-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, HirjfUOYQcBmsji13MWB3LQpAk3Xea+M8888NpZa4YfDXCwE46AcMmrP5jXvJAtD MTP0mE4PcHlvTgUxG551DQ== 0000950133-96-000332.txt : 19960403 0000950133-96-000332.hdr.sgml : 19960403 ACCESSION NUMBER: 0000950133-96-000332 CONFORMED SUBMISSION TYPE: DEF 14A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19960506 FILED AS OF DATE: 19960402 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: ALLIED CAPITAL CORP CENTRAL INDEX KEY: 0000003845 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 530245085 STATE OF INCORPORATION: MD FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: DEF 14A SEC ACT: 1934 Act SEC FILE NUMBER: 811-00907 FILM NUMBER: 96543878 BUSINESS ADDRESS: STREET 1: 1666 K ST N W STE 901 CITY: WASHINGTON STATE: DC ZIP: 20006 BUSINESS PHONE: 2023311112 MAIL ADDRESS: STREET 2: 1666 K STREET NW 9TH FL CITY: WASHINGTON STATE: DC ZIP: 20006 DEF 14A 1 ALLIED CAPITAL CORPORATION 1996 PROXY STATEMENT. 1 SCHEDULE 14A (RULE 14a-101) INFORMATION REQUIRED IN PROXY STATEMENT SCHEDULE 14A INFORMATION PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES EXCHANGE ACT OF 1934 (AMENDMENT NO. ) Filed by the Registrant /X/ Filed by a Party other than the Registrant / / Check the appropriate box: / / Preliminary Proxy Statement / / Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) /X/ Definitive Proxy Statement / / Definitive Additional Materials / / Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12 - -------------------------------------------------------------------------------- (Name of Registrant as Specified in Its Charter) ALLIED CAPITAL CORPORATION - -------------------------------------------------------------------------------- (Name of Person(s) Filing Proxy Statement, if other than the Registrant) Payment of Filing Fee (Check the appropriate box): /X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2) or Item 22(a)(2) of Schedule 14A. / / $500 per each party to the controversy pursuant to Exchange Act Rule 14a-6(i)(3). / / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11. (1) Title of each class of securities to which transaction applies: - -------------------------------------------------------------------------------- (2) Aggregate number of securities to which transaction applies: - -------------------------------------------------------------------------------- (3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is calculated and state how it was determined): - -------------------------------------------------------------------------------- (4) Proposed maximum aggregate value of transaction: - -------------------------------------------------------------------------------- (5) Total fee paid: - -------------------------------------------------------------------------------- / / Fee paid previously with preliminary materials. - -------------------------------------------------------------------------------- / / Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the form or schedule and the date of its filing. (1) Amount previously paid: - -------------------------------------------------------------------------------- (2) Form, schedule or registration statement no.: - -------------------------------------------------------------------------------- (3) Filing party: - -------------------------------------------------------------------------------- (4) Date filed: April 2, 1996 - -------------------------------------------------------------------------------- 2 ALLIED CAPITAL CORPORATION NOTICE OF ANNUAL MEETING OF STOCKHOLDERS To the Stockholders: The 1996 Annual Meeting of Stockholders of Allied Capital Corporation (the "Company") will be held at the Strathmore Hall Arts Center, 10701 Rockville Pike, North Bethesda, Maryland on May 6, 1996 at 10:00 a.m. for the following purposes: 1. To elect eight directors of the Company to serve until the next annual meeting of stockholders or until their successors are elected and qualified. 2. To ratify the selection of Matthews, Carter and Boyce to serve as independent public accountants for the Company for the year ending December 31, 1996. 3. To transact such other business as may properly come before the meeting. The Board of Directors of the Company has fixed the close of business on March 20, 1996 as the record date for the determination of stockholders entitled to notice of, and to vote at, the meeting and any adjournment thereof. The Company's stock transfer books will not be closed. By order of the Board of Directors /s/ THOMAS R. SALLEY Thomas R. Salley Secretary April 1, 1996 ================================================================================ VOTING YOUR PROXY IS IMPORTANT THIS IS AN IMPORTANT MEETING. TO ENSURE PROPER REPRESENTATION AT THE MEETING, YOU ARE REQUESTED TO COMPLETE, DATE, SIGN AND RETURN THE PROXY CARD IN THE ENCLOSED ENVELOPE PROVIDED FOR THAT PURPOSE. STOCKHOLDERS WHO EXECUTE A PROXY CARD MAY ATTEND THE MEETING AND VOTE THEIR SHARES IN PERSON. ================================================================================ 3 ALLIED CAPITAL CORPORATION C/O ALLIED CAPITAL ADVISERS, INC. 1666 K STREET, NW, NINTH FLOOR WASHINGTON, DC 20006 PROXY STATEMENT This Proxy Statement is furnished in connection with the solicitation of proxies by the Board of Directors of Allied Capital Corporation (the "Company") for use at the