<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
Allied Capital Corporation
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(Name of Registrant as Specified in Its Charter)
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(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(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):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] 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:
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(2) Form, schedule or registration statement no.:
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(3) Filing party:
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(4) Date filed:
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<PAGE> 2
ALLIED CAPITAL CORPORATION
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To the Stockholders:
The 1998 Annual Meeting of Stockholders of Allied Capital Corporation (the
"Company") will be held in the State Salon at the Sheraton Carlton Hotel, 629
Sixteenth Street, NW, Washington, DC on May 14, 1998 at 9:00 a.m. for the
following purposes:
1. To elect twelve directors of the Company, four of which will serve for
one year, four of which will serve for two years, and four of which
will serve for three years, or until their successors are elected and
qualified.
2. To ratify the selection of Arthur Andersen LLP to serve as independent
public accountants for the Company for the year ending December 31,
1998.
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 27, 1998 as the record date for the determination of stockholders
entitled to notice of, and to vote at, the meeting and any adjournment
thereof. Only recordholders of the common stock of the Company as of the
close of business on that date will be entitled to vote at the annual meeting
or any adjournments thereof. In the event there are not sufficient votes for
a quorum or to approve or ratify any of the foregoing proposals at the time
of the annual meeting, the annual meeting may be adjourned in order to permit
further solicitation of the proxies by the Company.
By order of the Board of Directors
/s/ Tricia Benz Daniels
Tricia Benz Daniels
Secretary
April 3, 1998
THIS IS AN IMPORTANT MEETING. TO ENSURE PROPER REPRESENTATION AT THE
MEETING, YOU ARE REQUESTED TO COMPLETE, SIGN, DATE AND RETURN THE PROXY CARD
IN THE ENCLOSED, SELF-ADDRESSED 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
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"), formerly known as Allied Capital Lending Corporation, for use at
the Company's 1998 Annual Meeting of Stockholders (the "Meeting") to be held
on May 14, 1998 at 9:00 a.m. in the State Salon at the Sheraton Carlton
Hotel, 629 Sixteenth Street, NW, Washington, DC and at any adjournments
thereof. This Proxy Statement, the accompanying proxy card and the Company's
Annual Report to Stockholders for the year ended December 31, 1997 are first
being sent to stockholders on or about April 3, 1998.
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.
THE MERGER
The Meeting will be the first annual meeting of Allied Capital Corporation as
a consolidated entity. On December 31, 1997, entities formerly known as
Allied Capital Corporation ("Allied I"), Allied Capital Corporation II
("Allied II"), Allied Capital Commercial Corporation ("Allied Commercial")
and Allied Capital Advisers, Inc. ("Advisers," and collectively with Allied
I, Allied II and Allied Commercial, the "Acquired Companies") merged (the
"Merger") with and into Allied Capital Lending Corporation ("Allied Lending,"
and together with the Acquired Companies, the "Allied Companies"), and Allied
Lending was renamed "Allied Capital Corporation." The surviving company is
an internally managed business development company. Because the Merger was
completed in 1997, certain information about the Company contained in this
Proxy Statement, particularly information regarding compensation paid to
officers and directors of the Company, consists of information for all the
Allied Companies.
VOTING SECURITIES
On March 27, 1998, there were 52,072,606 shares of the Company's common stock
outstanding. The stockholders entitled to vote at the Meeting are those of
record on that date (the "Record Date"). Each share of the 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
1
<PAGE> 4
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 Company's Employee Stock Ownership Plan (the "ESOP") owns a total of
433,095 shares, representing a total of 0.8% of the Company's total shares
outstanding. Participants in the ESOP may direct the voting of these shares;
however, if a participant does not direct the voting, the co-trustees of the
ESOP, who are executive officers of the Company, will vote the shares on
behalf of the participants.
Each of the twelve nominees for election as directors who receives a majority
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.
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,
the accompanying Notice of Annual Meeting of Stockholders, and proxy card,
will be borne by the Company. The Company has requested that brokers,
nominees, fiduciaries and other persons holding shares in their names, or in
the name of their nominees, which are beneficially owned by others, forward
the proxy materials to, and obtain proxies from, such beneficial owners. The
Company will reimburse such persons for their reasonable 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, officers or regular employees of the Company, without
special compensation therefor, or by a proxy solicitor.
SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN BENEFICIAL OWNERS
The following table sets forth, as of March 27, 1998, the beneficial
ownership of each current director, each nominee for director, the Chief
Executive Officer, the Company's executive officers, and the executive
officers and directors as a group. At this time the Company is unaware of
any shareholder owning 5% or more of the outstanding shares of common stock
of the Company. Unless otherwise indicated, the Company believes that each
beneficial owner set forth in the table has sole voting and investment power.
