pre14a
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
SCHEDULE 14A
(Rule 14a-101)
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities
Exchange Act of 1934 (Amendment No. )
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Filed by the Registranto
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Filed by a Party other than the
Registranto
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Check the appropriate box:
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þ Preliminary Proxy
Statement
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o Confidential, for Use
of the Commission Only (as permitted by Rule 14a-6(e)(2)) |
o Definitive Proxy
Statement
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o Definitive Additional
Materials
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o Soliciting Material
Pursuant to Rule 14a-11(c) or Rule 14a-12 |
Allied Capital Corporation
(Name of Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement if other than the
Registrant)
Payment of Filing Fee (Check the appropriate box):
þ No
fee required.
o Fee
computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
(1) Title of each class of securities to which transaction
applies:
(2) Aggregate number of securities to which transaction
applies:
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(3) |
Per unit price or other underlying value of transaction computed
pursuant to Exchange Act
Rule 0-11 (Set
forth the amount on which the filing fee is calculated and state
how it was determined): |
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
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o |
Fee paid previously with
preliminary materials.
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o |
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.
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(1) Amount previously paid:
(2) Form, schedule or registration statement no.:
(3) Filing party:
(4) Date filed:
Allied Capital
Corporation
Notice of Annual
Meeting of Stockholders
To the Stockholders:
The 2007 Annual Meeting of Stockholders of Allied Capital
Corporation (the Company) will be held at the Westin Embassy Row
Hotel, 2100 Massachusetts Avenue, NW, Washington, DC on
May 15, 2007, at 10:00 a.m. (Eastern Time) for the
following purposes:
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1. To elect four directors of the Company who will serve
for three years, or until their successors are elected and
qualified; |
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2. |
To ratify the selection of KPMG LLP to serve as the independent
registered public accounting firm for the Company for the year
ending December 31, 2007; |
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3. |
To approve an amendment to the Companys Restated Articles
of Incorporation to increase the total number of shares of
common stock that the Company is authorized to issue from
200,000,000 to 400,000,000 shares; |
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4. To approve an amendment to the Companys Amended
Stock Option Plan; and |
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5. To transact such other business as may properly come
before the meeting and any adjournments or postponements thereof. |
You have the right to receive notice of and to vote at the
meeting if you were a stockholder of record at the close of
business on February 23, 2007. Whether or not you expect to
be present in person at the Meeting, please sign the enclosed
proxy and return it promptly in the envelope provided, or
register your vote by telephone or through the Internet.
Instructions are shown on the proxy card. In the event there are
not sufficient votes for a quorum or to approve or ratify any of
the foregoing proposals at the time of the Annual Meeting, the
Annual Meeting may be adjourned in order to permit further
solicitation of the proxies by the Company.
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By order of the Board of Directors,
![BLASEY SIG](w28149w2814901.gif) |
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Ralph G. Blasey III
Executive Vice President and
Corporate Secretary |
Washington, DC
March , 2007
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This is an important meeting. To ensure proper representation at
the Meeting, please complete, sign, date and return the proxy
card in the enclosed, self-addressed envelope, vote your shares
by telephone, or vote via the Internet. Even if you vote your
shares prior to the Meeting, you still may attend the Meeting
and vote your shares in person. |
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Allied Capital
Corporation
1919 Pennsylvania Avenue, NW
Washington, DC 20006
PROXY STATEMENT
General
This Proxy Statement is furnished in connection with the
solicitation of proxies by the Board of Directors of Allied
Capital Corporation (the Company or Allied Capital) for use at
the Companys 2007 Annual Meeting of Stockholders (the
Meeting) to be held on May 15, 2007, at 10:00 a.m.
(Eastern Time) at the Westin Embassy Row Hotel,
2100 Massachusetts Avenue, NW, Washington, DC and at any
adjournments or postponements thereof. This Proxy Statement, the
accompanying proxy card, and the Companys Annual Report to
Stockholders for the year ended December 31, 2006, are
first being sent to stockholders on or about
March , 2007.
We encourage you to vote your shares, either by voting in person
at the Meeting or by granting a proxy (i.e., authorizing
someone to vote your shares). If you properly sign and date the
accompanying proxy card or otherwise provide voting
instructions, either via the Internet or the telephone, and the
Company receives it in time for the Meeting, the persons named
as proxies will vote the shares registered directly in your name
in the manner that you specified. If you give no instructions
on the proxy card, the shares covered by the proxy card 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.
If you are a stockholder of record (i.e., you
hold shares directly in your name), you may revoke a proxy at
any time before it is exercised by notifying the proxy
tabulator, Automatic Data Processing, Inc., in writing. Please
send your notification to Allied Capital Corporation, c/o ADP,
51 Mercedes Way, Edgewood, NY 11717, and submit a properly
executed, later-dated proxy or vote in person at the Meeting.
Any stockholder of record attending the Meeting may vote in
person whether or not he or she has previously voted his or her
shares. 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 and present
it at the Meeting.
Stockholders of record may also vote either via the Internet or
by telephone. Specific instructions to be followed by
stockholders of record interested in voting via the Internet or
the telephone are shown on the enclosed proxy card. The Internet
and telephone voting procedures are designed to authenticate the
stockholders identity and to allow stockholders to vote
their shares and confirm that their instructions have been
properly recorded.
Annual Meeting Admission
If you plan to attend the Meeting, an admission ticket and photo
identification will be required for admission to the Meeting. If
you are a stockholder of record, your ticket is attached to your
proxy card. If your shares are held in the name of a broker or
other nominee and you do not have an admission ticket, please
bring with you a legal proxy or letter from the broker, trustee,
bank, or nominee confirming
your beneficial ownership of the shares as of the record date,
February 23, 2007, along with your photo identification.
Purpose of Meeting
At the Meeting, you will be asked to vote on the following
proposals:
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1. To elect four directors of the Company who will serve
for three years, or until their successors are elected and
qualified; |
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2. |
To ratify the selection of KPMG LLP to serve as the independent
registered public accounting firm for the Company for the year
ending December 31, 2007; |
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3. |
To approve an amendment to the Companys Restated Articles
of Incorporation to increase the total number of shares of
common stock that the Company is authorized to issue from
200,000,000 to 400,000,000 shares; |
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4. To approve an amendment to the Companys Amended
Stock Option Plan; and |
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5. To transact such other business as may properly come
before the Meeting and any adjournments or postponements thereof. |
Voting Securities
You may vote your shares at the Meeting only if you were a
stockholder of record at the close of business on
February 23, 2007, (the Record Date). On February 23,
2007, there were 148,658,636 shares of the Companys
common stock outstanding. Each share of common stock is entitled
to one vote.
The Companys 401(k) Plan owns a total of
229,215 shares, representing less than 1% of the
Companys total outstanding shares. The sub-trustees of the
fund holding Company shares within the 401(k) Plan, who are
executive officers of the Company, will vote the shares on
behalf of the participants pursuant to their instructions.
Quorum Required
A quorum must be present at the Meeting for any business to be
conducted. The presence at the Meeting, in person or by proxy,
of the holders of a majority of the shares of common stock
outstanding on the record date will constitute a quorum.
Abstentions will be treated as shares present for quorum
purposes. Broker Shares for which the nominee has not received
voting instructions from the record holder and does not have
discretionary authority to vote the shares on certain proposals
(which are considered Broker Non-Votes with respect
to such proposals) will be treated as shares present for quorum
purposes.
If a quorum is not present at the Meeting, the stockholders who
are represented may adjourn the Meeting until a quorum is
present. 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 the
further solicitation of proxies.
2
Vote Required
Election
of Nominee Directors. The affirmative vote of a majority of
the votes cast at the Meeting in person or by proxy is required
to elect the four nominees as directors. Abstentions will not be
included in determining the number of votes cast and, as a
result, will have no effect on this proposal.
Ratification
of Independent Registered Public Accounting Firm. The
affirmative vote of a majority of the votes cast at the Meeting
in person or by proxy is required to ratify the appointment of
KPMG LLP to serve as the Companys independent registered
public accounting firm. Abstentions will not be included in
determining the number of votes cast and, as a result, will have
no effect on this proposal.
Approval
of an amendment to the Companys Restated Articles of
Incorporation to increase the total number of authorized shares
of common stock. The affirmative vote of a majority of the
votes entitled to be cast at the Meeting in person or by proxy
is required to adopt the amendment to the Companys
Restated Articles of Incorporation to increase the total number
of authorized shares of common stock, provided that the total
votes cast on this proposal represent over 50% in interest of
all shares entitled to vote on the proposal. Abstentions and
Broker Non-Votes will have the same effect as votes against the
proposal, unless holders of more than 50% of all securities
entitled to vote on the proposal cast votes, in which event
abstentions and Broker Non-Votes will not have any effect on the
result of the vote.
Approval
of an amendment to the Companys Amended Stock Option Plan.
The affirmative vote of a majority of the votes entitled to
be cast at the Meeting in person or by proxy is required to
adopt the amendment to the Companys Stock Option Plan,
provided that the total votes cast on this proposal represent
over 50% in interest of all shares entitled to vote on the
proposal. Abstentions and Broker Non-Votes will have the same
effect as votes against the proposal, unless holders of more
than 50% of all securities entitled to vote on the proposal cast
votes, in which event abstentions and Broker Non-Votes will not
have any effect on the result of the vote.
Additional
Solicitation. If there are not enough votes to approve any
proposals at the Meeting, the stockholders who are represented
may adjourn the Meeting to permit the further solicitation of
proxies. 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 the
further solicitation of proxies. Those proxies voted against any
proposal for which an adjournment is sought will be voted
against such adjournment.
Also, a stockholder vote may be taken on one or more of the
proposals in this Proxy Statement prior to any such adjournment
if there are sufficient votes for approval of such proposal(s).
Information Regarding This Solicitation
The Company will bear the expense of the solicitation of proxies
for the Meeting, including the cost of preparing, printing, and
mailing this Proxy Statement, the accompanying Notice of Annual
Meeting of Stockholders, the proxy card, and admission tickets.
The Company has requested that brokers, nominees, fiduciaries,
and other persons holding shares in their names, or in the name
of their nominees,
3
which are beneficially owned by others, forward the proxy
materials to, and obtain proxies from, such beneficial owners.
The Company will reimburse such persons for their reasonable
expenses in so doing.
In addition to the solicitation of proxies by mail, proxies may
be solicited in person and by telephone, facsimile transmission,
or telegram by directors, officers, or regular employees of the
Company (without special compensation therefor). The Company has
also retained Georgeson Shareholder Communications, Inc. to
assist in the solicitation of proxies for a fee of approximately
$7,000, plus out-of-pocket expenses. Any proxy given pursuant to
this solicitation may be revoked by notice from the person
giving the proxy at any time before it is exercised. Any such
notice of revocation should be provided in writing and signed by
the stockholder in the same manner as the proxy being revoked
and delivered to the Companys proxy tabulator.
Security Ownership of Management and Certain Beneficial
Owners
The following table sets forth, as of February 23, 2007,
each stockholder who owned more than 5% of the Companys
outstanding shares of common stock, each current director, each
nominee for director, each executive officer of the Company
listed in the Summary Compensation Table, and the directors and
executive officers as a group. Unless otherwise indicated, the
Company believes that each beneficial owner set forth in the
table has sole voting and investment power.
The Companys directors are divided into two
groups interested directors and independent
directors. Interested directors are interested
persons as defined in Section 2(a)(19)of the
Investment Company Act of 1940 (The 1940 Act).
