American Capital Strategies, Ltd.; Notice of Application, 56393-56395 [E7-19539]
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Federal Register / Vol. 72, No. 191 / Wednesday, October 3, 2007 / Notices
NUCLEAR REGULATORY
COMMISSION
SECURITIES AND EXCHANGE
COMMISSION
Advisory Committee on Reactor
Safeguards (ACRS); Meeting of the
ESBWR Subcommittee; Notice of
Meeting
[Investment Company Act Release No.
28001; 812–13398]
The ACRS ESBWR Subcommittee will
hold a meeting on October 25, 2007,
Room T–2B3, 11545 Rockville Pike,
Rockville, Maryland.
The entire meeting will be open to
public attendance, with the exception of
a portion that may be closed to discuss
unclassified safeguards and proprietary
information pursuant to 5 U.S.C.
552b(c)(3) and (4).
The agenda for the subject meeting
shall be as follows:
September 27, 2007.
American Capital Strategies, Ltd.;
Notice of Application
Thursday, October 25, 2007—8:30 a.m.
Until 5 p.m.
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The Subcommittee will review and
discuss several chapters of the Draft
Safety Evaluation Report with Open
Items associated with the ESBWR
Design Certification. The Subcommittee
will hear presentations by and hold
discussions with representatives of the
NRC staff, GE-Hitachi Nuclear Energy
Americas LLC, and other interested
persons regarding this matter. The
Subcommittee will gather information,
analyze relevant issues and facts, and
formulate proposed positions and
actions, as appropriate, for deliberation
by the full Committee.
Members of the public desiring to
provide oral statements and/or written
comments should notify the Designated
Federal Officer, Mr. Charles G. Hammer
(telephone 301/415–7363) 5 days prior
to the meeting, if possible, so that
appropriate arrangements can be made.
Electronic recordings will be permitted
only during those portions of the
meeting that are open to the public.
Detailed procedures for the conduct of
and participation in ACRS meetings
were published in the Federal Register
on September 26, 2007 (72 FR 54695).
Further information regarding this
meeting can be obtained by contacting
the Designated Federal Officer between
6:45 a.m. and 3:30 p.m. (ET). Persons
planning to attend this meeting are
urged to contact the above named
individual at least two working days
prior to the meeting to be advised of any
potential changes to the agenda.
Dated: September 27, 2007.
Cayetano Santos,
Chief, Reactor Safety Branch.
[FR Doc. E7–19503 Filed 10–2–07; 8:45 am]
BILLING CODE 7590–01–P
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Securities and Exchange
Commission (the ‘‘Commission’’).
ACTION: Notice of an application for an
order under section 61(a)(3)(B) of the
Investment Company Act of 1940 (the
‘‘Act’’).
AGENCY:
Applicant,
American Capital Strategies, Ltd.,
requests an order approving a proposal
to grant certain stock options to
directors who are not also employees or
officers of the applicant (the ‘‘Nonemployee Directors’’) under its 2007
Stock Option Plan (the ‘‘Plan’’).
FILING DATES: The application was filed
on June 15, 2007 and amended on
September 27, 2007.
HEARING OR NOTIFICATION OF HEARING: An
order granting the application will be
issued unless the Commission orders a
hearing. Interested persons may request
a hearing by writing to the
Commission’s Secretary and serving
applicant with a copy of the request,
personally or by mail. Hearing requests
should be received by the Commission
by 5:30 p.m. on October 22, 2007, and
should be accompanied by proof of
service on applicant, in the form of an
affidavit or, for lawyers, a certificate of
service. Hearing requests should state
the nature of the writer’s interest, the
reason for the request, and the issues
contested. Persons who wish to be
notified of a hearing may request
notification by writing to the
Commission’s Secretary.
ADDRESSES: Secretary, U.S. Securities
and Commission, 100 F Street, NE.,
Washington, DC 20549–1090;
Applicant, 2 Bethesda Metro Center,
14th Floor, Bethesda, Maryland 20814.