<TABLE>
<CAPTION>
NAME OF NUMBER OF SHARES OWNED PERCENTAGE OF
BENEFICIAL OWNER BENEFICIALLY CLASS (1)
---------------- ------------ -----
<S> <C> <C>
William L. Walton (9) 729,169 (2, 3) 1.4%
Jon W. Barker 449 *
Eleanor Deane 7,329 *
Bierbower
Brooks H. Browne (9) 38,883 *
Joseph A. Clorety III 5,707 *
Swep T. Davis 4,133 *
John D. Firestone (9) 16,231 *
Robert V. Fleming II 1,940 *
Michael I. Gallie 7,345 *
Anthony T. Garcia (9) 52,507 *
Lawrence I. Hebert (9) 16,800 *
Arthur H. Keeney III 177 *
John I. Leahy (9) 16,318 *
</TABLE>
2
<PAGE> 5
<TABLE>
<CAPTION>
NAME OF NUMBER OF SHARES OWNED PERCENTAGE OF
BENEFICIAL OWNER BENEFICIALLY CLASS (1)
---------------- ------------ ---------
<S> <C> <C>
Robert E. Long (9) 12,777 *
Robin B. Martin 500 (7) *
Warren K. Montouri (9) 196,182 *
John D. Reilly 41,006 (4) *
Guy T. Steuart II (9) 317,065 (5) *
T. Murray Toomey, 33,265 (6) *
Esq. (9)
Laura W. van Roijen (9) 28,302 *
George C. Williams, Jr. (9) 342,978 *
Smith T. Wood 14,627 *
EXECUTIVE OFFICERS:
Jon A. DeLuca 101,673 (2) *
John M. Scheurer 289,903 (2) *
Joan M. Sweeney 221,055 (2) *
G. Cabell Williams III 821,182 (2, 3) 1.6%
All directors and 2,853,979 (8) 5.5%
executive officers as
a group
(26 in number)
</TABLE>
- - - - - - - - - - - - - ------------
* Less than 1%
(1) Based on a total of 52,072,606 shares of the Company's common stock
issued and outstanding on March 27, 1998 and shares of the Company's
common stock issuable upon the exercise of immediately exercisable stock
options held by each individual executive officer. At this time, no
options have been granted to non-officer directors.
(2) Share ownership includes 109,865, 4,677, 52,854, 53,212, and 37,234
shares which Mr. Walton, Mr. DeLuca, Mr. Scheurer, Ms. Sweeney, and Mr.
Williams III, respectively, have options to purchase that are exercisable
within 60 days of March 27, 1998. Share ownership also includes 459,
4,616, 18,432, 7,381, and 59,499 shares, respectively, for Mr. Walton,
Mr. DeLuca, Mr. Scheurer, Ms. Sweeney and Mr. Williams III, respectively,
allocated to their respective ESOP accounts through December 31, 1997.
(3) Includes 433,095 shares held by the ESOP, of which Messrs. Walton and
Williams III are co-trustees. Participants in the ESOP may direct the
voting of these shares; however, if a participant does not direct the
voting, the co-trustees of the ESOP will vote the shares on behalf of the
participants. Messrs. Walton and Williams III disclaim beneficial
ownership of such shares. As of December 31, 1997, all shares held in
the ESOP had been allocated to participants' accounts.
(4) Includes 3,200 shares which are held in an irrevocable trust for the
benefit of Mr. Reilly's two minor children for which he is not the
trustee and for which he disclaims beneficial ownership.
(5) Includes 276,576 shares held by a corporation for which Mr. Steuart serves
as an executive officer.
(6) Shares are held by a trust for the benefit of Mr. Toomey and his wife.
(7) Shares are held by a trust for the benefit of Mr. Martin.
(8) Includes a total of 304,974 shares underlying stock options exercisable
within 60 days of March 27, 1998, which are assumed to be outstanding for
the purpose of calculating the group's percentage ownership, and 433,095
shares held by the ESOP.
(9) Director is a nominee standing for election at this Meeting.
3
<PAGE> 6
ELECTION OF DIRECTORS
In connection with the Merger, the bylaws of the Company were amended to
provide that, effective at the Meeting, directors of the Company will be
classified into three approximately equal classes, with each class being
elected initially for one, two or three-year terms, with the terms of office
of only one of the three classes expiring each year. At the Meeting, Class I
Directors will be elected for one-year terms, Class II Directors will be
elected for two-year terms and Class III Directors will be elected for the
full three-year terms. Thereafter, Class I Directors will be elected for
full three-year terms commencing with the 1999 annual meeting of stockholders
and Class II Directors will be elected for full three-year terms commencing
with the 2000 annual meeting of stockholders. Directors serve until their
successors are elected and qualified.
As of the consummation of the Merger, the Board of Directors was expanded to
twenty-two directors, and the Company's bylaws permitted a maximum of
twenty-five directors. Each director of the Acquired Companies was appointed
to serve as a director of the surviving entity joining the directors of
Allied Lending. The terms for all of the directors of the Company will
expire at this Meeting.
At the March 3, 1998 meeting of the Board of Directors, the directors voted
to amend the Company's bylaws to set the maximum number of directors at
fifteen and to decrease the size of the board to twelve directors effective
at this Meeting. The Board of Directors believes that this smaller size is
more appropriate to effectively manage the Company. No director's existing
term was reduced as a result of the board action.
For Class I Directors, Messrs. Firestone, Garcia, and Hebert, and Ms. van
Roijen have been nominated for election for a one-year term expiring in
1999. For Class II Directors, Messrs. Leahy, Montouri, Steuart, and Toomey
have been nominated for election for a two-year term expiring in 2000. For
Class III Directors, Messrs. Walton, Williams, Browne and Long have been
nominated for election for a three-year term expiring in 2001. No person
being nominated as a director is being proposed for election pursuant to any
agreement or understanding between any such person and the Company.
A stockholder using the enclosed proxy card 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
Board of Directors has no reason to believe that any of the persons named
will be unable or unwilling to serve.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE ELECTION OF THE
NOMINEES NAMED IN THIS PROXY STATEMENT.
INFORMATION ABOUT THE NOMINEES
Certain information, as of March 27, 1998, with respect to each of the twelve
nominees for election at the Meeting is set forth below, including their
names, ages, a brief description of their recent business experience,
including present occupations and employment, certain directorships held by
each, and the year in which each became a director of any of the Allied
Companies. Certain of the nominees currently serve as directors of the
Company's subsidiaries, including Allied Investment Corporation, Allied
Capital Financial Corporation, and Allied Capital SBLC Corporation.
Subsequent to the election at the Meeting, the Company intends to elect
directors of its subsidiaries. The board of directors of each subsidiary
will be composed of some or all of the Company's directors. The business
address of each nominee listed below is 1666 K Street, NW, 9th Floor,
Washington, DC 20006.
