<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 II
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
- --------------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
- --------------------------------------------------------------------------------
/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the form or schedule and the date of its filing.
(1) Amount previously paid:
- --------------------------------------------------------------------------------
(2) Form, schedule or registration statement no.:
- --------------------------------------------------------------------------------
(3) Filing party:
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(4) Date filed:
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<PAGE> 2
[ALLIED CAPITAL LOGO]
ALLIED CAPITAL CORPORATION II
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To the Stockholders:
The 1996 Annual Meeting of Stockholders of Allied Capital Corporation II (the
"Company") will be held at the Strathmore Hall Arts Center, 10701 Rockville
Pike, North Bethesda, Maryland on May 10, 1996 at 10:00 a.m. for the following
purposes:
1. To elect eight directors of the Company to serve until the
next annual meeting of stockholders or until their successors
are elected and qualified.
2. To ratify the selection of Matthews, Carter and Boyce to serve
as independent public accountants for the Company for the year
ending December 31, 1996.
3. To transact such other business as may properly come before
the meeting.
The Board of Directors of the Company has fixed the close of business on March
22, 1996 as the record date for the determination of stockholders entitled to
notice of, and to vote at, the meeting and any adjournment thereof. The
Company's stock transfer books will not be closed.
By order of the Board of Directors
/s/ THOMAS R. SALLEY
---------------------
Thomas R. Salley
Secretary
April 4, 1996
==================================================
VOTING YOUR PROXY IS IMPORTANT
THIS IS AN IMPORTANT MEETING. TO ENSURE PROPER
REPRESENTATION AT THE MEETING, YOU ARE REQUESTED
TO COMPLETE, DATE, SIGN AND RETURN THE PROXY CARD
IN THE ENCLOSED ENVELOPE PROVIDED FOR THAT
PURPOSE. STOCKHOLDERS WHO EXECUTE A PROXY CARD
MAY ATTEND THE MEETING AND VOTE THEIR SHARES IN
PERSON.
==================================================
<PAGE> 3
ALLIED CAPITAL CORPORATION II
C/O ALLIED CAPITAL ADVISERS, INC.
1666 K STREET, NW, NINTH FLOOR
WASHINGTON, DC 20006
PROXY STATEMENT
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Allied Capital Corporation II (the
"Company") for use at the Company's 1996 Annual Meeting of Stockholders (the
"Meeting") to be held on May 10, 1996 at 10:00 a.m. at the Strathmore Hall Arts
Center, 10701 Rockville Pike, North Bethesda, Maryland, and at any adjournment
thereof. This Proxy Statement, the accompanying proxy card and the Company's
Annual Report to Stockholders for the year ended December 31, 1995 are first
being sent to stockholders on or about April 4, 1996.
If the accompanying proxy card is properly signed and dated and is received in
time for the Meeting, those shares held of record by you (e.g., those shares
registered directly in your name) will be voted as specified on that proxy
card. If no instructions are given on that proxy card, the shares covered
thereby will be voted FOR the election of the nominees as directors and FOR the
other matters listed in the accompanying Notice of Annual Meeting of
Stockholders. Stockholders of record may revoke a proxy at any time before it
is exercised by so notifying the Secretary of the Company in writing at the
above address, by submitting a properly executed, later-dated proxy or by
voting in person at the Meeting. Any stockholder of record attending the
Meeting may vote in person whether or not he or she has previously executed and
returned a proxy card. If your shares are held for your account by a broker,
bank or other institution or nominee ("Broker Shares"), you may vote such
shares at the Meeting only if you obtain proper written authority from your
institution or nominee that you present at the Meeting.
VOTING
On March 22, 1996, there were 7,158,937 shares of the Company's common stock
outstanding. The stockholders entitled to vote at the Meeting are those of
record on that date. Each share of the Company's common stock is entitled to
one vote.
A majority of the shares entitled to vote at the Meeting constitutes a quorum.