Company's 1996 Annual Meeting of Stockholders (the "Meeting") to be held on May 6, 1996 at 10:00 a.m. at the Strathmore Hall Arts Center, 10701 Rockville Pike, North Bethesda, Maryland, and at any adjournment thereof. This Proxy Statement, the accompanying proxy card and the Company's Annual Report to Stockholders for the year ended December 31, 1995 are first being sent to stockholders on or about April 1, 1996. If the accompanying proxy card is properly signed and dated and is received in time for the Meeting, those shares held of record by you (e.g., those shares registered directly in your name) will be voted as specified on that proxy card. If no instructions are given on that proxy card, the shares covered thereby will be voted FOR the election of the nominees as directors and FOR the other matters listed in the accompanying Notice of Annual Meeting of Stockholders. Stockholders of record may revoke a proxy at any time before it is exercised by so notifying the Secretary of the Company in writing at the above address, by submitting a properly executed, later-dated proxy or by voting in person at the Meeting. Any stockholder of record attending the Meeting may vote in person whether or not he or she has previously executed and returned a proxy card. If your shares are held for your account by a broker, bank or other institution or nominee ("Broker Shares"), you may vote such shares at the Meeting only if you obtain proper written authority from your institution or nominee that you present at the Meeting. VOTING On March 20, 1996, there were 6,891,836 shares of the Company's common stock outstanding. The stockholders entitled to vote at the Meeting are those of record on that date. Each share of the Company's common stock is entitled to one vote. A majority of the shares entitled to vote at the Meeting constitutes a quorum. If a share is represented in person or by proxy for any purpose at the Meeting, it is deemed to be present for quorum purposes. Abstentions and Broker Shares that are voted on any matter at the Meeting are included in determining the presence of a quorum for the transaction of business at the commencement of the Meeting and on those matters for which the broker, nominee or fiduciary has authority to vote. In the event that a quorum is not present at the Meeting, or in the event that a quorum is present but sufficient votes to approve any of the proposals are not received, the persons named as proxies may propose one or more adjournments of the Meeting to permit further solicitation of proxies. Any such adjournment will require the affirmative vote of a majority of the shares represented at the Meeting in person or by proxy. The persons named as proxies will vote those proxies for such adjournment unless marked to be voted against any proposal for which an adjournment is sought to permit further solicitation of proxies. A stockholder vote may be taken on one or more of the proposals in this Proxy Statement prior to any such adjournment if sufficient votes have been received for approval. The eight nominees for election as directors who receive a plurality of the affirmative votes cast at the Meeting in person or by proxy in the election of directors will be so elected. Stockholders may not cumulate their votes. Votes that are withheld, abstentions and Broker Shares that are not voted in the election of directors will not be included in determining the number of votes cast, and will have no effect on the election of directors. 4 INFORMATION REGARDING THIS SOLICITATION The expense of the Company's solicitation of proxies for the Meeting, including the cost of preparing, printing and mailing this Proxy Statement and the accompanying notice of the Meeting and proxy card will be borne by the Company. The Company will request that brokers, nominees, fiduciaries and other persons holding shares in their names for others forward this Proxy Statement and certain accompanying material to their principals and request authority for the execution of a proxy. The Company will reimburse such persons for their expenses in so doing. In addition to the solicitation of proxies by the use of the mails, proxies may be solicited in person and by telephone, facsimile transmission or telegram by directors or officers of the Company or by regular employees of Allied Capital Advisers, Inc. ("Advisers"), without special compensation therefor, or by a proxy solicitor. Advisers, the Company's investment adviser, has its offices at 1666 K Street, NW, Ninth Floor, Washington, DC 20006. BENEFICIAL OWNERSHIP OF COMMON STOCK As of March 20, 1996, there were 6,891,836 shares of common stock outstanding. The Company knows of no person who owned beneficially more than five percent of its shares at that date. The following table sets forth certain information regarding the shares of the Company's common stock beneficially owned by: (i) each of the Company's directors and named executive officers; and (ii) all directors and executive officers as a group. Because the Company does not pay cash compensation to its executive officers (other than directors' fees to those of its officers who are also directors), the Company considers the "named executive officers" to be its Chief Executive Officer and the four most highly compensated executive officers of Advisers who are also officers of the Company.