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Dollar Range of | |
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Equity Securities | |
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Number of | |
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Beneficially | |
Name of |
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Shares Owned | |
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Percentage | |
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Owned by | |
Beneficial Owner |
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Beneficially(1) | |
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of Class(2) | |
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Directors(3) | |
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Capital Research and Management Company
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7,646,020 |
(4) |
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5.1 |
% |
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333 South Hope Street, 55th Floor
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Los Angeles, CA 90071-1447
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Interested Directors:
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William L. Walton
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3,654,739 |
(5,6,7,15) |
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2.4 |
% |
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over $100,000 |
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Joan M. Sweeney
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1,989,675 |
(5,15) |
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1.3 |
% |
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over $100,000 |
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Robert E. Long
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56,111 |
(8) |
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* |
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over $100,000 |
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Independent Directors:
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Ann Torre Bates
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29,250 |
(7,8) |
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* |
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over $100,000 |
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Brooks H. Browne
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88,713 |
(7,8) |
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* |
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over $100,000 |
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John D. Firestone
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77,426 |
(7,8) |
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* |
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over $100,000 |
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Anthony T. Garcia
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103,512 |
(8) |
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* |
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over $100,000 |
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Edwin L. Harper
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10,400 |
(8,13) |
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* |
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over $100,000 |
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Lawrence I. Hebert
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57,800 |
(8,12) |
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* |
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over $100,000 |
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John I. Leahy
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62,318 |
(8) |
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* |
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over $100,000 |
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Alex J. Pollock
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33,224 |
(7,8,9) |
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* |
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over $100,000 |
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Marc F. Racicot
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15,000 |
(8) |
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* |
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over $100,000 |
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Guy T. Steuart II
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369,044 |
(8,10) |
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* |
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over $100,000 |
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Laura W. van Roijen
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79,454 |
(7,8) |
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* |
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over $100,000 |
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Number of | |
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Name of |
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Shares Owned | |
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Percentage | |
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of Class(2) | |
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Executive Officers:
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Michael J. Grisius
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798,904 |
(5,7,15) |
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* |
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Penni F. Roll
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824,748 |
(5,15) |
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* |
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John D. Shulman
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1,030,106 |
(5) |
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All directors and executive officers as a group (28 in
number)
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14,651,101 |
(11) |
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9.2 |
% |
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* Less than 1%
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(1) |
Beneficial ownership has been determined in accordance with
Rule 13d-3 of the
Securities Exchange Act of 1934. |
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(2) |
Based on a total of 148,658,636 shares of the
Companys common stock issued and outstanding on
February 23, 2007, and the number of shares of the
Companys common stock issuable upon the exercise of stock
options exercisable within 60 days held by each executive
officer and non-officer director, which totals 11,411,327 in the
aggregate. |
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(3) |
Beneficial ownership has been determined in accordance with
Rule 16a-1(a)(2)
of the Securities Exchange Act of 1934. |
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(4) |
Information regarding share ownership was obtained from the
Schedule 13F-HR that Capital Research and Management
Company filed with the SEC on February 13, 2007. |
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(5) |
Share ownership for the following executive officers includes: |
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Owned | |
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Options | |
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Through | |
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Exercisable | |
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Deferred | |
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Within 60 Days | |
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Allocated | |
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Owned | |
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Compensation | |
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of February 23, | |
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to 401(k) | |
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Directly | |
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Plans (14) | |
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2007 | |
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Plan | |
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William L. Walton
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467,264 |
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239,626 |
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2,718,634 |
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8,049 |
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Joan M. Sweeney
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310,154 |
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120,125 |
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1,542,032 |
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17,364 |
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Penni F. Roll
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103,967 |
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41,813 |
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667,256 |
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11,712 |
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Michael J. Grisius
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119,009 |
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51,397 |
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608,387 |
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20,111 |
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John D. Shulman
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4,799 |
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68,205 |
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957,102 |
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(6) |
Includes 229,215 shares held by the 401(k) Plan, of which
Mr. Walton is sub-trustee of the fund holding the
Companys shares. The sub-trustee disclaims beneficial
ownership of such shares. |
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(7) |
Includes certain shares held in IRA or Keogh accounts:
Walton 12,015 shares; Bates 4,250
shares; Browne 12,280 shares; Firestone
3,415 shares; Pollock 1,000 shares; van
Roijen 8,998 shares; and Grisius 1,242
shares. |
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(8) |
Beneficial ownership for these non-officer directors includes
exercisable options to purchase 45,000 shares, except with
respect to Ms. Bates who has exercisable options to
purchase 25,000 shares, Mr. Harper who has exercisable
options to purchase 10,000 shares; Mr. Leahy who has
exercisable options to purchase 42,500 shares, Mr. Pollock
who has exercisable options to purchase 14,000 shares, and
Mr. Racicot who has exercisable options to purchase 15,000
shares. |
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(9) |
Includes 5,024 shares held in a deferred compensation plan for
Mr. Pollock. |
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(10) |
Includes 276,691 shares held by a corporation for which
Mr. Steuart serves as an executive officer. |
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(11) |
Includes a total of 11,411,327 shares underlying stock
options exercisable within 60 days of February 23,
2007, which are assumed to be outstanding for the purpose of
calculating the groups percentage ownership, and 229,215
shares held by the 401(k) Plan. |
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(12) |
Includes 9,000 shares held in a revocable trust. |
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(13) |
Includes 400 shares held in a revocable trust. |
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(14) |
See Individual Performance Award and The 2005
Deferred Compensation Plan II for a discussion of shares
owned through the deferred compensation plans. |
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(15) |
Includes certain shares held in margin accounts or are otherwise
pledged: Walton 184,891 shares;
Sweeney 192,301 shares; Roll
29,427 shares; Grisius 16,914 shares. |
5
PROPOSAL 1.
ELECTION OF DIRECTORS
Pursuant to the Companys bylaws, the Board of Directors
may modify the number of members of the Board provided that the
number of directors will not be fewer than three or greater than
fifteen, unless otherwise permitted by law. Directors are
elected for a staggered term of three years each, with the term
of office of only one of the three classes of directors expiring
each year. Directors serve until their successors are elected
and qualified.
The Class III directors, Ms. Sweeney and
Messrs. Browne, Long, and Walton have been nominated for
election by the Board of Directors for a three-year term
expiring in 2010. Each Class III director has agreed to
serve as a director if elected and has consented to be named as
a nominee. No person being nominated as a director is being
proposed for election pursuant to any agreement or understanding
between any such person and the Company.
A stockholder can vote for or withhold his or her vote from any
or all of the nominees. In the absence of instructions to the
contrary, it is the intention of the persons named as proxies to
vote such proxy FOR the election of all the nominees named
below. If any of the nominees should decline or be unable to
serve as a director, it is intended that the proxy will be voted
for the election of such person or persons as are nominated as
replacements. The Board of Directors has no reason to
believe that any of the persons named will be unable or
unwilling to serve.
THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS THAT
STOCKHOLDERS VOTE FOR THE ELECTION OF THE NOMINEES NAMED IN
THIS PROXY STATEMENT.
Information about the Directors
Certain information, as of February 23, 2007, with respect
to each of the four nominees for election at the Meeting, as
well as each of the current directors, is set forth below,
including their names, ages, a brief description of their recent
business experience, including present occupations and
employment, certain directorships that each nominee holds, and
the year in which each nominee became a director of the Company
or any of its predecessor companies.
The Board of Directors of each consolidated subsidiary will be
composed of all of the Companys directors. The business
address of each nominee and director listed below is 1919
Pennsylvania Avenue, NW, Washington, DC 20006.
6
Nominees for Class III Directors Term
Expiring 2010
Messrs. Walton and Long and Ms. Sweeney are
interested persons, as defined in the 1940 Act, in the cases of
Mr. Walton and Ms. Sweeney, due to their positions as
officers of the Company and in the case of Mr. Long, as the
father of an executive officer of the Company. Mr. Browne
is an independent director.
William L. Walton
Age 57. Mr. Walton has been Chairman, President and Chief
Executive Officer of the Company since 1997 and a director since
1986. Mr. Waltons previous experience includes
serving as a Managing Director of Butler Capital Corporation, as
personal investment advisor to William S. Paley, founder of CBS,
and as Senior Vice President in Lehman Brothers Kuhn Loebs
Merger and Acquisition Group. He also founded two education
service companies Language Odyssey and Success Lab.
Mr. Walton currently serves on the boards of the U.S.
Chamber of Commerce and the Financial Services Roundtable, and
he is Treasurer of the National Symphony Orchestra.
Mr. Walton also serves on The Kelley School of Business
Deans Council at Indiana University.
Joan M. Sweeney
Age 47. Ms. Sweeney is the Chief Operating Officer of the
Company and has been employed by the Company since 1993.
Ms. Sweeney oversees the Companys daily operations.
Prior to joining Allied Capital, Ms. Sweeney was employed
by Ernst & Young, Coopers & Lybrand, and the
Division of Enforcement of the Securities and Exchange
Commission. She has served as a director of the Company since
2004.
Brooks H. Browne
Age 57. Mr. Browne has been a private investor since 2002.
Mr. Browne was the President of Environmental Enterprises
Assistance Fund from 1993 to 2002 and served as a director from
1991 to 2005. He currently serves as Chairman of the Board for
Winrock International, a non-profit organization. He has served
as a director of the Company or one of its predecessors since
1990.
Robert E. Long
Age 75. Mr. Long has been the Chief Executive Officer and a
director of GLB Group, Inc., an investment management firm,
since 1997 and President of Ariba GLB Asset Management, Inc.,
the parent company of GLB Group, Inc., since 2005. He has
been the Chairman of Emerald City Radio Partners, LLC since
1997. Mr. Long was the President of Business News Network,
Inc. from 1995 to 1998, the Chairman and Chief Executive Officer
of Southern Starr Broadcasting Group, Inc. from 1991 to 1995,
and a director and the President of Potomac Asset Management,
Inc. from 1983 to 1991. Mr. Long is a director of AmBase
Corporation, CSC Scientific, Inc., and Advanced Solutions
International, Inc. He has served as a director of the Company
or one of its predecessors since 1972. Mr. Long is the
father of Robert D. Long, an executive officer of the Company.
7
Class II Directors Term Expiring
2009
All five Class II directors are independent directors
for purposes of the 1940 Act.
Ann Torre Bates
Age 48. Ms. Bates has been a strategic and financial
consultant since 1997. From 1995 to 1997, Ms. Bates served
as Executive Vice President, CFO and Treasurer of NHP, Inc., a
national real estate services firm. From 1991 to 1995,
Ms. Bates was Vice President and Treasurer of US Airways.
She currently serves on the boards of Franklin Mutual Series,
Franklin Mutual Recovery, and SLM Corporation (Sallie Mae). She
has served as a director of the Company since 2003.
Edwin L. Harper
Age 65. Mr. Harper has been an executive for Assurant,
Inc., a financial services and insurance provider, since 1998.
He currently serves as Senior Vice President, Public Affairs and
Government Relations and previously served as Chief Operating
Officer and Chief Financial Officer for Assurants largest
subsidiary. From 1992 to 1997, Mr. Harper served as
President and Chief Executive Officer of the Association of
American Railroads. He also spent five years with Campbell Soup
Company, serving as Chief Financial Officer from 1986 to 1991.
Earlier in his career, Mr. Harper served on the White House
staffs of both President Reagan and President Nixon.
Mr. Harper currently serves as Director for the Council for
Excellence in Government. He has served as a director of the
Company since 2006.
John I. Leahy
Age 76. Mr. Leahy has been the President of Management and
Marketing Associates, a management consulting firm, since 1986.
Previously, Mr. Leahy spent 34 years of his career
with Black & Decker Corporation, where he served as
President and CEO of the United States subsidiary from 1979 to
1981 and President and Group Executive Officer of the Western
Hemisphere of Black & Decker Corporation from 1982 to
1985. Mr. Leahy is currently a director of B&L Sales,
Inc. and Chairman of Integra Health Management, Inc. He is also
Trustee Emeritus of the Sellinger School of Business at Loyola
College, Maryland. He has served as a director of the Company or
one of its predecessors since 1994.
Alex J. Pollock
Age 64. Mr. Pollock has been a Resident Fellow at the
American Enterprise Institute since 2004. He was President and
Chief Executive Officer of the Federal Home Loan Bank of Chicago
from 1991 to 2004. He currently serves as a director of the
Chicago Mercantile Exchange, Great Lakes Higher Education
Corporation, the Great Books Foundation, the Illinois Council on
Economic Education and the International Union for Housing
Finance. He has served as a director of the Company since 2003.
Guy T. Steuart II
Age 75. Mr. Steuart has been a director of Steuart
Investment Company, which manages, operates, and leases real and
personal property and holds stock in operating subsidiaries
engaged in various businesses, since 1960 where he served as
President until 2003 and currently serves as Chairman.
Mr. Steuart has served as Trustee Emeritus of Washington
and Lee University since 1992. He has served as a director of
the Company or one of its predecessors since 1984.
8
Class I Directors Term Expiring
2008
All five Class I directors are independent directors for
purposes of the 1940 Act.
John D. Firestone
Age 63. Mr. Firestone has been a Partner of Secor Group, a
venture capital firm since 1978. Mr. Firestone has also
served as a director of Security Storage Company of Washington,
DC, since 1978. He is currently a director of Cuisine Solutions,
Inc., and several non-profit organizations, including the
National Rehabilitation Hospital, The Washington Ballet and the
Tudor Place Foundation of which he is the past president. From
1997 to 2001 he was a director of The Bryn Mawr Trust
Corporation. He has served as a director of the Company or one
of its predecessors since 1993.
