As filed with the Securities and Exchange Commission on December 15, 1998.
Registration No. 333-_______
================================================================================
SECURITIES AND EXCHANGE COMMISSION
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
AMERICAN CAPITAL STRATEGIES, LTD.
(Exact Name of Registrant as Specified in its Charter)
Delaware 52-145-1377
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
3 Bethesda Metro Center, Suite 860
Bethesda, Maryland 20814
(301) 951-6122
(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)
Malon Wilkus
Chairman, President and Chief Executive Officer
American Capital Strategies, Ltd.
3 Bethesda Metro Center, Suite 860
Bethesda, Maryland 20814
(301) 951-6122
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
--------------------
Copy to:
Samuel A. Flax, Esq.
Arnold & Porter
555 Twelfth Street, N.W.
Washington, D.C. 20004
--------------------
Approximate date of commencement of proposed sale to the public: From time
to time after the effective date of the Registration Statement as the Registrant
may determine.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [X]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [ ]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
Calculation of Registration Fee
<TABLE>
<CAPTION>
- ----------------------------- ------------ ------------------------- -------------------------- ----------------
Title of each class of Amount to be Proposed maximum offering Proposed maximum aggregate Amount of
securities to be registered registered price per unit (1) offering price (1) registration fee
- ----------------------------- ------------ ------------------------- -------------------------- ----------------
<S> <C> <C> <C> <C>
Common Stock, par value $0.01
per share 500,000 $15.125 $7,562,500 $2,102.38
- ----------------------------- ------------ ------------------------- -------------------------- ----------------
- ----------------------------- ------------ ------------------------- -------------------------- ----------------
Total
- ----------------------------- ------------ ------------------------- -------------------------- ----------------
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee based
upon the closing price on December 10, 1998 of the Registrant's Common Stock
listed on the Nasdaq National Market as provided pursuant to Rule 457(c).
<PAGE>
AMERICAN CAPITAL STRATEGIES, LTD.
Dividend Reinvestment Plan
500,000 shares of Common Stock
--------------------
Five hundred thousand authorized and unissued shares of common stock,
$0.01 par value per share ("Common Stock"), of American Capital Strategies, Ltd.
(the "Company" or "American Capital") have been authorized for purchase under
the Company's Dividend Reinvestment Plan (the "Plan"). The Common Stock is
quoted on the Nasdaq National Market System ("Nasdaq") under the symbol "ACAS."
The Company suggests that this Prospectus be retained for future reference.
--------------------
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed upon the
adequacy or accuracy of this prospectus. Any representation to the contrary is a
criminal offense.
--------------------
The date of this Prospectus is December 15, 1998
<PAGE>
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
American Capital Strategies, Ltd. is subject to the informational
requirements of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and in accordance therewith files reports, proxy statements and other
information with the Securities and Exchange Commission (the "Commission").
Reports, proxy statements, the Registration Statement referred to below and
other information concerning the Company may be inspected and copied at
prescribed rates at the Public Reference Section of the Commission at 450 Fifth
Street, N.W., Room 1024, Washington, D.C. 20549. The public may obtain
information on the operation of the Public Reference Room by calling the
Commission at 1-800-SEC-0330. In addition, the Commission maintains an Internet
site that contains reports, proxy and information statements, and other
information regarding registrants, like the Company, that file electronically
with the Commission. Such materials may be accessed electronically at the
Commission's site on the World Wide Web located at http://www.sec.gov. The
common stock of the Company is quoted on the Nasdaq. The aforementioned reports,
proxy statements and other materials concerning the Company may also be
inspected at the offices of the National Association of Securities Dealers,
Inc., 1735 K Street, N.W., Washington, D.C. 20006.
The Company has filed with the Commission in Washington, D.C. a
Registration Statement on Form S-3 (including all amendments thereto, the
"Registration Statement") under the Securities Act of 1933, as amended (the
"Securities Act"), with respect to the Securities offered hereby. As permitted
by the rules and regulations of the Commission, this Prospectus does not contain
all of the information set forth in the Registration Statement and the exhibits
and schedules thereto. Such additional information is available for inspection
and copying at the offices of the Commission. Statements contained in this
Prospectus, in any Prospectus Supplement or in any document incorporated by
reference herein or therein as to the contents of any contract or other document
referred to herein or therein are not necessarily complete, and in each instance
reference is made to the copy of such contract or other document filed as an
exhibit to, or incorporated by reference in, the Registration Statement, each
such statement being qualified in all respects by such reference.
The following documents previously filed by the Company with the
Commission under the Exchange Act are incorporated herein by reference:
(a) The Company's latest Annual Report on Form 10-K/A for the fiscal
year ended December 31, 1997, filed with the Commission on March 31, 1998.
(b) The Company's Quarterly Reports on Form 10-Q for the quarters ended
March 31, 1998, June 30, 1998 and September 30, 1998.
(c) The description of the Company's common stock, par value $0.01 per
share ("Common Stock"), contained in the Company's Registration Statement on
Form 8-A filed with the Commission by the Registrant on August 27, 1997.
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(d) All other reports filed pursuant to Sections 13(a), 13(c), 14, or
15(d) of the Exchange Act subsequent to the date of this Prospectus and prior to
the termination of the offering of the Common Stock pursuant to the Plan.
Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained herein
(or in any other subsequently filed document that is or is deemed to be
incorporated by reference herein) modifies or supercedes such previous
statement. Any statement so modified or superceded shall not be deemed to
constitute a part of this Prospectus except as so modified or superseded.
The Company will provide without charge to each person, including any
beneficial owner, to whom a copy of this Prospectus has been delivered, on the
written or oral request of such person, a copy of any or all of the documents
described above under "Incorporation of Certain Documents by Reference," other
than exhibits to such documents unless such exhibits are also specifically
incorporated by reference herein or therein. Requests for such copies should be
directed to American Capital Strategies, Ltd., 3 Bethesda Metro Center, Suite
860, Bethesda, Maryland 20814, Attention: John R. Erickson, telephone number
(301) 951-6122.
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<PAGE>
THE COMPANY
Background
The Company, a Delaware corporation, was incorporated in 1986 to
provide financial advisory services to and invest in small and medium sized
businesses. On August 29, 1997, the Company completed an initial public offering
("IPO") of 10,382,437 shares of its Common Stock and became a non-diversified,
closed end investment company that has elected to be treated as a business
development company ("BDC") under the Investment Company Act of 1940, as amended
("1940 Act"). On October 1, 1997, the Company began operations so as to qualify
to be taxed as a regulated investment company ("RIC") as defined in Subtitle A,
Chapter 1, under Subchapter M of the Internal Revenue Code of 1986 as amended
(the "Code"). As contemplated by these transactions, the Company materially
changed its business plan and format from structuring and arranging financing
for buyout transactions on a fee for services basis to primarily being a lender
to and investor in small and medium sized companies. The Company continues to
provide financial advisory services to businesses through ACS Capital
Investments Corporation ("CIC"), a wholly-owned subsidiary. The Company has
established itself as a leading firm in structuring and obtaining funding for
management and employee buyouts of subsidiaries, divisions and product lines
being divested by larger corporations through the use of employee stock
ownership plans ("ESOPs"). From its formation in 1986 through the IPO, the
Company arranged twenty-nine financing transactions aggregating over $400
million.
Business
The Company is a buyout and specialty finance company that is
principally engaged in providing senior debt, subordinated debt and equity to
companies in need of capital for employee buyouts, management buyouts, growth,
acquisitions, liquidity and restructuring. The Company invests up to $20 million
in each transaction and through its subsidiary, CIC, will arrange and secure
capital for larger transactions.
The Company's primary business objectives are to increase its net
operating income and net asset value by investing its assets in senior debt,
subordinated debt with detachable warrants and equity of small to medium sized
businesses with attractive current yields and potential for equity appreciation.
The Company's loans typically range from $1 million to $20 million, mature in
five to ten years, and require monthly or quarterly interest payments at
variable rates based on the prime rate plus a margin. The Company's equity
interests in small and medium sized businesses are purchased with the goal of
disposing of such interests and realizing a gain within three to seven years.
The principal executive office of the Company is located at 3 Bethesda
Metro Center, Suite 860, Bethesda, Maryland 20814. The telephone number is (301)
951-6122.
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<PAGE>
USE OF PROCEEDS
The Company has no basis for determining precisely the number of shares
of Common Stock that ultimately may be sold pursuant to the Plan, the extent to
which shares will be purchased directly from the Company rather than in the open
market, or the prices at which shares will be sold. The net proceeds from any
purchases of Common Stock directly from the Company under the Plan would provide
the Company with funds that it would expect to use for general corporate
purposes. Shares purchased in market transactions will provide no proceeds to
the Company.
PLAN OF DISTRIBUTION
The Plan allows for dividends to be reinvested into shares purchased by
the Plan Administrator on the market or newly issued shares purchased by the
Plan Administrator from the Company. If the shares are purchased on the market,
the Company will absorb all administrative expenses connected with the operation
of the Plan, except for brokerage commissions. Brokerage commissions shall be
borne pro rata by Participants.
DIVIDENT REINVESTMENT PLAN
The Company's Dividend Reinvestment Plan (the "Plan") is set forth
below in question and answer format. Further questions and correspondence should
be directed to either American Capital Strategies, Ltd. (Attention:
Investor Relations) or the Plan Administrator at the following address:
Boston EquiServe
150 Royall Street
Mail Stop 45-02-62
Canton, MA 02021
(800) 425-5523
PURPOSE
1. What is the purpose of the Plan?
The purpose of the Plan is to provide stockholders with a simple and
convenient method of investing cash dividends and distributions in
additional shares of Common Stock of the Company at the Common Stock's
current market price. Participants in the Plan ("Participants") may
have cash dividends and distributions automatically reinvested without
charges for recordkeeping, and may take advantage of the custodial and
reporting services provided by Boston EquiServe (the "Plan
Administrator") at no additional Cost.
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ADMINISTRATION
2. What does the Plan Administrator do?
The Plan Administrator administers the Plan for Participants, keeps
records, sends statement of accounts to Participants, and performs
other duties relating to the Plan.
ENROLLMENT AND PARTICIPATION
3. How does a stockholder enroll?
The Company's Dividend Reinvestment Plan is an "opt-out" plan. A
stockholder whose shares are registered in his own name will have all
distributions reinvested automatically in additional shares by the Plan
Administrator unless the stockholder elects, in writing, not to
participate in the Plan. The procedure for terminating participation in
the Plan is explained in the answer to Question 17.