FOR FURTHER INFORMATION CONTACT:
Laura J. Riegel, Senior Counsel, at (202)
551–6873, or Nadya B. Roytblat,
Assistant Director, at (202) 551–6821
(Division of Investment Management,
Office of Investment Company
Regulation).
SUMMARY OF APPLICATION:
The
following is a summary of the
application. The complete application is
available for a fee at the Public
Reference Desk, U.S. Securities and
Exchange Commission, 100 F Street,
NE., Washington, DC 20549–0102
(telephone 202–551–5850).
SUPPLEMENTARY INFORMATION:
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56393
Applicant’s Representations
1. Applicant, a Delaware corporation,
is a business development company
(‘‘BDC’’) within the meaning of section
2(a)(48) of the Act.1 Applicant’s primary
business objectives are to increase its
net operating income and net asset
value by investing its assets in senior
debt, subordinated debt, with and
without detachable warrants, and equity
of small to medium sized businesses
with attractive current yields and
potential for equity appreciation.
Applicant’s investment decisions are
made either by its board of directors (the
‘‘Board’’), based on recommendations of
the executive officers of applicant, or,
for investments that meet certain
objective criteria established by the
Board, by the executive officers of
applicant, under authority delegated by
the Board. Applicant does not have an
external investment adviser within the
meaning of section 2(a)(20) of the Act.
2. Applicant requests an order under
section 61(a)(3)(B) of the Act approving
its proposal to grant certain stock
options under the Plan to its Nonemployee Directors.2 Applicant has a
nine member Board. Seven of the eight
current members of the Board are not
‘‘interested persons’’ (as defined in
section 2(a)(19) of the Act) of the
applicant (‘‘Disinterested Directors’’).3
The Board approved the Plan at a
meeting held on March 8, 2007.
Applicant’s stockholders approved the
Plan at the annual meeting of
stockholders held on May 4, 2007.
3. Applicant’s officers and employees,
and Non-employee Directors are eligible
to receive options under the Plan. Under
the Plan, a maximum of 400,000 shares
of applicant’s common stock, in the
aggregate, may be issued to Nonemployee Directors and 50,000 shares of
1 Section 2(a)(48) defines a BDC to be any closedend investment company that operates for the
purpose of making investments in securities
described in sections 55(a)(1) through 55(a)(3) of the
Act and makes available significant managerial
assistance with respect to the issuers of such
securities.
2 The Non-employee Directors receive a $75,000
per year retainer payment and $2,500 for each
Board or committee meeting or other designated
Board-related meeting attended, and reimbursement
for related expenses. Non-employee Directors who
chair a committee of the Board receive an
additional $10,000 retainer per year. Non-employee
Directors who serve as directors on the boards of
portfolio companies also receive an annual retainer
from applicant set at $30,000 per board, in lieu of
any payment from the portfolio company. Further,
under the terms of a disinterested director retention
plan that applicant established in 2006, Nonemployee Directors are generally entitled to receive
a payment upon termination of service as a director
equal to a multiple of the number of years of service
as a Non-employee Director.
3 The Board presently has one vacancy. All of the
Non-employee Directors are Disinterested Directors.
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Federal Register / Vol. 72, No. 191 / Wednesday, October 3, 2007 / Notices
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applicant’s common stock may be
issued to any one Non-employee
Director. Each of the seven Nonemployee Directors serving on the Board
as of May 4, 2007 will be granted
options to purchase 50,000 shares of
applicant’s common stock (the ‘‘Initial
Grants’’) on the date that the
Commission issues an order on the
application (‘‘Order Date’’). The options
issued under the Initial Grants will vest
in three equal parts on each of the first
three anniversaries of May 4, 2007. Any
person who becomes a Non-employee
Director after May 4, 2007 will be
entitled to receive options to purchase
50,000 shares of applicant’s common
stock (the ‘‘Other Grants’’) on the later
of the date such person becomes a Nonemployee Director and the Order Date.
The options issued under the Other
Grants will vest in three equal parts on
each of the first three anniversaries of
the date such person becomes a Nonemployee Director.