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<PAGE> 7
NOMINEES FOR CLASS I DIRECTORS
JOHN D. FIRESTONE
Age 54. Partner of Secor Group since 1978; Director of Business Mortgage
Investors, Inc. (an affiliate of the Company) and Security Storage Company of
Washington, D.C.; Senior Advisor to Gilbert Capital, Inc.; Chairman, Secor
Investments, Inc. from 1980 to 1993; and Director, Palmer National Bank from
1988 to 1994. He has served as a director of an Allied Company since 1993.
ANTHONY T. GARCIA
Age 41. General Manager of Breen Capital Group (investor in tax liens) since
1997; Senior Vice President of Lehman Brothers Inc. from 1985 to 1996. He
has served as a director of an Allied Company since 1991.
LAWRENCE I. HEBERT
Age 51. Director and President of Perpetual Corporation (a holding and
management company) since 1981; Vice Chairman (since 1983) and President
(since 1984) of Allbritton Communications Company; President of Westfield
News Advertiser, Inc. since 1988; Vice Chairman (from 1990 to 1993) and
Director of Riggs National Corporation (since 1988); Vice President of
University Bancshares, Inc. from 1975 to 1997; Director of Riggs Bank Europe,
Ltd., formerly Riggs AP Bank, Ltd. since 1986, and Riggs Investment
Management Corporation (RIMCO) since 1990. Trustee of the Allbritton
Foundation. He has served as a director of an Allied Company since 1989.
LAURA W. VAN ROIJEN
Age 45. Private real estate investor since 1992. Chairman of CWV &
Associates (RTC qualified contracting firm) from 1991 to 1994; Director and
Treasurer of Black Possum Inc. (retail concern) from 1994 to 1996; President
of Volta Place, Inc. (real estate advisory firm) from 1991 to 1994; Vice
President (from 1986 to 1991) and Market Director (from 1989 to 1991) of
Citicorp Real Estate, Inc. She has served as a director of an Allied Company
since 1992.
NOMINEES FOR CLASS II DIRECTORS
JOHN I. LEAHY
Age 67. President of Management and Marketing Associates (a management
consulting firm) since 1986; President and Group Executive Officer, Western
Hemisphere of Black & Decker Corporation; Director of Kar Kraft Systems,
Inc., Cavanaugh Capital, Inc., Acorn Products, Inc., The Wills Group,
Thulman-Eastern Company and Gallagher Fluid Seals, Inc. He has served as a
director of an Allied Company since 1994.
WARREN K. MONTOURI
Age 68. Partner, Montouri & Roberson, Investment Real Estate since 1980;
Director of C&S/Sovran Bank from 1970 to 1990; Director of Sovran Financial
Corporation from 1989 to 1990; Director of NationsBank, N.A. from 1990 to
1996; Director of Franklin National Bank since 1996; Trustee of Suburban
Hospital from 1991 to 1994; Trustee of Audubon Naturalist Society from 1979
to 1985. He has served as a director of an Allied Company since 1986.
GUY T. STEUART II
Age 66. 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 of an Allied
Company since 1984.
T. MURRAY TOOMEY, ESQ.
Age 74. Attorney at law since 1949; Director of The National Capital Bank of
Washington, Federal Center Plaza Corporation, and The Donohoe Companies,
Inc.; Trustee of The Catholic University of America. He has served as a
director of an Allied Company since 1959.
5
<PAGE> 8
NOMINEES FOR CLASS III DIRECTORS
WILLIAM L. WALTON *
Age 48. Chairman, Chief Executive Officer and President of the Company since
1997; President of Allied II from 1996 to 1997; Chairman of Business Mortgage
Investors, Inc. (an affiliate of the Company); Chief Executive Officer of
Success Lab, Inc. (children's educational services) from 1993 to 1996; Chief
Executive Officer of Language Odyssey (educational publishing and services)
from 1992 to 1996; Managing Director of Butler Capital Corporation from 1987
to 1991. He has served as a director of an Allied Company since 1986.
GEORGE C. WILLIAMS, JR. *
Age 71. Chairman Emeritus of the Company; Officer of the Allied Companies
from the later of 1959 or the inception of the relevant entity; President or
Chairman and Chief Executive Officer of the Allied Companies from the later
of 1964 or each entities' inception until 1991. Director of Business
Mortgage Investors, Inc. (an affiliate of the Company). He has served as a
director of the Allied Companies since the later of 1964 or each entity's
inception. Mr. Williams is the father of G. Cabell Williams III, an
executive officer of the Company.
BROOKS H. BROWNE
Age 48. President of Environmental Enterprises Assistance Fund since 1993;
President, Executive Vice President or Senior Vice President of Advisers from
1984 to 1993; Director of SEAF, International Fund for Renewable Energy and
Energy Efficiency, Corporation Financiera Ambiental (Panama), Empresas
Ambientales de Centro America (Costa Rica) and Yayasan Bina Usaha Lingkungan
(Indonesia) (environmental non-profit or investment funds). He has served as
a director of an Allied Company since 1990.
ROBERT E. LONG
Age 66. Managing Director of Goodwyn & Long Investment Management, Inc.;
President and Chief Executive Officer of Business News Network, Inc. since
1995; Chairman and Chief Executive Officer of Southern Starr Broadcasting
Group, Inc. from 1991 to 1995; Director and President of Potomac Asset
Management, Inc. from 1983 to 1991; Director of Ambase Inc., AHL Shipping
Company, Inc., CSC Scientific, Inc., and Global Travel, Inc. He has served
as a director of an Allied Company since 1972.
- - - - - - - - - - - - - ------------
* Messrs. Walton and Williams are interested persons of the Company, as
defined in the Investment Company Act of 1940, as amended, due to their
positions as officers of the Company.
MEETINGS OF THE BOARD OF DIRECTORS AND COMMITTEES
The Board of Directors of the Company has established an Executive Committee,
an Audit Committee, a Nominating Committee and a Compensation Committee.