If a share is represented in person or by proxy for any purpose at the Meeting,
it is deemed to be present for quorum purposes. Abstentions and Broker Shares
that are voted on any matter at the Meeting are included in determining the
presence of a quorum for the transaction of business at the commencement of the
Meeting and on those matters for which the broker, nominee or fiduciary has
authority to vote. In the event that a quorum is not present at the Meeting,
or in the event that a quorum is present but sufficient votes to approve any of
the proposals are not received, the persons named as proxies may propose one or
more adjournments of the Meeting to permit further solicitation of proxies.
Any such adjournment will require the affirmative vote of a majority of the
shares represented at the Meeting in person or by proxy. The persons named as
proxies will vote those proxies for such adjournment unless marked to be voted
against any proposal for which an adjournment is sought to permit further
solicitation of proxies. A stockholder vote may be taken on one or more of the
proposals in this Proxy Statement prior to any such adjournment if sufficient
votes have been received for approval.
The eight nominees for election as directors who receive a plurality of the
affirmative votes cast at the Meeting in person or by proxy in the election of
directors will be so elected. Stockholders may not cumulate their votes.
Votes that are withheld, abstentions and Broker Shares that are not voted in
the
<PAGE> 4
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 and the
accompanying notice of the Meeting and proxy card will be borne by the Company.
The Company will request that brokers, nominees, fiduciaries and other persons
holding shares in their names for others forward this Proxy Statement and
certain accompanying material to their principals and request authority for the
execution of a proxy. The Company will reimburse such persons for their
expenses in so doing.
In addition to the solicitation of proxies by the use of the mails, proxies may
be solicited in person and by telephone, facsimile transmission or telegram by
directors or officers of the Company or by employees of Allied Capital
Advisers, Inc. ("Advisers"), without special compensation therefor, or by a
proxy solicitor. Advisers, the Company's investment adviser, has its offices
at 1666 K Street, NW, Ninth Floor, Washington, DC 20006.
BENEFICIAL OWNERSHIP OF COMMON STOCK
As of March 22, 1996 there were 7,158,937 shares outstanding. The Company knows
of no person who owned beneficially more than 5% of its common stock as of that
date. The following table sets forth certain information regarding the shares
of the Company's common stock beneficially owned by (i) each of the Company's
directors and named executive officers, and (ii) all directors and executive
officers as a group. Because the Company does not pay cash compensation to its
executive officers (other than directors' fees to those of its officers who are
also directors), the Company considers the "named executive officers" to be its
Chief Executive Officer and the four other most highly compensated officers of
Advisers, who are also officers of the Company.
<TABLE>
<CAPTION>
Number of Shares Percentage
Name of Beneficial Owner Owned Beneficially Of Class (1)
------------------------ ------------------ --------
<S> <C> <C>
David Gladstone (2) 53,006 *
George C. Williams (2) 31,409 *
William F. Dunbar (2) 88,847 1.2%
John D. Firestone (3) 4,347 *
Lawrence I. Hebert (3) 5,333 *
John I. Leahy (3) 4,887 *
John D. Reilly (3) 8,333 *
Smith T. Wood (3) 6,110 *
John M. Scheurer 15,168 *
G. Cabell Williams III (4) 44,871 *
Joan M. Sweeney (4) 21,815 *
Directors and executive officers
as a group (12 in number) 300,766 4.2%
</TABLE>
2
<PAGE> 5
- --------------
* Less than one percent
(1) Based on a total of 7,158,937 shares of the Company's common stock issued
and outstanding as of March 22, 1996. For purposes of calculating
beneficial ownership by a particular person, these numbers assume that
shares of the Company's common stock issuable upon the exercise of stock
options held by such person which are exercisable within 60 days of March
22, 1996 are outstanding. The shares issuable are as follows: 13,938 for
Gladstone, 19,998 for Williams, 68,732 for Dunbar, 24,873 for Williams III,
7,896 for Scheurer, and 3,333 by each of Messrs. Firestone, Hebert, Leahy,
Reilly and Wood; executive officers and directors as a group hold
immediately exercisable stock options for a total of 155,874 shares.
(2) Director and executive officer
(3) Director
(4) Executive officer
ELECTION OF DIRECTORS
At the Meeting, stockholders will elect eight directors, constituting the
entire membership of the Board of Directors of the Company, to serve until the
next Annual Meeting of Stockholders or until their successors have been elected
and qualified. All such nominees have consented to be named as such in this
Proxy Statement and to serve as directors if elected.