4. Under the terms of the Plan, the
exercise price of an option will not be
less than 100% of the current market
value of, or if no such market value
exists, the current net asset value per
share of, applicant’s common stock on
the date of the issuance of the option.4
Options granted under the Plan will
expire within ten years from the date of
grant and may not be assigned or
transferred other than by will or the
laws of descent and distribution. In the
event of the death or disability of a Nonemployee Director during such
director’s service, all such director’s
unexercised options will immediately
become exercisable and may be
exercised for a period of three years
following the date of death (by such
director’s personal representative) or
one year following the date of disability,
but in no event after the respective
expiration dates of such options. In the
event of the termination of a Nonemployee Director for cause, any
unexercised options will terminate
immediately. If a Non-employee
Director’s service is terminated for any
reason other than by death, disability, or
for cause, the options may be exercised
within one year immediately following
the date of termination, but in no event
later than the expiration date of such
options.
5. Applicant’s officers and employees
are eligible or have been eligible to
receive options under applicant’s six
stock option plans under which Non4 Under the Plan, ‘‘current market value’’ (defined
as ‘‘fair market value’’) is generally the closing sales
price of applicant’s shares as quoted on the Nasdaq
Global Select Market, or alternatively, on the
exchange where applicant’s shares are traded, on
the date the option is granted.
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employee Directors are not entitled to
participate (the ‘‘Employee Plans’’),
applicant’s 2006 stock option plan (the
‘‘2006 Option Plan’’) and the Plan. Nonemployee Directors are eligible or have
been eligible to receive options under
applicant’s two Disinterested Director
stock option plans (the ‘‘Disinterested
Director Plans’’) and the 2006 Option
Plan (collectively, the 2006 Option Plan,
the Disinterested Director Plans and the
Employee Plans are the ‘‘Other Plans’’).
As of August 31, 2007, applicant had
186,436,201 shares of common stock
outstanding.5 The 400,000 shares of
applicant’s common stock that may be
issued to Non-employee Directors under
the Plan represent 0.2% of applicant’s
outstanding voting securities as of
August 31, 2007. As of the same date,
applicant had no outstanding warrants
or rights to purchase its voting securities
and had no outstanding options to
purchase its voting securities other than
the outstanding options issued to
applicant’s directors, officers, and
employees under the Other Plans and
the Plan. As of August 31, 2007, the
amount of voting securities that would
result from the exercise of all
outstanding options issued to
applicant’s directors, officers, and
employees under the Other Plans and
the Plan would be 19,173,168 shares of
applicant’s common stock, or
approximately 10.3% of applicant’s
outstanding voting securities. As of the
same date, the maximum number of
voting securities that would result from
the exercise of all outstanding options
issued and all options issuable to
applicant’s directors, officers, and
employees under the Other Plans and
the Plan would be 25,225,611 shares of
applicant’s common stock, or
approximately 13.5% of applicant’s
outstanding voting securities.
Applicant’s Legal Analysis
1. Section 63(3) of the Act permits a
BDC to sell its common stock at a price
below current net asset value upon the
exercise of any option issued in
accordance with section 61(a)(3).
Section 61(a)(3)(B) provides, in
pertinent part, that a BDC may issue to
its non-employee directors options to
purchase its voting securities pursuant
to an executive compensation plan,
provided that: (a) The options expire by
their terms within ten years; (b) the
exercise price of the options is not less
than the current market value of the
underlying securities at the date of the
issuance of the options, or if no market
exists, the current net asset value of the
5 Applicant’s common stock constitutes the only
voting security of applicant currently outstanding.
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voting securities; (c) the proposal to
issue the options is authorized by the
BDC’s shareholders, and is approved by
order of the Commission upon
application; (d) the options are not
transferable except for disposition by
gift, will or intestacy; (e) no investment
adviser of the BDC receives any
compensation described in section
205(a)(1) of the Investment Advisers Act
of 1940, except to the extent permitted
by clause (b)(1) or (b)(2) of that section;
and (f) the BDC does not have a profitsharing plan as described in section
57(n) of the Act.