Each of the other Allied Companies maintained similar committees (as
appropriate) prior to the consummation of the Merger. During 1997, the Board
of Directors of the Company held six board meetings and nine committee
meetings. The boards of directors of the Acquired Companies held a similar
number of board meetings and committee meetings. Directors of all of the
Allied Companies attended at least 75% of the aggregate number of meetings of
the respective boards and of the respective committees on which they served.
The Executive Committee of the Company has and may exercise those rights,
powers and authority of the Board of Directors as may from time to time be
granted to it by the Board of Directors, except where action by the Board is
required by statute, an order of the Securities and Exchange Commission (the
"Commission") or the Company's Charter or bylaws. Following the Meeting, it
is anticipated that the Executive Committee of the Company will consist of
Messrs. Walton, Leahy, Long, Montouri, and Williams. The Executive Committee
met twice during 1997.
The Audit Committee of the Company 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
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<PAGE> 9
independent public accountants the adequacy of internal control systems,
reviews the annual financial statements of the Company and receives audit
reports and financial statements of the Company. Following the Meeting, it
is anticipated that the Audit Committee of the Company will consist of
Messrs. Browne, Leahy and Steuart. The Audit Committee met four times during
1997.
The Compensation Committee of the Company determines the compensation for the
executive officers of the Company and the amount of salary and bonus to be
included in the compensation package for each of the Company's officers and
employees. In addition, the Compensation Committee approves stock option
grants for officers of the Company under the Company's Stock Option Plan.
Following the Meeting, it is anticipated that the Compensation Committee of
the Company will consist of Messrs. Browne, Long, Firestone, and Garcia. The
Compensation Committee met three times during 1997, including one joint
committee meeting with the Compensation Committees of the Acquired Companies.
The Nominating Committee of the Company recommends candidates for election as
directors to the Board of Directors. Following the Meeting, it is anticipated
that the Nominating Committee of the Company will consist of Messrs. Walton,
Hebert, Toomey and Steuart, and Ms. van Roijen. The Nominating Committee did
not meet in 1997 since it was formed late in 1997. The Nominating Committee
met on March 3, 1998.
COMPENSATION OF EXECUTIVE OFFICERS AND DIRECTORS
Under Commission rules applicable to business development companies, the
Company is required to set forth certain information regarding the
compensation of certain of its executive officers and directors. Prior to
the Merger, the Company had no employees and did not pay any cash
compensation to any of its officers (other than directors' fees to those of
its officers who also were directors). All of the Company's officers and
employees were employed by Advisers, which paid all of their cash
compensation. The information regarding compensation of the executive
officers of the Company includes the compensation paid by Advisers and the
other Allied Companies.
Prior to the Merger, each of the Allied Companies maintained a stock option
plan (the "Old Plans"). In connection the Merger, the Old Plans were
terminated, and the Company adopted a new stock option plan (the "New Plan")
effective January 1, 1998. See "Stock Options Awards." Therefore, the
information regarding stock option awards to directors and executive officers
during 1997 represents awards made under all the Old Plans.
The following table sets forth compensation paid by the Allied Companies in
all capacities during the year ended December 31, 1997, to all the directors
and the four highest paid executive officers of the Company (collectively,
the "Compensated Persons").
<TABLE>
<CAPTION>
COMPENSATION TABLE
PENSION OR
RETIREMENT
BENEFITS ACCRUED
AS PART OF DIRECTORS FEES
NAME AND POSITION AGGREGATE COMPENSATION COMPANY PAID BY ALL OF THE
WITH THE COMPANY FROM AN ALLIED COMPANY (1,2) EXPENSES ALLIED COMPANIES (6)
- - - - - - - - - - - - - ---------------- ---------------------------- -------- --------------------
<S> <C> <C> <C>
William L. Walton, Chairman $765,737 (3) 0 $57,000
and Chief Executive Officer (5)
John M. Scheurer, $490,117 (3) 0 18,000
Managing Director
Joan M. Sweeney, $453,757 (3) 0 9,000
Managing Director
</TABLE>
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<PAGE> 10
<TABLE>
<CAPTION>
PENSION OR
RETIREMENT
BENEFITS ACCRUED
AS PART OF DIRECTORS FEES
NAME AND POSITION AGGREGATE COMPENSATION COMPANY PAID BY ALL OF THE
WITH THE COMPANY FROM AN ALLIED COMPANY (1,2) EXPENSES ALLIED COMPANIES (6)
- - - - - - - - - - - - - ---------------- ---------------------------- -------- --------------------
<S> <C> <C> <C>
G. Cabell Williams III, $419,864 (3) $0 $13,000
Managing Director
Jon W. Barker, Director 8,000 0 8,000
Eleanor Deane Bierbower, Director 9,000 0 9,000
Brooks H. Browne, Director (5) 16,000 0 16,000
Joseph A. Clorety III, Director 14,500 0 14,500
Swep T. Davis, Director 30,250 (4) 0 10,000
John D. Firestone, Director (5) 12,000 0 12,000
Robert V. Fleming II, Director 12,500 0 12,500
Michael I. Gallie, Director 16,500 0 16,500
Anthony T. Garcia, Director (5) 28,500 0 28,500
Lawrence I. Hebert, Director (5) 16,500 0 16,500
Arthur H. Keeney III, Director 7,000 0 7,000
John I. Leahy, Director (5) 8,500 0 8,500
Robert E. Long, Director (5) 18,000 0 18,000
Robin B. Martin, Director 10,500 0 10,500
Warren K. Montouri, Director (5) 11,500 0 11,500
John D. Reilly, Director 35,000 0 35,000
Guy T. Steuart II, Director (5) 18,000 0 18,000
T. Murray Toomey, Director (5) 14,000 0 14,000
Laura W. van Roijen, Director (5) 19,000 0 19,000
George C. Williams, Jr. 217,325 (3,4) 0 52,000
Director, Chairman Emeritus (5)
Smith T. Wood, Director 15,500 0 15,500
</TABLE>
8
<PAGE> 11
(1) All options issued under the Old Plans that were unexercised as of December
30, 1997 were canceled in connection with the Merger. See "Option Grants
During 1997" table below.