Anthony T. Garcia
Age 50. Mr. Garcia has been a private investor since March
2007. Previously, Mr. Garcia was Vice President of Finance
of Kirusa, a developer of mobile services, from January to March
2007, and was a private investor from 2003 through 2006.
Mr. Garcia was Vice President of Finance of Formity
Systems, Inc., a developer of software products for business
management of data networks, from 2002 through 2003.
Mr. Garcia was a private investor from 2000 to 2001, the
General Manager of Breen Capital Group, an investor in tax
liens, from 1997 to 2000, and a Senior Vice President of Lehman
Brothers Inc. from 1985 to 1996. He has served as a director of
the Company or one of its predecessors since 1991.
Lawrence I. Hebert
Age 60. Mr. Hebert is Senior Advisor for PNC Bank, N.A.,
and was a director and President and Chief Executive Officer of
Riggs Bank N.A., a subsidiary of Riggs National Corporation,
from 2001 to 2005. Mr. Hebert also served as Chief
Executive Officer of Riggs National Corporation during 2005 and
served as a director of Riggs National Corporation from 1988 to
2005. Mr. Hebert served as a director of Riggs Investment
Advisors and Riggs Bank Europe Limited (both indirect
subsidiaries of Riggs National Corporation). Mr. Hebert
previously served as Vice Chairman from 1983 to 1998, President
from 1984 to 1998, and Chairman and Chief Executive Officer from
1998 to 2001 of Allbritton Communications Company. He has served
as a director of the Company or one of its predecessors since
1989.
Marc F. Racicot
Age 58. Mr. Racicot has served as President and Chief
Executive Officer of the American Insurance Association since
August 2005. Prior to that, he was an attorney at the law firm
of Bracewell & Giuliani, LLP from 2001 to 2005. He is a
former Governor (1993 to 2001) and Attorney General (1989 to
1993) of the State of Montana. Mr. Racicot was appointed by
President Bush to serve as the Chairman of the Republican
National Committee from 2002 to 2003 and he served as Chairman
of the Bush/ Cheney Re-election Committee from 2003 to 2004. He
presently serves on the Board of Directors for Burlington
Northern Santa Fe Corporation, Massachusetts Mutual Life
Insurance Company, Jobs for Americas Graduates, and the
Board of Visitors for the University of Montana School of Law.
He has served as a director of the Company since 2005.
9
Laura W. van Roijen
Age 54. Ms. van Roijen has been a private investor since 1992.
Ms. van Roijen was a Vice President at Citicorp from 1982 to
1992. She has served as a director of the Company or one of its
predecessors since 1992.
Director Compensation
[To be provided in definitive proxy.]
CORPORATE GOVERNANCE
Director Independence
In accordance with rules of the New York Stock Exchange (NYSE),
the Board of Directors annually determines the independence of
each director. No director is considered independent unless the
Board of Directors has determined that he or she has no material
relationship with the Company. The Company monitors the status
of its directors and officers through the activities of the
Companys Corporate Governance / Nominating Committee
and through a questionnaire to be completed by each director no
less frequently than annually, with updates periodically if
information provided in the most recent questionnaire has
changed.
In order to evaluate the materiality of any such relationship,
the Board of Directors uses the definition of director
independence set forth in the New York Stock Exchange Listed
Company Manual (NYSE Listed Company Manual).
Section 303A.00 of the NYSE Listed Company Manual provides
that business development companies (BDCs), such as the Company,
are required to comply with all of the provisions of
Section 303A applicable to domestic issuers other than
Sections 303A.02, the section that defines director
independence. Section 303A.00 provides that a director of a
BDC shall be considered to be independent if he or she is not an
interested person of the Company, as defined in
Section 2(a)(19) of the 1940 Act. Section 2(a)(19) of
the 1940 Act defines an interested person to
include, among other things, any person who has, or within the
last two years had, a material business or professional
relationship with the Company.
The Board has determined that each of the directors is
independent and has no relationship with the Company, except as
a director and stockholder of the Company, with the exception of
William L. Walton, Joan M. Sweeney and Robert E. Long.
Mr. Walton and Ms. Sweeney are interested persons of
the Company due to their positions as officers of the Company
and Mr. Long is an interested person of the Company because
he is the father of an executive officer of the Company. During
its assessment of director independence, the Board also
considered a donation of $25,000 by the Company to the American
Enterprise Institute where Mr. Pollock serves as a Resident
Fellow. The Board determined that the donation did not impair
Mr. Pollocks status as an independent director.
Committees of the Board of Directors
The Board of Directors of the Company has established an
Executive Committee, an Audit Committee, a Compensation
Committee, and a Corporate Governance/ Nominating Committee. The
Audit Committee, Compensation Committee, and
10
Corporate Governance/ Nominating Committee each operate pursuant
to a committee charter. The charter of each Committee is
available on the Companys web site at
www.alliedcapital.com in the Investor Resources section and is
also available in print to any stockholder who requests a copy.
During 2006, the Board of Directors of the Company held 21 Board
meetings and 76 committee meetings. All directors attended at
least 75% of the aggregate number of meetings of the Board and
of the respective committees on which they served, except for
Mr. Harper who attended 67% of the aggregate number of
meetings of the Board and of the respective committees on which
he served. Each director makes a diligent effort to attend all
Board and committee meetings, as well as the Annual Meeting of
Stockholders. Each of the directors was present at the
Companys 2006 Annual Meeting of Stockholders.
The Company has designated the Chairman of the Corporate
Governance/ Nominating Committee as the Presiding Director to
preside at all executive sessions of non-management directors.
In his absence, the Chairman of the Audit Committee has been
designated to serve in such capacity. Executive sessions of
non-management directors are held regularly. Stockholders may
communicate with the Presiding Director by writing to Presiding
Director of the Board of Directors, Allied Capital Corporation,
c/o Corporate Secretary, 1919 Pennsylvania Avenue, NW,
Washington, DC 20006.
The Executive Committee. The Executive Committee has and
may exercise those rights, powers, and authority that the Board
of Directors from time to time grants to it, except where action
by the Board is required by statute, an order of the Commission,
or the Companys charter or bylaws. The Executive Committee
has been delegated authority from the Board to review and
approve certain investments. The Executive Committee met 50
times during 2006. The Executive Committee members currently are
Messrs. Walton (Chairman), Harper, Hebert, Leahy, Long,
Pollock and Steuart. Messrs. Harper, Hebert, Leahy, Pollock
and Steuart are independent directors for purposes of the
Investment Company Act of 1940 Act. Messrs. Walton and Long
are interested persons of the Company, as defined in
Section 2(a)(19) of the 1940 Act.
The Audit Committee. The Audit Committee operates
pursuant to a charter approved by the Board of Directors and
meets the requirements of Section 3(a)(58)(A) of the
Exchange Act. The charter sets forth the responsibilities of the
Audit Committee. The primary function of the Audit Committee is
to serve as an independent and objective party to assist the
Board of Directors in fulfilling its responsibilities for
overseeing and monitoring the quality and integrity of the
Companys financial statements, the adequacy of the
Companys system of internal controls, the review of the
independence, qualifications and performance of the
Companys independent registered public accounting firm,
and the performance of the Companys internal audit
function. The Audit Committee met 13 times during 2006. The
Audit Committee is presently composed of five persons, including
Mmes. Bates (Chairman) and van Roijen, and
Messrs. Browne, Garcia, and Harper, all of whom are
considered independent under the rules promulgated by the New
York Stock Exchange. The Companys Board of Directors has
determined that Ms. Bates and Messrs. Browne, Harper
and Garcia are audit committee financial experts as
defined under Item 407(d)(5) of
Regulation S-K of
the Securities Exchange Act of 1934, as each meets the current
independence and experience
11
requirements of Rule 10A-3 of the Exchange Act and, in
addition, are not interested persons of the Company
as defined in Section 2(a)(19) of the 1940 Act.
The Compensation Committee. The Compensation Committee
approves the compensation of the Companys executive
officers, and reviews the amount of salary and bonus for each of
the Companys other officers and employees. In addition,
the Compensation Committee approves stock option grants for the
Companys officers under the Companys Amended Stock
Option Plan, determines the Individual Performance Awards (IPA)
and Individual Performance Bonuses (IPB) for participants and
determines other compensation arrangements for employees. The
Compensation Committee met nine times during 2006. The
Compensation Committee members currently are Messrs. Garcia
(Chairman), Browne, Firestone, Leahy, and Racicot, each of whom
is not an interested person as defined in
Section 2(a)(19) of the 1940 Act.
The Corporate Governance/ Nominating Committee. The
Corporate Governance/ Nominating Committee recommends candidates
for election as directors to the Board of Directors and makes
recommendations to the Board as to the Companys corporate
governance policies. The Corporate Governance/ Nominating
Committee met four times during 2006. The Corporate Governance/
Nominating Committee members currently are Messrs. Hebert
(Chairman), Firestone, Pollock, Racicot, and Steuart, each of
whom is not an interested person as defined in
Section 2(a)(19) of the 1940 Act.
The Corporate Governance/ Nominating Committee will consider
qualified director nominees recommended by stockholders when
such recommendations are submitted to the care of the Corporate
Secretary in accordance with the Companys bylaws,
Corporate Governance Policy, and any other applicable law, rule
or regulation regarding director nominations. When submitting a
nomination to the Company for consideration, a stockholder must
provide certain information that would be required under
applicable Commission rules, including the following minimum
information for each director nominee: full name, age and
address; principal occupation during the past five years;
current directorships on publicly held companies and investment
companies; number of shares of Company common stock owned, if
any; and, a written consent of the individual to stand for
election if nominated by the Board of Directors and to serve if
elected by the stockholders.
In evaluating director nominees, the Corporate Governance/
Nominating Committee considers the following factors:
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the appropriate size and composition of the Companys Board
of Directors; |
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whether or not the person is an interested person of
the Company as defined in Section 2(a)(19) of the 1940 Act; |
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the needs of the Company with respect to the particular talents
and experience of its directors; |
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the knowledge, skills, and experience of nominees in light of
prevailing business conditions and the knowledge, skills, and
experience already possessed by other members of the Board; |
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familiarity with national and international business matters; |
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experience with accounting rules and practices; |
12
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appreciation of the relationship of the Companys business
to the changing needs of society; |
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the capacity and desire to represent the balanced, best
interests of the stockholders as a whole and not a special
interest group or constituency; |
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the desire to balance the considerable benefit of continuity
with the periodic injection of the fresh perspective provided by
new members; and |
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all applicable laws, rules, regulations, and listing standards. |
The Corporate Governance/ Nominating Committees goal is to
assemble a Board of Directors that brings to the Company a
variety of perspectives and skills derived from high quality
business and professional experience.
Other than the foregoing, there are no stated minimum criteria
for director nominees, although the Corporate Governance/
Nominating Committee may also consider such other factors as it
may deem to be in the best interests of the Company and its
stockholders. The Corporate Governance/ Nominating Committee
also believes it appropriate for certain key members of the
Companys management to participate as members of the Board.
The Corporate Governance/ Nominating Committee identifies
nominees by first evaluating the current members of the Board of
Directors willing to continue in service. Current members of the
Board with skills and experience that are relevant to the
Companys business and who are willing to continue in
service are considered for re-nomination, balancing the value of
continuity of service by existing members of the Board with that
of obtaining a new perspective. The Corporate Governance/
Nominating Committee considers the age limit guideline included
in the Companys Corporate Governance Policy, which
suggests that a director should not stand for re-nomination
after age 72, but that the Board may, in its discretion, ask a
director to stand for re-nomination if the Board believes that
such director will continue to make significant contributions to
the work of the Board. In its deliberations to recommend the
Class III directors to stand for election at the Meeting,
the Corporate Governance/ Nominating Committee noted that Robert
E. Long is over the age of 72, but felt that he continues to
contribute significantly to the Board and recommended that he be
nominated to stand for re-election.
If any member of the Board does not wish to continue in service
or if the Corporate Governance/ Nominating Committee or the
Board decides not to re-nominate a member for re-election, or if
the Corporate Governance/ Nominating Committee recommends to
expand the size of the Board of Directors, the Corporate
Governance/ Nominating Committee identifies the desired skills
and experience of a new nominee in light of the criteria above.
