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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 19, 1996
REGISTRATION NO. 33-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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FORM S-3
REGISTRATION STATEMENT
UNDER THE
SECURITIES ACT OF 1933
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ALLIED CAPITAL COMMERCIAL CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
MARYLAND
(STATE OF INCORPORATION)
C/O ALLIED CAPITAL ADVISERS, INC.
1666 K STREET, N.W., 9TH FLOOR
WASHINGTON, DC 20006
(202) 331-1112
(ADDRESS, INCLUDING ZIP CODE, AND
TELEPHONE NUMBER, INCLUDING AREA CODE,
OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
52-1777868
(I.R.S. EMPLOYER IDENTIFICATION NO.)
DAVID GLADSTONE, CHAIRMAN
ALLIED CAPITAL ADVISERS, INC.
1666 K STREET, N.W., 9TH FLOOR
WASHINGTON, DC 20006
(202) 331-1112
(NAME, ADDRESS, INCLUDING ZIP CODE
AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
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With Copy To:
STEVEN B. BOEHM, ESQ.
SUTHERLAND, ASBILL & BRENNAN
1275 PENNSYLVANIA AVENUE, N.W.
WASHINGTON, DC 20004-2404
(202) 383-0100
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
From time to time after the effective date of this Registration Statement.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box.
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
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PROPOSED
PROPOSED MAXIMUM
AMOUNT MAXIMUM AGGREGATE AMOUNT OF
TITLE OF EACH CLASS OF SECURITIES TO BE PRICE PER OFFERING REGISTRATION
TO BE REGISTERED REGISTERED UNIT* PRICE* FEE*
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Common Stock, $0.0001 par value
per share................................. 750,000 Shares $20.1875 $15,140,625 $5,220.91
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* Estimated solely for the purpose of calculating the registration fee pursuant
to Rule 457(c) under the Securities Act of 1933 based on the average of the
high and low reported sales price of the Registrant's common stock on the
Nasdaq National Market on July 17, 1996.
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<PAGE> 2
PROSPECTUS
ALLIED CAPITAL COMMERCIAL CORPORATION
COMMON STOCK DIVIDEND REINVESTMENT PLAN
This Prospectus relates to shares of common stock, $0.0001 par value per
share (the "Common Stock") of Allied Capital Commercial Corporation (the
"Company"), a Maryland corporation, offered pursuant to the Allied Capital
Commercial Corporation Dividend Reinvestment Plan (the "Plan"). The Plan
provides shareholders with a method of investing cash dividends and
distributions in additional shares of Common Stock. Any shareholder of record of
Common Stock is eligible to participate in the Plan. In addition, brokers or
nominees are eligible (but are not required) to participate in the Plan on
behalf of the beneficial owners for whom they are holding shares. See
"Description of the Common Stock Dividend Reinvestment Plan -- Participation."
The Company will use its transfer agent ("TA") to act as agent for the
participants in the Plan. American Stock Transfer and Trust Company ("AST")
currently is the transfer agent for the Company. The TA will receive all of the
cash dividends (whether such dividends are from earnings or are a return of
capital) paid on participants' Common Stock and will use such dividends to
acquire shares of Common Stock for the accounts of such participants. As further
described in the Plan, the TA will either acquire shares on the open market, or
purchase shares directly from the Company, or receive newly issued shares from
the Company. Shares purchased in the open market will be deemed to be purchased
at the average price of all shares purchased for participants in the Plan,
including brokerage commissions, with the proceeds of the dividends then being
invested. When the Company elects to issue new shares under the Plan, the price
of the shares of Common Stock will be calculated based on the five-day average
of the closing prices for the Common Stock prior to and including the payment
date.
The TA's fees for administering the Plan are included in the fees paid by
the Company to the TA for acting as its transfer agent. The price at which
shares are credited to participants' accounts will, however, include
participants' shares of any brokerage commissions incurred in connection with
TA's open market purchase of such shares. There will be no brokerage charges in
connection with any credit of newly issued shares.
Any participant in the Plan may withdraw from participation in the Plan at
any time as described herein.
This Prospectus relates to 750,000 shares of Common Stock of the Company.
It is suggested that this Prospectus be retained for future reference.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
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THE DATE OF THIS PROSPECTUS IS JULY 19, 1996
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AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and, in accordance
therewith, files reports and other information with the Securities and Exchange
Commission (the "Commission"). Such reports and other information filed by the
Company with the Commission pursuant to the informational requirements of the
Exchange Act may be inspected and copied at the public reference facilities
maintained by the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549,
and at the following regional offices of the Commission: New York Regional
Office, 7 World Trade Center, 13th Floor, New York, New York 10048; and Chicago
Regional Office, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661.
Copies of such materials may be obtained from the Public Reference Section of
the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549 at prescribed
rates. The Company's Common Stock is listed on the Nasdaq National Market.
Reports and other information concerning the Company can be inspected and copied
at the following location: The Nasdaq Stock Market, 1735 K Street, N.W.,
Washington, D.C. 20006.
The Company has filed with the Commission a Registration Statement on Form
S-3 (the "Registration Statement") under the Securities Act of 1933, as amended
(the "Securities Act"), with respect to the shares of Common Stock offered
hereby. This Prospectus, which constitutes part of the Registration Statement,
omits certain of the information contained in the Registration Statement
pursuant to the rules and regulations of the Commission. For further
information, reference is made to the Registration Statement and to the exhibits
thereto. The Registration Statement and the exhibits thereto may be inspected
without charge at the public reference facilities of the Commission described
above, and copies thereof may be obtained from the Commission upon payment of
the prescribed fees.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The following documents (or specified portions thereof) filed by the
Company with the Commission prior to the date hereof are hereby incorporated by
reference in this Prospectus, except as superseded or modified herein:
1. The description of the Common Stock contained in Amendment No. 2 to
the Company's Registration Statement on Form S-11 (File No.
33-47791) as filed with the Commission on June 30, 1992;
2. The Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1995; and
3. The Company's Quarterly Report on Form 10-Q for the quarter ended
March 31, 1996.
Each document filed subsequent to the date of this Prospectus pursuant to
Section 13(a), 13(c), 14 or 15(d) of the Exchange Act and prior to termination
of this offering of the Common Stock shall be deemed to be incorporated by
reference in this Prospectus and shall be part hereof from the date of filing of
such document.
Any statement contained in a document that is 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 also deemed to be incorporated by reference
herein modifies or supersedes such statement, and any statement contained in
this Prospectus shall be deemed to be modified or superseded to the extent that
a statement contained in any subsequently filed document that also is deemed to
be incorporated by reference herein modifies or supersedes such statement. Any
such statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of this Prospectus.