4. What if the shares are held by a broker, bank or nominee?
If your shares are held on the books of the Plan Administrator in the
name of a broker, bank or other nominee (a "Nominee"), your
distributions will be reinvested automatically by the Nominee in
additional shares under the Plan unless your Nominee does not provide
such a service or you elect not to participate in the Plan. Many
Nominees do not provide such a service and routinely request dividends
and distributions to be paid in cash on all shares registered in their
names. If your shares are held for your account by a Nominee and you
would like to participate in the Plan, you should either make
appropriate arrangements for your Nominee to participate on your
behalf, or you must become stockholder of record by having a part or
all of your shares transferred to your own name. If your shares are
held in the name of a Nominee you should contact the Nominee for
details.
5. What if a stockholder would rather receive cash?
If you would rather receive cash, you must notify the Plan
Administrator in writing that you would like to terminate your
participation in the Plan. You may terminate your participation in the
Plan at any time. The procedure for terminating participation in the
Plan is explained in the answer to Question 17.
6. What if a stockholder wishes to receive cash on only some of his or her
shares?
If you wish to receive dividends and distributions in cash on some of
your shares, and have the remaining dividends and distributions
reinvested, you must notify the Plan Administrator, in writing, to that
effect. As a partial participant, you will receive your dividends and
distributions in cash only with respect to the number of shares that
you have specified. With respect to any other shares registered in your
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<PAGE>
name, and with respect to the shares credited to your account on the
books of the Plan Administrator, the corresponding dividends and
distributions will be paid in additional shares.
The number of shares on which you receive cash may be changed at any
time simply by writing the Plan Administrator.
7. May a stockholder elect to re-enroll once he has terminated participation in
the Plan?
Yes. If stockholder has previously elected to receive dividends and
distributions in cash and thus terminated participation in the Plan,
and later wishes to participate in the Plan, the stockholder may
re-enroll at any time by completing an Authorization Form and
delivering it to the Plan Administrator. Any letter requesting
enrollment must be received by the Plan Administrator prior to the
dividend declaration date in order for it to take effect as of the next
dividend or distribution.
A dividend declaration date is a date on which the Company's Board of
Directors (the "Board of Directors") declares a dividend or
distribution to be paid and specifies the amount of such dividend or
distribution.
PURCHASE OF SHARES UNDER THE PLAN
8. How does the Dividend Reinvestment Plan work and how are shares allocated
under the Plan?
When the Board of Directors declares a dividend or distribution, all
non-participants will receive such dividend or distribution by check
mailed directly to the record holder by or under the direction of the
Plan Administrator. The number of shares allocated to a Participant's
Plan Account (a "Plan Account") will be arrived at as follows. Except
under the circumstances outlined in Question 9, the Plan Administrator
will buy shares of Common Stock in the open market, on Nasdaq or
elsewhere, beginning on or before the payment date of the dividend or
distribution, until it has expended for such purchase all of the cash
that would otherwise be payable to the Participants. The number of
shares that will then be credited to the Participants' Plan Accounts
will be based on the average cost of the shares so purchased, including
brokerage commissions. Each Participant's Plan Account will be credited
with a number of shares, including fractional shares, equal to the
total amount of cash dividend or distribution, net of any applicable
withholding taxes, otherwise due to the Participant, divided by the
price of the shares.
Neither the Company nor any stockholder has the authority or power to
direct the time or price at which shares of Common Stock may be
purchased or the selection of the broker or dealer through or from whom
purchases are to be made. The Company will absorb all administrative
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expenses connected with the operation of the Plan (except brokerage
commissions, which shall be borne pro rata by the Participants). The
Plan Administrator will hold the total shares of Common Stock purchased
for all Participants in the name of its nominee and will have no
responsibility for the value of such shares after their purchase.
9. Will newly issued shares ever be paid to Participants?
The Board of Directors may (but is not required to) declare a dividend
or distribution to be paid to Participants in newly issued shares of
Common Stock. In that situation, the price of newly issued shares
credited to a Participant's Plan Account will be equal to the average
of the closing sales prices reported for the shares in The Wall Street
Journal NASDAQ National Market System listings for the five days on
which trading of shares takes place immediately prior to the dividend
payment date (but not less than 95% of the opening sales price on that
date).
Even if the Board of Directors has declared the dividend or
distribution to be payable to Participants in newly issued shares, the
Plan Administrator will be under standing instructions not to credit
newly issued shares, and instead to buy shares in the market, if (i)
the price at which newly issued shares are to be credited does not
exceed 110% of the last determined net asset value of the Common Stock
or (ii) the Company has advised the Plan Administrator that since such
net asset value was last determined it has become aware of events that
indicate the possibility of a change in per share net asset value as a
result of which the net asset value of the Common Stock on the payment
date might be higher than the price at which the Plan Administrator
would credit newly issued shares to the Participants' Plan Accounts.
If the Plan Administrator buys shares on the market, it is possible
that by the time the Plan Administrator has completed its purchases,
the average per share purchase price paid by the Plan Administrator may
exceed the price at which the newly issued shares would have been
credited, or the shares' current net asset value. As a result, there
would be credited to the Participants' Plan Accounts a smaller number
of shares than would have been credited if the dividend or distribution
had been paid in newly issued shares.