(2) Includes amounts paid by all the Allied Companies, including directors'
fees.
(3) For Mr. Walton, Mr. Scheurer, Ms. Sweeney and Mr. Williams III, amount
includes: (i) salaries for 1997 in the amounts of $277,051, $215,588,
$177,864, and $198,919, respectively; (ii) bonuses for 1997 in the amounts
of $400,000, $235,000, $250,000, and $190,000, respectively; (iii)
directors' fees in the amounts of $57,000, $18,000, $9,000 and $13,000,
respectively; and (iv) a cash contribution in the amounts of $13,269,
$21,529, $16,893, and $17,946, respectively, to the account of each under
the Company's ESOP during 1997. In addition, Mr. Walton received $18,418 in
consulting fees prior to his appointment as Chairman in February 1997. There
were no perquisites paid by the Company in excess of the lesser of $50,000
or 10% of the Compensated Person's total salary and bonus for the year. No
portion of the Formula Award has been included herein for any Compensated
Person; the Formula Award, which totaled approximately $19 million in the
aggregate, will be paid to all recipients in three equal installments on
December 31, 1998, 1999, and 2000, and will be expensed for financial
reporting purposes similarly. In addition, no portion of the Cut-Off Award
has been included herein; the Cut-Off Award, which totaled $2.9 million in
the aggregate, will be paid to individuals on the respective vesting date of
any options under the Old Plans which were canceled in connection with the
Merger. See "Cut-Off Award and Formula Award." No portion of the Formula
Award or Cut-Off Award was expensed in 1997; each will be expensed in future
years.
(4) Consists of directors' fees and consulting fees paid by the relevant Allied
Company.
(5) Director is a nominee standing for election at the Meeting.
(6) Consists only directors' fees paid by the Allied Companies during 1997. Such
fees are also included in the column titled "Aggregate Compensation from an
Allied Company."
COMPENSATION OF DIRECTORS
During 1997, each director received a fee of $1,000 for each meeting of the
Board of Directors of the Allied Company or Allied Companies for which he or
she served as a director in 1997 or any separate committee meeting attended
and $500 for each committee meeting attended on the same day as a Board
meeting. In addition, the directors of Allied Commercial each received an
annual retainer of $12,000; the Company does not currently pay any such
retainer. Because the Old Plans were canceled in connection with the Merger,
any unexercised or unvested stock options previously granted to directors
were canceled at the end of 1997. Directors are eligible for stock option
awards under the New Plan provided that the Commission grants exemptive
relief to permit such awards. No grants have been made to directors under
the New Plan. See "Stock Option Plan."
STOCK OPTION AWARDS
The following table sets forth the details relating to option grants in 1997
to Compensated Persons of all the Allied Companies under the Old Plans, and
the potential realizable value of each grant, as prescribed to be calculated
by the Commission. As discussed below under "Formula Award and Cut-Off
Award," upon the consummation of the Merger, each Old Plan was terminated,
and all unexercised or unvested stock options under the Old Plans were
canceled. After the consummation of the Merger, the Company adopted the New
Plan for directors and officers. See "Stock Option Plan."
<TABLE>
<CAPTION>
OPTION GRANTS DURING 1997
POTENTIAL REALIZABLE
NUMBER OF PERCENT OF VALUE AT ASSUMED ANNUAL RATES
SECURITIES TOTAL OF STOCK APPRECIATION OVER 1997
UNDERLYING OPTIONS EXERCISE 10-YEAR TERM (2) OPTIONS
OPTIONS GRANTED PRICE PER EXPIRATION ---------------- CANCELLED
NAME GRANTED (1) IN 1997 SHARE DATE 5% 10% UPON MERGER (1)
---- ----------- ------- ----- ---- -- --- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
William L. Walton 150,000 (3) 49.1% $15.33 5/2/07 $1,445,672 $3,663,615 112,500
100,000 (4) 28.9% 18.25 5/2/07 1,147,733 2,908,580 75,000
125,000 (5) 40.3% 23.13 5/12/07 1,817,899 4,606,912 93,750
200,000 (6) 93.8% 4.65 5/2/07 536,005 1,404,368 150,000
100,000 (7) 100% 15.13 5/9/07 951,203 2,410,535 75,000
</TABLE>
9
<PAGE> 12
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUE AT
NUMBER OF PERCENT OF ASSUMED ANNUAL RATES
SECURITIES TOTAL OF STOCK APPRECIATION OVER 1997
UNDERLYING OPTIONS EXERCISE 10-YEAR TERM (2) OPTIONS
OPTIONS GRANTED PRICE PER EXPIRATION ---------------- CANCELLED
NAME GRANTED (1) IN 1997 SHARE DATE 5% 10% UPON MERGER (1)
---- ----------- ------- ----- ---- -- --- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
John M. Scheurer 24,996 (5) 8.1% $23.75 6/24/07 $373,346 $946,133 19,996
Joan M. Sweeney 15,468 (3) 5.1% $15.88 5/21/07 $154,428 $391,351 9,169
22,111 (4) 6.4% 21.00 5/21/07 292,015 740,024 17,350
8,332 (5) 2.7% 23.75 6/24/07 124,449 315,378 7,507
G. Cabell Williams III 25,680 (4) 7.4% $21.00 5/21/07 $339,150 $859,473 21,496
4,166 (5) 1.3% 23.75 6/24/07 62,224 157,689 4,166
George C. Williams, Jr. 30,000 (3) 9.8% $15.88 5/21/07 $299,511 $759,020 22,500
30,000 (4) 8.7% 21.00 5/21/07 396,204 1,004,058 22,500
Swep T. Davis 13,333 (6) 6.2% $ 5.33 3/19/07 $44,650 $113,153 --
</TABLE>
- - - - - - - - - - - - - ------------
(1) All unvested and unexercised options under the Old Plans were canceled in
connection with the Merger, including those granted in 1997.