The Company will provide without charge to each person, including any
beneficial owner, to whom a copy of this Prospectus is delivered, upon the
written or oral request of any such person, a copy of any document described
above (other than exhibits). Requests for such copies should be directed to
Allied Capital Commercial Corporation, c/o Allied Capital Advisers, Inc., 1666 K
Street, N.W., 9th Floor, Washington, D.C. 20006, Attention: Investor Relations.
The Company's telephone number is (202) 331-1112.
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THE COMPANY
The Company was incorporated in Maryland in May 1992. The Company's
existence as a corporation is perpetual; however, stockholders holding more than
two-thirds of the Company's shares outstanding and entitled to vote in the years
2000, 2003, or 2006 can elect at that time to have the Company's Board of
Directors liquidate the Company. Allied Capital Advisers, Inc., a registered
investment adviser, serves as the Company's investment manager.
The Company has elected to qualify as a real estate investment trust
("REIT") for federal tax purposes. As a result of this election, the Company is
not taxed at the corporate level on taxable income distributed to stockholders,
provided that certain REIT qualification tests are met.
The Company invests primarily in commercial loans to small businesses
secured by liens or mortgages on real estate ("business loans"). Such loans are
purchased by the Company in accordance with established underwriting criteria.
The Company derives income from interest on its business loans and temporary
investments and from discounts on its portfolio of purchased and originated
business loans.
USE OF PROCEEDS
The Company has no basis for estimating either the number of shares of
Common Stock that will ultimately be purchased from the Company under the Plan
or the prices at which such shares will be sold. Proceeds from the shares of
Common Stock purchased from the Company will be used for general corporate
purposes.
DESCRIPTION OF THE COMMON STOCK
DIVIDEND REINVESTMENT PLAN
The Company is offering the holders of its Common Stock the opportunity to
purchase additional shares of Common Stock through the Plan. The following is a
numbered question-and-answer format setting forth the provisions of the Plan,
and is qualified in its entirety by reference to the terms and conditions of the
Plan:
PURPOSE
1. What is the purpose of the Plan?
The purpose of the Plan is to provide shareholders with a simple and
convenient method of investing cash dividends and distributions in additional
shares of Common Stock, $0.0001 par value per share, of Allied Capital
Commercial Corporation at the current market price. Participants in the Plan may
have cash dividends and distributions automatically reinvested without charges
for recordkeeping, and may take advantage of the custodial and reporting
services provided by the TA at no additional cost.
ADMINISTRATION
2. What does the TA do?
The TA administers the Plan for participants, keeps records, sends
statements of accounts to participants, and performs other duties relating to
the Plan.
PARTICIPATION
3. How does a shareholder enroll?
For each shareholder of record, that is for every individual who owns
shares and has the shares registered in his own name on the books of the TA, no
enrollment is necessary. In that case, the shareholder is automatically a
participant in the Plan and the TA, as the Plan's agent, will automatically
reinvest for that shareholder's account all dividends that may be declared and
paid on the shareholder's shares. If all of a
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shareholder's shares of record are enrolled in the Plan, that shareholder is
considered to be an unlimited participant. An enrollment card is included with
the Plan that is provided to participants in the Plan.
4. What if the shares are held by a broker, bank or nominee?
If a shareholder's shares are held on the books of the TA in the name of a
broker, bank or other nominee (a "nominee"), that shareholder can participate in
the Plan only to the extent that the nominee participates on that shareholder's
behalf. Many nominees do not provide that service and routinely request
dividends and distributions to be paid in cash on all shares registered in their
names. Therefore, if a shareholder's shares are held for that shareholder's
account by a nominee, the shareholder either must make appropriate arrangements
for the nominee to participate on the shareholder's behalf, or must become a
shareholder of record by having a part or all of his shares transferred to his
own name.
5. What if a shareholder would rather receive cash?
If a shareholder would rather receive cash, that shareholder may write a
letter either to the Company or to the TA to communicate that he would like to
terminate participation in the Plan or return an Enrollment Status Card to the
TA. Any communication by a shareholder expressing a preference for cash in lieu
of shares must be received by the Company or the TA before the record date of
the next dividend or distribution.
6. What if a shareholder wishes to receive cash on only some of his shares?
If a shareholder wishes to receive dividends and distributions in cash on
some of his shares, and have the remaining dividends and distributions
reinvested, that shareholder must write to the Company or the TA and give notice
to that effect before the record date of the next dividend or distribution. A
shareholder may also use an Enrollment Status Card for this purpose. As a
partial participant, the shareholder will receive dividends and distributions in
shares only with respect to the number of shares that he has specified. With
respect to any other shares registered in that shareholder's name, and with
respect to the shares credited to the shareholder's account on the books of the
TA, the corresponding dividends and distributions will be paid in cash.
The number of shares reinvested may be changed at any time simply by
writing to the Company or the TA.
7. May a shareholder elect to re-enroll once he has terminated
participation in the Plan?
Yes. If a shareholder 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 shareholder may re-enroll at any time by
writing to the Company. Any letter requesting re-enrollment must be received by
the Company prior to the dividend declaration date in order for it to take
effect as of the next dividend or distribution.
PURCHASES
8. How does the Dividend Reinvestment Plan work?
When the Board of Directors declares a dividend or distribution, all
non-participants will receive it in cash. Participants will have credited to
their separate accounts maintained on the books of TA pursuant to the Plan
(each, a "Plan Account"), the number of full and fractional shares (computed to
three decimal places) that could be obtained, at the price determined in
accordance with the answers to Questions 9 and 10, with the cash, net of any
applicable withholding taxes, that would have been paid to them if they were not
participants.
9. How are shares allocated under the Plan?
The number of shares allocated to a participant's Plan Account will be
arrived at as follows. Except under the circumstances outlined below in Question
10, the TA will buy shares of Allied Capital Commercial Corporation in the open
market, through the Nasdaq National Market or elsewhere, beginning on the day
following the record date through the date that is 30 days after the payment
date of the dividend or distribution, until it has expended for such purchases
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.
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10. Will newly issued shares ever be sold to participants in the Plan?
When the Company's shares sell in the market at a substantial premium (as
determined by the Company) over their book value, the Company's Board of
Directors may (but is not required to) declare a dividend or distribution to be
paid to Plan participants in newly issued shares of the Company. In that
situation, the price of newly issued shares allocated 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 listings for the
five days on which trading of shares takes place immediately prior to and
including 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 Plan participants in newly issued shares, the TA will be under
standing instructions not to credit newly issued shares, and instead to buy
shares in the market, if (1) the price at which newly issued shares are to be
credited does not exceed 110% of the last determined book value of the Company's
shares or (2) the Company has advised the TA that since such book value was last
determined the Company has become aware of events that indicate the possibility
of a change in per share book value as a result of which the book value of the
Company's shares on the payment date might be higher than the price at which the
TA would credit newly issued shares to the participants' Plan Accounts.