Current members of the Corporate Governance/ Nominating
Committee and the Board of Directors provide suggestions as to
individuals meeting the criteria of the Corporate Governance/
Nominating Committee. Consultants may also be engaged to assist
in identifying qualified individuals.
Communication with the Board of Directors
Stockholders and other interested parties with questions about
the Company are encouraged to contact Allied Capitals
Investor Relations department. However, if
13
stockholders or other interested parties feel their questions
have not been addressed, they may communicate with the
Companys Board of Directors by sending their
communications to Allied Capital Corporation Board of Directors,
c/o Corporate Secretary, 1919 Pennsylvania Avenue, NW,
Washington, DC 20006. All communications received by the
Companys Corporate Secretary in this manner will be
delivered to one or more members of the Board of Directors as
appropriate.
Code of Business Conduct
Each executive officer as well as every employee of the Company
is subject to the Companys Code of Business Conduct, which
is available on the Companys website at
www.alliedcapital.com in the Investor Resources section and is
also available in print to any stockholder or other interested
party who requests a copy.
Corporate Governance Policy
The Companys Corporate Governance Policy is available on
the Companys website at www.alliedcapital.com in the
Investor Resources section and is available in print to any
stockholder or other interested party who requests a copy.
Compensation Committee Interlocks and Insider
Participation
All members of the Compensation Committee are independent
directors and none of the members are present or past employees
of the Company within the last ten years. No member of the
Compensation Committee: (i) has had any relationship with
the Company requiring disclosure under Item 404 of
Regulation S-K
under the Exchange Act; or (ii) is an executive officer of
another entity, at which one of our executive officers serves on
the board of directors.
Information about Executive Officers
The following information, as of February 23, 2007,
pertains to the Companys executive officers who are not
directors of the Company.
Kelly A. Anderson
Age 53. Ms. Anderson, Executive Vice President and
Treasurer, has been employed by the Company since 1987.
Ms. Andersons responsibilities include the
Companys infrastructure operations, business process
management, and certain treasury functions.
Scott S. Binder
Age 52. Mr. Binder, Chief Valuation Officer, has been
employed by the Company since 1997. He has served as Chief
Valuation Officer since 2003. He served as a consultant to the
Company from 1991 until 1997. Prior to joining the Company,
Mr. Binder formed and was President of Overland
Communications Group. He also served as a board member and
financial consultant for a public affairs and lobbying firm in
Washington, DC. Mr. Binder founded Lonestar Cablevision in
1986, serving as President until 1991. In the early 1980s,
Mr. Binder worked for two firms specializing in leveraged lease
transactions. From 1976 to 1981, he was employed by
Coopers & Lybrand.
14
Ralph G. Blasey III
Age 46. Mr. Blasey, Executive Vice President, Chief
Compliance Officer, and Corporate Secretary has been employed by
the Company since 2004. Mr. Blasey also serves as the
Companys private finance counsel. Prior to joining the
Company, Mr. Blasey practiced law from 1987 to 2004.
Michael J. Grisius
Age 43. Mr. Grisius, Managing Director, has been employed
by the Company since 1992. Prior to joining the Company,
Mr. Grisius worked in leveraged finance at Chemical Bank
from 1989 to 1992 and held senior accountant and consultant
positions with KPMG LLP from 1985 to 1988.
Jeri J. Harman
Age 49. Ms. Harman, Managing Director, has been employed by
the Company since 2004. Prior to joining the Company,
Ms. Harman served as a Managing Director and Principal for
American Capital Strategies, Ltd., a business development
company, from 2000 until 2004. She worked as a Managing Director
and Head of Private Placements for First Security Van Kasper
from 1996 to 2000 and a Managing Director of Coopers &
Lybrand from 1993 to 1996. From 1982 to 1993, Ms. Harman
held various senior level positions in the private placement arm
of The Prudential Insurance Company of America. She has served
on the Board of Directors for the Association of Corporate
Growth since 2000 and currently serves on the Board of
Womens Leadership Council.
Thomas C. Lauer
Age 39. Mr. Lauer, Managing Director, has been employed by
the Company since 2004. Prior to joining the Company,
Mr. Lauer worked in GE Capitals sponsor finance group
from 2003 to 2004 and in the merchant banking and leveraged
finance groups of Wachovia Securities (previously First Union
Securities) from 1997 to 2003. He also held senior analyst
positions at Intel Corporation and served as a corporate lender
and credit analyst at National City Corporation.
Robert D. Long
Age 50. Mr. Long, Managing Director, has been employed by
the Company since 2002 and currently manages business
development activities. Prior to joining the Company,
Mr. Long was Managing Director and Head of Investment
Banking at C.E. Unterberg from 2001 to 2002, and Managing
Director at E*OFFERING/ Wit SoundView from 2000 to 2001. He also
held management positions at Bank of America (Montgomery
Securities) from 1996 to 2000, and Nomura Securities
International from 1992 to 1996, and prior to that he served as
a Managing Director at CS First Boston.
Justin S. Maccarone
Age 47. Mr. Maccarone, Managing Director, has been employed
by the Company since April 2005. Prior to joining the Company,
Mr. Maccarone served as a partner with UBS Capital
Americas, LLC, a private equity fund focused on middle market
investments, from 1993 to 2005. Prior to that,
Mr. Maccarone served as a Senior Vice President at GE
Capital specializing in merchant banking and leveraged finance
from 1989 to 1993 and served as Vice President of the Leveraged
Finance Group at HSBC/ Marine Midland Bank from 1981 to 1989.
15
Diane E. Murphy
Age 53. Ms. Murphy, Executive Vice President and Director
of Human Resources, has been employed by the Company since 2000.
Prior to joining the Company, Ms. Murphy was employed by
Allfirst Financial from 1982 to 1999 and served in several
capacities including head of the retail banking group in the
Greater Washington Metro Region from 1994 to 1996 and served as
the senior human resources executive from 1996 to 1999.
Penni F. Roll
Age 41. Ms. Roll, Chief Financial Officer, has been
employed by the Company since 1995. Ms. Roll is responsible
for the Companys financial operations. Prior to joining
the Company, Ms. Roll was employed by KPMG LLP in the
firms audit practice.
Daniel L. Russell
Age 42. Mr. Russell, Managing Director, has been employed
by the Company since 1998. Prior to joining the Company,
Mr. Russell was employed by KPMG LLP in the firms
financial services group.
John M. Scheurer
Age 54. Mr. Scheurer, Managing Director, has been employed
by the Company since 1991. Mr. Scheurer is currently a
member of the Board of Governors of the Commercial Mortgage
Securities Association. He has also served as Chairman and as a
Vice Chair of the Capital Markets Committee for the Commercial
Real Estate Finance Committee of the Mortgage Bankers
Association.
John D. Shulman
Age 44. Mr. Shulman, Managing Director, has been employed
by the Company since 2001. Prior to joining the Company,
Mr. Shulman served as the President and CEO of Onyx
International, LLC, a private equity firm, from 1994 to 2001. He
currently serves as a member of the investment committee of
Greater China Private Equity Fund.
Suzanne V. Sparrow
Age 41. Ms. Sparrow, Executive Vice President, has been
employed by the Company since 1987. Ms. Sparrow manages
various special projects for the Company and is involved in the
Companys compliance and corporate governance activities.
Certain Relationships and Related Transactions
The Company has procedures in place for the review, approval and
monitoring of transactions involving the Company and certain
related persons of the Company. As a BDC, the Company is
prohibited by the 1940 Act from participating in transactions
with any persons affiliated with the BDC, including, officers,
directors, and employees of the BDC and any person controlling
or under common control with the BDC (the Affiliates) absent an
SEC exemptive order.
In the ordinary course of business, the Company enters into
transactions with portfolio companies that may be considered
related party transactions. In order to ensure that the Company
does not engage in any prohibited transactions with any
16
persons affiliated with Company, the Company has implemented the
following procedures:
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Every proposed transaction must have a completed write-up and a
transaction analysis, which should identify all parties to the
transaction, including any selling stockholders. |
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Each transaction is screened by officers of the Company for any
possible affiliations, close or remote, between the proposed
portfolio investment, the Company, companies controlled by the
Company, and any Affiliates of the Company. |
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All Affiliates are notified by officers of the Company of any
proposed transactions and the parties involved in the
transaction, and are asked to notify the Chief Operating Officer
or the Chief Financial Officer or any other officer of the
Company who has been designated to serve in this capacity (each
a Screening Officer). |
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A Screening Officer analyzes all potential affiliations between
the proposed portfolio investment, the Company, companies
controlled by the BDC, and any Affiliates of the Company to
determine if prohibited affiliations exist. |
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A Screening Officer obtains the advice of legal counsel whenever
there is uncertainty as to whether particular persons involved
in a proposed transaction are Affiliates of the Company. |
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A Screening Officer reviews the terms of each transaction to
review whether any affiliated person could receive brokerage
commissions that exceed the provisions of the 1940 Act. |
No agreement shall be entered into unless and until a Screening
Officer is satisfied that no affiliations prohibited by the 1940
Act exist or, if such affiliations exist, appropriate actions
have been taken to seek Board review and approval or exemptive
relief for such transaction. The Board of Directors reviews
these procedures on an annual basis.
In addition, the Companys Code of Business Conduct, which
is annually reviewed and approved by the Board of Directors and
acknowledged in writing by all employees, requires that all
employees and directors avoid any conflict, or the appearance of
a conflict, between an individuals personal interests and
the interests of the Company. Pursuant to the Code of Business
Conduct, each employee and director must disclose any conflicts
of interest, or actions or relationships that might give rise to
a conflict, to the Corporate Secretary. In the event that the
Corporate Secretary is involved in the action or relationship
giving rise to the conflict of interest, the individual is
directed to disclose the conflict to another member of the
Companys senior management team. The Corporate Governance/
Nominating Committee is charged with monitoring and making
recommendations to the Board of Directors regarding policies and
practices relating to corporate governance. Certain actions or
relationships that might give rise to a conflict of interest are
reviewed and approved by the Board of Directors.
The following table sets forth certain information, as of
February 23, 2007, regarding indebtedness to the Company in
excess of $120,000 of any person serving as a director or
executive officer of the Company and of any nominee for election
as
17
a director at any time since January 1, 2006. All of such
indebtedness results from loans made by the Company to enable
the exercise of stock options. The loans are required to be
fully collateralized and are full recourse against the borrower
and have varying terms not exceeding ten years. The interest
rates charged generally reflect the applicable federal rate on
the date of the loan.
As a BDC under the 1940 Act, the Company is entitled to provide
and has provided loans to officers of the Company in connection
with the exercise of stock options. However, as a result of
provisions of the Sarbanes-Oxley Act of 2002, the Company has
been prohibited from making new loans to its executive officers
since July 30, 2002.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount | |
|
Amount | |
|
|
|
Range of | |
|
|
|
|
of Principal | |
|
of Interest | |
|
Highest Amount | |
|
Interest Rates | |
|
Amount | |
Name and Position |
|
Paid During | |
|
Paid During | |
|
Outstanding | |
|
| |
|
Outstanding at | |
with Company |
|
2006 | |
|
2006 | |
|
During 2006 | |
|
High | |
|
|
|
Low | |
|
February 23, 2007 | |
|
|
| |
|
| |
|
| |
|
| |
|
|
|
| |
|
| |
Executive Officers: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Kelly A. Anderson, Executive Vice President and Treasurer
|
|
$ |
|
|
|
$ |
24,116 |
|
|
$ |
496,225 |
|
|
|
5.96% |
|
|
|
|
|
3.91% |
|
|
$ |
496,225 |
|
Michael J. Grisius, Managing Director
|
|
$ |
24,000 |
|
|
$ |
12,594 |
|
|
$ |
230,727 |
|
|
|
4.68% |
|
|
|
|
|
3.91% |
|
|
$ |
206,727 |
|
Penni F. Roll, Chief Financial Officer
|
|
$ |
344,246 |
|
|
$ |
23,179 |
|
|
$ |
875,770 |
|
|
|
5.89% |
|
|
|
|
|
4.45% |
|
|
$ |
531,524 |
|
Suzanne V. Sparrow, Executive Vice President
|
|
$ |
147,170 |
|
|
$ |
17,342 |
|
|
$ |
556,498 |
|
|
|
6.18% |
|
|
|
|
|
4.45% |
|
|
$ |
281,213 |
|
Joan M. Sweeney, Chief Operating Officer and
Director(1)
|
|
$ |
399,962 |
|
|
$ |
9,346 |
|
|
$ |
399,962 |
|
|
|
4.45% |
|
|
|
|
|
4.45% |
|
|
$ |
|
|
|
|
(1) |
Ms. Sweeney is an interested director. Interested directors are
interested persons as defined by the 1940 Act. |
Section 16(a) Beneficial Ownership Reporting
Compliance
Pursuant to Section 16(a) of the Securities Exchange Act of
1934, the Companys directors and executive officers, and
any persons holding 10% or more of its common stock, are
required to report their beneficial ownership and any changes
therein to the Commission 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 Companys review of Forms 3,
4, and 5 filed by such persons, the Company believes that during
2006 all Section 16(a) filing requirements applicable to
such persons were met in a timely manner, with the exception of
the Form 3 for Ms. Diane Murphy, which was amended to
include a transaction that had not previously been included.