2. In addition, section 61(a)(3)
provides that the amount of the BDC’s
voting securities that would result from
the exercise of all outstanding warrants,
options, and rights at the time of
issuance may not exceed 25% of the
BDC’s outstanding voting securities,
except that if the amount of voting
securities that would result from the
exercise of all outstanding warrants,
options, and rights issued to the BDC’s
directors, officers, and employees
pursuant to an executive compensation
plan would exceed 15% of the BDC’s
outstanding voting securities, then the
total amount of voting securities that
would result from the exercise of all
outstanding warrants, options, and
rights at the time of issuance will not
exceed 20% of the outstanding voting
securities of the BDC.
3. Applicant represents that its
proposal to grant certain stock options
to Non-employee Directors under the
Plan meets all the requirements of
section 61(a)(3)(B). Applicant states that
the Board is actively involved in the
oversight of applicant’s affairs and that
it relies extensively on the judgment
and experience of its Board. In addition
to their duties as Board members
generally, applicant states that the Nonemployee Directors provide guidance
and advice on operational issues,
underwriting policies, credit policies,
asset valuation and strategic direction,
as well as serving on committees.
Applicant believes that the availability
of options under the Plan will provide
significant at-risk incentives to Nonemployee Directors to remain on the
Board and devote their best efforts to
ensure applicant’s success. Applicant
states that the options will provide a
means for the Non-employee Directors
to increase their ownership interests in
applicant, thereby ensuring close
identification of their interests with
those of applicant and its stockholders.
Applicant asserts that by providing
incentives such as options, applicant
will be better able to maintain
continuity in the Board’s membership
and to attract and retain the highly
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Federal Register / Vol. 72, No. 191 / Wednesday, October 3, 2007 / Notices
experienced, successful and dedicated
business and professional people who
are critical to applicant’s success as a
BDC.
4. Applicant states that the amount of
voting securities that would result from
the exercise of all outstanding options
issued to applicant’s directors, officers,
and employees under the Other Plans
and the Plan would be 19,173,168
shares of applicant’s common stock, or
approximately 10.3% of applicant’s
outstanding voting securities as of
August 31, 2007, which is below the
percentage limitations in the Act.
Applicant asserts that, given the
relatively small amount of common
stock issuable to Non-employee
Directors upon their exercise of options
under the Plan, the exercise of such
options would not, absent extraordinary
circumstances, have a substantial
dilutive effect on the net asset value of
applicant’s common stock.
For the Commission, by the Division of
Investment Management, pursuant to
delegated authority.
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E7–19539 Filed 10–2–07; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Investment Company Act Release No.
28000; 812–13390]
Rydex ETF Trust, et al.; Notice of
Application
September 27, 2007.
Securities and Exchange
Commission (‘‘Commission’’).
ACTION: Notice of an application to
amend a prior order under section 6(c)
of the Investment Company Act of 1940
(‘‘Act’’) for an exemption from sections
2(a)(32), 5(a)(1), 22(d) and 24(d) of the
Act and rule 22c–1 under the Act, and
under sections 6(c) and 17(b) of the Act
for an exemption from sections 17(a)(1)
and (a)(2) of the Act.
AGENCY:
Rydex ETF Trust (‘‘Trust’’),
PADCO Advisors II, Inc. (‘‘Adviser’’),
and Rydex Distributors, Inc.
(‘‘Distributor’’).
SUMMARY OF APPLICATION: Applicants
request an order to amend a prior order
that permits: (a) Certain open-end
management investment companies
(‘‘Initial Funds’’) to issue shares
redeemable in large aggregations only
(‘‘Shares’’); (b) secondary market
transactions in Shares to occur at
negotiated market prices; (c) dealers to
sell Shares to secondary market
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APPLICANTS:
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purchasers unaccompanied by a
prospectus, when prospectus delivery is
not required by the Securities Act of
1933; and (d) certain affiliated persons
of the Initial Funds to deposit securities
into, and receive securities from, the
Initial Funds in connection with the
purchase and redemption of
aggregations of Shares (‘‘Prior Order’’).1
Applicants seek an amended order to
permit the Trust to offer series (‘‘New
Inverse Funds’’) that seek to achieve the
inverse performance of certain
international equity and fixed income
securities indices (collectively, ‘‘New
Underlying Indices’’). The amended
order also would permit the Trust to
offer future series (‘‘Future Funds’’) that
seek to achieve a multiple or the inverse
of the performance of additional equity
and fixed income securities indices (the
New Inverse Funds and Future Funds
are ‘‘New Funds,’’ and the New Funds
and Initial Funds are ‘‘Funds’’).
