voting to ratify their selection as
independent public accountants for the Company's subsidiaries, Allied
Investment Corporation, Allied Capital Financial Corporation and Allied
Development Corporation.
Matthews, Carter and Boyce, or its predecessor, has served as the Company's
independent public accountants since its inception and has no financial
interest in the Company. It is not expected that a representative of Matthews,
Carter and Boyce will be present, or available to answer questions, at the
Meeting, but a representative would have an opportunity to make a statement if
he or she chose to attend.
The expense recorded during the fiscal year ended December 31, 1995 for the
professional services provided to the Company by Matthews, Carter and Boyce
consisted of fees for audit services (which included the audit of the
consolidated financial statements of the Company and its subsidiaries and
review of the filings by the Company and its subsidiaries of reports and
registration statements) and for non-audit services, the fees for which
aggregated approximately 23% of total fees. The non-audit services, which were
arranged for by management without prior consideration by the Board of
Directors, consisted of non-audit related consultation and the preparation of
tax returns for the Company and its subsidiaries.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE TO RATIFY THE SELECTION OF
MATTHEWS, CARTER AND BOYCE AS INDEPENDENT PUBLIC ACCOUNTANTS FOR THE COMPANY.
OTHER BUSINESS
The Board of Directors knows of no other business to be presented for action at
the Meeting. If any matters do come before the Meeting on which action can
properly be taken, it is intended that the proxies shall vote in accordance
with the judgment of the person or persons exercising the authority conferred
by the proxy at the Meeting.
1997 ANNUAL MEETING OF STOCKHOLDERS
The Company expects that the 1997 Annual Meeting of Stockholders will be held
in May 1997, but the exact date, time, and location of such meeting have yet to
be determined. A stockholder who intends to present a proposal at that annual
meeting must submit the proposal in writing to the Company no later than
November 30, 1996 in order for the proposal to be considered for inclusion in
the Company's proxy statement for that meeting. The submission of a proposal
does not guarantee its inclusion in the Company's proxy statement or
presentation at the meeting unless certain securities law requirements are met.
8
<PAGE> 11
PROXY
ALLIED CAPITAL CORPORATION
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned stockholder of ALLIED CAPITAL CORPORATION (the
"Company") appoints David Gladstone, George C. Williams and Thomas R. Salley,
or any of them, proxies, with full power of substitution, to vote at the 1996
Annual Meeting of Stockholders of the Company to be held in the Strathmore Hall
Arts Center, 10701 Rockville Pike, North Bethesda, Maryland 20852 at 10:00 a.m.,
Monday, May 6, 1996, and any adjournment or adjournments thereof, the
shares of Common Stock of the Company that the undersigned is entitled to vote,
on all matters that may properly come before that meeting.
(Continued on reverse side)
/X/ PLEASE MARK YOUR VOTES AS IN THIS EXAMPLE
<TABLE>
<S> <C> <C> <C>
WITHHOLD
FOR all nominees AUTHORITY
listed to the right to vote for all
(except as marked nominees listed
to the contrary) to the right. NOMINEES: David Gladstone
George C. Williams
1. Election of eight T. Murray Toomey
Directors for the / / / / Joseph A. Clorety III
ensuing year Guy T. Steuart II
Warren K. Montouri
G. Cabell Williams III
Michael I. Gallie
</TABLE>
(INSTRUCTION: TO WITHHOLD YOUR VOTE FOR ONE OR MORE INDIVIDUAL NOMINEES, WRITE
THE NAMES OF EACH NOMINEE WITH RESPECT TO WHOM YOU CHOOSE TO WITHHOLD AUTHORITY
TO VOTE IN THE SPACE PROVIDED BELOW.)
- -------------------------------------
<TABLE>
<S> <C> <C> <C>
FOR AGAINST ABSTAIN
2. To ratify the selection of Matthews,
Carter and Boyce to serve as independent / / / / / /
public accountants for the Company for
the year ending December 31, 1996.
</TABLE>
3. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
YOU ARE URGED TO CAST YOUR VOTE BY MARKING THE APPROPRIATE BOXES. PLEASE NOTE
THAT, UNLESS A CONTRARY INSTRUCTION IS INDICATED, THIS PROXY WILL BE VOTED FOR
ELECTION OF ALL NOMINEES IDENTIFIED IN ITEM 1 AND FOR RATIFICATION OF THE
SELECTION OF INDEPENDENT PUBLIC ACCOUNTANTS DESCRIBED IN ITEM 2.
(PLEASE MARK, DATE, SIGN AND RETURN THIS PROXY IN THE ENCLOSED ENVELOPE.)
SIGNATURE DATE
------------------------------ --------------------
SIGNATURE DATE
------------------------------ --------------------
IF HELD JOINTLY
IMPORTANT: Please sign your name or names exactly as shown hereon and date
your proxy in the blank space provided above. For joint accounts,
each joint owner should sign. When signing as attorney, executor,
administrator, trustee or guardian, please give your full title as
such. If the signer is a corporation or partnership, please sign in
full corporate or partnership name by duly authorized officer or
partner.