If they are elected as directors, it is expected that the Company will vote to
cause all directors also to serve as directors of the Company's wholly owned
subsidiaries of the Company, Allied Investment Corporation II and Allied
Financial Corporation II.
A stockholder using the enclosed form of proxy can vote for or withhold his or
her vote from any or all of the nominees. If the proxy card is properly
executed but unmarked, it is the intention of the persons named as proxies to
vote such proxy FOR the election of all the nominees named below. In the event
that any of the nominees should decline or be unable to serve as a director, it
is intended that the enclosed proxy will be voted for the election of such
person or persons as are nominated as replacements. The nominees, their ages
and principal occupations are as follows:
DAVID GLADSTONE (1,2)
Age 53. Chairman and Chief Executive Officer of the Company, Allied Capital
Corporation, Allied Capital Commercial Corporation, Allied Capital Lending
Corporation and Advisers; Director, President and Chief Executive Officer of
Business Mortgage Investors, Inc. and Allied Capital Mortgage Corporation;
Director of The Riggs National Corporation; Trustee of The George Washington
University. He has held positions as an executive officer of the Company
since its inception and with Advisers, Allied Capital Corporation, Allied
Capital Commercial Corporation, Allied Capital Lending Corporation, Business
Mortgage Investors, Inc. and Allied Capital Mortgage Corporation since the
later of 1976 or the inception of the relevant entity. He has served as a
director since 1989.
3
<PAGE> 6
GEORGE C. WILLIAMS (1,2,5)
Age 69. Vice Chairman of the Board of the Company, Allied Capital
Corporation, Allied Capital Commercial Corporation, Allied Capital Lending
Corporation and Advisers; Chairman of Business Mortgage Investors, Inc. and
Allied Capital Mortgage Corporation. He has held positions as an executive
officer of the Company since its inception and with Advisers, Allied Capital
Corporation, Allied Capital Commercial Corporation, Allied Capital Lending
Corporation, Business Mortgage Investors, Inc. and Allied Capital Mortgage
Corporation since the later of 1964 or the inception of the relevant entity.
He has served as a director since 1989.
WILLIAM F. DUNBAR (2)
Age 37. President and Chief Operating Officer of the Company, Executive Vice
President of Allied Capital Corporation, Allied Capital Commercial
Corporation, Allied Capital Lending Corporation, Business Mortgage Investors,
Inc. and Advisers; He has held positions as an officer or executive officer
of the Company and with Advisers, Allied Capital Corporation, Allied Capital
Commercial Corporation, Allied Capital Lending Corporation and Business
Mortgage Investors, Inc. since the later of 1987 or the inception of the
relevant entity. He has served as a director since 1993.
LAWRENCE I. HEBERT (1,4)
Age 49. 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; Vice Chairman from 1990
to 1993 and Director of The Riggs National Corporation; Vice President of
University Bancshares, Inc. since 1975; Director of Riggs AP Bank, Ltd. and
Riggs National Bank of Washington, DC. He has served as a director since
1989.
JOHN D. REILLY (1,4)
Age 53. President of Reilly Investment Corporation since 1994; Executive
Director of Reilly Mortgage Group from 1992 to 1994; Chairman of Reilly
Mortgage Group from 1988 to 1992; Director of Allied Capital Commercial
Corporation, Datavault Corporation, and Victory Housing, Inc.; Member of Arts
and Letters Advisory Council of the University of Notre Dame; Trustee of
Government Investors Trust, GIT Equity Trust, GIT Income Trust and GIT
Tax-Free Trust. He has served as a director since 1989.
SMITH T. WOOD (1,3)
Age 48. President of CyberServ L.L.C. (a provider of internet services)
since 1995; President of Seneca Corporation (a provider of computer services)
from 1990 to 1995; Adjunct Professor at Georgetown University; Trustee of
Government Investors Trust, GIT Equity Trust, GIT Income Trust and GIT
Tax-Free Trust. He has served as a director since 1989.