FILING DATES: The application was filed
on May 23, 2007, and amended on
September 21, 2007. Applicants have
agreed to file an amendment during the
notice period, the substance of which is
reflected in this notice.
HEARING OR NOTIFICATION OF HEARING: An
order granting the requested relief will
be issued unless the Commission orders
a hearing. Interested persons may
request a hearing by writing to the
Commission’s Secretary and serving
applicants with a copy of the request,
personally or by mail. Hearing requests
should be received by the Commission
by 5:30 p.m. on October 22, 2007, and
should be accompanied by proof of
service on applicants, in the form of an
affidavit or, for lawyers, a certificate of
service. Hearing requests should state
the nature of the writer’s interest, the
reason for the request, and the issues
contested. Persons who wish to be
notified of a hearing may request
notification by writing to the
Commission’s Secretary.
ADDRESSES: Secretary, U.S. Securities
and Exchange Commission, 100 F
Street, NE., Washington, DC 20549–
1090. Applicants: Rydex ETF Trust;
Rydex Distributors, Inc.; and PADCO
Advisors II, Inc., 9601 Blackwell Road,
Suite 500, Rockville, MD 20850.
FOR FURTHER INFORMATION CONTACT:
Laura L. Solomon, Senior Counsel, at
(202) 551–6915, or Julia Kim Gilmer,
Branch Chief, at (202) 551–6821
(Division of Investment Management,
Office of Investment Company
Regulation).
1 Rydex
ETF Trust, et al., Investment Company
Act Release Nos. 27703 (Feb. 20, 2007) (notice) and
27754 (Mar. 20, 2007) (order).
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56395
The
following is a summary of the
application. The complete application
may be obtained for a fee at the
Commission’s Public Reference Desk,
100 F Street, NE., Washington, DC
20549–0102 (tel. 202–551–5850).
SUPPLEMENTARY INFORMATION:
Applicants’ Representations
1. The Trust, a Delaware statutory
trust, is an open-end management
investment company registered under
the Act and is organized as a series fund
with multiple separate Funds. The
Adviser, which is registered as an
investment adviser under the
Investment Advisers Act of 1940
(‘‘Advisers Act’’), serves as investment
adviser to each Fund. The Adviser may
in the future retain one or more subadvisers (‘‘Sub-Advisers’’) to manage
particular Funds’ portfolios. Any SubAdviser to a Fund will be registered
under the Advisers Act. The Distributor,
a broker-dealer registered under the
Securities Exchange Act of 1934, serves
as the principal underwriter and
distributor for the Funds.
2. The Prior Order permits the Initial
Funds to seek daily investment results,
before fees and expenses, that (a)
Correspond to 125%, 150% or 200% of
the return of certain equity securities
indices, or (b) move in the opposite
direction of the performance of certain
equity securities indices in multiples of
100%, 125%, 150% or 200%.
Applicants seek to amend the Prior
Order to permit the Trust to issue shares
of New Inverse Funds using the New
Underlying Indices,2 and Future Funds
using additional securities indices (such
additional indices, together with the
New Underlying Indices and the
underlying indices for the Initial Funds,
the ‘‘Underlying Indices’’).
3. A New Fund using a fixed income
index as its Underlying Index will not:
(a) Hold restricted securities eligible for
resale pursuant to Rule 144A under the
Securities Act of 1933, or (b) engage in
‘‘to-be-announced’’ transactions when
trading mortgage-backed securities.
Additionally, such New Funds will use
the same portfolio investment
methodology currently used by the
Trust except that, where relevant, such
Funds may also invest in the fixed
income equivalents of the portfolio
investments described in the
application for the Prior Order. A New
Fund that uses an international index as
its Underlying Index will not hold
depositary receipts.