18
EXECUTIVE COMPENSATION
[To be provided in definitive proxy].
PROPOSAL 2.
RATIFICATION OF SELECTION OF INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
The Audit Committee and the independent members of the Board of
Directors have appointed KPMG LLP as the Companys
independent registered public accounting firm for the year
ending December 31, 2007. If the stockholders ratify the
selection of KPMG LLP as the Companys accountants, KPMG
LLP also will be the independent registered public accounting
firm for the consolidated subsidiaries of the Company, if
required.
KPMG LLP has advised the Company that neither the firm nor any
present member or associate of it has any material financial
interest, direct or indirect, in the Company or its subsidiaries.
The Company expects that a representative of KPMG LLP will be
present at the Meeting and will have an opportunity to make a
statement if he or she so chooses and will be available to
respond to appropriate questions.
Unless marked to the contrary, the shares represented by the
enclosed proxy card will be voted for ratification of the
selection of KPMG LLP as the independent registered public
accounting firm of the Company.
THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS THAT
STOCKHOLDERS VOTE TO RATIFY THE SELECTION OF KPMG LLP AS
THE
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM OF THE
COMPANY.
Fees Paid to KPMG LLP for 2006 and 2005
The following are aggregate fees billed to the Company by KPMG
LLP during 2006 and 2005.
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal Year Ended | |
|
|
December 31 | |
|
|
| |
|
|
2006 | |
|
2005 | |
|
|
| |
|
| |
Audit Fees
|
|
$ |
1,663,338 |
|
|
$ |
1,731,841 |
|
Audit-Related Fees
|
|
|
212,500 |
|
|
|
255,502 |
|
Tax Fees
|
|
|
34,250 |
|
|
|
79,000 |
|
All Other Fees
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL FEES:
|
|
$ |
1,910,088 |
|
|
$ |
2,066,343 |
|
|
|
|
|
|
|
|
Audit Fees. Audit fees consist of fees billed for
professional services rendered for the audit of the
Companys year-end consolidated financial statements and
reviews of the interim consolidated financial statements
included in quarterly reports and services that are normally
provided by KPMG LLP in connection with statutory and regulatory
filings. These services also include the audits of
managements
19
assessment of the effectiveness and the effectiveness of the
Companys internal controls over financial reporting.
Audit-Related Fees. Audit-related fees consist of fees
billed for assurance and related services that are reasonably
related to the performance of the audit or review of the
Companys consolidated financial statements and are not
reported under Audit Fees. These services include
attest services that are not required by statute or regulation,
consultations concerning financial accounting and reporting
standards, and fees related to requests for documentation and
information from regulatory and other government agencies.
Tax Fees. Tax fees consist of fees billed for
professional services for tax compliance. These services include
assistance regarding federal, state, and local tax compliance.
All Other Fees. All other fees would include fees for
products and services other than the services reported above.
Report of the Audit Committee
As part of its oversight of the Companys financial
statements, the Audit Committee reviewed and discussed with both
management and the Companys independent registered public
accounting firm all of the Companys financial statements
filed with the Commission for each quarter during 2006 and as of
and for the year ended December 31, 2006. Management
advised the Audit Committee that all financial statements were
prepared in accordance with U.S. generally accepted accounting
principles (GAAP), and reviewed significant accounting issues
with the Audit Committee. The Audit Committee also discussed
with the independent registered public accounting firm the
matters required to be discussed by Statement on Auditing
Standards No. 61, Communication with Audit Committees,
as amended, by the Auditing Standards Board of the American
Institute of Certified Public Accountants.
The Audit Committee of the Board has established a pre-approval
policy that describes the permitted audit, audit-related, tax,
and other services to be provided by KPMG LLP, the
Companys independent registered public accounting firm.
Pursuant to the policy, the Audit Committee pre-approves the
audit and non-audit services performed by the independent
registered public accounting firm in order to assure that the
provision of such service does not impair the firms
independence.
Any requests for audit, audit-related, tax, and other services
that have not received general pre-approval must be submitted to
the Audit Committee for specific pre-approval, irrespective of
the amount, and cannot commence until such approval has been
granted. Normally, pre-approval is provided at regularly
scheduled meetings of the Audit Committee. However, the Audit
Committee may delegate pre-approval authority to one or more of
its members. The member or members to whom such authority is
delegated shall report any pre-approval decisions to the Audit
Committee at its next scheduled meeting. The Audit Committee
does not delegate its responsibilities to pre-approve services
performed by the independent registered public accounting firm
to management.
The Audit Committee received and reviewed the written
disclosures from the independent registered public accounting
firm required by Independence Standard
20
No. 1, Independence Discussions with Audit Committees,
as amended, by the Independence Standards Board, and has
discussed with the firm its independence. The Audit Committee
has reviewed the audit fees paid by the Company to the
independent registered public accounting firm. It has also
reviewed non-audit services and fees to assure compliance with
the Companys and the Audit Committees policies
restricting the independent registered public accounting firm
from performing services that might impair its independence. The
Audit Committee also reviewed the requirements and the
Companys compliance with Section 404 of the
Sarbanes-Oxley Act of 2002 including the Public Company
Accounting Oversight Boards Auditing Standard No. 2
regarding the audit of internal controls over financial
reporting.
Based on the reviews and discussions referred to above, the
Audit Committee recommended to the Board of Directors that the
financial statements as of and for the year ended
December 31, 2006, be included in the Companys Annual
Report on
Form 10-K for the
year ended December 31, 2006, for filing with the
Commission. The Audit Committee also recommended the selection
of KPMG LLP to serve as the independent registered public
accounting firm of the Company for the year ending
December 31, 2007.
|
|
|
Audit Committee |
|
Ann Torre Bates, Chairman |
|
Brooks H. Browne, Member |
|
Anthony T. Garcia, Member |
|
Edwin L. Harper, Member |
|
Laura W. van Roijen, Member |
PROPOSAL 3.
APPROVAL OF AN AMENDMENT TO THE RESTATED ARTICLES OF
INCORPORATION TO INCREASE THE TOTAL NUMBER OF
AUTHORIZED SHARES OF COMMON STOCK
The Board of Directors has determined that it is in the
Companys best interest and in the best interest of the
Companys stockholders to amend the Companys Restated
Articles of Incorporation to increase the total number of
authorized shares of common stock from 200,000,000 shares
to 400,000,000 shares. At its meeting held on
February 1, 2007, the Board of Directors unanimously
approved the proposed amendment to the Restated Articles of
Incorporation (the Amendment), in substantially the
form attached hereto as Appendix A, and hereby seeks the
approval of the Amendment by the Companys stockholders.
The proposed amendment would increase the number of shares of
common stock the Company is authorized to issue from
200,000,000 shares of common stock, $0.0001 par value, to
400,000,000 shares of common stock. The additional
authorized shares could be used by the Company for business and
financial purposes that the Board of Directors deems are in the
Companys best interest, including raising capital through
the sale of common stock and attracting and retaining employees
through the issuance of additional securities under the
Companys Amended Stock Option Plan. Having shares
available for issuance in the future will give the Company
greater flexibility to issue shares without the expense and
delay of a stockholders
21
meeting. Such a delay might deny the Company the flexibility the
Board of Directors views as important in facilitating the
effective use of its securities.
The additional 200,000,000 shares would be a part of the
existing class of common stock and, if and when issued, would
have the same rights and privileges as the shares of common
stock presently issued and outstanding. The holders of common
stock of the Company are not entitled to preemptive rights or
cumulative voting. Accordingly, the issuance of additional
shares of common stock might dilute, under certain
circumstances, the ownership and voting rights of stockholders.
At February 23, 2007, 148,658,636 shares of the
Companys common stock were outstanding.
The Company maintains a shelf registration statement that allows
the Company to issue common stock. The Company raises equity
from time to time using this registration statement. The Company
generally raises equity when it has a use of proceeds for
investment opportunities. Historically, this process has enabled
the Company to raise equity on an accretive basis for existing
stockholders of common stock.
The Company considers investment opportunities on a regular
basis. In this regard, it is possible that the Company may
identify and act on opportunities that would commit it to issue
a portion of its currently authorized but unissued shares of
common stock. There is no assurance, however, that suitable
potential transactions will be identified or that any
transaction will be completed. Having said that, at the date of
this proxy statement, no specific transaction is presently
contemplated which would result in the issuance of any of the
additional shares of common stock that would be authorized by
the Amendment.
The increase in the number of authorized shares and the ability
to reclassify authorized but unissued shares into one or more
classes of stock, including preferred stock, may have
anti-takeover effects. While the authorization of additional
shares might have such an effect, the Board of Directors does
not intend or view the proposed increase in authorized shares as
an anti-takeover measure.
If the Amendment is approved by the Companys stockholders,
the Amendment will become effective upon the filing of a
certificate of amendment with the Department of Assessments and
Taxation in the State of Maryland, which filing is expected to
occur promptly after the Meeting.
Vote Required
The proposal will be approved by the affirmative vote of a
majority of the votes entitled to be cast at the Meeting in
person or by proxy, provided that the total votes cast on this
proposal represent over 50% in interest of all shares entitled
to vote on the proposal. Abstentions and Broker Non-Votes will
have the same effect as votes against the proposal, unless
holders of more than 50% of all securities entitled to vote on
the proposal cast votes in which event abstentions and Broker
Non-Votes will not have any effect on the result of the vote.
THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS THAT
STOCKHOLDERS VOTE FOR THE AMENDMENT TO THE COMPANYS
RESTATED ARTICLES OF INCORPORATION.
22
PROPOSAL 4.
APPROVAL TO AMEND THE COMPANYS STOCK OPTION PLAN
The Company established the Stock Option Plan, as amended, (the
Option Plan), which is attached to this Proxy Statement as
Exhibit B, to encourage stock ownership in the Company by
officers, thus giving them a proprietary interest in the
Companys performance and also to reward outstanding
performance and provide a means to attract and retain persons of
outstanding ability to the service of the Company.
The Companys Board of Directors and its Compensation
Committee, which consists entirely of directors who are not
employees of the Company, believe that stock-based incentive
compensation, particularly the award of stock options, is a key
element of officer and director compensation. Stock-based
compensation advances the interests of the Company by providing
substantial motivation for superior performance and more fully
aligning the interests of officers and directors with the
interests of the stockholders.
As a BDC, Allied Capital is permitted to allocate up to 20% of
the Companys total shares outstanding to the Option Plan.
Currently, the Option Plan provides for the issuance of options
to purchase a maximum of 32,175,000 shares of common stock,
which represents approximately 14.3%, on a fully diluted basis,
of the 148,658,636 shares of common stock that were outstanding
as of February 23, 2007. The Option Plan was last approved
by stockholders in May 2004 and at that time the
32,175,000 shares available in the Option Plan represented
approximately 20% of the shares outstanding on a fully diluted
basis. The percentage of shares available under the Option Plan
has been diluted by the additional shares that have been issued
by the Company to support its growth over the last three years.
The Compensation Committee is submitting to the stockholders for
approval, an amendment to the existing Option Plan to increase
the number of shares of common stock authorized for issuance
under the Option Plan to 37,175,000 shares, which would
represent approximately 20% of the outstanding common stock of
the Company on a fully diluted basis. The Compensation Committee
and Board of Directors believe that the approval of this
amendment is essential to further the long-term stability and
financial success of the Company by attracting, motivating, and
retaining qualified employees through the use of stock
incentives.
The Company believes that restoring the number of shares of
common stock available under the Option Plan to 20% of the
Companys total shares outstanding, on a fully diluted
basis, is reasonable and appropriate and achieves its
competitive compensation objectives without compromising
stockholder value through less favorable alternatives, such as
option repricing, which are unavailable to the Company because
of its status as a BDC. The Compensation Committee and the Board
of Directors recommend the adoption of the proposal to increase
the number of shares authorized for issuance to bring the total
options available under the Option Plan to
37,175,000 shares, which represents approximately 20% of
the Companys total shares outstanding on a fully diluted
basis as of the date of this Proxy Statement.