Number of Shares Name of Beneficial Owner Beneficially Owned Percentage of Class(1) ------------------------ ------------------ ---------------------- David Gladstone (2) 87,910 1.4% George C. Williams (2) 77,430 1.2% T. Murray Toomey (3) 20,354 * Joseph A. Clorety III (3) 5,089 * Guy T. Steuart II (3,5) 146,670 2.4% Warren K. Montouri (3) 135,036 2.2% G. Cabell Williams III (2) 128,182 2.0% Michael I. Gallie (3) 3,533 * Joan M. Sweeney (4) 23,464 * John M. Scheurer 17,136 * Directors and executive officers as a group (12 in number) 713,228 10.9%
- -------------------- * Less than 1% (1) Based on a total of 6,891,836 shares of the Company's common stock issued and outstanding as of March 20, 1996. For purposes of calculating beneficial ownership by a particular person, these numbers assume that shares of the Company's common stock issuable upon the exercise of stock options held by such person which are exercisable within 60 days of March 20, 1996 are outstanding. The shares issuable are as follows: 53,896 for Gladstone, 46,753 for Williams, 101,439 for Williams III, 23,464 for Sweeney, 17,136 for Scheurer and 3,333 for each of Messrs. Toomey, Clorety, Steuart, Montouri and Gallie; executive officers and directors as a group hold stock options exercisable within 60 days of March 20, 1996 for shares totaling 327,277 shares. 2 5 (2) Director and executive officer (3) Director (4) Executive officer (5) Includes 15,282 shares held directly by Mr. Steuart and 128,055 shares held by a corporation for which Mr. Steuart serves as an executive officer and of which he shares voting power. ELECTION OF DIRECTORS At the Meeting, stockholders will elect eight Directors, constituting the entire membership of the Board of Directors of the Company, to serve until the next Annual Meeting of Stockholders or until their successors have been elected and qualified. All such nominees have consented to be named as such in this Proxy Statement and to serve as directors if elected. If they are elected as directors, it is expected that the Company will vote to elect Messrs. Williams, Steuart, Clorety, Gallie, Montouri and Williams III to be the directors of Allied Capital Financial Corporation, to elect Messrs. Williams, Clorety, Gallie, Montouri, Toomey and Williams III to be the directors of Allied Investment Corporation and to elect Messrs. Gladstone, Williams, Williams III, Clorety, Gallie and Montouri to be the directors of Allied Development Corporation, all of which are wholly owned subsidiaries of the Company. A stockholder using the enclosed form of proxy can vote for or withhold his or her vote from any or all of the nominees. If the proxy card is properly executed but unmarked, it is the intention of the persons named as proxies to vote such proxy FOR the election of all the nominees named below. In the event that any of the nominees should decline or be unable to serve as a director, it is intended that the enclosed proxy will be voted for the election of such person or persons as are nominated as replacements. The nominees, their ages and principal occupations are as follows: DAVID GLADSTONE (1,2) Age 53. Chairman and Chief Executive Officer of the Company, Allied Capital Corporation II, Allied Capital Commercial Corporation, Allied Capital Lending Corporation and Advisers; Director, President and Chief Executive Officer of Business Mortgage Investors, Inc. and Allied Capital Mortgage Corporation; Director of The Riggs National Corporation; Trustee of The George Washington University. He has held positions as an executive officer of the Company and with Advisers, Allied Capital Corporation II, Allied Capital Commercial Corporation, Allied Capital Lending Corporation, Business Mortgage Investors, Inc. and Allied Capital Mortgage Corporation since the later of 1976 or the inception of the relevant entity. He has served as a director since 1976. GEORGE C. WILLIAMS (1,2,5) Age 69. Vice Chairman of the Board of the Company, Allied Capital