2 The New Underlying Indices, which are
described in the application, include 41
international equity indices and 18 fixed income
indices.
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]]>Agencies
[Federal Register Volume 72, Number 191 (Wednesday, October 3, 2007)]
[Notices]
[Pages 56393-56395]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E7-19539]
=======================================================================
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SECURITIES AND EXCHANGE COMMISSION
[Investment Company Act Release No. 28001; 812-13398]
American Capital Strategies, Ltd.; Notice of Application
September 27, 2007.
AGENCY: Securities and Exchange Commission (the ``Commission'').
ACTION: Notice of an application for an order under section 61(a)(3)(B)
of the Investment Company Act of 1940 (the ``Act'').
-----------------------------------------------------------------------
Summary of Application: Applicant, American Capital Strategies, Ltd.,
requests an order approving a proposal to grant certain stock options
to directors who are not also employees or officers of the applicant
(the ``Non-employee Directors'') under its 2007 Stock Option Plan (the
``Plan'').
Filing Dates: The application was filed on June 15, 2007 and amended on
September 27, 2007.
Hearing or Notification of Hearing: An order granting the application
will be issued unless the Commission orders a hearing. Interested
persons may request a hearing by writing to the Commission's Secretary
and serving applicant with a copy of the request, personally or by
mail. Hearing requests should be received by the Commission by 5:30
p.m. on October 22, 2007, and should be accompanied by proof of service
on applicant, in the form of an affidavit or, for lawyers, a
certificate of service. Hearing requests should state the nature of the
writer's interest, the reason for the request, and the issues
contested. Persons who wish to be notified of a hearing may request
notification by writing to the Commission's Secretary.
ADDRESSES: Secretary, U.S. Securities and Commission, 100 F Street,
NE., Washington, DC 20549-1090; Applicant, 2 Bethesda Metro Center,
14th Floor, Bethesda, Maryland 20814.
FOR FURTHER INFORMATION CONTACT: Laura J. Riegel, Senior Counsel, at
(202) 551-6873, or Nadya B. Roytblat, Assistant Director, at (202) 551-
6821 (Division of Investment Management, Office of Investment Company
Regulation).
SUPPLEMENTARY INFORMATION: The following is a summary of the
application. The complete application is available for a fee at the
Public Reference Desk, U.S. Securities and Exchange Commission, 100 F
Street, NE., Washington, DC 20549-0102 (telephone 202-551-5850).
Applicant's Representations
1. Applicant, a Delaware corporation, is a business development
company (``BDC'') within the meaning of section 2(a)(48) of the Act.\1\
Applicant's primary business objectives are to increase its net
operating income and net asset value by investing its assets in senior
debt, subordinated debt, with and without detachable warrants, and
equity of small to medium sized businesses with attractive current
yields and potential for equity appreciation. Applicant's investment
decisions are made either by its board of directors (the ``Board''),
based on recommendations of the executive officers of applicant, or,
for investments that meet certain objective criteria established by the
Board, by the executive officers of applicant, under authority
delegated by the Board. Applicant does not have an external investment
adviser within the meaning of section 2(a)(20) of the Act.
---------------------------------------------------------------------------
\1\ Section 2(a)(48) defines a BDC to be any closed-end
investment company that operates for the purpose of making
investments in securities described in sections 55(a)(1) through
55(a)(3) of the Act and makes available significant managerial
assistance with respect to the issuers of such securities.
---------------------------------------------------------------------------
2. Applicant requests an order under section 61(a)(3)(B) of the Act
approving its proposal to grant certain stock options under the Plan to
its Non-employee Directors.\2\ Applicant has a nine member Board. Seven
of the eight current members of the Board are not ``interested
persons'' (as defined in section 2(a)(19) of the Act) of the applicant
(``Disinterested Directors'').\3\ The Board approved the Plan at a
meeting held on March 8, 2007. Applicant's stockholders approved the
Plan at the annual meeting of stockholders held on May 4, 2007.