10. When will shares of Common Stock be purchased under the Plan?
In the months in which dividends are paid, dividends will be invested
beginning on the dividend payment date. The Plan Administrator will
make every effort to invest any dividends it receives promptly
beginning on each dividend payment date, and in no event later than
thirty days from such date, except where necessary under any applicable
federal securities laws.
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No interest will be paid on funds held by the Plan Administrator
pending investment.
REPORTS TO PARTICIPANTS
11. What accounts are maintained for Participants and what reports on these
accounts do Participants receive?
The Plan Administrator will maintain a separate account for each
Participant. All shares issued to a Participant under the Plan will be
credited to the Participant's account. The Plan Administrator will mail
to each Participant a statement confirming the issuance of shares
within fifteen days after the allocation of shares is made. The
statement will show the amount of the dividend or distribution, the
price at which shares were credited, the number of full and fractional
shares credited, the number of shares previously credited and the
cumulative total of shares credited. In addition, each Participant will
receive copies of the Company's annual and quarterly reports to
stockholders, proxy statements and dividend income information for tax
purposes.
VOTING OF SHARES
12. How will a Participant's shares be voted at meetings of stockholders?
The Participant will receive a proxy card covering the total number of
shares held by the Participant of record, including shares credited to
the Participant's Plan Account. If a proxy card is returned properly
signed, but without indicating instructions as to the manner in which
shares are to be voted with respect to any item thereon, the
corresponding shares will be voted in accordance with the
recommendation of the Board of Directors. If the proxy card is not
returned, or it is unexecuted or improperly executed, the corresponding
shares will not be voted unless the Participant or the Participant's
duly appointed representative votes in person at the meeting.
CERTIFICATES FOR SHARES
13. Will certificates be issued for shares issued under the Plan?
No. Certificates for shares issued under the Plan will not be furnished
to you until your account is terminated or unless you request
certificates in writing for a specified number of shares credited to
your Plan Account. All written requests for certificates should be
directed to the Plan Administrator, allowing two weeks for processing.
The issuance of certificates for shares credited to a Plan Account will
not terminate your participation in the Plan. No certificate for a
fractional share will be issued. If you terminate your participation in
the Plan (see Question 17), the Plan Administrator will sell for your
account any fractional share and send you a check for the proceeds.
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14. In whose name will certificates be registered when issued?
Accounts under the Plan are maintained in the name in which share
certificates of the Participant were registered at the time that the
Participant entered the Plan. Certificates for whole shares issued at
the request of a Participant will be similarly registered.
DIVIDENDS AND STOCK SPLITS
15. What happens if the Company issues a stock dividend or declares a stock
split?
Any stock dividends or split shares distributed by the Company on
shares held by the Plan Administrator for the Participant will be
credited to the Participant's account.
FEDERAL TAX CONSEQUENCES
16. What is the tax status of reinvested dividends?
The automatic reinvestment of dividends and distributions will not
relieve a Participant of any income tax liability associated with such
dividend or distribution. A Participant in the Plan will be treated for
Federal income tax purposes as having received, on the dividend payment
date, a dividend or distribution in an equal amount to the cash that
the Participant could have received instead of shares. The tax basis of
such shares will equal the amount of such cash.
A Participant will not realize any taxable income upon receipt of a
certificate for whole shares credited to the Participant's account
either upon the Participant's request for a specified number of shares
or upon termination of enrollment in the Plan. Each Participant will
receive early in each year a Form 1099 regarding the Federal income tax
status of all dividends and distributions taxable during the previous
year.
MODIFICATION AND TERMINATION
17. What happens if a Participant wishes to terminate participation?
You may terminate your participation in the Plan at any time by
notifying the Plan Administrator in writing. To be effective on any
given dividend payment date, the notice to terminate must be received
by the Plan Administrator before the record date for the dividend
payment. All dividends with a record date after receipt of your
notification will be sent directly to you. Upon termination of your
participation, you will receive a certificate for the number of full
shares of Common Stock held for you by the Plan Administrator at no
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charge. At the same time, you will receive a check in payment for any
fractional shares in your account, valued at the then current market
price of the Company's Common Stock, less any applicable brokerage
commissions and any other costs of sale. If you prefer, you can request
that your full shares of Common Stock held by the Plan Administrator be
sold, and you will receive a check for the proceeds, less any
applicable brokerage commissions and any other costs of sale.
18. May the Plan be Changed or Discontinued?
The Company and the Plan Administrator may amend, suspend or terminate
the Plan at any time. Notice of any such amendment, suspension or
termination will be sent to all Participants at least ninety days prior
to the dividend or declaration date for which the amendment, suspension
or termination is to be effective.
PLAN ADMINISTRATOR RESPONSIBILITIES
19. What are the Plan Administrator's responsibilities under the Plan?
The Plan Administrator will not be liable under the Plan for any act
done by the Plan Administrator in good faith or for any good faith
omission to act including, without limitation, any claims for liability
(a) arising out of failure to terminate a Participant's participation
in the Plan upon the Participant's death prior to receipt of notice in
writing of such death; (b) with respect to the prices at which shares
are purchased or sold for the Participant's account and the time such
purchases or sales are made; and (c) relating to the value of the
shares acquired for the Participant's account.
The Internal Revenue Code of 1986, as amended, imposes certain
reporting obligations upon brokers and other middlemen. As a result,
the Plan Administrator will be required to report to the Internal
Revenue Service and the Participant any sales of stock by the Plan
Administrator on behalf of a Participant.