23
Description of the Option Plan
Purpose. The purpose of the Option Plan is to advance the
interests of the Company by providing officers and non-officer
directors of the Company who have substantial responsibility for
the direction and management of the Company with additional
incentives to exert their best efforts to increase their
proprietary interest in the success of the Company, to reward
outstanding performance, and to attract and retain persons of
outstanding ability.
Authorization. Under the existing Option Plan, options
may be granted from time to time up to 32,175,000 shares.
As of February 23, 2007, the Company had granted 30,456,557
options (net of any cancellations), of which 7,461,095 have been
exercised, and 1,718,443 options remain available for grant. The
Board of Directors proposes to amend the existing Option Plan to
increase the number of shares authorized for issuance from
32,175,000 shares to 37,175,000 shares. The maximum
number of shares that may be issued through the exercise of
options granted under the Option Plan, as proposed to be
amended, would represent approximately 20% of the Companys
total shares outstanding on a fully diluted basis.
Administration. The Option Plan is administered by the
Companys Compensation Committee which is comprised of
members of the Companys Board of Directors, who each shall
(a) be a non-employee director, as defined in
Rule 16b-3
promulgated under the Securities Exchange Act of 1934,
(b) have no financial interest in grants of stock options
to officers of the Company under the Option Plan and not be an
interested person, as defined in
Section 2(a)(19) of the 1940 Act, of the Company, and
(c) be an outside director as the term is
defined under Section 162(m) of the Code.
The Compensation Committee interprets the Option Plan and, to
the extent and in the manner contemplated in the Option Plan,
exercises the discretion reserved to it in the Option Plan. The
Compensation Committee may prescribe, amend, and rescind rules
and regulations relating to the Option Plan and make all other
determinations necessary for its administration. The decision of
the Compensation Committee on any interpretation of the Option
Plan or administration thereof, if in compliance with the
provisions of the 1940 Act and regulations promulgated
thereunder, shall be final and binding with respect to the
Company, any optionee or any person claiming to have rights as,
or on behalf of, any optionee.
Terms of options. The Compensation Committees
principal objective in awarding stock options to the eligible
officers of the Company is to align each optionees
interests with the success of the Company and the financial
interests of its stockholders by linking a portion of such
optionees compensation with the performance of the
Companys stock and the value delivered to stockholders.
Stock options are granted under the Option Plan at a price not
less than the prevailing market value at the time of grant and
will have realizable value only if the Companys stock
price increases. The Compensation Committee determines the
amount and features of the stock options, if any, to be awarded
to optionees. The Compensation Committee evaluates a number of
criteria, including the past service of each such optionee to
the Company, the present and potential contributions of such
optionee to the success of the Company, and such other factors
as the Compensation Committee shall deem relevant in connection
with accomplishing the purposes of the Option Plan, including
the recipients current stock holdings, years of service,
24
position with the Company, and other factors. The Compensation
Committee does not apply a formula assigning specific weights to
any of these factors when making its determination. The
Compensation Committee awards stock options on a subjective
basis and such awards depend in each case on the performance of
the officer under consideration. Pursuant to the 1940 Act,
options may not be repriced for any participant.
Participants officers. The Compensation
Committee determines and designates those officers of the
Company who are eligible to participate in the Option Plan. The
Compensation Committee also determines the number of options to
be awarded to each optionee. In making these determinations, the
Compensation Committee takes into account the past service of
the optionee and potential contributions to the success of the
Company, and such other factors as the Compensation Committee
deems relevant to accomplish the purposes of the Option Plan.
Participants non-officer directors. Pursuant
to an order of the Commission granted on September 8, 1999,
the Companys non-officer directors became eligible to
receive option grants. On that date, each incumbent director
received options to purchase 10,000 shares, and
pursuant to the Commission order, each will receive options to
purchase 5,000 shares each year thereafter. New
directors will receive options to
purchase 10,000 shares upon election to the board and
options to purchase 5,000 shares each year thereafter. The
amended Option Plan reflects the terms of these automatic grants
provided for in the Commission order.
As of the date of this Proxy Statement, approximately 100
persons were eligible to participate in the Option Plan. Options
are not transferable other than by the laws of descent and
distribution, a qualified domestic relations order, or with the
permission of the Compensation Committee, which may allow
options to be transferred to family members, or entities
established for the benefit of family members, for estate
planning purposes.
Exercise of options. Options are exercisable at a price
equal to the fair market value of the shares at the time the
option is granted, except with respect to options that are
intended to be incentive stock options (within the meaning of
the Code) and that are granted to any holder of 10% or more of
the Companys outstanding shares, in which case the
exercise price will be not less than 110% of the then-current
fair market value. The day on which the Company approves the
granting of an option or the date specified in the Plan is
considered the date on which the option is granted. For purposes
of the Option Plan, the fair market value of the shares is the
closing price of the shares on the New York Stock Exchange on
the date on which the option is awarded.
Options may contain such other terms and conditions as the
Compensation Committee deems advisable, including, but not
limited to, being exercisable only in installments. Options
granted to different optionees or at different times need not
contain similar provisions. Each option will state the period or
periods of time within which the option may be exercised by the
optionee, which may not exceed ten years from the date the
option is granted. The option period may not exceed five years
if the option is intended to be an incentive stock option
(within the meaning of the Code) and the option is awarded to a
holder of 10% or more of the Companys outstanding shares.
25
All rights to exercise options terminate 60 days after an
optionee ceases to be (i) a non-officer director,
(ii) both an officer and a director, if such optionee
serves in both capacities, or (iii) an officer (if such
officer is not also a director) of the Company for any cause
other than death or total and permanent disability. If an
optionees employment is terminated for any reason other
than death or total and permanent disability before expiration
of his option and before he has fully exercised it, the optionee
has the right to exercise the option during the balance of a
60-day period from the
date of termination. If an optionee dies or becomes totally and
permanently disabled before expiration of the option without
fully exercising it, he or she or the executors or
administrators or legatees or distributees of the estate shall,
as may be provided at the time of the grant, have the right,
within one year after the optionees death or total and
permanent disability, to exercise the option in whole or in part
before the expiration of its term.
Payment for shares. Full payment for shares purchased
must be made at the time of exercising the option in whole or in
part. However, at the request of an officer-optionee, the Board
of Directors or the Compensation Committee was authorized until
July 30, 2002, to lend to such officer-optionee, in whole
or in part as of the date of exercise, an amount equal to the
exercise price of the option. The loan was required to
(a) have a term of not more than ten years; (b) become
due within 60 days after the recipient ceases to be an
officer of the Company; (c) bear interest at a rate not
less than the applicable federal rate under the Code at the time
the loan is made; and (d) be fully collateralized at all
times, which collateral may include securities issued by the
Company. Pursuant to the Sarbanes-Oxley Act of 2002, no
additional loans have been made since July 30, 2002, and no
changes to any material terms of any outstanding loans may be
made.
Effect of change in shares subject to the amended plan.
If there is a change in the outstanding shares through the
declaration of stock dividends, stock splits, or combinations or
exchanges of shares, or otherwise, the number of shares
available for option and the shares subject to an option and the
option prices shall be appropriately adjusted by the
Compensation Committee.
Change of control. In the event of a Change of Control
(as described in Executive Compensation
Severance and Change in Control Arrangements above), all
outstanding options will become fully vested and exercisable as
of the Change of Control. For purposes of the Option Plan, a
Change in Control means (i) the sale or other
disposition of all or substantially all of the Companys
assets; or (ii) the acquisition, whether directly,
indirectly, beneficially (within the meaning of
Rule 13d-3 of the
1934 Act), or of record, as a result of a merger,
consolidation or otherwise, of securities of the Company
representing fifteen percent (15%) or more of the aggregate
voting power of the Companys then outstanding common stock
by any person (within the meaning of Section 13(d) and
14(d) of the 1934 Act), including, but not limited to, any
corporation or group of persons acting in concert, other than
(A) the Company or its subsidiaries and/or (B) any employee
pension benefit plan (within the meaning of Section 3(2) of
the Employee Retirement Income Security Act of 1974) of the
Company or its subsidiaries, including a trust established
pursuant to any such plan; or (iii) the individuals who
were members of the Board of Directors as of the Effective Date
(the Incumbent Board) cease to constitute at least
two-thirds
(2/3)
of the Board; provided, however, that any director appointed by
at least two-thirds
(2/3)
of the then Incumbent Board or nominated by at least two-
26
thirds
(2/3)
of the Corporate Governance/ Nominating Committee of the Board
of Directors (a majority of the members of the Corporate
Governance/ Nominating Committee shall be members of the then
Incumbent Board or appointees thereof), other than any director
appointed or nominated in connection with, or as a result of, a
threatened or actual proxy or control contest, shall be deemed
to constitute a member of the Incumbent Board.
Amendment and termination. The Compensation Committee may
modify, revise or terminate the Option Plan at any time. While
the Board of Directors may seek stockholder approval of an
action modifying a provision of the Option Plan when deemed
advisable, the Board of Directors may make certain modifications
without stockholder approval (except with respect to the number
of options authorized for issuance under the Option Plan). The
Option Plan will terminate when all shares reserved for issuance
have been issued upon the exercise of options, or by action of
the Board of Directors, whichever shall first occur.
If the Compensation Committee determines that the listing,
registration, or qualification of the shares subject to an
option upon a securities exchange or under any state or federal
law, or the consent or approval of any government regulatory
body, is necessary or desirable as a condition of, or in
connection with, the granting of such option or the issue or
purchase of shares thereunder, the option may not be exercised
unless such listing, registration, qualification, consent, or
approval has been effected or obtained free of any conditions
not acceptable to the Compensation Committee. No option will
expire during any period when the right to exercise an option is
so suspended by the Compensation Committee. The Compensation
Committee will extend its term for a further period so as to
afford the optionee a reasonable opportunity to exercise the
option, except that no option may be exercised more than ten
years after it was granted.
Resale of shares acquired pursuant to options. Optionees
purchasing shares pursuant to options may resell the shares
through brokers or dealers at prevailing market prices. Any
sales by optionees who may be deemed affiliates of the Company
must be made pursuant to registration under the Securities Act
or pursuant to an exemption therefrom.
Federal tax consequences of the option plan. The
following is a summary of certain federal income tax
consequences of transactions under the Option Plan based on
current federal income tax laws. This summary is not intended to
be exhaustive and does not describe state, local, or other tax
consequences.
Incentive stock options. In general, no income will be
recognized by an optionee and no deduction will be allowed to
the Company with respect to the grant or exercise of an
incentive stock option granted under the Option Plan. The
difference between the exercise price and the fair market value
of the shares of common stock on the date the option is
exercised is, however, an adjustment item for the participant
for purposes of the alternative minimum tax. When the stock
received upon exercise of the option is sold, provided that the
stock is held for more than two years from the date of grant of
the option and more than one year from the date of exercise, the
participant will recognize a long-term capital gain or loss
equal to the difference between the amount realized and the
exercise price of the option related to such stock. If the above
mentioned holding period requirements of the Code are not
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satisfied, the subsequent sale of stock received upon exercise
of an incentive stock option is treated as a disqualifying
disposition.
In general, the participant will recognize taxable income at the
time of such disqualifying disposition as follows:
(i) ordinary income in an amount equal to the excess of
(A) the lesser of the fair market value of the shares of
common stock on the date the incentive stock option is exercised
or the amount realized on such disqualifying disposition over
(B) the exercise price and (ii) capital gain to the
extent of any excess of the amount realized on such
disqualifying disposition over the fair market value of the
shares of common stock on the date the incentive stock option is
exercised (or capital loss to the extent of any excess of the
exercise price over the amount realized on disposition). Any
capital gain or loss recognized by the participant will be
long-term or short-term depending upon the holding period for
the stock sold. The Company may claim a deduction at the time of
the disqualifying disposition equal to the amount of ordinary
income the participant recognizes. Note that the tax treatment
generally applies only to the extent that the optionee is an
employee of the Company at the time of the grant of the option
and at all times during the period ending three months before
the date of exercise.