If the TA buys shares on the market, it is possible that by the time the TA
has completed its purchases, the average per share purchase price paid by the TA
may exceed the price at which the newly issued shares would have been credited
or the shares' current book 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 applied to purchase newly
issued shares.
EXPENSES
11. Are there any charges for participating in the Plan?
The TA's fees for administering the Company's Plan are included in the fees
paid by the Company to the TA for acting as its transfer agent. The price at
which shares are credited to a participant's Plan Account will, however, include
his share of any brokerage commissions incurred in connection with the TA's open
market purchases of such shares. There will be no brokerage charges in
connection with any credit of newly issued shares.
PLAN ACCOUNTS; REPORTS TO PARTICIPANTS
12. What accounts are maintained for participants and what reports on these
accounts do participants receive?
The TA will maintain a separate Plan Account for each participant. All
shares issued to a participant under the Plan will be credited to the
participant's Plan Account. The TA 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 shareholders, proxy
statements and dividend income information for tax purposes. The proxy card
received by each participant will represent all shares held of record, including
shares held in the Plan Account.
CERTIFICATES FOR SHARES
13. Will certificates be issued for shares issued under the Plan?
Certificates for shares issued under the Plan will not be furnished to a
participant until his Plan Account is terminated or unless he requests
certificates in writing for a specified number of shares credited to his Plan
Account. All written requests for certificates should be directed to the TA,
allowing two weeks for processing. The issuance of certificates for shares
credited to a Plan Account will not terminate a participant's
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participation in the Plan. No certificate for fractional shares will be issued.
If a participant terminates his participation in the Plan (see Question 15), the
TA will pay to the participant the market value of his fractional shares.
14. In whose name will certificates be registered when issued?
Plan Accounts are maintained in the name in which share certificates of the
participant were registered at the time the participant entered the Plan.
Certificates for whole shares issued at the request of a participant will be
similarly registered.
TERMINATION BY A PARTICIPANT
15. What happens if a participant wishes to terminate participation?
A participant may terminate participation in the Plan at any time by
notifying the Company or the TA in writing. Within twenty days, and according to
the participant's instructions, the TA will either (1) issue certificates for
the whole shares credited to his Plan Account and a check representing the value
of any fractional shares or (2) sell the shares in the market. The proceeds of
the sale, less any brokerage commissions that may be incurred, will be remitted
to the shareholder and address of record at the time of liquidation. The address
of record may not be changed per telephone instruction, but rather must be
changed in writing to the Company or to the TA. Notification for termination
must be received prior to the record date of any impending distribution in order
for it to take effect for that distribution.
If a participant sells or transfers all of the shares registered in his
name on the books of the TA, participation in the Plan will continue with
respect to any shares credited to the participant's Plan Account unless and
until termination is requested.
MODIFICATION OR TERMINATION BY THE COMPANY
16. May the Company modify or terminate the Plan?
Experience under the Plan may indicate that changes are desirable.
Accordingly, the Plan may be amended or terminated by the Company or the TA with
at least 90 days' written notice to Plan participants. The Company may also
amend or terminate the Plan without notice if necessary to preserve the
Company's status as a REIT.
OTHER INFORMATION
17. 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 TA for the participant will be credited to the participant's Plan
Account.
18. What are the federal income tax consequences of participation in the
Plan?
The automatic reinvestment of dividends and distributions will not relieve
participants of any income tax burden that they might otherwise owe on such
dividends or distributions. 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. Generally, the tax basis of such shares
will equal the amount of such cash; however, the following is for general
information only. For complete information on tax consequences, a shareholder
should consult a qualified tax advisor.
A participant will not realize any taxable income upon receipt of
certificates for whole shares credited to the participant's Plan Account either
upon the participant's request for a specified number of shares, or upon
termination of enrollment in the Plan.
Each participant in the Plan will receive early in each year a Form 1099
regarding the Federal income tax status of all dividends and distributions paid
during the previous year.
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LEGAL MATTERS
The validity of the Common Stock offered hereby has been passed on for the
Company by Sutherland, Asbill & Brennan, Washington, D.C.
EXPERTS
The consolidated financial statements of Allied Capital Commercial
Corporation incorporated by reference in Allied Capital Commercial Corporation's
Annual Report on Form 10-K for the years ended December 31, 1995, 1994 and 1993,
and incorporated by reference in this prospectus and elsewhere in the
registration statement, have been audited by Arthur Andersen LLP (1995 and 1994)
and Matthews, Carter and Boyce (1993), independent public accountants, to the
extent and for the periods indicated in their reports and are included herein in
reliance upon the authority of said firms as experts in giving said reports.
INDEMNIFICATION
The Company's Articles of Incorporation provide for indemnification of
directors, officers and, to such extent as shall be authorized by the Board of
Directors, other employees and agents to the full extent permitted by Maryland
law. Pursuant to the Company's Articles of Incorporation, to the fullest extent
permitted by Maryland statutory or decisional law, as amended or interpreted, no
director or officer of the Company shall be personally liable to the Company or
its stockholders for money damages. The Company maintains insurance from
commercial carriers against certain liabilities incurred by the directors and
officers of the Company.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 (the "Securities Act") may be permitted to directors, officers or
persons controlling the Company pursuant to the foregoing provisions, the
Company has been informed that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable.
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NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION IN CONNECTION WITH THIS OFFERING OTHER THAN THOSE CONTAINED IN
THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH OTHER INFORMATION OR REPRESENTATION
MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY. NEITHER THE
DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY
CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE
AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY SECURITIES
OTHER THAN THE REGISTERED SECURITIES TO WHICH IT RELATES. THIS PROSPECTUS DOES
NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY SUCH
SECURITIES IN ANY CIRCUMSTANCES IN WHICH SUCH OFFER OR SOLICITATION IS UNLAWFUL.
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TABLE OF CONTENTS
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Available Information.................. 2
Incorporation of Certain Information By
Reference............................ 2
The Company............................ 3
Use of Proceeds........................ 3
Description of the Common Stock
Dividend Reinvestment Plan........... 3
Legal Matters.......................... 7
Experts................................ 7
Indemnification........................ 7
</TABLE>
750,000 SHARES
ALLIED CAPITAL
COMMERCIAL
CORPORATION
COMMON STOCK
DIVIDEND REINVESTMENT PLAN
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PROSPECTUS
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July 19, 1996
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<PAGE> 10
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION*
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SEC Registration Fee............................................... $ 5,156
Blue Sky Fees and Expenses......................................... 1,000
Legal Fees and Expenses............................................ 15,000
Accounting Fees and Expenses....................................... 3,500
Printing and Engraving Expenses.................................... 3,000
Miscellaneous...................................................... 3,000
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TOTAL......................................................... $30,656
=======
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* Estimated
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Company's Articles of Incorporation provide for indemnification of
directors, officers and, to such extent as shall be authorized by the Board of
Directors, other employees and agents to the full extent permitted by Maryland
law. Pursuant to the Company's Articles of Incorporation, to the fullest extent
permitted by Maryland statutory or decisional law, as amended or interpreted, no
director or officer of the Company shall be personally liable to the Company or
its stockholders for money damages.