LEGAL MATTERS
The validity of the shares of Common Stock offered hereby will be
passed upon for the Company by Arnold & Porter, Washington, D.C.
EXPERTS
The financial statements of American Capital Strategies, Ltd. appearing
in the American Capital Strategies, Ltd. Annual Report (Form 10-K/A) for the
year ended December 31, 1997 have been audited by Ernst & Young LLP, independent
auditors, as set forth in their report thereon included therein and incorporated
herein by reference. Such financial statements are incorporated herein by
reference in reliance upon such report given upon the authority of such firm as
experts in accounting and auditing.
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INDEMNIFICATION
Section 145 of the Delaware General Corporation Law ("DGCL"), permits,
under certain circumstances, the indemnification of any person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action, suit, or proceeding, whether civil, criminal, administrative
or investigative (other than an action by or in the right of the corporation) by
reason of the fact that he is or was a director, officer, employee or agent of
the corporation, or is or was serving in a similar capacity for another
enterprise at the request of the corporation. To the extent that a director,
officer, employee or agent of the corporation has been successful in defending
any such proceeding, the DGCL provides that he shall be indemnified against
expenses (including attorneys' fees) actually and reasonably incurred by him in
connection therewith.
With respect to a proceeding by or in the right of the corporation,
such person may be indemnified against expenses (including attorneys' fees),
actually and reasonably incurred, if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
corporation. The DGCL provides, however, that indemnification shall not be
permitted in such a proceeding if such person is adjudged liable to the
corporation unless, and only to the extent that, the court, upon application,
determines, that he is entitled to indemnification under the circumstances. With
respect to proceedings other than those brought by or in the right of the
corporation, notwithstanding the outcome of such a proceeding, such person may
be indemnified against judgments, fines, and amounts paid in settlement, as well
as expenses, if he acted in good faith and in a manner he reasonably believed to
be in or not opposed to the best interests of the corporation and, with respect
to any criminal action, had no reason to believe his conduct was unlawful.
Except with respect to mandatory indemnification of expenses to successful
defendants as described in the preceding paragraph or pursuant to a court order,
the indemnification described in this paragraph may be made only upon a
determination in each specific case (i) by majority vote of the directors that
are not parties to the proceeding, even though less than a quorum, or (ii) if
there are no such directors, or if such directors so direct, by independent
legal counsel in a written opinion, or (iii) by the stockholders.
The DGCL permits a corporation to advance expenses incurred by a
proposed indemnitee in advance of final disposition of the proceeding, provided
that the indemnitee undertakes to repay such advanced expenses if it is
ultimately determined that he is not entitled to indemnification. Also, a
corporation may purchase insurance on behalf of an indemnitee against any
liability asserted against him in his designated capacity, whether or not the
corporation itself would be empowered to indemnify him against such liability.
The Company has adopted provisions in its Second Amended and Restated
Certificate of Incorporation and its Second Amended and Restated Bylaws that
provide for indemnification of its officers and directors to the maximum extent
permitted under the DGCL.
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As authorized by the DGCL, the Company's Second Amended and Restated
Certificate of Incorporation limits the liability of directors of the
Corporation for monetary damages. The effect of this provision is to eliminate
the rights of the Company and its stockholders (through stockholders' derivative
suits on behalf of the Company) to recover monetary damages against a director
for breach of the fiduciary duty of care as a director (including breaches
resulting from negligent or grossly negligent behavior) except in certain
limited situations. This provision does not limit or eliminate the rights of the
Company or any stockholder to seek non-monetary relief such as an injunction or
rescission in the event of a breach of a director's duty of care. This provision
will not alter the liability of directors under federal securities laws.
The Company has purchased an insurance policy which purports to insure
the officers and directors of the Corporation against certain liabilities
incurred by them in the discharge of their functions as such officers and
directors, except for liabilities resulting from their own malfeasance.
The foregoing descriptions are general summaries only. Reference is
made to the full text of the Company's Second Amended and Restated Certificate
of Incorporation and its Second Amended and Restated Bylaws, both filed with the
Commission on August 12, 1997 as part of Pre-Effective Amendment Number 1 to the
Registration Statement on Form N-2 (File No. 333-29943), which are incorporated
herein by reference.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers or persons controlling the
registrant pursuant to the foregoing provisions, the Registrant has been
informed that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and is
therefore unenforceable.
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No person has been authorized to give any information or to make any
representations other than those contained in this Prospectus in connection with
the offer contained herein and, if given or made, such information or
representations must not be relied upon as having been authorized by the
Company. This Prospectus does not constitute an offer to sell or a solicitation
of an offer to buy any securities offered hereby in any jurisdiction or to any
person in which or to whom it is unlawful to make such offer or solicitation.
Neither the delivery of this Prospectus nor any sale made hereunder shall, under
any circumstance, create any implication that there has been no change in the
affairs of the Company or the facts herein set forth since the date hereof.
Table of Contents
Available Information..................... 2
Incorporation of Certain
Documents by Reference.................. 2
The Company............................... 4
Use of Proceeds........................... 4
Plan of Distribution...................... 5
Dividend Reinvestment
Plan.................................... 5
Legal Matters............................. 11
Experts................................... 11
Indemnification........................... 11
500,000 Shares
AMERICAN
CAPITAL STRATEGIES, LTD.