Non-qualified stock options. The grant of a non-qualified
stock option under the Option Plan will not result in the
recognition of taxable income to the participant or in a
deduction to the Company. In general, upon exercise, a
participant will recognize ordinary income in an amount equal to
the excess of the fair market value of the shares of common
stock purchased over the exercise price. The Company is required
to withhold tax on the amount of income so recognized, and is
entitled to a tax deduction equal to the amount of such income.
Gain or loss upon a subsequent sale of any shares of common
stock received upon the exercise of a non-qualified stock option
is taxed as capital gain or loss (long-term or short-term,
depending upon the holding period of the stock sold) to the
participant.
The Board of Directors believes that it is in the best interests
of the Company and its stockholders to adopt the amendment to
the Option Plan, which increases the number of shares available
for grant.
Vote Required
The affirmative vote of a majority of the votes entitled to be
cast at the Meeting in person or by proxy is required to adopt
the amendment to the Option Plan, provided that the total votes
cast on this proposal represent over 50% in interest of all
shares entitled to vote on the proposal. Abstentions and Broker
Non-Votes will have the same effect as votes against the
proposal, unless holders of more than 50% of all securities
entitled to vote on the proposal cast votes, in which event
abstentions and Broker Non-Votes will not have any effect on the
result of the vote. In the event such approval is not obtained,
the Option Plan shall not be amended and shall continue in
operation as it existed prior to its proposed amendment.
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THE BOARD OF DIRECTORS OF THE COMPANY
RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE AMENDMENT TO
THE STOCK OPTION PLAN.
OTHER BUSINESS
The Board of Directors knows of no other business to be
presented for action at the Meeting. If any matters do come
before the Meeting on which action can properly be taken, it is
intended that the proxies shall vote in accordance with the
judgment of the person or persons exercising the authority
conferred by the proxy at the Meeting. The submission of a
proposal does not guarantee its inclusion in the Companys
Proxy Statement or presentation at the Meeting unless certain
requirements are met.
2008 ANNUAL MEETING OF STOCKHOLDERS
Any stockholder proposals submitted pursuant to the
Commissions Rule 14a-8 for inclusion in the Companys
proxy statement and form of proxy for the 2008 annual meeting of
stockholders must be received by the Company on or before
December , 2007. Such
proposals must also comply with the requirements as to form and
substance established by the Commission if such proposals are to
be included in the proxy statement and form of proxy. Any such
proposal should be mailed to: Allied Capital Corporation, 1919
Pennsylvania Avenue, N.W., Washington, D.C. 20006, Attention:
Corporate Secretary.
Stockholder proposals or director nominations to be presented at
the 2008 annual meeting of stockholders, other than stockholder
proposals submitted pursuant to the Commissions
Rule 14a-8, must
be delivered to, or mailed and received at, the principal
executive offices of the Company not less than ninety
(90) days in advance of the one year anniversary of the
date the Companys proxy statement was released to
stockholders in connection with the previous years annual
meeting of stockholders. For the Companys 2008 annual
meeting of stockholders, the Company must receive such proposals
and nominations no later than
January , 2008. If the date
of the annual meeting has been changed by more than thirty
(30) calendar days from the date contemplated at the time
of the previous years proxy statement, stockholder
proposals or director nominations must be so received not later
than the tenth day following the day on which such notice of the
date of the 2008 annual meeting of stockholders or such public
disclosure is made. Proposals must also comply with the other
requirements contained in the Companys bylaws, including
supporting documentation and other information. Proxies
solicited by the Company will confer discretionary voting
authority with respect to these proposals, subject to Commission
rules governing the exercise of this authority.
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Appendix A
ALLIED CAPITAL CORPORATION
ARTICLES OF AMENDMENT
Allied Capital Corporation, a Maryland corporation (the
Corporation), having its principal office in the
State of Maryland, hereby certifies to the State Department of
Assessments and Taxation of Maryland (the
Department) that:
FIRST: The Corporation desires to, and does hereby, amend
its charter (the Charter) as currently in effect as
hereafter set forth.
SECOND: The Charter is hereby amended by deleting the
existing Article Fourth, Section A in its entirety and
substituting in lieu thereof a new Article Fourth,
Section A which read as follows:
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A. |
The total number of shares of stock of all classes which the
Corporation has the authority to issue is four hundred million
(400,000,000) shares of capital stock, with a par value of
One-Tenth of One Mil ($0.0001) per share, amounting in aggregate
to Forty Thousand Dollars ($40,000). All of such shares are
initially classified as Common Stock. The Board of
Directors may classify and reclassify any unissued shares of
capital stock by setting or changing in any one or more respects
the preferences, conversion or other rights, voting powers,
restrictions, limitations as to dividends, qualifications, terms
or conditions of redemption or other rights of such shares of
stock. |
THIRD: The amendment to the Charter as set forth above
has been duly advised by the Board of Directors of the
Corporation and approved by the stockholders of the Corporation
as required by law.
FOURTH: The total number of shares of stock which the
Corporation had authority to issue immediately before the
amendment to the Charter as set forth above was two hundred
million (200,000,000) shares of stock, with a par value of
One-Tenth of One Mil ($0.0001) per share, amounting in aggregate
to Twenty Thousand Dollars ($20,000).
FIFTH: The total number of shares of stock which the
Corporation had authority to issue immediately after the
amendment to the Charter as set forth above is four hundred
million (400,000,000) shares of stock, with a par value of
One-Tenth of One Mil ($0.0001) per share, amounting in aggregate
to Forty Thousand Dollars ($40,000).
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Appendix B
ALLIED CAPITAL CORPORATION
Amended Stock Option Plan
The purpose of this Amended Stock Option Plan (this
Plan) is to advance the interests of Allied Capital
Corporation (the Company) by providing to directors
of the Company and to officers of the Company who have
substantial responsibility for the direction and management of
the Company additional incentives to exert their best efforts on
behalf of the Company, to increase their proprietary interest in
the success of the Company, to reward outstanding performance
and to provide a means to attract and retain persons of
outstanding ability to the service of the Company. It is
recognized that the Company cannot attract or retain these
officers and directors without this compensation. Options
granted under this Plan may qualify as incentive stock options
(ISOs), as defined in Section 422 of the
Internal Revenue Code of 1986, as amended (the Code).
This Plan shall be administered by a committee (the
Committee) comprised of members of the
Companys Board of Directors who each shall (a) be a
non-employee director, as defined in
Rule 16b-3
promulgated under the Securities Exchange Act of 1934, as
amended, unless administration of the Plan by non-employee
directors is not then required for exemptions under
Rule 16b-3 to
apply to transactions under the Plan, (b) not be an
interested person, as defined in
Section 2(a)(19) of the Investment Company Act of 1940, as
amended (the Act), and (c) be an outside
director as defined under Section 162(m) of the Code,
unless the action taken pursuant to the Plan is not required to
be taken by outside directors to qualify for tax
deductibility under Section 162(m) of the Code. The
Committee shall interpret this Plan and, to the extent and in
the manner contemplated herein, shall exercise the discretion
reserved to it hereunder. The Committee may prescribe, amend and
rescind rules and regulations relating to this Plan and to make
all other determinations necessary for its administration. The
decision of the Committee on any interpretation of this Plan or
administration hereof, if in compliance with the provisions of
the Act and regulations promulgated thereunder, shall be final
and binding with respect to the Company, any optionee or any
person claiming to have rights as, or on behalf of, any optionee.
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Shares Subject to the Plan |
The shares subject to option and the other provisions of this
Plan shall be shares of the Companys common stock, par
value $.0001 per share (shares). Subject to the
provisions hereof concerning adjustment, the total number of
shares which may be purchased upon the exercise or surrender of
stock options granted under this Plan shall not exceed
37,175,000 shares, which includes all shares with respect
to which options have been granted or surrendered for payment in
cash or other consideration
B-1
pursuant to this Plan or predecessor forms of this Plan. In the
event any option shall cease to be exercisable in whole or in
part for any reason, the shares which were covered by such
option, but as to which the option had not been exercised, shall
again be available under this Plan. Shares may be made available
from authorized, unissued or reacquired stock or partly from
each.
The Committee shall determine and designate from time to time
those key officers of the Company who shall be eligible to
participate in this Plan. The Committee shall also determine the
number of shares to be offered from time to time to each
optionee. In making these determinations, the Committee shall
take into account the past service of each such officer to the
Company, the present and potential contributions of such officer
to the success of the Company and such other factors as the
Committee shall deem relevant in connection with accomplishing
the purposes of this Plan; provided that the Committee shall
determine that each grant of options to an optionee, the number
of shares offered thereby and the terms of such option are in
the best interests of the Company and its shareholders. The date
on which the Committee approves the grant of any option to an
officer of the Company shall be the date of issuance of such
option; provided, however, that if (1) any such action by
the Committee does not constitute approval thereof by both
(A) a majority of the Companys directors who have no
financial interest in such action and (B) a majority of the
Companys directors who are not interested
persons (as defined in Section 2(a)(19) of the Act)
of the Company and (2) such approval is at such time
required by Section 61(a)(3)(B)(i)(I) or other applicable
provision of the Act, then the grant of any option by such
action shall not be effective, and there shall be no issuance of
such option, until there has been approval of such action by
(A) a majority of the Companys directors who have no
financial interest in such action and (B) a majority of the
Companys directors who are not interested
persons of the Company, on the basis that such action is
in the best interests of the Company and its shareholders, and
the last date on which such required approval is obtained shall
be the date of issuance of such option. The agreement
documenting the award of any option granted pursuant to this
paragraph 4(a) shall contain such terms and conditions as
the Committee shall deem advisable, including but not limited to
being exercisable only in such installments as the Committee may
determine.
In accordance with the Securities and Exchange Commission (the
Commission) order issued September 8, 1999, the
following provisions provide the terms of the grants that may be
made to directors who are not officers of the Company:
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1. A one time grant of options in accordance with the
provisions of this paragraph (b)(1) shall be made to each
director of the Company who is not an officer of the Company who
is serving on the date on which the issuance of options pursuant
to this Plan to non-officer directors is approved by order of
the Securities and Exchange Commission pursuant to
Section 61(a)(3)(B)(i)(II) of the Act. After such date, a
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provisions of this paragraph (b)(1) shall be made to each
new non-officer director other than any non-officer director who
received a grant pursuant to the first sentence of this
paragraph (b)(1) upon his or her initial election as a
director of the Company. Each grant pursuant to this
paragraph (b)(1) shall award the non-officer director an
option to purchase 10,000 shares at a price equal to
the current fair market value of the shares at the date of
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2. A grant of options in accordance with the provisions of
this paragraph (b)(2) shall be made to each director of the
Company who is not an officer of the Company who is serving as a
director on the date of the annual meeting of stockholders each
year. Each grant pursuant to this paragraph (b)(2) shall
award the non-officer directors an option to
purchase 5,000 shares at a price equal to the current
fair market value of the shares at the date of issuance of such
option, and the options shall vest immediately. |
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3. The agreement documenting the award of any option
pursuant to this paragraph (b) shall contain the terms
and conditions, as the Committee shall deem advisable. |
Agreements evidencing options granted to different optionees or
at different times need not contain similar provisions. Options
that are intended to be ISOs will be designated as such; any
option not so designated will be treated as a nonqualified stock
option.
Each option agreement shall state the price at which the subject
option may be exercised, which shall not be less than the
current fair market value of the shares at the date of issuance
of an option; provided that the exercise price of any option
that is intended to be an ISO and that is granted to a holder of
10% or more of the Companys shares shall not be less than
110% of such current fair market value.
Each option agreement shall state the period or periods of time
within which the subject option may be exercised, in whole or in
part, by the optionee which shall be such period or periods of
time as may be determined by the Committee; provided that the
option period shall not exceed ten years from the date of
issuance of the option and, in the case of an option that is
intended to be an ISO and that is granted to a holder of 10% or
more of the Companys shares, shall not exceed five years.
Full payment for shares purchased shall be made at the time of
exercising the option in whole or in part. Payment of the
purchase price shall be made in cash (including check, bank
draft or money order).
B-3
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8. |
Transferability of Options |
Options shall not be transferable other than by will or the laws
of descent and distribution and pursuant to a qualified domestic
relations order. Notwithstanding the foregoing, the Committee
shall have the authority to permit transfer of options to family
members or entities established for the benefit of family
members in accordance with federal income tax laws.