---------------------------------------------------------------------------
\2\ The Non-employee Directors receive a $75,000 per year
retainer payment and $2,500 for each Board or committee meeting or
other designated Board-related meeting attended, and reimbursement
for related expenses. Non-employee Directors who chair a committee
of the Board receive an additional $10,000 retainer per year. Non-
employee Directors who serve as directors on the boards of portfolio
companies also receive an annual retainer from applicant set at
$30,000 per board, in lieu of any payment from the portfolio
company. Further, under the terms of a disinterested director
retention plan that applicant established in 2006, Non-employee
Directors are generally entitled to receive a payment upon
termination of service as a director equal to a multiple of the
number of years of service as a Non-employee Director.
\3\ The Board presently has one vacancy. All of the Non-employee
Directors are Disinterested Directors.
---------------------------------------------------------------------------
3. Applicant's officers and employees, and Non-employee Directors
are eligible to receive options under the Plan. Under the Plan, a
maximum of 400,000 shares of applicant's common stock, in the
aggregate, may be issued to Non-employee Directors and 50,000 shares of
[[Page 56394]]
applicant's common stock may be issued to any one Non-employee
Director. Each of the seven Non-employee Directors serving on the Board
as of May 4, 2007 will be granted options to purchase 50,000 shares of
applicant's common stock (the ``Initial Grants'') on the date that the
Commission issues an order on the application (``Order Date''). The
options issued under the Initial Grants will vest in three equal parts
on each of the first three anniversaries of May 4, 2007. Any person who
becomes a Non-employee Director after May 4, 2007 will be entitled to
receive options to purchase 50,000 shares of applicant's common stock
(the ``Other Grants'') on the later of the date such person becomes a
Non-employee Director and the Order Date. The options issued under the
Other Grants will vest in three equal parts on each of the first three
anniversaries of the date such person becomes a Non-employee Director.
4. Under the terms of the Plan, the exercise price of an option
will not be less than 100% of the current market value of, or if no
such market value exists, the current net asset value per share of,
applicant's common stock on the date of the issuance of the option.\4\
Options granted under the Plan will expire within ten years from the
date of grant and may not be assigned or transferred other than by will
or the laws of descent and distribution. In the event of the death or
disability of a Non-employee Director during such director's service,
all such director's unexercised options will immediately become
exercisable and may be exercised for a period of three years following
the date of death (by such director's personal representative) or one
year following the date of disability, but in no event after the
respective expiration dates of such options. In the event of the
termination of a Non-employee Director for cause, any unexercised
options will terminate immediately. If a Non-employee Director's
service is terminated for any reason other than by death, disability,
or for cause, the options may be exercised within one year immediately
following the date of termination, but in no event later than the
expiration date of such options.
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\4\ Under the Plan, ``current market value'' (defined as ``fair
market value'') is generally the closing sales price of applicant's
shares as quoted on the Nasdaq Global Select Market, or
alternatively, on the exchange where applicant's shares are traded,
on the date the option is granted.
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5. Applicant's officers and employees are eligible or have been
eligible to receive options under applicant's six stock option plans
under which Non-employee Directors are not entitled to participate (the
``Employee Plans''), applicant's 2006 stock option plan (the ``2006
Option Plan'') and the Plan. Non-employee Directors are eligible or
have been eligible to receive options under applicant's two
Disinterested Director stock option plans (the ``Disinterested Director
Plans'') and the 2006 Option Plan (collectively, the 2006 Option Plan,
the Disinterested Director Plans and the Employee Plans are the ``Other
Plans''). As of August 31, 2007, applicant had 186,436,201 shares of
common stock outstanding.\5\ The 400,000 shares of applicant's common
stock that may be issued to Non-employee Directors under the Plan
represent 0.2% of applicant's outstanding voting securities as of
August 31, 2007. As of the same date, applicant had no outstanding
warrants or rights to purchase its voting securities and had no
outstanding options to purchase its voting securities other than the
outstanding options issued to applicant's directors, officers, and
employees under the Other Plans and the Plan. As of August 31, 2007,
the amount of voting securities that would result from the exercise of
all outstanding options issued to applicant's directors, officers, and
employees under the Other Plans and the Plan would be 19,173,168 shares
of applicant's common stock, or approximately 10.3% of applicant's
outstanding voting securities. As of the same date, the maximum number
of voting securities that would result from the exercise of all
outstanding options issued and all options issuable to applicant's
directors, officers, and employees under the Other Plans and the Plan
would be 25,225,611 shares of applicant's common stock, or
approximately 13.5% of applicant's outstanding voting securities.