Corporation II, Allied Capital Commercial Corporation, Allied Capital Lending Corporation and Advisers; Chairman of Business Mortgage Investors, Inc. and Allied Capital Mortgage Corporation. He has held positions as an executive officer of the Company since 1964 and with Advisers, Allied Capital Corporation II, Allied Capital Commercial Corporation, Allied Capital Lending Corporation, Business Mortgage Investors, Inc. and Allied Capital Mortgage Corporation since the later of 1964 or the inception of the relevant entity. He has served as a director since 1964. T. MURRAY TOOMEY (1) Age 72. Attorney at Law for more than the past five years; Director of The National Capital Bank of Washington; Director of Federal Center Plaza Corporation, and The Donohoe Companies, Inc.; Trustee of The Catholic University of America. He has served as a director since 1959. 3 6 JOSEPH A. CLORETY III (3,4) Age 53. President of Clorety & Company, Inc. (registered investment adviser) since 1987. He has served as a director since 1984. GUY T. STEUART II (1,3) Age 64. Director and President of Steuart Investment Company (manages, operates, and leases real and personal property and holds stock in operating subsidiaries engaged in various businesses) since 1960; Trustee Emeritus of Washington and Lee University. He has served as a director since 1984. WARREN K. MONTOURI (1,3,4) Age 66. Investor since 1958; Director of NationsBank, N.A. He has served as a director since 1986. G. CABELL WILLIAMS III (2,5) Age 41. President and Chief Operating Officer of the Company; Executive Vice President of Allied Capital Corporation II, Allied Capital Commercial Corporation, Allied Capital Lending Corporation, Business Mortgage Investors, Inc. and Advisers; Director of Environmental Enterprises Assistance Fund. He has held positions with the Company and with Advisers, Allied Capital Corporation II, Allied Capital Commercial Corporation, Allied Capital Lending Corporation and Business Mortgage Investors, Inc. since the later of 1981 or the inception of the relevant entity. He has served as a director since 1993. MICHAEL I. GALLIE (1,4) Age 49. Principal of The Millennium Group Inc. (financial and management consulting firm) since 1991; President of Economic Development Finance Corporation from 1987 to 1990; Trustee and Chairman of the Investment Committee of the District of Columbia Retirement Board from 1991 to 1995. He has served as a director since 1994. - -------------------- (1) Member of the Executive Committee. (2) Messrs. Gladstone, Williams and Williams III, as officers of the Company and of the Company's investment adviser, are "interested persons" as defined in the Investment Company Act of 1940. (3) Member of the Compensation Committee. (4) Member of the Audit Committee. (5) George C. Williams is the father of G. Cabell Williams III. THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE TO ELECT THE FOREGOING NOMINEES TO SERVE AS DIRECTORS OF THE COMPANY. MEETINGS OF THE BOARD OF DIRECTORS The Board of Directors has established an Executive Committee, an Audit Committee and a Compensation Committee. The Board has established no nominating committee. During 1995, the Board of Directors held eight regular meetings and five committee meetings. All directors attended at least 75% of the aggregate number of meetings of the Board and of the committees on which they served. The Executive Committee is intended, during intervals between meetings of the Board of Directors, to exercise all powers of the Board in the management and direction of the business and affairs of the Company, except where action by the Board is required by statute, an order of the Securities and Exchange Commission (the "Commission") or the Company's Articles of Incorporation or By-Laws. The Executive Committee did not meet during 1995. The Audit Committee recommends the selection of independent public accountants for the Company, reviews with such independent public accountants the