Until July 30, 2002, upon the exercise of any option, the
Company, at the request of an officer-optionee, and subject to
the approval of both (a) a majority of the Companys
directors who each has no financial interest in such loan and
(b) a majority of the Companys directors who each was
not an interested person, as defined in
Section 2(a)(19) of the Act, of the Company on the basis
that such loan was in the best interests of the Company and its
stockholders (whether such approval is by the Committee or
otherwise), was authorized to lend to such officer-optionee, as
of the date of exercise, an amount equal to the exercise price
of such option; provided, that such loan (a) had a term of
not more than ten years, (b) became due within sixty days
after the recipient of the loan ceased to be an officer of the
Company, (c) bore interest at a rate no less than the
prevailing rate applicable to
90-day United States
Treasury bills at the time the loan is made, and (d) was
fully collateralized at all times, which collateral may include
securities issued by the Company. No new loans may be made after
July 30, 2002.
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10. |
Termination of Options |
All rights to exercise options shall terminate sixty days after
any optionee ceases to be a director or an officer of the
Company, and no options will vest after an optionees
termination date. Notwithstanding the foregoing, however, where
an optionees service as a director or officer of the
Company terminates as a result of the optionees death or
his total and permanent disability, the optionee or the
executors or administrators or legatees or distributees of the
estate, as the case may be, shall have the right, from time to
time within one year after the optionees total and
permanent disability or death and prior to the expiration of the
term of the option, to exercise any portion of the option not
previously exercised, in whole or in part, as provided in the
respective option agreement.
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11. |
Effect of Change in Stock Subject to the Plan |
Subject to any required action by the shareholders of the
Company and the provisions of applicable corporate law, the
number of shares represented by the unexercised portion of an
option, the number of shares which have been authorized or
reserved for issuance hereunder, and the number of shares
covered by any applicable vesting schedule hereunder, as well as
the exercise price of a share represented by the unexercised
portion of an option, shall be proportionately adjusted for
(a) a division, combination or reclassification of any of
the shares of common stock of the Company or (b) a dividend
payable in shares of common stock of the Company.
B-4
Each option shall be subject to the requirement that, if at any
time the Board of Directors shall determine, at its discretion,
that the listing, registration or qualification of the shares
subject to such option upon any securities exchange or under any
state or federal law, or the consent or approval of any
government regulatory body, is necessary or desirable as a
condition of, or in connection with, the granting of such option
or the issue or purchase of the shares thereunder, such option
may not be exercised in whole or in part unless such listing,
registration, qualification, consent or approval shall have been
effected or obtained free of any conditions not acceptable to
the Company. Subject to the limitations of paragraph 6, no
option shall expire during any period when exercise of such
option has been prohibited by the Board of Directors, but shall
be extended for such further period so as to afford the optionee
a reasonable opportunity to exercise his option.
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13. |
Miscellaneous Provisions |
a. No optionee shall have rights as a shareholder with
respect to shares covered by his option until the date of
exercise of his option.
b. The granting of any option shall not impose upon the
Company any obligation to appoint or to continue to appoint as a
director or officer any optionee, and the right of the Company
to terminate the employment of any officer or other employee, or
service of any director, shall not be diminished or affected by
reason of the fact that an option has been granted to such
optionee.
c. Options shall be evidenced by stock option agreements in
such form and subject to the terms and conditions of this Plan
as the Committee shall approve from time to time, consistent
with the provisions of this Plan. Such stock option agreements
may contain such other provisions as the Committee in its
discretion may deem advisable. In the case of any discrepancy
between the terms of the Plan and the terms of any option
agreement, the Plan provisions shall control.
d. For purposes of this Plan, the fair market value of the
shares shall be the closing sales price of the stock on the New
York Stock Exchange for the date of issuance of such option, as
provided herein. If the Companys shares are traded on
another exchange, the price shall be the price of the
Companys stock as reported in The Wall Street Journal
for such date of issuance of an option. If no closing price
is reported, the fair market value shall be the average of high
and low sales prices on the date of grant.
e. The aggregate fair market value (determined as of the
date of issuance of an option) of the shares with respect to
which an option, or portion thereof, intended to be an ISO is
exercisable for the first time by any optionee during any
calendar year (under all incentive stock option plans of the
Company and subsidiary corporations) shall not exceed $100,000.
f. All options issued pursuant to this Plan shall be
granted within ten years from the earlier of the date of
adoption of this Plan (or any amendment thereto requiring
shareholder approval pursuant to the Code) or the date this Plan
(or any amendment thereto requiring shareholder approval
pursuant to the Code) is approved by the shareholders of the
Company.
B-5
g. No option may be issued if exercise of all warrants,
options and rights of the Company outstanding immediately after
issuance of such option would result in the issuance of voting
securities in excess of 20% of the Companys outstanding
voting securities.
h. A leave of absence granted to an employee does not
constitute an interruption in continuous employment for purposes
of this Plan as long as the leave of absence does not extend
beyond one year.
i. Any notices given in writing shall be deemed given if
delivered in person or by certified mail; if given to the
Company at Allied Capital Corporation,
1919 Pennsylvania Avenue, N.W., 3rd Floor,
Washington, D.C. 20006; and, if to an optionee, in care of
the optionee at his or her last known address.
j. This Plan and all actions taken by those acting under
this Plan shall be governed by the substantive laws of Maryland
without regard to any rules regarding
conflict-of-law or
choice-of-law.
k. All costs and expenses incurred in the operation and
administration of this Plan shall be borne by the Company.
In the event of a Change of Control (as hereinafter defined),
all then-outstanding options will become fully vested and
exercisable as of the Change of Control. For purposes of the
Plan, a Change in Control means (i) the sale or
other disposition of all or substantially all of the
Companys assets; or (ii) the acquisition, whether
directly, indirectly, beneficially (within the meaning of
Rule 13d-3 of the
1934 Act), or of record, as a result of a merger,
consolidation or otherwise, of securities of the Company
representing fifteen percent (15%) or more of the aggregate
voting power of the Companys then outstanding common stock
by any person (within the meaning of Section 13(d) and
14(d) of the 1934 Act), including, but not limited to, any
corporation or group of persons acting in concert, other than
(A) the Company or its subsidiaries and/or (B) any
employee pension benefit plan (within the meaning of
Section 3(2) of the Employee Retirement Income Security Act
of 1974) of the Company or its subsidiaries, including a trust
established pursuant to any such plan; or (iii) the
individuals who were members of the Board of Directors as of the
Effective Date (the Incumbent Board) cease to
constitute at least two-thirds (2/3) of the Board; provided,
however, that any director appointed by at least two-thirds
(2/3) of the then Incumbent Board or nominated by at least
two-thirds (2/3) of the Corporate Governance/ Nominating
Committee of the Board of Directors (a majority of the members
of the Corporate Governance/ Nominating Committee shall be
members of the then Incumbent Board or appointees thereof),
other than any director appointed or nominated in connection
with, or as a result of, a threatened or actual proxy or control
contest, shall be deemed to constitute a member of the Incumbent
Board.
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15. |
Amendment and Termination |
The Board of Directors may modify, revise or terminate this Plan
at any time and from time to time. While the Board of Directors
may seek shareholder approval of an action modifying a provision
of the Plan where it is determined that such
B-6
shareholder approval is advisable under the provisions of
applicable law, the Board of Directors shall be permitted to
make any modification or revision to any provision of this Plan
without shareholder approval. This Plan shall terminate when all
shares reserved for issuance hereunder have been issued upon the
exercise of options, or by action of the Board of Directors
pursuant to this paragraph, whichever shall first occur.
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16. |
Effective Date of the Plan |
The amended Plan shall become effective upon the latest to occur
of (1) adoption by the Board of Directors, and
(2) approval of this Plan by the shareholders of the
Company. The Plan was initially approved by shareholders on
November 26, 1997; amendments to the stock option plan were
approved by shareholders on May 9, 2000, May 7, 2002,
and May 12, 2004. Shareholders will be asked to approve an
amendment to the Plan at the Annual Meeting of Stockholders to
be held on May 15, 2007.
B-7
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ALLIED
CAPITAL CORPORATION 1919
PENNSYLVANIA AVE. NWWASHINGTON,
DC 20006
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VOTE BY INTERNET www.proxyvote.com Use the Internet to transmit your voting instructions
and for electronic delivery of information up until
11:59 P.M. Eastern Time the day before the cut-off date or meeting
date. Have your proxy card in hand when you access the web
site and follow the instructions to obtain your records and
to create an electronic voting instruction form. |
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VOTE BY PHONE 1-800-690-6903 |
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Use any touch-tone telephone to transmit your
voting instructions |
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up until 11:59 P.M. Eastern Time the
day before the cut-off date |
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or meeting date. Have your proxy card in hand
when you call |
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and then follow the instructions. |
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VOTE BY MAIL |
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Mark, sign, and date your proxy card and return
it in the postage- |
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paid envelope we have provided or return it
to Allied Capital |
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Corporation, c/o ADP, 51 Mercedes Way, Edgewood,
NY 11717. |
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: þ
ALCAP1 KEEP THIS PORTION FOR YOUR RECORDS
DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID
ONLY WHEN SIGNED AND DATED.
ALLIED CAPITAL CORPORATION
Election of Directors
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1.
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This election of the following four persons |
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(except as marked to the contrary) as Class |
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III Directors who will serve as directors of |
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Withhold
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For All
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To withhold authority to vote, mark For All Except |
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Allied Capital Corporation until
2010, or until their successors are elected
and qualified.
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All
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All
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Except
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and write the nominees number on the line below. |
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NOMINEES: CLASS
III DIRECTORS
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_____________________________________________ |
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01)
William L. Walton |
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02)
Joan M. Sweeney |
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03)
Brooks H. Browne |
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04)
Robert E. Long |
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Vote On Proposal |
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Abstain |
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2.
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The ratification of the selection of KPMG LLP as independent registered
public accounting firm for Allied Capital Corporation for the year ending
December 31, 2007.
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o
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o
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o |
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3.
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To approve an amendment to the
Companys Restated Articles of Incorporation to increase the
total number of shares of common stock that the Company is authorized
to issue from 200,000,000 to 400,000,000 shares. |
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o
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o
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4.
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To approve an amendment to the
Companys Amended Stock Option Plan; and |
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o
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o |
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5.
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To transact such other business as may properly come before the Meeting. |
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IMPORTANT: Please sign your name(s) exactly as shown hereon and date your proxy in
the blank provided. For joint accounts, each joint owner should sign. When signing as attorney,
executor, administrator, trustee or guardian, please give your full title as such. If the signer
is a corporation or partnership, please sign in full corporate or partnership name by a duly
authorized officer or partner.
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Yes
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No |
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Please indicate if you plan to attend this meeting in person.
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o
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_____________________________________________
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__________________________________________ |
Signature [PLEASE SIGN WITHIN BOX] Date
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P10330 |
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Signature (Joint Owners) Date |
ALLIED CAPITAL CORPORATION
Annual Meeting of Stockholders
Admission Ticket
May 15, 2007
10:00 a.m.
The Westin Embassy Row Hotel
2100 Massachusetts Avenue, NW
Washington, DC
If you plan to attend the
Annual Meeting of Stockholders on May 15th, please detach this card and bring it with you
for presentation at the Meeting. Please be sure to bring this ticket
with you along with photo identification as you will need both to gain access to the Meeting.
The doors will open at
9:15 a.m.; a continental breakfast buffet will be served.
ALLIED CAPITAL CORPORATION
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The
undersigned hereby appoints PENNI F. ROLL and RALPH G. BLASEY III, or either of them, and each with full power of substitution, to act as attorneys and proxies for the undersigned
to vote all the shares of Common Stock of the Company which the undersigned is entitled to vote at the Annual
Meeting of Stockholders of the Company to be held at the Westin Embassy Row Hotel, 2100 Massachusetts Avenue, NW,
Washington, DC on May 15, 2007, at 10:00 A.M. [Eastern] and at all adjournments thereof, as indicated
on this proxy.
THIS PROXY IS REVOCABLE AND WILL BE VOTED AS DIRECTED, BUT IF NO INSTRUCTIONS ARE SPECIFIED, THIS
PROXY WILL BE VOTED FOR THE NOMINEES AND FOR THE PROPOSAL LISTED. If any other business is presented
at the meeting, this proxy will be voted by the proxies in their best judgment,
including a motion to adjourn or postpone the meeting to another time and/or place for the purpose
of soliciting additional proxies. At the present time, the Board of Directors knows of no other business
to be presented at the meeting.
Please mark, sign and
return this proxy in the enclosed envelope. The undersigned acknowledges receipt
from the Company prior to the execution of this Proxy of a Notice of
Annual Meeting of Stockholders and a proxy statement.
(CONTINUED ON REVERSE SIDE)