Section 2-418 of the Maryland General Corporation Law generally permits a
Maryland corporation to indemnify any director made a party to any threatened,
pending or completed action, suit or proceeding, whether civil, criminal,
administrative, or investigative, by reason of service in his capacity as a
director, unless it is established that (i) the act or omission of the director
was material to the matter giving rise to the proceeding and (a) was committed
in bad faith or (b) was the result of active and deliberate dishonesty; or (ii)
the director actually received an improper personal benefit in money, property,
or services; or (iii) in the case of any criminal proceeding, the director had
reasonable cause to believe that the act or omission was unlawful.
Indemnification may be against judgments, penalties, fines, settlements, and
reasonable expenses actually incurred by the director in connection with the
proceeding. If the proceeding was one by or in the right of the corporation,
indemnification may not be made in respect of any proceeding in which the
director shall have been adjudged to be liable to the corporation. In addition,
a director may not be indemnified in respect of any proceeding charging improper
personal benefit to the director, whether or not involving action in the
director's official capacity, in which the director was adjudged to be liable on
the basis that personal benefit was improperly received. The termination of any
proceeding by conviction, or a plea of nolo contendere or its equivalent, or an
entry of an order of probation prior to judgment, creates a rebuttable
presumption that the director did not meet the requisite standard of conduct.
Section 2-418 also provides that a court of appropriate jurisdiction may,
upon application of a director and such notice as the court shall require, order
indemnification if it determines that a director is entitled to reimbursement
because the director has been successful on the merits or otherwise, in any such
proceeding, in which case the director shall be entitled to recover the expenses
of securing such reimbursement, or if the court determines that the director is
fairly and reasonably entitled to indemnification in view of all the relevant
circumstances, whether or not the director has met the applicable standards of
conduct or has been adjudged liable in a proceeding charging improper personal
benefit to the director. Indemnification with respect to any proceeding by or in
the right of the corporation or in which liability shall have been adjudged on
the basis that personal benefit was improperly received shall be limited to
expenses. The indemnification and advancement of expenses provided or authorized
by Section 2-418 may not be deemed exclusive of any other rights, by
indemnification or otherwise, to which a director may be entitled under the
charter, the bylaws, a resolution of stockholders or directors, an agreement or
otherwise, both as to action in an official capacity and as to action in another
capacity while holding such office. A corporation may indemnify and advance
expenses to an officer,
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employee, or agent of the corporation to the same extent that it may indemnify
directors under Section 2-418 and, in addition, may indemnify and advance
expenses to an officer, employee, or agent who is not a director to such further
extent, consistent with law, as may be provided by its charter, bylaws, general
or specific action of its board of directors or contract. Section 2-418 also
provides that a corporation may purchase and maintain insurance against
liabilities for which indemnification is not expressly provided by the statute.
The Company maintains insurance from commercial carriers against certain
liabilities incurred by the directors and officers of the Company.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 (the "Securities Act") may be permitted to directors, officers or
persons controlling the Company pursuant to the foregoing provisions, the
Company has been informed that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable.
ITEM 16. EXHIBITS
<TABLE>
<C> <S>
*4.1 Form of Common Stock Certificate
*4.2 Allied Capital Commercial Corporation Dividend Reinvestment Plan
*5.1 Opinion of Sutherland, Asbill & Brennan, counsel to the Registrant, as to the
legality of the Common Stock being offered
*8.1 Opinion of Sutherland, Asbill & Brennan re Tax Matters
*23.1 Consent of Arthur Andersen LLP
*23.2 Consent of Sutherland, Asbill & Brennan (included in Exhibit 5.1)
23.3 Consent of Matthews, Carter and Boyce
</TABLE>
- - ---------------
* Filed herewith.
ITEM 17. UNDERTAKINGS
(a) 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;
(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 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 and 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
change 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 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 15(d) of the
Exchange Act that are incorporated by reference in the registration
statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a
new registration statement relating to the securities offered
II-2
<PAGE> 12
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.
(b) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to Section 13(a) or 15(d) of the Exchange
Act (and, where applicable, each filing of an employee benefit plan's annual
report pursuant to Section 15(d) of the Exchange Act) 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.
(c) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised 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. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
II-3
<PAGE> 13
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 Washington, District of Columbia, on the 26th day of
June, 1996.
ALLIED CAPITAL COMMERCIAL CORPORATION
By: /s/ DAVID GLADSTONE
-----------------------------------
DAVID GLADSTONE
CHAIRMAN OF THE BOARD AND CHIEF
EXECUTIVE 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>
TITLE
SIGNATURE CAPACITY DATE
- - ---------------------------------------- ---------------------------------- --------------
<C> <S> <C>
/s/ DAVID GLADSTONE Chairman and Chief Executive June 26, 1996
- - ---------------------------------------- Officer (Principal Executive
DAVID GLADSTONE Officer)
/s/ GEORGE C. WILLIAMS Vice Chairman of the Board June 26, 1996
- - ----------------------------------------
GEORGE C. WILLIAMS
/s/ JOHN M. SCHEURER Director, President and Chief June 26, 1996
- - ---------------------------------------- Operating Officer
JOHN M. SCHEURER
/s/ CHARLES L. PALMER Director June 26, 1996
- - ----------------------------------------
CHARLES L. PALMER
/s/ ANTHONY T. GARCIA Director June 26, 1996
- - ----------------------------------------
ANTHONY T. GARCIA
Director
- - ----------------------------------------
JOHN D. REILLY
Director
- - ----------------------------------------
LAURA W. VAN ROIJEN
/s/ JON A. DELUCA Executive Vice President, June 26, 1996
- - ---------------------------------------- Treasurer and Chief Financial
JON A. DELUCA Officer (Principal Financial
and Accounting Officer)
</TABLE>
II-4
<PAGE> 14
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBITS DESCRIPTION
- - -------- -------------------------------------------------------------------------
<C> <S> <C>
*4.1 Form of Common Stock Certificate
*4.2 Allied Capital Commercial Corporation Dividend Reinvestment Plan
*5.1 Opinion of Sutherland, Asbill & Brennan, counsel to the Registrant, as to
the legality of the Common Stock being offered
*8.1 Opinion of Sutherland, Asbill & Brennan re tax matters
*23.1 Consent of Arthur Andersen LLP
*23.2 Consent of Sutherland, Asbill & Brennan (included in Exhibit 5.1)
23.3 Consent of Matthews, Carter and Boyce
</TABLE>
- - ---------------
* Filed herewith.