(2) Potential realizable value is calculated on 1997 options granted, and 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, or stock option exercises
are dependent on the future performance of the shares, overall market
conditions, and the continued employment by the Company of the option
holder. The potential realizable value will not necessarily be realized.
(3) Options granted under Allied I's Old Plan.
(4) Options granted under Allied II's Old Plan.
(5) Options granted under Allied Commercial's Old Plan.
(6) Options granted under Advisers' Old Plan.
(7) Options granted under Allied Lending's Old Plan.
CUT-OFF AWARD AND FORMULA AWARD
Prior to the Merger, each of the five Allied Companies had a stock option
plan (the Old Plans, as defined above), and options under the Old Plans had
been granted to various employees of Advisers, who were also officers of the
Allied Companies. In preparation for the Merger, the Compensation Committee
of Advisers, in conjunction with the Compensation Committees of the other
Allied Companies, determined that the five Old Plans should be terminated
upon the Merger, so that the new merged Company would be able to develop a
new plan that would incent all officers and directors with a single equity
security. The existence of the Old Plans had resulted in certain inequities
in option grants among the various officers of the Allied Companies simply
because of the differences in the underlying equity securities.
To balance stock option awards among Advisers' employees, and to account for
the deviations caused by the existence of five plans supported by five
different publicly traded stocks, Advisers developed two special awards to be
granted in lieu of options under the Old Plans that would be forgone upon the
Merger and the cancellation of the Old Plans.
Cut-Off Award. The first award established a cut-off dollar amount as of the
date of the announcement of the Merger (August 14, 1997) that would be
computed for all outstanding, but unvested options that would be canceled as
of the date of the Merger (the "Cut-Off Award"). The Cut-Off Award was
designed to cap the appreciated value in unvested options at the Merger
announcement date in order to set the foundation to balance option awards
upon the Merger. The Cut-Off Award, in the aggregate, was computed to be
$2.9 million, and is equal to the difference between the market price of the
shares of stock underlying the canceled options under the Old Plans at August
14, 1997, less the exercise prices of the
10
<PAGE> 13
options. The Cut-Off Award will be payable for each canceled option as the
canceled options would have vested and will vest automatically in the event of a
change of control. The Cut-Off Award will only be payable if the award recipient
is employed by the Company on the future vesting date. The following table
indicates the Cut-Off Award for each Compensated Person, and the related vesting
schedule.
<TABLE>
<CAPTION>
CUT-OFF AWARD RECIPIENT 1998 1999 2000 2001 2002 THEREAFTER
----------------------- ---- ---- ---- ---- ---- ----------
<S> <C> <C> <C> <C> <C> <C>
William L. Walton $170,157 $170,157 $170,157 $ 0 $ 0 $ 0
John M. Scheurer 29,248 29,248 29,248 29,248 27,998 142,770
Joan M. Sweeney 38,964 37,678 36,602 2,026 0 0
G. Cabell Williams III 88,257 46,803 39,678 21,152 18,916 0
George C. Williams, Jr. 32,685 4,687 52,373 0 0 0
</TABLE>
Formula Award. The second award (the "Formula Award") was designed to
compensate officers from the point when their unvested options would cease to
appreciate in value pursuant to the Cut-Off Award (i.e. August 14, 1997) up
until the time in which they would be able to receive option awards in the
Company after the Merger became effective. In the aggregate, the Formula
Award equaled six percent (6%) of the difference between the combined
aggregate market capitalizations of the Allied Companies as of the close of
the market on December 30, 1997, and the combined aggregate market
capitalizations of the Allied Companies on August 14, 1997. In total, the
combined aggregate market capitalization of the Allied Companies increased by
$319 million from August 14, 1997 to December 30, 1997, and the aggregate
Formula Award was approximately $19 million.
Advisers' Compensation Committee designed the Formula Award as a long-term
incentive compensation program to be a replacement for canceled stock options
and to balance share ownership among key officers for past and prospective
service. The terms of the Formula Award require that the award be
contributed to the Company's deferred compensation plan, and used to purchase
shares of the Company in the open market. See "Deferred Compensation Plan."
The Formula Award vests and accrues equally over a three-year period, on the
anniversary of the Merger date (December 31, 1997), and vests automatically
in the event of a change of control of the Company. If an officer terminates
employment with the Company prior to the vesting of any part of the Formula
Award, that amount will be forfeited to the Company. Assuming all officers
meet the vesting requirement, the Company will accrue the Formula Award over
the three-year period in equal amounts of approximately $6.4 million. The
following table indicates the Formula Award for each Compensated Person, and
the related vesting schedule.