planning, scope and results of their audit of the Company's financial statements and the fees for services performed, reviews with the independent public accountants the adequacy of internal control systems, reviews the quarterly and annual financial statements of the Company and receives audit reports and financial statements of the Company. The Audit Committee met four times during 1995. The Compensation Committee determines and issues stock option grants for officers of the Company under the Company's Stock Option Plan, which is the only form of compensation paid by the Company to its officers for serving as such. The Compensation Committee met once during 1995. 4 7 COMPENSATION OF EXECUTIVE OFFICERS AND DIRECTORS Under Commission rules applicable to business development companies, the Company is required to set forth certain information regarding its three most highly compensated executive officers who received compensation from the Company in excess of $60,000 during 1995. However, the Company has no employees and does not pay any cash compensation to any of its officers (other than directors' fees to those of its officers who are also directors). All of the Company's officers and staff are employed by Advisers, which pays all of their cash compensation. The Company, from time to time, grants stock options to its officers under the Company's Stock Option Plan. As described in "Compensation of Directors" below, the Company also has granted stock options to its non-officer directors under the Company's Stock Option Plan. STOCK OPTIONS The following table sets forth, as to the Company's Chief Executive Officer and the four most highly compensated officers of Advisers, who are also officers of the Company, the details relating to option grants in 1995 and the potential realizable value of each grant, as prescribed to be calculated by the Commission. OPTION GRANTS DURING 1995
Potential realizable value at assumed annual rates of Number of Percent of stock price appreciation securities total options Exercise over 10-year term (1) underlying granted price per Expiration --------------------- Name options granted in 1995 share date 5% 10% ---- --------------- ------- ----- ---- -- --- David Gladstone 24,240 8.6% $12.375 02/03/05 $188,650 $478,075 George C. Williams 0 N/A N/A N/A N/A N/A John M. Scheurer 8,080 2.9% $12.375 02/03/05 $ 62,883 $159,358 G. Cabell Williams III 40,400 14.3% $12.375 02/03/05 $314,416 $796,792 Joan M. Sweeney 8,080 2.9% $12.375 02/03/05 $ 62,883 $159,358
- -------------------- (1) Potential realizable value is net of the option exercise price but before any tax liabilities that may be incurred. These amounts represent certain assumed rates of appreciation, as mandated by the Commission. Actual gains, if any, on stock option exercises are dependent on the future performance of the shares, overall market conditions, and the continued employment of the option holder. The potential realizable value may not necessarily be realized. 5 8 COMPENSATION OF DIRECTORS During 1995, each director received a fee of $1,000 for each meeting of the Board of the Company and its wholly owned subsidiaries or each separate committee meeting attended and $500 for each committee meeting attended on the same day as a Board meeting. There is no duplication of directors' fees and expenses even though some directors also take action on behalf of the Company's wholly owned subsidiaries. Aggregate directors' fees for 1995 were $71,000. In addition, on December 26, 1995 each non-officer director (Messrs. Clorety, Steuart, Montouri, Toomey and Gallie) received a one-time grant of options to purchase 10,000 shares at the then-current market price ($13.625) pursuant to the Company's Stock Option Plan. The following table sets forth certain details of compensation paid to directors during 1995, as well as compensation paid for serving as a director of the two other investment companies with which the Company may be deemed to be related.