<PAGE> 1
EXHIBIT 4.1
NUMBER SHARES
CL ALLIED CAPITAL COMMERCIAL CORPORATION
<TABLE>
<S> <C>
COMMON COMMON
INCORPORATED UNDER THE LAWS CUSIP 019029 10 7
OF THE STATE OF MARYLAND SEE REVERSE FOR CERTAIN DEFINITIONS
</TABLE>
This certifies that
is the owner of
FULL PAID AND NON-ASSESSABLE SHARES OF THE PAR VALUE OF $0.0001 EACH OF THE
COMMON STOCK OF
ALLIED CAPITAL COMMERCIAL CORPORATION
CERTIFICATE OF STOCK
transferable on the books of the Corporation by the holder hereof in person
or by duly authorized attorney upon surrender of this Certificate
properly endorsed.
This Certificate is not valid unless countersigned and registered by the
Transfer Agent and Register.
WITNESS the facsimile deal of the Corporation and the facsimile
signatures of its duly authorized officers.
Dated:
[SIG] [SIG]
SECRETARY [ALLIED CAPITAL COMMERCIAL CORPORATION SEAL] CHAIRMAN OF THE BOARD
[SIG]
PRESIDENT
COUNTERSIGNED AND REGISTERED:
AMERICAN STOCK TRANSFER & TRUST COMPANY
(NEW YORK, N.Y.)
BY TRANSFER AGENT AND REGISTRAR
AUTHORIZED SIGNATURE
<PAGE> 1
EXHIBIT 4.2
DESCRIPTION OF THE COMMON STOCK
DIVIDEND REINVESTMENT PLAN
Allied Capital Commercial Corporation (the "Company") is offering the
holders of its shares of common stock $0.0001 par value per share (the "Common
Stock") the opportunity to purchase additional shares of Common Stock through
the Allied Capital Commercial Corporation Dividend Reinvestment Plan (the
"Plan"). The following is a numbered question-and-answer format setting forth
the provisions of the Plan, and is qualified in its entirety by reference to the
terms and conditions of the Plan:
PURPOSE
1. What is the purpose of the Plan?
The purpose of the Plan is to provide shareholders with a simple and
convenient method of investing cash dividends and distributions in additional
shares of Common Stock, $0.0001 par value per share, of Allied Capital
Commercial Corporation at the current market price. Participants in the Plan may
have cash dividends and distributions automatically reinvested without charges
for recordkeeping, and may take advantage of the custodial and reporting
services provided by the transfer agent ("TA") at no additional cost.
ADMINISTRATION
2. What does the TA do?
The TA administers the Plan for participants, keeps records, sends
statements of accounts to participants, and performs other duties relating to
the Plan.
PARTICIPATION
3. How does a shareholder enroll?
For each shareholder of record, that is for every individual who owns
shares and has the shares registered in his own name on the books of the TA, no
enrollment is necessary. In that case, the shareholder is automatically a
participant in the Plan and the TA, as the Plan's agent, will automatically
reinvest for that shareholder's account all dividends that may be declared and
paid on the shareholder's shares. If all of a shareholder's shares of record are
enrolled in the Plan, that shareholder is considered to be an unlimited
participant. An enrollment card is included with the Plan that is provided to
participants in the Plan.
4. What if the shares are held by a broker, bank or nominee?
If a shareholder's shares are held on the books of the TA in the name of a
broker, bank or other nominee (a "nominee"), that shareholder can participate in
the Plan only to the extent that the nominee participates on that shareholder's
behalf. Many nominees do not provide that service and routinely request
dividends and distributions to be paid in cash on all shares registered in their
names. Therefore, if a shareholder's shares are held for that shareholder's
account by a nominee, the shareholder either must make appropriate arrangements
for the nominee to participate on the shareholder's behalf, or must become a
shareholder of record by having a part or all of his shares transferred to his
own name.
5. What if a shareholder would rather receive cash?
If a shareholder would rather receive cash, that shareholder may write a
letter either to the Company or to the TA to communicate that he would like to
terminate participation in the Plan or return an Enrollment Status Card to the
TA. Any communication by a shareholder expressing a preference for cash in lieu
of shares must be received by the Company or the TA before the record date of
the next dividend or distribution.
6. What if a shareholder wishes to receive cash on only some of his shares?
If a shareholder wishes to receive dividends and distributions in cash on
some of his shares, and have the remaining dividends and distributions
reinvested, that shareholder must write to the Company or the TA and
<PAGE> 2
give notice to that effect before the record date of the next dividend or
distribution. A shareholder may also use an Enrollment Status Card for this
purpose. As a partial participant, the shareholder will receive dividends and
distributions in shares only with respect to the number of shares that he has
specified. With respect to any other shares registered in that shareholder's
name, and with respect to the shares credited to the shareholder's account on
the books of the TA, the corresponding dividends and distributions will be paid
in cash.
The number of shares reinvested may be changed at any time simply by
writing to the Company or the TA.
7. May a shareholder elect to re-enroll once he has terminated
participation in the Plan?
Yes. If a shareholder 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 shareholder may re-enroll at any time by
writing to the Company. Any letter requesting re-enrollment must be received by
the Company prior to the dividend declaration date in order for it to take
effect as of the next dividend or distribution.
PURCHASES
8. How does the Dividend Reinvestment Plan work?
When the Board of Directors declares a dividend or distribution, all
non-participants will receive it in cash. Participants will have credited to
their separate accounts maintained on the books of TA pursuant to the Plan
(each, a "Plan Account"), the number of full and fractional shares (computed to
three decimal places) that could be obtained, at the price determined in
accordance with the answers to Questions 9 and 10, with the cash, net of any
applicable withholding taxes, that would have been paid to them if they were not
participants.
9. How are shares allocated under the Plan?
The number of shares allocated to a participant's Plan Account will be
arrived at as follows. Except under the circumstances outlined below in Question
10, the TA will buy shares of Allied Capital Commercial Corporation in the open
market, through the Nasdaq National Market or elsewhere, beginning on the day
following the record date through the date that is 30 days after the payment
date of the dividend or distribution, until it has expended for such purchases
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.