JOHN D. FIRESTONE (3,4)
Age 52. Partner, Secor Group since 1980; Director of Business Mortgage
Investors, Inc. and Security Storage Company of Washington, DC; Senior
Advisor, Gilbert Capital, Inc. He has served as a director since 1993.
JOHN I. LEAHY (3)
Age 65. President of Management and Marketing Associates (a management
consulting firm) since 1986; Director of Master Power, Inc., Kar Kraft
Systems, Inc., Vision Hardware Group, The Wills Group, Thulman-Eastern
Company and Gallagher Fluid Seals, Inc.; Trustee of Loyola College and St.
Mary's University. He has served as a director since 1994.
4
<PAGE> 7
- ---------------
(1) Member of the Executive Committee.
(2) Messrs. Gladstone, Williams and Dunbar, as officers of the Company and
as officers of the Company's investment adviser, are "interested
persons" as defined by the Investment Company Act of 1940.
(3) Member of the Audit Committee.
(4) Member of the Compensation Committee.
(5) George C. Williams is the father of G. Cabell Williams III, an
executive officer of the Company.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE TO ELECT THE FOREGOING NOMINEES
TO SERVE AS DIRECTORS OF THE COMPANY.
MEETINGS OF THE BOARD OF DIRECTORS AND COMMITTEES
The Board of Directors has established an Executive Committee, an Audit
Committee and a Compensation Committee. The Board has not established a
nominating committee. During 1995, the Board of Directors held seven regular
meetings and four committee meetings. All directors attended at least 75% of
the aggregate number of meetings of the Board and of the committees on which
they served.
The Executive Committee is intended, during intervals between meetings of the
Board of Directors, to exercise all powers of the Board in the management and
direction of the business and affairs of the Company, except where action by
the Board is required by statute, an order of the Securities and Exchange
Commission (the "Commission") or the Company's Articles of Incorporation or
By-Laws. The Executive Committee met once during 1995.
The Audit Committee recommends the selection of independent public accountants
for the Company, reviews with such independent public accountants the planning,
scope and results of their audit of the Company's financial statements and the
fees for services performed, reviews with the independent public accountants
the adequacy of internal control systems, reviews the annual financial
statements of the Company and receives audit reports and financial statements
of the Company. The Audit Committee met twice during 1995.
The Compensation Committee determines and issues stock option grants for
officers of the Company under the Company's Stock Option Plan, which is the
only form of compensation paid by the Company to its officers for serving as
such. The Compensation Committee met once during 1995.
COMPENSATION OF EXECUTIVE OFFICERS AND DIRECTORS
Under Commission rules applicable to business development companies, the
Company is required to set forth certain information regarding its three most
highly compensated executive officers who received compensation from the
Company in excess of $60,000 in 1995. However, the Company has no employees
and does not pay any cash compensation to any of its officers (other than
directors' fees to those of its officers who are also directors). All of the
Company's officers and staff are employed by Advisers, which pays all of their
cash compensation. The Company, from time to time, grants stock options to its
officers under the Company's Stock Option Plan. As described in "Compensation
of Directors" below, the Company has also granted stock options to its
non-officer directors under the Company's Stock Option Plan.
5
<PAGE> 8
STOCK OPTIONS
The following table sets forth, as to the Company's Chief Executive Officer and
the four most highly compensated officers of Advisers, who are also officers of
the Company, the details relating to stock option grants made in 1995 and the
potential realizable value of each grant, as prescribed to be calculated by the
Commission.
OPTION GRANTS DURING 1995
<TABLE>
<CAPTION>
Potential realizable
value at assumed annual
rates of stock price
Number of Percent of appreciation over
securities total options Exercise 10-year term (1)
underlying granted price per Expiration ------------
Name options granted in 1995 share date 5% 10%
---- --------------- ------- ----- ---- -- ---
<S> <C> <C> <C> <C> <C> <C>
David Gladstone 21,816 10.3% $13.75 02/02/05 $188,650 $478,075
George C. Williams 0 N/A N/A N/A N/A N/A
John M. Scheurer 7,272 3.4% 13.75 02/02/05 62,883 159,358
G. Cabell Williams III 7,272 3.4% 13.75 02/02/05 62,883 159,358
Joan M. Sweeney 14,544 6.9% 13.75 02/02/05 125,766 318,717
</TABLE>
- ---------------
(1) Potential realizable value is net of the option exercise price but
before any tax liabilities that may be incurred. These amounts
represent certain assumed rates of appreciation, as mandated by the
Commission. Actual gains, if any, on stock option exercises are
dependent on the future performance of the shares, overall market
conditions, and the continued employment of the option holder. The
potential realizable value may not necessarily be realized.