Pension or Total compensation Aggregate retirement benefits from Company and compensation accrued as part of related companies Name and position from Company(1) Company expenses paid to directors(2) ----------------- -------------- ------------------- -------------------- David Gladstone, Chairman of the $ 8,000 $0 $25,000 Board and Chief Executive Officer George C. Williams, Vice Chairman $ 7,000 $0 $24,000 G. Cabell Williams III, President, $ 8,000 $0 $ 8,000 Chief Operating Officer and Director Joseph A. Clorety III, Director $11,000 $0 $11,000 Guy T. Steuart II, Director $ 8,000 $0 $ 8,000 Warren K. Montouri, Director $10,000 $0 $10,000 T. Murray Toomey, Director $ 8,000 $0 $ 8,000 Michael I. Gallie, Director $11,000 $0 $11,000
- -------------------- (1) Consists only of directors' fees. (2) Includes amounts paid as compensation to directors by Allied Capital Corporation II and Allied Capital Lending Corporation. CERTAIN TRANSACTIONS INVESTMENT ADVISORY AGREEMENT The Company is a party to an investment advisory agreement with Advisers. Pursuant to the investment advisory agreement, Advisers is entitled to be paid, quarterly in arrears, a fee equal to 0.625% per quarter (2.5% per annum) of the quarter-end value of the Company's consolidated total assets, less the value of the shares of Allied Capital Lending Corporation owned by the Company, consolidated interim investments, cash and cash equivalents plus 0.125% per quarter (0.5% per annum) of the quarter-end value of the Company's consolidated interim investments, cash and cash equivalents. For 1995, the Company incurred $2,799,000 in investment advisory fees. Advisers was a wholly owned subsidiary of the Company from its inception in 1964 until the Company distributed its shares of Advisers to stockholders of the Company in December 1990. Messrs. Toomey, Clorety, Steuart and Montouri owned shares of Advisers from 1990 until 1994. Messrs. Gladstone, Williams and Williams III continue to own shares of Advisers, and their beneficial ownership of Advisers shares as of March 15, 1996 represented approximately 9.7%, 3.4% and 3.6%, respectively, of Advisers' shares then outstanding or deemed to be outstanding, including shares allocated to their respective Allied Employee Stock Ownership Plan stock account through December 31, 1995. Mr. Gladstone, the Company's Chairman and Chief Executive Officer and a nominee for re-election as a director, is the Chairman and Chief Executive Officer of Advisers; Mr. Williams, the Company's Vice Chairman and a nominee for re- election as a director, is the Vice Chairman of Advisers; Mr. Williams III, the 6 9 Company's President and Chief Operating Officer and a nominee for re-election as a director, is an executive officer of Advisers. Each officer of the Company is also an officer of Advisers. INDEBTEDNESS OF MANAGEMENT The following table sets forth certain information regarding indebtedness to the Company in excess of $60,000 of any person serving as a director or executive officer of the Company and of any nominee for election as a director at any time since January 1, 1995. All of such indebtedness results from loans made by the Company to enable officers to exercise stock options. The interest rate charged generally reflects the applicable federal rate on the date of the loan.
Highest Amount Amount Capacity in Outstanding Interest Outstanding Name which Served in 1995 Rate at March 1, 1996 - ---- ------------ ------- ---- ---------------- David Gladstone Chairman of the Board & $200,000 5.34% $200,000 Chief Executive Officer G. Cabell Williams, III Director, President & $ 37,475 8.32% $ 37,475 Chief Operating Officer $135,326 8.50% $135,326 $ 28,311 7.02% $ 28,311
COMPLIANCE WITH REPORTING REQUIREMENTS OF SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934 Pursuant to Section 16(a) of the Securities Exchange Act of 1934, the Company's directors and executive officers, affiliated persons of the Company's investment adviser, and any persons holding ten percent or more of the Company's common stock are required to report their beneficial ownership and any changes therein to the Commission, the National Association of Securities Dealers, Inc. and the Company. Specific due dates for those reports have been established, and the Company is required to report herein any failure to file such reports by those due dates. Based on the Company's review of Forms 3, 4 and 5 filed by such persons, the Company has identified no deficiencies in the filing of reports pursuant to Section 16(a) of the Securities Exchange Act of 1934 in its most recent fiscal year, except as to Robert E. Long, a director of the Company's investment adviser who sold 631 shares of the Company in 1993 and reported the transaction in 1995. 