Common Stock
__________
PROSPECTUS
__________
Dividend Reinvestment Plan
December 15, 1998
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The expenses to be incurred in connection with the issuance and
distribution of the shares of Common Stock being offered hereby payable by the
Registrant are estimated as follows:
SEC Registration Fee..................................................$ 2,102.38
Printing and Engraving Costs..........................................$10,000.00
Fees and Expenses of Counsel..........................................$25,000.00
Accounting Fees and Expenses..........................................$10,000.00
Miscellaneous.........................................................$ 2,897.62
----------
TOTAL.................................................................$50,000.00
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the Delaware General Corporation Law ("DGCL"), permits,
under certain circumstances, the indemnification of any person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action, suit, or proceeding, whether civil, criminal, administrative
or investigative (other than an action by or in the right of the corporation) by
reason of the fact that he is or was a director, officer, employee or agent of
the corporation, or is or was serving in a similar capacity for another
enterprise at the request of the corporation. To the extent that a director,
officer, employee or agent of the corporation has been successful in defending
any such proceeding, the DGCL provides that he shall be indemnified against
expenses (including attorneys' fees) actually and reasonably incurred by him in
connection therewith.
With respect to a proceeding by or in the right of the corporation,
such person may be indemnified against expenses (including attorneys' fees),
actually and reasonably incurred, if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
corporation. The DGCL provides, however, that indemnification shall not be
permitted in such a proceeding if such person is adjudged liable to the
corporation unless, and only to the extent that, the court, upon application,
determines, that he is entitled to indemnification under the circumstances. With
respect to proceedings other than those brought by or in the right of the
corporation, notwithstanding the outcome of such a proceeding, such person may
be indemnified against judgments, fines, and amounts paid in settlement, as well
as expenses, if he acted in good faith and in a manner he reasonably believed to
be in or not opposed to the best interests of the corporation and, with respect
to any criminal action, had no reason to believe his conduct was unlawful.
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<PAGE>
Except with respect to mandatory indemnification of expenses to successful
defendants as described in the preceding paragraph or pursuant to a court order,
the indemnification described in this paragraph may be made only upon a
determination in each specific case (i) by majority vote of the directors that
are not parties to the proceeding, even though less than a quorum, or (ii) if
there are no such directors, or if such directors so direct, by independent
legal counsel in a written opinion, or (iii) by the stockholders.
The DGCL permits a corporation to advance expenses incurred by a
proposed indemnitee in advance of final disposition of the proceeding, provided
that the indemnitee undertakes to repay such advanced expenses if it is
ultimately determined that he is not entitled to indemnification. Also, a
corporation may purchase insurance on behalf of an indemnitee against any
liability asserted against him in his designated capacity, whether or not the
corporation itself would be empowered to indemnify him against such liability.
The Company has adopted provisions in its Second Amended and Restated
Certificate of Incorporation and its Second Amended and Restated Bylaws that
provide for indemnification of its officers and directors to the maximum extent
permitted under the DGCL.
As authorized by the DGCL, the Company's Second Amended and Restated
Certificate of Incorporation limits the liability of directors of the
Corporation for monetary damages. The effect of this provision is to eliminate
the rights of the Company and its stockholders (through stockholders' derivative
suits on behalf of the Company) to recover monetary damages against a director
for breach of the fiduciary duty of care as a director (including breaches
resulting from negligent or grossly negligent behavior) except in certain
limited situations. This provision does not limit or eliminate the rights of the
Company or any stockholder to seek non-monetary relief such as an injunction or
rescission in the event of a breach of a director's duty of care. This provision
will not alter the liability of directors under federal securities laws.
The Company has purchased an insurance policy which purports to insure
the officers and directors of the Corporation against certain liabilities
incurred by them in the discharge of their functions as such officers and
directors, except for liabilities resulting from their own malfeasance.
The foregoing descriptions are general summaries only. Reference is
made to the full text of the Company's Second Amended and Restated Certificate
of Incorporation and its Second Amended and Restated Bylaws, both filed with the
Commission on August 12, 1997 as part of Pre-Effective Amendment Number 1 to the
Registration Statement on Form N-2 (File No. 333-29943), which are incorporated
herein by reference.
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<PAGE>
ITEM 16. EXHIBITS
Exhibit 3.1 American Capital Strategies, Ltd. Second Amended and
Restated Certificate of Incorporation, incorporated herein
by reference to Exhibit 2.a of the Pre-Effective Amendment
Number 1 to the Registration Statement on Form N-2 (File No.
333-29943) filed on August 12, 1997.
Exhibit 3.2 American Capital Strategies, Ltd. Second Amended and
Restated Bylaws, incorporated herein by reference to Exhibit
2.b of the Pre-Effective Amendment Number 1 to the
Registration Statement on Form N-2 (File No. 333-29943)
filed on August 12, 1997.
Exhibit 4 Instruments defining the rights of security holders - see
Exhibits 3.1 and 3.2.
Exhibit 5 Opinion of Arnold & Porter regarding legality of common
stock being registered.
Exhibit 23.1 Consent of Arnold & Porter, included in the opinion filed as
Exhibit 5 hereto.
Exhibit 23.2 Consent of Ernst & Young LLP.
Exhibit 24 Powers of Attorney of certain directors and officers of
American Capital Strategies, Ltd.
Exhibit 99 American Capital Strategies, Ltd. Dividend Reinvestment
Plan, incorporated herein by reference to Exhibit 2.e of
the Pre-Effective Amendment Number 2 to the Registration
Statement on Form N-2 (File No. 333-29943) filed on August
29, 1997.