10. Will newly issued shares ever be sold to participants in the Plan?
When the Company's shares sell in the market at a substantial premium (as
determined by the Company) over their book value, the Company's Board of
Directors may (but is not required to) declare a dividend or distribution to be
paid to Plan participants in newly issued shares of the Company. In that
situation, the price of newly issued shares allocated 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 listings for the
five days on which trading of shares takes place immediately prior to and
including 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 Plan participants in newly issued shares, the TA will be under
standing instructions not to credit newly issued shares, and instead to buy
shares in the market, if (1) the price at which newly issued shares are to be
credited does not exceed 110% of the last determined book value of the Company's
shares or (2) the Company has advised the TA that since such book value was last
determined the Company has become aware of events that indicate the possibility
of a change in per share book value as a result of which the book value of the
Company's shares on the payment date might be higher than the price at which the
TA would credit newly issued shares to the participants' Plan Accounts.
If the TA buys shares on the market, it is possible that by the time the TA
has completed its purchases, the average per share purchase price paid by the TA
may exceed the price at which the newly issued shares would have been credited
or the shares' current book value. As a result, there would be credited to the
2
<PAGE> 3
participants' Plan Accounts a smaller number of shares than would have been
credited if the dividend or distribution had been applied to purchase newly
issued shares.
EXPENSES
11. Are there any charges for participating in the Plan?
The TA's fees for administering the Company's Plan are included in the fees
paid by the Company to the TA for acting as its transfer agent. The price at
which shares are credited to a participant's Plan Account will, however, include
his share of any brokerage commissions incurred in connection with the TA's open
market purchases of such shares. There will be no brokerage charges in
connection with any credit of newly issued shares.
PLAN ACCOUNTS; REPORTS TO PARTICIPANTS
12. What accounts are maintained for participants and what reports on these
accounts do participants receive?
The TA will maintain a separate Plan Account for each participant. All
shares issued to a participant under the Plan will be credited to the
participant's Plan Account. The TA 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 shareholders, proxy
statements and dividend income information for tax purposes. The proxy card
received by each participant will represent all shares held of record, including
shares held in the Plan Account.
CERTIFICATES FOR SHARES
13. Will certificates be issued for shares issued under the Plan?
Certificates for shares issued under the Plan will not be furnished to a
participant until his Plan Account is terminated or unless he requests
certificates in writing for a specified number of shares credited to his Plan
Account. All written requests for certificates should be directed to the TA,
allowing two weeks for processing. The issuance of certificates for shares
credited to a Plan Account will not terminate a participant's participation in
the Plan. No certificate for fractional shares will be issued. If a participant
terminates his participation in the Plan (see Question 15), the TA will pay to
the participant the market value of his fractional shares.
14. In whose name will certificates be registered when issued?
Plan Accounts are maintained in the name in which share certificates of the
participant were registered at the time the participant entered the Plan.
Certificates for whole shares issued at the request of a participant will be
similarly registered.
TERMINATION BY A PARTICIPANT
15. What happens if a participant wishes to terminate participation?
A participant may terminate participation in the Plan at any time by
notifying the Company or the TA in writing. Within twenty days, and according to
the participant's instructions, the TA will either (1) issue certificates for
the whole shares credited to his Plan Account and a check representing the value
of any fractional shares or (2) sell the shares in the market. The proceeds of
the sale, less any brokerage commissions that may be incurred, will be remitted
to the shareholder and address of record at the time of liquidation. The address
of record may not be changed per telephone instruction, but rather must be
changed in writing to the Company or to the TA. Notification for termination
must be received prior to the record date of any impending distribution in order
for it to take effect for that distribution.
3
<PAGE> 4
If a participant sells or transfers all of the shares registered in his
name on the books of the TA, participation in the Plan will continue with
respect to any shares credited to the participant's Plan Account unless and
until termination is requested.
MODIFICATION OR TERMINATION BY THE COMPANY
16. May the Company modify or terminate the Plan?
Experience under the Plan may indicate that changes are desirable.
Accordingly, the Plan may be amended or terminated by the Company or the TA with
at least 90 days' written notice to Plan participants. The Company may also
amend or terminate the Plan without notice if necessary to preserve the
Company's status as a REIT.
OTHER INFORMATION
17. 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 TA for the participant will be credited to the participant's Plan
Account.
18. What are the federal income tax consequences of participation in the
Plan?
The automatic reinvestment of dividends and distributions will not relieve
participants of any income tax burden that they might otherwise owe on such
dividends or distributions. 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. Generally, the tax basis of such shares
will equal the amount of such cash; however, the following is for general
information only. For complete information on tax consequences, a shareholder
should consult a qualified tax advisor.
A participant will not realize any taxable income upon receipt of
certificates for whole shares credited to the participant's Plan Account either
upon the participant's request for a specified number of shares, or upon
termination of enrollment in the Plan.
Each participant in the Plan will receive early in each year a Form 1099
regarding the Federal income tax status of all dividends and distributions paid
during the previous year.
4
<PAGE> 5
ALLIED CAPITAL COMMERCIAL CORPORATION DIVIDEND REINVESTMENT PLAN
ENROLLMENT STATUS CARD
The undersigned shareholder of record of Allied Capital Commercial Corporation
elects to:
/ / TERMINATE enrollment in the Dividend Reinvestment Plan and receive
dividends and distributions in cash with respect to all shares of Allied
Capital Commercial Corporation held of record or credited to the
undersigned's Plan account. CHECK ONE OF THE FOLLOWING: / / Liquidate all
Plan account shares and remit proceeds, or / / Send certificate for whole
shares in Plan account and liquidate fractional shares.
/ / PARTICIPATE in the Dividend Reinvestment Plan and receive dividends and
distributions in additional shares with respect to ALL Allied Capital
Commercial Corporation shares held of record or credited to the
undersigned's Plan account.
/ / PARTIALLY PARTICIPATE in the Dividend Reinvestment Plan with respect to
all Allied Capital Commercial Corporation shares held of record, including
the shares subsequently credited to the undersigned's Plan account, except
______ shares on which dividends and distributions are to be paid in cash.
Termination and partial participation instructions will take effect on the
record date following receipt of this card by the Plan Administrator. Enrollment
instructions will take effect on the declaration date following receipt of this
card by the Plan Administrator.
- - --------------------------------------------- --------------------------------
Tax identification number Signature
- - --------------------------------------------- --------------------------------
Type or print name exactly as it appears on Signature
your share certificate(s)
Please fold and staple for mailing.
5
<PAGE> 1
EXHIBIT 5.1
SUTHERLAND, ASBILL & BRENNAN
1275 PENNSYLVANIA AVENUE, N.W.
WASHINGTON, D.C. 20004-2404
<TABLE>
<S> <C>
STEVEN B. BOEHM TEL: (202) 383-0100
DIRECT LINE: (202) 383-0176 FAX: (202) 637-3593
</TABLE>
July 18, 1996
Allied Capital Commercial Corporation
c/o Allied Capital Advisers, Inc.