7 10 RATIFICATION OF SELECTION OF INDEPENDENT PUBLIC ACCOUNTANTS The disinterested members of the Board of Directors have selected Matthews, Carter and Boyce as independent public accountants for the Company for the year ending December 31, 1996. This selection is subject to ratification or rejection by the stockholders of the Company. If the stockholders ratify the selection of Matthews, Carter and Boyce as the Company's independent public accountants, they will also be the independent public accountants for the Company's subsidiaries, Allied Investment Corporation, Allied Capital Financial Corporation and Allied Development Corporation. This selection is subject to ratification or rejection by the stockholders of the Company pursuant to an undertaking by the Company to the Commission. Thus, stockholders who vote to ratify the selection of Matthews, Carter and Boyce will, likewise, be voting to ratify their selection as independent public accountants for the Company's subsidiaries, Allied Investment Corporation, Allied Capital Financial Corporation and Allied Development Corporation. Matthews, Carter and Boyce, or its predecessor, has served as the Company's independent public accountants since its inception and has no financial interest in the Company. It is not expected that a representative of Matthews, Carter and Boyce will be present, or available to answer questions, at the Meeting, but a representative would have an opportunity to make a statement if he or she chose to attend. The expense recorded during the fiscal year ended December 31, 1995 for the professional services provided to the Company by Matthews, Carter and Boyce consisted of fees for audit services (which included the audit of the consolidated financial statements of the Company and its subsidiaries and review of the filings by the Company and its subsidiaries of reports and registration statements) and for non-audit services, the fees for which aggregated approximately 23% of total fees. The non-audit services, which were arranged for by management without prior consideration by the Board of Directors, consisted of non-audit related consultation and the preparation of tax returns for the Company and its subsidiaries. THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE TO RATIFY THE SELECTION OF MATTHEWS, CARTER AND BOYCE AS INDEPENDENT PUBLIC ACCOUNTANTS FOR THE COMPANY. OTHER BUSINESS The Board of Directors knows of no other business to be presented for action at the Meeting. If any matters do come before the Meeting on which action can properly be taken, it is intended that the proxies shall vote in accordance with the judgment of the person or persons exercising the authority conferred by the proxy at the Meeting. 1997 ANNUAL MEETING OF STOCKHOLDERS The Company expects that the 1997 Annual Meeting of Stockholders will be held in May 1997, but the exact date, time, and location of such meeting have yet to be determined. A stockholder who intends to present a proposal at that annual meeting must submit the proposal in writing to the Company no later than November 30, 1996 in order for the proposal to be considered for inclusion in the Company's proxy statement for that meeting. The submission of a proposal does not guarantee its inclusion in the Company's proxy statement or presentation at the meeting unless certain securities law requirements are met. 8 11 PROXY ALLIED CAPITAL CORPORATION THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS The undersigned stockholder of ALLIED CAPITAL CORPORATION (the "Company") appoints David Gladstone, George C. Williams and Thomas R. Salley, or any of them, proxies, with full power of substitution, to vote at the 1996 Annual Meeting of Stockholders of the Company to be held in the Strathmore Hall Arts Center, 10701 Rockville Pike, North Bethesda, Maryland 20852 at 10:00 a.m., Monday, May 6, 1996, and any adjournment or adjournments thereof, the shares of Common Stock of the Company that the undersigned is entitled to vote, on all matters that may properly come before that meeting. (Continued on reverse side) /X/ PLEASE MARK YOUR VOTES AS IN THIS EXAMPLE WITHHOLD FOR all nominees AUTHORITY listed to the right to vote for all (except as marked nominees listed to the contrary) to the right. NOMINEES: David Gladstone George C. Williams 1. Election of eight T. Murray Toomey Directors for the / / / / Joseph A. Clorety III ensuing year Guy T. Steuart II Warren K. Montouri G. Cabell Williams III Michael I. Gallie
(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.) - ------------------------------------- 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.
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. -----END PRIVACY-ENHANCED MESSAGE-----