ITEM 17. UNDERTAKINGS
The undersigned Registrant hereby undertakes:
1. To file, during any period in which offers or sales are being made,
a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of
the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the Registration Statement (or the
most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental
change in the information set forth in the Registration
Statement. Notwithstanding the foregoing, any increase or
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<PAGE>
decrease in volume of securities offered (if the total dollar
value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form
of prospectus filed with the Commission pursuant to Rule
424(b) if, in the aggregate, the changes in volume and price
represent no more than a 20 percent change in the maximum
aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration
statement;
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the
Registration Statement or any material change to such
information in the Registration Statement;
Provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not
apply if the Registration Statement is on Form S-3, Form S-8 or Form
F-3, and the information required to be included in a post-effective
amendment by those paragraphs is contained in periodic reports filed
with or furnished to the Commission by the Registrant pursuant to
Section 13 or Section 15(d) of the Securities Exchange Act of 1934 that
are incorporated by reference in the Registration Statement;
2. That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall
be deemed to be the initial bona fide offering thereof;
3. To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering;
4. That, for purposes of determining any liability under the Securities
Act of 1933, each filing of the Registrant's annual report pursuant to
Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (and,
where applicable, each filing of an employee benefit plan's annual
report pursuant to Section 15(d) of the Securities Exchange Act of
1934) that is incorporated by reference in the registration statement
shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
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<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and has duly caused this registration
statement to be signed on its behalf by the undersigned thereunto duly
authorized in the city of Bethesda, state of Maryland, on December 15, 1998.
AMERICAN CAPITAL STRATEGIES, LTD.
By: /s/ John R. Erickson
------------------------------------------
John R. Erickson
Vice President and Chief Financial Officer
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated:
<TABLE>
<CAPTION>
Signature Title Date
<S> <C> <C>
* Director December 15, 1998
- ---------------------------
Robert L. Allbriton
/s/ Adam Blumenthal Director, Executive Vice President and December 15, 1998
- ---------------------------
Adam Blumenthal Secretary
/s/ John R. Erickson Vice President and Chief Financial December 15, 1998
- ---------------------------
John R. Erickson Officer
/s/ David Gladstone Vice Chairman of the Board of Directors December 15, 1998
- ---------------------------
David Gladstone
* Director December 15, 1998
- ---------------------------
Neil M. Hahl
* Director December 15, 1998
- ---------------------------
Philip R. Harper
* Vice President December 15, 1998
- ---------------------------
Stephen L. Hester
* Director December 15, 1998
- ---------------------------
Stan Lundine
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
Signature Title Date
<S> <C> <C>
* Director December 15, 1998
- ---------------------------
Alvin N. Puryear
* Director December 15, 1998
- ---------------------------
Stephen P. Walko
/s/ Malon Wilkus Chairman of the Board of Directors, December 15, 1998
- ---------------------------
Malon Wilkus President and Chief Executive Officer
* By: /s/ John R. Erickson December 15, 1998
--------------------------
(Attorney-in-fact)
</TABLE>
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<PAGE>
Exhibit Index
Exhibit Description
Exhibit 3.1 American Capital Strategies, Ltd. Second Amended and Restated
Certificate of Incorporation, incorporated herein by reference
to Exhibit 2.a of the Pre-Effective Amendment Number 1 to the
Registration Statement on Form N-2 (File No. 333-29943) filed
on August 12, 1997.
Exhibit 3.2 American Capital Strategies, Ltd. Second Amended and Restated
Bylaws, incorporated herein by reference to Exhibit 2.b of the
Pre-Effective Amendment Number 1 to the Registration Statement
on Form N-2 (File No. 333-29943) filed on August 12, 1997.
Exhibit 4 Instruments defining the rights of security holders - see
Exhibits 3.1 and 3.2.
Exhibit 5 Opinion of Arnold & Porter regarding legality of common stock
being registered.
Exhibit 23.1 Consent of Arnold & Porter, included in the opinion filed as
Exhibit 5 hereto.
Exhibit 23.2 Consent of Ernst & Young LLP.
Exhibit 24 Powers of Attorney of certain directors and officers of
American Capital Strategies, Ltd.
Exhibit 99 American Capital Strategies, Ltd. Dividend Reinvestment Plan,
incorporated herein by reference to Exhibit 2.e of the
Pre-Effective Amendment Number 2 to the Registration Statement
on Form N-2 (File No. 333-29943) filed on August 29, 1997.
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Exhibit 5
[ARNOLD & PORTER LETTERHEAD]
December 15, 1998
Board of Directors
American Capital Strategies, Ltd.
3 Bethesda Metro Center, Suite 860
Bethesda, Maryland 20814
Re: Registration Statement on Form S-3
File No. 333 -
----------------------------------
Ladies and Gentlemen:
We have acted as your counsel in the preparation of a Registration
Statement on Form S-3 (the "Registration Statement") relating to American
Capital Strategies, Ltd.'s (the "Company") Dividend Reinvestment Plan (the
"Plan") filed by you with the Securities and Exchange Commission covering
500,000 shares (the "Shares") of common stock, $0.01 par value per share
("Common Stock"), issuable pursuant to the Plan.