1666 K Street, N.W., 9th Floor
Washington, D.C. 20006-2803
Ladies and Gentlemen:
We have acted as counsel to Allied Capital Commercial Corporation (the
"Company"), a Maryland corporation, in connection with the registration with the
Securities and Exchange Commission of the Company's proposed offering of shares
of the Company's common stock (the "Shares") pursuant to a registration
statement on Form S-3 (the "Registration Statement"). The shares are being
offered pursuant to the Allied Capital Commercial Corporation Dividend
Reinvestment Plan as described in the Registration Statement.
We have participated in the preparation of the Registration Statement and
have examined originals or copies, certified or otherwise identified to our
satisfaction by public officials or officers of the Company as authentic copies
of originals, of (i) the Company's Articles of Incorporation and its Bylaws,
(ii) resolutions of the Board of Directors of the Company approving the offer
and the issuance of the Shares, and (iii) such other documents as in our
judgment were necessary to enable us to render the opinions expressed below. In
our review and examination of all such documents, we have assumed the legal
capacity of all natural persons, the genuineness of all signatures, the
authenticity of all documents and records submitted to us as originals, and the
conformity with authentic originals of all documents and records submitted to us
as copies. To the extent we have deemed appropriate, we have relied upon
certificates of public officials and certificates and statements of corporate
officers of the Company as to certain factual matters.
This opinion is limited to the laws of the State of Maryland, and we
express no opinion with respect to the laws of any other jurisdiction. We do not
hold ourselves out as experts in the laws of the State of Maryland, and we have
not consulted with Maryland counsel with respect to this opinion letter. The
opinions expressed in this letter are based on our review of the Maryland
Corporation Law, with which we are familiar.
Based upon and subject to the foregoing and our investigation of such
matters of law as we have considered advisable, we are of the opinion that:
1. The Company is a corporation duly incorporated, validly existing and in
good standing under the laws of the State of Maryland.
2. Upon the consummation of sale of Shares and the payment of the
consideration therefor in the manner described above and in the
Registration Statement, the Shares will be duly authorized, validly
issued, fully paid and nonassessable.
<PAGE> 2
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement. By giving this consent, we do not admit that we are in
the category of persons whose consent is required under Section 7 of the
Securities Act of 1933, as amended.
Very truly yours,
SUTHERLAND, ASBILL & BRENNAN
By: /s/ STEVEN B. BOEHM
------------------------------------
STEVEN B. BOEHM
<PAGE> 1
EXHIBIT 8.1
July 15, 1996
Allied Capital Commercial Corporation
c/o Allied Capital Advisors, Inc.
1666 K Street, N.W., 9th Floor
Washington, DC 20006
Gentlemen:
In connection with the registration of certain shares of
Common Stock of Allied Capital Commercial Corporation (the "Company") pursuant
to the Allied Capital Commercial Corporation Common Stock Dividend Reinvestment
Plan (the "Plan"), as described in a Registration Statement on Form S-3 dated
July 19, 1996, filed by the Company (the "Registration Statement"), we have
been asked to render our opinion to you with respect to certain Federal income
tax consequences of various transactions contemplated by the Plan.
We have examined the provisions of the Plan and made such
other investigations and inquiries as we deem necessary in order to enable us
to render this opinion. Unless otherwise
<PAGE> 2
Allied Capital Commercial Corporation
July 15, 1996
Page 2
specified below, all statutory references are to the Internal Revenue Code of
1986, as amended (the "Code").
THE PLAN
GENERALLY
The Company, which we understand is a real estate investment
trust ("REIT") within the meaning of Code section 856, has established the Plan
to provide holders of the Company's Common Stock the opportunity to purchase
additional shares of Common Stock.
The Plan is administered by the Company's transfer agent
("TA"). The TA invests participants' dividends in shares of the Company's
Common Stock, keeps records, sends statements of accounts to participants, and
performs other duties relating to the Plan.
The maximum aggregate number of shares of Company Common Stock
that may be purchased under the Plan is 750,000. The Plan permits adjustments
in the number of shares issuable
<PAGE> 3
Allied Capital Commercial Corporation
July 15, 1996
Page 3
under the Plan in the event of mergers, stock dividends, stock splits, and
similar changes in the corporate structure or capitalization of the Company
affecting the Common Stock.
PURCHASES OF COMMON STOCK UNDER THE PLAN
Any shareholder of record of Company Common Stock may
participate in the Plan. If the shareholder's shares are registered with the
TA, the shareholder is automatically a participant in the Plan, except to the
extent that the shareholder informs the Company or the TA, in writing received
by the Company or the TA before the record date of the next dividend or
distribution, that he wishes to receive dividends and distributions on some or
all of his shares in cash. If the shareholder's shares are held in the name of
a broker, bank or other nominee, the shareholder may participate in the plan,
but only to the extent that the nominee participates on his behalf.
A participant may discontinue his participation in the
<PAGE> 4
Allied Capital Commercial Corporation
July 15, 1996
Page 4
Plan by indicating his intent to do so in writing to the Company or the TA.
Termination of participation will be effective as of the first record date
following the receipt by the Company or the TA of this written communication.
Any participant who has terminated participation in the Plan may reenroll by
indicating his intent to do so in writing to the Company or the TA.
Recommencement of participation will be effective as of the first dividend
declaration date following the receipt by the Company or the TA of this written
communication.
When the Company's board of directors declares a dividend or
distribution, participants will have credited to their Plan accounts the number
of full and fractional shares (computed to three decimal places) that could be
purchased with the cash, net of any applicable tax withholding, that would have
been paid to them in cash if they had not been participants in the Plan. The
number of shares that could be purchased with the dividend or distribution of
cash to the participants is determined as follows. Generally, the TA will buy
shares of Company Common Stock in the open market, on Nasdaq or otherwise,
beginning on or before the
<PAGE> 5
Allied Capital Commercial Corporation
July 15, 1996
Page 5
payment date of the dividend or distribution, until it has expended for these
purchases all the cash that would otherwise be payable to the participants.
The number of shares that will then be credited to participants' Plan accounts
will be based on the average cost of the shares so purchased, including
brokerage commissions. Notwithstanding, the foregoing, the Company's board of
directors may declare that the dividend or distribution payable to Plan
participants be paid in the form of newly issued shares. In such a case, the
number of the newly issued shares allocated to a participant's Plan account will
be determined on the basis of the average of the closing sales prices for the
shares reported in The Wall Street Journal -- Nasdaq National Market System
listings for the five days on which trading of shares takes place immediately
prior to and including the dividend payment date (but not less than 95% of the
opening sales price on that date).
TAX TREATMENT OF AWARDS UNDER THE PLAN
For the reasons discussed below, we believe that a Plan
participant should be considered to receive taxable income on the
<PAGE> 6
Allied Capital Commercial Corporation
July 15, 1996
Page 6
dividend payment or distribution date equal to the amount of the dividend or
distribution that would have been paid to him in cash if he had not been a
participant.