<TABLE>
<CAPTION>
FORMULA AWARD RECIPIENT 1998 1999 2000
----------------------- ---- ---- ----
<S> <C> <C> <C>
William L. Walton $1,472,451 $1,472,451 $1,472,451
John M. Scheurer 400,228 400,228 400,228
Joan M. Sweeney 862,761 862,761 862,761
G. Cabell Williams III 400,664 400,664 400,664
George C. Williams, Jr. 601,068 601,068 601,068
</TABLE>
STOCK OPTION PLAN
The Company (with the approval of its stockholders and independent directors)
established the Company's Stock Option Plan (the "New Plan"), which is
intended to encourage stock ownership in the Company by officers, thus giving
them a proprietary interest in the Company's performance. The New Plan was
approved by stockholders at the Special Meeting of Stockholders of Allied
Lending held on November 26, 1997. The committee's principal objective in
awarding stock options to the Chief Executive Officer and other eligible
officers of the Company is to align each officer's interests with the success
of the Company and the financial interests of its stockholders by linking a
portion of such executive's compensation with the performance of the
Company's stock and the value delivered to stockholders. Stock options are
granted under the New Plan at a price not less than the prevailing market
value and
11
<PAGE> 14
will have value only if the Company's stock price increases. The committee
determines the amount and features of the stock options, if any, to be awarded
to the Company's officers. Historically, when granting stock options, the
committee evaluated a number of criteria, including the recipient's current
stock holdings, years of service, position with the Company, and other factors;
the committee has not applied a formula assigning specific weights to any of
these factors when making its determination. Executive officers have been
granted options under the New Plan, which generally vest over a five-year
period. See "Security Ownership of Management and Certain Beneficial Owners" for
the currently exercisable options.
The New Plan is designed to satisfy the conditions of Section 422 of the Code
so that options granted thereunder may qualify as "incentive stock options."
To qualify as "incentive stock options," options may not become exercisable
for the first time in any year to the extent that the number of incentive
options first exercisable in that year multiplied by the exercise price
exceeds $100,000.
EMPLOYEE STOCK OWNERSHIP PLAN
In connection with the Merger, the Company adopted an amended and restated
Employee Stock Ownership Plan, or ESOP. All eligible employees (i.e.,
employees with one (1) year of service who are at least 21 years of age) of
the Company are eligible participants in the ESOP. Pursuant to this
qualified plan, during 1997 the Company contributed 5% of each eligible
participant's total cash compensation for the year (up to a $30,000 limit per
person) to a plan account on the participant's behalf, which fully vests over
a two-year period. The ESOP has used substantially all of these cash
contributions to purchase shares of the Company, thus aligning every
employee's interest with those of the Company and its stockholders. The ESOP
currently holds 0.8% of the outstanding shares of the Company, and at
December 31, 1997 all of these shares had been allocated to participants'
plan accounts. See "Voting Securities."
DEFERRED COMPENSATION PLAN
Pursuant to the Merger, the Company succeeded to the deferred compensation
plan of Advisers (the "Deferred Compensation Plan"), and subsequently adopted
such plan as amended and restated. The Deferred Compensation Plan is
intended to be a funded plan for the purpose of providing deferred
compensation to the Company's employees and consultants. Any employee or
consultant of the Company are eligible to participate in the plan at such
time and for such period as designated by the Board of Directors. The
Deferred Compensation Plan is administered through a trust, and the Company
funds this plan through cash and open market purchases of the Company's
common stock. See "--Formula Award."
CERTAIN TRANSACTIONS
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, 1997. All of
such indebtedness results from loans made by the Company to enable officers
to exercise stock options. The interest rates charged generally reflect the
applicable federal rate on the date of the loan.
<TABLE>
<CAPTION>
HIGHEST AMOUNT AMOUNT OUTSTANDING
POSITION WITH OUTSTANDING RANGE OF AT
NAME THE COMPANY DURING 1997 INTEREST RATES MARCH 27, 1998
- - - - - - - - - - - - - ---- ----------- ----------- -------------- --------------
<S> <C> <C> <C>
William L. Walton Chairman and Chief Executive $2,414,218 6.24% $2,414,218
Officer
Jon A. DeLuca Principal and Chief $1,198,822 5.56% - 6.36% $1,198,822
Financial Officer
John M. Scheurer Managing Director $2,389,417 5.25% - 7.45% $2,389,417
Joan M. Sweeney Managing Director $1,832,719 5.79% - 6.63% $1,832,719
</TABLE>
12
<PAGE> 15
<TABLE>
<CAPTION>
HIGHEST AMOUNT AMOUNT OUTSTANDING
POSITION WITH OUTSTANDING RANGE OF AT
NAME THE COMPANY DURING 1997 INTEREST RATES MARCH 27, 1998
- - - - - - - - - - - - - ---- ----------- ----------- -------------- --------------
<S> <C> <C> <C>
G. Cabell Williams III Managing Director $3,322,977 4.92% - 6.24% $3,322,977
George C. Williams, Jr. Director and $1,850,446 5.89% - 6.24% $1,850,446
Chairman Emeritus
</TABLE>
Investment Advisory Agreements. As of December 31, 1997, the Company is
internally managed and pays no investment advisory fees to an outside
investment adviser. Prior to the Merger, however, each of the Company,
Allied I, Allied II and Allied Commercial was managed by Advisers and each
was a party to a respective investment advisory agreement with Advisers.
Pursuant to the investment advisory agreement for the Company, Allied I,
Allied II, and Allied Commercial, Advisers was entitled to be paid, on a
quarterly basis, a fee equal to approximately 0.625% (2.5% per annum) of the
quarter-end value of each the relevant Allied Company's respective invested
assets, less interim and investments, cash and cash equivalents and 0.125%
(0.5% per annum) of the quarter-end value of interim investments, cash and
cash equivalents. With respect to Allied Commercial, Advisers adjusted its
fee schedule to provide a range of fees charged on new loans originated by
Allied Commercial. The range of fees for loans originated in 1997 was from
0.5% to 3%; Advisers maintained a quarterly cap on the advisory fees charged
to Allied Commercial, which equated to 2.5% per annum. With the consummation
of the Merger, all external advisory fees have been eliminated. During 1997,
Allied I accrued $3.1 million, Allied II accrued $2.2 million, Allied
Commercial accrued $7.2 million, and Allied Lending accrued $1.7 million in
advisory fees payable to Advisers.