COMPENSATION OF DIRECTORS
During 1995, each director received a fee of $1,000 for each meeting of the
Board of the Company and its wholly owned subsidiaries or each separate
committee meeting attended and $500 for each committee meeting attended on the
same day as a Board meeting. There is no duplication of directors' fees and
expenses even though some directors also take action on behalf of the Company's
wholly owned subsidiaries. Aggregate directors' fees for 1995 were $76,000.
In addition, on December 26, 1995 each non-officer director (Messrs. Hebert,
Reilly, Wood, Leahy and Firestone) received a one-time grant of options to
purchase 10,000 shares at the then-current market price ($17.75) pursuant to
the Company's Stock Option Plan. The following table sets forth certain
details of compensation paid to directors during 1995, as well as compensation
paid for serving as a director of the two other investment companies with which
the Company may be deemed to be related.
6
<PAGE> 9
<TABLE>
<CAPTION>
Total
Compensation
Pension or from Company
Aggregate Retirement Benefits and Related
Compensation Accrued as Part of Companies Paid
from Company (1) Company Expenses to Directors (2)
------------------ -------------------- -------------------
<S> <C> <C> <C>
David Gladstone, Chairman of the $ 8,000 $0 $25,000
Board & Chief Executive Officer
George C. Williams, Vice Chairman $ 8,000 $0 $24,000
William F. Dunbar, Director, President $ 7,000 $0 $ 7,000
& Chief Operating Officer
Lawrence I. Hebert, Director $14,500 $0 $14,500
John D. Reilly, Director $ 9,000 $0 $ 9,000
Smith T. Wood, Director $ 8,000 $0 $ 8,000
John I. Leahy, Director $ 8,500 $0 $ 8,500
John D. Firestone, Director $13,000 $0 $13,000
</TABLE>
- ----------------
(1) Consists only of directors' fees.
(2) Includes amounts paid as compensation to directors by Allied Capital
Corporation and Allied Capital Lending Corporation.
CERTAIN TRANSACTIONS
INVESTMENT ADVISORY AGREEMENT
The Company is a party to an investment advisory agreement with Advisers.
Pursuant to the investment advisory agreement, Advisers is entitled to be paid,
quarterly in arrears, a fee equal to 0.625% per quarter (2.5% per annum) of the
quarter-end value of the Company's consolidated total assets, less consolidated
interim investments, cash and cash equivalents, plus 0.125% per quarter (0.5%
per annum) of the quarter-end value of the Company's consolidated interim
investments, cash and cash equivalents. For 1995, the Company incurred
approximately $2,445,000 in investment advisory fees.
Mr. Reilly owned shares of Advisers from 1990 until 1994, and Mr. Wood owned
shares of Advisers from 1991 until 1994. As of March 22, 1996, Messrs.
Gladstone, Williams and Dunbar continued to own shares of Advisers, and their
beneficial ownership of Advisers shares as of such date represented
approximately 9.7%, 3.4% and 2.6%, respectively, of the Advisers shares then
outstanding or deemed to be outstanding, including shares allocated to their
Allied Employee Stock Ownership Plan stock account through December 31, 1995.
Mr. Gladstone, the Company's Chairman and Chief Executive Officer and a nominee
for re-election as a director, is the Chairman and Chief Executive Officer of
Advisers; Mr. Williams, the Company's Vice Chairman and a nominee for
re-election as a director, is the Vice Chairman of Advisers; Mr. Dunbar, the
Company's President and Chief Operating Officer and a nominee for re-election
as a director, is an executive officer of Advisers. Each officer of the Company
is also an officer of Advisers.