In connection with rendering the opinions set forth in this letter, we
have examined such corporate records of the Company, including forms of the
Company's Second Amended and Restated Certificate of Incorporation, its Second
Amended and Restated Bylaws, and resolutions of the Board of Directors, as well
as made such investigation of matters of fact and law and examined such other
documents as we deem necessary for rendering the opinions hereinafter expressed.
The opinions set forth herein are subject to the following
qualifications, which are in addition to any other qualifications contained
herein:
A. We have assumed without verification the genuineness of all
signatures on all documents, the authority of the parties (other than the
Company) executing such documents, the authenticity of all documents submitted
to us as originals, and the conformity to original documents of all documents
submitted to us as copies.
B. The opinions set forth herein are based on existing laws,
ordinances, rules, regulations, court and administrative decisions as they
presently have been interpreted and we can give no assurances that our opinions
would not be different after any change in any of the foregoing occurring after
the date hereof.
<PAGE>
C. We have assumed without verification that, with respect to the
minutes of any meetings of the Board of Directors or any committees thereof of
the Company that we have examined, due notice of the meetings was given or duly
waived, the minutes accurately and completely reflect all actions taken at the
meetings and a quorum was present and acting throughout the meetings.
D. We have assumed without verification the accuracy and completeness
of all corporate records made available to us by the Company.
E. We express no opinion as to the effect or application of any laws or
regulations other than the general corporation law of the State of Delaware and
the federal laws of the United States. As to matters governed by the laws
specified in the foregoing sentence, we have relied exclusively on the latest
standard compilations of such statutes and laws as reproduced in commonly
accepted unofficial publications available to us.
Based on the foregoing, upon the assumption that there will be no
material changes in the documents we have examined and the matters investigated
referred to above, we are of the opinion that the Shares, when issued and
delivered in the manner and on the terms described in the Plan and the
Registration Statement, will be validly issued, fully paid and nonassessable.
This letter does not address any matters other than those expressly
addressed herein. This letter is given for your sole benefit and use. No one
else is entitled to rely hereupon. This letter speaks only as of the date
hereof. We undertake no responsibility to update or supplement it after such
date.
We hereby consent to your filing of this opinion as an exhibit to the
Registration Statement.
Very truly yours,
ARNOLD & PORTER
By: /s/ Samuel A. Flax
-------------------
Samuel A. Flax
Exhibit 23.2
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-3, No. 333-_____ ) and related Prospectus of
American Capital Strategies, Ltd. for the registration of 500,000 shares of its
common stock and to the incorporation by reference therein of our report dated
February 12, 1998, with respect to the financial statements of American Capital
Strategies, Ltd. included in its Annual Report (Form 10-K/A) for the year ended
December 31, 1997, filed with the Securities and Exchange Commission.
December 14, 1998 /s/ ERNST & YOUNG LLP
Exhibit 24
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director and/or
officer of American Capital Strategies, Ltd., a corporation organized under the
laws of the state of Delaware (the "Company"), hereby constitutes and appoints
Malon Wilkus, Adam Blumenthal, John R. Erickson and Samuel A. Flax, and each of
them (with full power to each of them to act alone), his or her true and lawful
attorneys-in-fact and agents for him and her on his or her behalf and in his or
her name, place and stead, in all cases with full power of substitution and
resubstitution, in any hand and all capacities, to sign, execute and affix his
or her seal to and file with the Securities and Exchange Commission (or any
other governmental or regulatory authority) a Registration Statement on Form S-3
or any other appropriate form and all amendments or supplements (including
post-effective amendments) thereto with all exhibits and any and all documents
required to be filed with respect thereto, relating to the registration of
shares of common stock, par value $0.01 per share, of the Company, and grants to
each of them full power and authority to do and to perform each and every act
and thing requisite and necessary to be done in and about the premises in order
to effectuate the same as fully and to all intents and purposes as he himself or
she herself might or could do if personally present, hereby ratifying and
confirming all that said attorneys-in-fact and agents, or any of them, may
lawfully do or cause to be done by virtue hereof.
IN WITNESS HEREOF, the undersigned director and or officer has hereunto
set his or her hand and seal, as of the date specified.
<TABLE>
<CAPTION>
Signature Title Date
<S> <C> <C>
/s/ Robert L. Allbriton Director October 16, 1998
- ---------------------------
Robert L. Allbriton
/s/ Adam Blumenthal Director, Executive Vice President and October 25, 1998
- ---------------------------
Adam Blumenthal Secretary
/s/ David Gladstone Vice Chairman of the Board of Directors October 16, 1998
- ---------------------------
David Gladstone
/s/ Neil M. Hahl Director October 15, 1998
- ---------------------------
Neil M. Hahl
/s/ Philip R. Harper Director October 21, 1998
- ---------------------------
Philip R. Harper
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Signature Title Date
<S> <C> <C>
/s/ Stephen L. Hester Vice President October 15, 1998
- ---------------------------
Stephen L. Hester
/s/ Stan Lundine Director October 16, 1998
- ---------------------------
Stan Lundine
/s/ Alvin N. Puryear Director October 16, 1998
- ---------------------------
Alvin N. Puryear
/s/ Stephen P. Walko Director October 16, 1998
- ---------------------------
Stephen P. Walko
/s/ Malon Wilkus Chairman of the Board of Directors, October 16, 1998
- ---------------------------
Malon Wilkus President and Chief Executive Officer
</TABLE>