Messrs. Walton and Williams, who are director nominees at the Meeting, were
and continue to be "interested persons," as defined in the Investment Company
Act of 1940, as amended, of the Company, as are the executive officers of the
Company named herein. All of the executive officers of the Company were also
executive officers of Advisers prior to the Merger.
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, and any persons holding 10% or
more of its 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 believes that
during 1997 all Section 16(a) filing requirements applicable to such persons
were met in a timely manner except for Messrs. Leahy, Reilly, and Wood, and
Ms. van Roijen, who inadvertently excluded their dividend reinvestment plan
shares on their initial Form 3 following the Merger. A de minimis number of
shares held in the dividend reinvestment plan accounts of each of the above
named individuals were subsequently reported on an amended Form 3.
RATIFICATION OF SELECTION OF INDEPENDENT PUBLIC ACCOUNTANTS
The disinterested members of the Board of Directors have selected Arthur
Andersen LLP as independent public accountants for the Company for the year
ending December 31, 1998. This selection is subject to ratification or
rejection by the stockholders of the Company. If the stockholders ratify the
selection of Arthur Andersen LLP as the Company's accountants, Arthur
Andersen also will be the independent public accountants for all subsidiaries
of the Company.
Prior to the year ended December 31, 1997, the Company's financial statements
were audited by Matthews, Carter and Boyce, P.C. On December 12, 1997,
Matthews, Carter and Boyce, P.C. resigned, effective upon the consummation of
the Merger, and Arthur Andersen LLP was engaged and continues
13
<PAGE> 16
as the independent accountants of the Company. The decision to change
accountants was recommended by the Audit Committee and was approved by the Board
of Directors of the Company.
For the year ended December 31, 1996 and up to the date of resignation of
Matthews, Carter and Boyce, P.C., there were no disagreements with Matthews,
Carter and Boyce, P.C. on any matter of accounting principles or practices,
financial statement disclosure or auditing scope or procedure which, if not
resolved to the satisfaction of Matthews, Carter and Boyce, P.C., would have
caused it to make reference to the subject matter of the disagreement in
connection with its report. The independent accountants' report on the 1996
financial statements did not contain an adverse opinion or a disclaimer of
opinion, and was not qualified or modified as to uncertainty, audit scope or
accounting principles.
Arthur Andersen LLP has advised the Company that neither the firm nor any
present member or associate of it has any material financial interest, direct
or indirect, in the Company or its subsidiaries. It is not expected that a
representative of Arthur Andersen LLP 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, 1997 for the
professional services provided to the Company by Arthur Andersen LLP
consisted of fees for audit services (which included examination of the
financial statements of the Company and review of the filings by the Company
of reports and registration statements) and for non-audit services. 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. Unless
marked to the contrary, the shares represented by the enclosed proxy card
will be voted for ratification of the appointment of Arthur Andersen LLP as
the independent public accountants of the Company.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE TO RATIFY THE SELECTION OF
ARTHUR ANDERSEN LLP 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. 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.
1999 ANNUAL MEETING OF STOCKHOLDERS
The Company expects that the 1999 Annual Meeting of Stockholders will be held
in May 1998, 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 at its
address in Washington, DC no later than December 4, 1998 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.
14
<PAGE> 17
ALLIED CAPITAL CORPORATION
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints WILLIAM L. WALTON, GEORGE C. WILLIAMS, JR. and
TRICIA BENZ DANIELS, or any one of them, and each with full power of
substitution, to act as attorneys and proxies for the undersigned to vote all
the shares of common stock of the Company which the undersigned is entitled to
vote at the Annual Meeting of Stockholders of the Company to be held in the
State Salon of the Sheraton Carlton Hotel, 629 Sixteenth Street, NW, Washington,
DC on May 14, 1998 at 9:00 A.M. and at all adjournments thereof, as indicated on
this proxy.
1. FOR WITHHOLD AUTHORITY
The election of the following twelve persons (except as marked to the
contrary) as directors for Allied Capital Corporation, four of which
will serve as Class I Directors and will serve until 1999, four of
which will serve as Class II Directors and will serve until 2000, and
four of which will serve as Class III Directors and will serve until
2001, or until their successors are elected and qualified.
<TABLE>
<CAPTION>
Class I Directors Class II Directors Class III Directors
----------------- ------------------ -------------------
<S> <C> <C>
John D. Firestone John I. Leahy William L. Walton
Anthony T. Garcia Warren K. Montouri George C. Williams, Jr.
Lawrence I. Hebert Guy T. Steuart II Brooks H. Browne
Laura W. van Roijen T. Murray Toomey, Esq. Robert E. Long
</TABLE>
INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL, STRIKE A LINE
THROUGH HIS OR HER NAME ON THE LIST ABOVE.
2. FOR AGAINST ABSTAIN
The ratification of the selection of Arthur Andersen LLP as independent
public accountants for Allied Capital Corporation for the year ending
December 31, 1998.
THIS PROXY IS REVOCABLE AND WILL BE VOTED AS DIRECTED, BUT IF NO INSTRUCTIONS
ARE SPECIFIED, THIS PROXY WILL BE VOTED "FOR" THE NOMINEES AND FOR THE PROPOSAL
LISTED. If any other business is presented at the meeting, this proxy will be
voted by the proxies in their best judgment, including a motion to adjourn or
postpone the meeting to another time and/or place for the purpose of soliciting
additional proxies. At the present time, the Board of Directors knows of no
other business to be presented at the meeting.
Please mark, sign and return this proxy in the enclosed envelope. The
undersigned acknowledges receipt from the Company prior to the execution of this
proxy of a Notice of Annual Meeting of Stockholders and a Proxy Statement.
Dated
---------------------------------------------
Signature
-----------------------------------------------
Signature
-----------------------------------------------
Please sign your name(s) exactly as shown
hereon and date your proxy in the blank
provided. 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 a duly authorized
officer or partner.