7
<PAGE> 10
INDEBTEDNESS OF MANAGEMENT
The following table sets forth certain information regarding indebtedness to
the Company in excess of $60,000 of any person serving as a director or
executive officer of the Company and of any nominee for election as a director
at any time since January 1, 1995. All of such indebtedness results from loans
made by the Company to enable officers to exercise stock options. The interest
rate charged generally reflects the applicable federal rate on the date of the
loan.
<TABLE>
<CAPTION>
Highest amount
Capacity in outstanding Interest Amount outstanding
Name which served during 1995 rate at March 1, 1996
- ---- ------------ ----------- ---- -------------
<S> <C> <C> <C> <C>
Jon A. DeLuca Executive Vice President & $ 99,990 5.91% $ 99,990
Chief Financial Officer
William F. Dunbar President & Chief $199,980 7.04% $199,980
Operating Officer $ 99,990 6.15% $ 99,990
David Gladstone Chairman & Chief
Executive Officer $499,950 5.79% $499,950
Thomas R. Salley General Counsel & $ 99,990 5.91% $ 94,672
Secretary $100,007 5.79% $ 96,490
Joan M. Sweeney Executive Vice President $299,956 5.79% $299,956
G. Cabell Williams III Executive Vice President $144,845 6.22% $144,845
$146,438 6.15% $146,438
</TABLE>
COMPLIANCE WITH REPORTING REQUIREMENTS OF SECTION 16(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
Pursuant to Section 16(a) of the Securities Exchange Act of 1934, the Company's
directors, executive officers, directors of the Company's investment adviser,
and any persons holding ten percent or more of the Company's common stock are
required to report their beneficial ownership and any changes therein to the
Commission, the National Association of Securities Dealers, Inc. and the
Company. Specific due dates for those reports have been established, and the
Company is required to report herein any failure to file such reports by those
due dates. Based on the Company's review of Forms 3, 4 and 5 filed by such
persons, the Company has identified no deficiencies in the filing of reports
pursuant to Section 16(a) of the Securities Exchange Act of 1934 in its most
recent fiscal year, except as to Brooks H. Browne, a director of the Company's
investment adviser delinquently reported in 1995 his acquisition of shares over
a two-year period pursuant to the Company's dividend reinvestment plan. Robert
E. Long and William L. Walton, also directors of the investment adviser,
delinquently filed their respective Form 3s in 1995, but have had no
transactions in the Company's stock. G. Cabell Williams III filed a Form 3 in
January 1994 that inadvertantly under-reported his holdings at that date; that
Form 3 was amended in 1996 to reflect the correct number of shares held at the
time of the initial filing. The shares in question were acquired through the
exercise of stock options and not through open-market transactions.
8
<PAGE> 11
RATIFICATION OF SELECTION OF INDEPENDENT PUBLIC ACCOUNTANTS
The disinterested members of the Board of Directors have selected Matthews,
Carter and Boyce as independent public accountants for the Company for the year
ending December 31, 1996. This selection is subject to ratification or
rejection by the stockholders of the Company.
If the stockholders ratify the selection of Matthews, Carter and Boyce as the
Company's independent accountants, they will also be the independent public
accountants for all subsidiaries of the Company, Allied Investment Corporation
II and Allied Financial Corporation II.
Matthews, Carter and Boyce has served as the Company's independent public
accountants since its organization in 1989 and has been selected to serve in
such capacity for the year ending December 31, 1996 by all of those members of
the Board of Directors who are not "interested persons" of the Company, as
defined in the Investment Company Act of 1940. This selection is subject to
ratification or rejection by the stockholders of the Company. Matthews, Carter
and Boyce has no financial interest in the Company.
It is not expected that a representative of Matthews, Carter and Boyce will be
present, or available to answer questions, at the Meeting, but a representative
would have an opportunity to make a statement if he or she chose to attend.
The expense recorded during the fiscal year ended December 31, 1995 for the
professional services provided to the Company by Matthews, Carter and Boyce
consisted of fees for audit services (which included the audit of the
consolidated financial statements of the Company and its subsidiaries and
review of the filings by the Company and its subsidiaries of reports and
registration statements) and for non-audit services, the fees for which
aggregated approximately 21% of total fees. The non-audit services, which were
arranged for by management without prior consideration by the Board of
Directors, consisted of non-audit related consultation and the preparation of
tax returns for the Company and its subsidiaries.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE TO RATIFY THE SELECTION OF
MATTHEWS, CARTER AND BOYCE AS INDEPENDENT PUBLIC ACCOUNTANTS.