If the Company Common Stock allocated to a participant's Plan
account is acquired through open market purchases made by the TA, the
participant will be treated as if he received the dividend or distribution, and
turned such dividend or distribution over to the TA for the TA to invest in
Company Common Stock on the participant's behalf. See Rev. Rul. 77-149, 1977-1
C.B. 82. Thus, under Code section 301, the participant will have taxable
income equal to the amount of the cash dividend that the participant is treated
as having received.
If the shares of Company Common Stock allocated to the
participant's Plan account are shares newly issued by the Company, the analysis
is somewhat different. Generally, where a shareholder receives a dividend or
distribution with respect to his shares in the form of additional shares, the
shareholder recognizes no taxable income as a result of the distribution.
<PAGE> 7
Allied Capital Commercial Corporation
July 15, 1996
Page 7
Code section 305(a). If, however, a shareholder has the ability to elect to
receive a dividend or distribution either in the form of additional shares or
in the form of cash or other property, the exclusion from income provided by
Code section 305(a) does not apply; rather, the shareholder is treated as
receiving a distribution of property taxable under Code section 301. Code
section 305(b)(1).
Where a shareholder receives a distribution of stock that is
treated, under Code section 305(b)(1), as a distribution of property to which
Code section 301 applies, the shareholder is generally required to recognize
income as a result of the distribution in an amount equal to the fair market
value of the stock on the date of the distribution. Treasury Regulation
section 1.305-1(b)(1). Where, however, a corporation that regularly
distributes its earnings and profits, such as a regulated investment company,
declares a dividend pursuant to which the shareholders may elect to receive
either money or stock of the distributing corporation of equivalent value, the
amount of the distribution of the stock received, and hence the amount of
taxable income required to be
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Allied Capital Commercial Corporation
July 15, 1996
Page 8
recognized as a result of the distribution, will be considered to equal the
amount of the money which could have been received instead. Treasury
Regulation section 1.305-1(b)(2).
Because a REIT is subject to substantially the same
requirements to distribute its income as is a regulated investment company, the
Company should be considered one that "regularly distributes its earnings and
profits." Thus, the special rule of Treas. Reg. section 1.305-1(b)(2) should
apply to stock acquired pursuant to the Plan if the stock is of "equivalent"
value to the dividend that would be paid in cash to the shareholder if he were
not a participant in the Plan.
Although the term "equivalent value" is not defined in the
Code, Treasury regulations or any rulings, Treas. Reg. Section 1.305-1(b)(2)
refers to example 2 of Treas. Reg. Section 1.305-2(b). This example describes a
situation in which a corporation declared, on January 10, a dividend of $1 per
share of its common stock. The dividend is payable February 11 in cash or in
stock of the corporation of equivalent value determined as of January 22. The
example concludes that the amount of taxable income required to be recognized
as a result of the payment of the dividend is $1, regardless of whether the
dividend is paid in cash or stock. Implicit in this result is a conclusion
that basing the determination of the amount of stock to be distributed to a
shareholder who elects to be paid in that form on the value of the stock as of
a date 20 days before the dividend payment date does not cause the stock to
fail to be of equivalent value within the meaning of Treas. Reg. Section
1.305-1(b)(2). Thus, it would
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Allied Capital Commercial Corporation
July 15, 1996
Page 9
appear that an arrangement that bases the determination of the amount of stock
to be distributed to a shareholder who elects to be paid in that form on the
average value of the stock during the five-trading-day period that precedes the
dividend payment date should similarly not cause the stock to fail to be of
equivalent value within the meaning of Treas. Reg. Section 1.305-1(b)(2).
Consequently, Treas. Reg. Section 1.305-1(b)(2) should apply to a Plan
participant to require him to recognize taxable income at the dividend payment
date equal to the amount of cash he would have received if he had not been a
participant.
Regardless of the manner in which shares of Company Common
Stock are acquired for allocation to a participant's Plan account, the
participant's basis in the shares allocated to his account should be equal to
the amount of the cash he would have received if the dividends had not been
reinvested. Code section 1012 provides that a taxpayer's basis on property is
the cost of the property. Where the stock allocated to the participant's
account is acquired by the TA on the open market, the participant is treated as
if he received a cash dividend and purchased,
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Allied Capital Commercial Corporation
July 15, 1996
Page 10
through the TA, the shares for the amount of the cash dividend. Because the
amount of the cash dividend is the cost of the shares allocated to his account,
that amount is his basis in those shares.
Code section 301(d) provides that the basis of property
received in a distribution to which Code section 301(a) applies is the fair
market value of the property. Code section 301(b) provides that the amount
distributed to a shareholder is the fair market value of property distributed.
As was noted above, Treas. Reg. Section 1.305-1(b)(2) provides that, under
certain circumstances, where stock is distributed pursuant to an election to
receive cash or stock of equivalent value, the amount distributed is considered
to be the amount of the cash dividend that would have been paid if the stock
had not been distributed. Thus, if stock allocated to a participant's Plan
account is stock newly issued by the Company, these provisions when read
together should cause the shareholder's basis in the stock allocated to his
Plan account to equal the amount of the cash dividend that he would have
received if he had not been a participant.
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Allied Capital Commercial Corporation
July 15, 1996
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* * *
We hereby consent to the filing of this opinion as Exhibit 8
to the Registration Statement.
Very truly yours,
Sutherland, Asbill & Brennan
By: /s/ JAMES L. DAHLBERG
-------------------------
James L. Dahlberg
By: /s/ IAN A. HERBERT
-------------------------
Ian A. Herbert
<PAGE> 1
[LETTERHEAD OF ARTHUR ANDERSEN LLP]
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation
by reference in this Registration Statement on Form S-3 of our report dated
January 27, 1996 on the consolidated financial statements of Allied Capital
Commercial Corporation incorporated by reference in Allied Capital Commercial
Corporation's Annual Report on Form 10-K for the years ended December 31, 1995
and 1994 and to all references to our Firm included in this Registration
Statement.
Arthur Andersen LLP
Washington, D.C.
July 18, 1996
<PAGE> 1
[LETTERHEAD OF MATTHEWS, CARTER AND BOYCE]
EXHIBIT 23.3
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation
by reference in this Registration Statement on Form S-3 of our report dated
March 3, 1994 on the consolidated financial statements of Allied Capital
Commercial Corporation incorporated by reference in Allied Capital Commercial
Corporation's Annual Report on Form 10-K for the year ended December 31, 1993
and to all references to our Firm included this Registration Statement.
Matthews, Carter and Boyce
Washington, D.C.
July 18, 1996