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\5\ Applicant's common stock constitutes the only voting
security of applicant currently outstanding.
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Applicant's Legal Analysis
1. Section 63(3) of the Act permits a BDC to sell its common stock
at a price below current net asset value upon the exercise of any
option issued in accordance with section 61(a)(3). Section 61(a)(3)(B)
provides, in pertinent part, that a BDC may issue to its non-employee
directors options to purchase its voting securities pursuant to an
executive compensation plan, provided that: (a) The options expire by
their terms within ten years; (b) the exercise price of the options is
not less than the current market value of the underlying securities at
the date of the issuance of the options, or if no market exists, the
current net asset value of the voting securities; (c) the proposal to
issue the options is authorized by the BDC's shareholders, and is
approved by order of the Commission upon application; (d) the options
are not transferable except for disposition by gift, will or intestacy;
(e) no investment adviser of the BDC receives any compensation
described in section 205(a)(1) of the Investment Advisers Act of 1940,
except to the extent permitted by clause (b)(1) or (b)(2) of that
section; and (f) the BDC does not have a profit-sharing plan as
described in section 57(n) of the Act.
2. In addition, section 61(a)(3) provides that the amount of the
BDC's voting securities that would result from the exercise of all
outstanding warrants, options, and rights at the time of issuance may
not exceed 25% of the BDC's outstanding voting securities, except that
if the amount of voting securities that would result from the exercise
of all outstanding warrants, options, and rights issued to the BDC's
directors, officers, and employees pursuant to an executive
compensation plan would exceed 15% of the BDC's outstanding voting
securities, then the total amount of voting securities that would
result from the exercise of all outstanding warrants, options, and
rights at the time of issuance will not exceed 20% of the outstanding
voting securities of the BDC.
3. Applicant represents that its proposal to grant certain stock
options to Non-employee Directors under the Plan meets all the
requirements of section 61(a)(3)(B). Applicant states that the Board is
actively involved in the oversight of applicant's affairs and that it
relies extensively on the judgment and experience of its Board. In
addition to their duties as Board members generally, applicant states
that the Non-employee Directors provide guidance and advice on
operational issues, underwriting policies, credit policies, asset
valuation and strategic direction, as well as serving on committees.
Applicant believes that the availability of options under the Plan will
provide significant at-risk incentives to Non-employee Directors to
remain on the Board and devote their best efforts to ensure applicant's
success. Applicant states that the options will provide a means for the
Non-employee Directors to increase their ownership interests in
applicant, thereby ensuring close identification of their interests
with those of applicant and its stockholders. Applicant asserts that by
providing incentives such as options, applicant will be better able to
maintain continuity in the Board's membership and to attract and retain
the highly
[[Page 56395]]
experienced, successful and dedicated business and professional people
who are critical to applicant's success as a BDC.
4. Applicant states that the amount of voting securities that would
result from the exercise of all outstanding options issued to
applicant's directors, officers, and employees under the Other Plans
and the Plan would be 19,173,168 shares of applicant's common stock, or
approximately 10.3% of applicant's outstanding voting securities as of
August 31, 2007, which is below the percentage limitations in the Act.
Applicant asserts that, given the relatively small amount of common
stock issuable to Non-employee Directors upon their exercise of options
under the Plan, the exercise of such options would not, absent
extraordinary circumstances, have a substantial dilutive effect on the
net asset value of applicant's common stock.
For the Commission, by the Division of Investment Management,
pursuant to delegated authority.
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E7-19539 Filed 10-2-07; 8:45 am]
BILLING CODE 8011-01-P