OTHER BUSINESS
The Board of Directors knows of no other business to be presented for action at
the Meeting. If any matters do come before the Meeting on which action can
properly be taken, it is intended that the proxies shall vote in accordance
with the judgment of the person or persons exercising the authority conferred
by the proxy at the Meeting.
1997 ANNUAL MEETING OF STOCKHOLDERS
The Company expects that the 1997 Annual Meeting of Stockholders will be held
in May 1997, but the exact date, time, and location of such meeting have yet to
be determined. A stockholder who intends to present a proposal at that annual
meeting must submit the proposal in writing to the Company no later than
December 3, 1996 in order for the proposal to be considered for inclusion in
the Company's proxy statement for that meeting. The submission of a proposal
does not guarantee its inclusion in the Company's proxy statement or
presentation at the meeting unless certain securities law requirements are met.
9
<PAGE> 12
PROXY
ALLIED CAPITAL CORPORATION II
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned stockholder of ALLIED CAPITAL CORPORATION II (the
"Company") appoints David Gladstone, George C. Williams and Thomas R. Salley,
or any of them, proxies, with full power of substitution, to vote at the 1996
Annual Meeting of Stockholders of the Company to be held in the Strathmore Hall
Arts Center, 10701 Rockville Pike, North Bethesda, Maryland 20852 at 10:00 a.m.,
Friday, May 10, 1996, and any adjournment or adjournments thereof, the
shares of Common Stock of the Company that the undersigned is entitled to vote,
on all matters that may properly come before that meeting.
(Continued on reverse side)
/X/ PLEASE MARK YOUR VOTES AS IN THIS EXAMPLE
<TABLE>
<S> <C> <C> <C>
WITHHOLD
FOR all nominees AUTHORITY
listed to the right to vote for all
(except as marked nominees listed
to the contrary) to the right. NOMINEES: David Gladstone
George C. Williams
1. Election of eight William F. Dunbar
Directors for the / / / / Lawrence I. Hebert
ensuing year John D. Reilly
Smith T. Wood
John D. Firestone
John I. Leahy
</TABLE>
(INSTRUCTION: TO WITHHOLD YOUR VOTE FOR ONE OR MORE INDIVIDUAL NOMINEES, WRITE
THE NAMES OF EACH NOMINEE WITH RESPECT TO WHOM YOU CHOOSE TO WITHHOLD AUTHORITY
TO VOTE IN THE SPACE PROVIDED BELOW.)
- -------------------------------------
<TABLE>
<S> <C> <C> <C>
FOR AGAINST ABSTAIN
2. To ratify the selection of Matthews,
Carter and Boyce to serve as independent / / / / / /
public accountants for the Company for
the year ending December 31, 1996.
</TABLE>
3. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
YOU ARE URGED TO CAST YOUR VOTE BY MARKING THE APPROPRIATE BOXES. PLEASE NOTE
THAT, UNLESS A CONTRARY INSTRUCTION IS INDICATED, THIS PROXY WILL BE VOTED FOR
ELECTION OF ALL NOMINEES IDENTIFIED IN ITEM 1 AND FOR RATIFICATION OF THE
SELECTION OF INDEPENDENT PUBLIC ACCOUNTANTS DESCRIBED IN ITEM 2.
(PLEASE MARK, DATE, SIGN AND RETURN THIS PROXY IN THE ENCLOSED ENVELOPE.)
SIGNATURE DATE
------------------------------ --------------------
SIGNATURE DATE
------------------------------ --------------------
IF HELD JOINTLY
IMPORTANT: Please sign your name or names exactly as shown hereon and date
your proxy in the blank space provided above. For joint accounts,
each joint owner should sign. When signing as attorney, executor,
administrator, trustee or guardian, please give your full title as
such. If the signer is a corporation or partnership, please sign in
full corporate or partnership name by duly authorized officer or
partner.
