Kohlberg Capital Corporation; Notice of Application, 18304-18306 [E8-6876]
Download as PDF
<![CDATA[
18304
Federal Register / Vol. 73, No. 65 / Thursday, April 3, 2008 / Notices
$155,530 incurred in connection with
the reorganization were paid by Munder
Capital Management, applicant’s
investment adviser. Applicant has
retained approximately $14,200 in cash
to pay certain outstanding liabilities.
Filing Dates: The application was
filed on March 3, 2008, and amended on
March 26, 2008.
Applicant’s Address: 480 Pierce St.,
Birmingham, MI 48009.
Dreyfus Balanced Fund, Inc. [File No.
811–7068]
Summary: Applicant seeks an order
declaring that it has ceased to be an
investment company. On December 17,
2004, applicant transferred its assets to
Dreyfus Premier Balanced Opportunity
Fund, a corresponding series of Dreyfus
Premier Manager Funds II, based on net
asset value. Expenses of $64,000
incurred in connection with the
reorganization were paid by The
Dreyfus Corporation, applicant’s
investment adviser.
Filing Dates: The application was
filed on January 30, 2008, and amended
on March 20, 2008.
Applicant’s Address: c/o The Dreyfus
Corporation, 200 Park Ave., New York,
NY 10166.
SEI Index Funds [File No. 811–4283]
Summary: Applicant seeks an order
declaring that it has ceased to be an
investment company. On September 14,
2007, applicant transferred its assets to
S&P 500 Index Fund, a series of SEI
Institutional Managed Trust, based on
net asset value. Expenses of $148,500
incurred in connection with the
reorganization were paid by applicant
and SEI Investment Management
Corporation, applicant’s investment
adviser.
Filing Date: The application was filed
on March 3, 2008.
Applicant’s Address: One Freedom
Valley Dr., Oaks, PA 19456.
rwilkins on PROD1PC63 with NOTICES
HBI Equity Trust, Series 1 [File No.
811–8184]
Summary: Applicant, a unit
investment trust, seeks an order
declaring that it has ceased to be an
investment company. On May 15, 2001,
applicant made a liquidating
distribution to its unitholders, based on
net asset value. Applicant incurred no
expenses in connection with the
liquidation.
Filing Date: The application was filed
on February 19, 2008.
Applicant’s Address: 222 South
Riverside Plaza, 7th Floor, Chicago, IL
60606.
VerDate Aug<31>2005
17:19 Apr 02, 2008
Jkt 214001
Private Asset Management Fund [File
No. 811–21049]
Summary: Applicant seeks an order
declaring that it has ceased to be an
investment company. On December 27,
2007, applicant made a liquidating
distribution to its shareholders based on
net asset value. Expenses of $2,540
incurred in connection with the
liquidation were paid by Private Asset
Management, Inc., applicant’s
investment adviser.
Filing Date: The application was filed
on February 25, 2008.
Applicant’s Address: 11995 El
Camino Real, Suite 303, San Diego, CA
92130.
Alliance All-Market Advantage Fund,
Inc. [File No. 811–8702]
Summary: Applicant, a closed-end
investment company, seeks an order
declaring that it has ceased to be an
investment company. On February 1,
2008, applicant transferred its assets to
AllianceBernstein Large Cap Growth
Fund, Inc., based on net asset value.
Expenses of $260,000 incurred in
connection with the reorganization were
paid by applicant.
Filing Date: The application was filed
on February 21, 2008.
Applicant’s Address: 1345 Avenue of
the Americas, New York, NY 10105.
outstanding expenses. After these
expenses have been paid, remaining
monies will be distributed pro rata to
the common shareholders.
Filing Dates: The application was
filed on January 30, 2008, and amended
on March 11, 2008.
Applicant’s Address: c/o Skadden,
Arps, Slate, Meagher & Flom LLP, Four
Times Sq., New York, NY 10036.
Atlas Insurance Trust [File No. 811–
8041]
Summary: Applicant seeks an order
declaring that it has ceased to be an
investment company. On February 26,
2007, applicant made a liquidating
distribution to its shareholders, based
on net asset value. Applicant incurred
no expenses in connection with the
liquidation.
Filing Dates: The application was
filed on December 19, 2007, and
amended on January 31, 2008.
Applicant’s Address: 794 Davis Street,
San Leandro, CA 94577.
For the Commission, by the Division of
Investment Management, pursuant to
delegated authority.
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E8–6873 Filed 4–2–08; 8:45 am]
BILLING CODE 8011–01–P
Oppenheimer Emerging Technologies
Fund [File No. 811–9845]
Summary: Applicant seeks an order
declaring that it has ceased to be an
investment company. On October 26,
2007, applicant transferred its assets to
Oppenheimer Capital Appreciation
Fund, based on net asset value.
Expenses of approximately $102,108
incurred in connection with the
reorganization were paid by applicant.
Filing Date: The application was filed
on March 11, 2008.
Applicant’s Address: 6803 South
Tucson Way, Centennial, CO 80112.
SECURITIES AND EXCHANGE
COMMISSION
Fortress Pinnacle Investment Fund LLC
[File No. 811–21232]
Summary: Applicant, a closed-end
investment company, seeks an order
declaring that it has ceased to be an
investment company. On November 27,
2007, applicant distributed to its
preferred shareholders cash payments
equal to the face amount of their
securities plus preferred dividends
accrued. On January 22, 2008, applicant
made a liquidating distribution to its
common shareholders, based on net
asset value. Expenses of $195,000
incurred in connection with the
liquidation will be paid by applicant.
Applicant has retained approximately
$260,159 in cash to cover the
Applicant,
Kohlberg Capital Corporation
(‘‘Kohlberg Capital’’), requests an order
approving the proposal to grant stock
options to directors who are not also
employees or officers of Kohlberg
Capital (the ‘‘Non-Employee Directors’’)
under its 2008 Non-Employee Director
Plan (the ‘‘Plan’’).
FILING DATES: The application was filed
on February 27, 2007, and amended on
February 13, 2008, and March 21, 2008.
Applicants have agreed to file an
amendment to the application during
the notice period, the substance of
which is reflected in this notice.
HEARING OR NOTIFICATION OF HEARING: An
order granting the application will be
PO 00000
Frm 00048
Fmt 4703
Sfmt 4703
[Investment Company Act Release No.
28228; 812–13368]
Kohlberg Capital Corporation; Notice
of Application
March 28, 2008.
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:
SUMMARY OF APPLICATION:
E:\FR\FM\03APN1.SGM
03APN1
Federal Register / Vol. 73, No. 65 / Thursday, April 3, 2008 / Notices
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 April 22, 2008, 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 Exchange Commission, 100 F
Street, NE., Washington, DC 20549–
1090; Applicant, 295 Madison Avenue,
6th Floor, New York, NY, 10017.
FOR FURTHER INFORMATION CONTACT:
Bruce R. MacNeil, Senior Counsel, at
(202) 551–6817, or Julia Kim Gilmer,
Branch Chief, 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).
rwilkins on PROD1PC63 with NOTICES
Applicant’s Representations
1. Kohlberg Capital, a Delaware
corporation, is a business development
company (‘‘BDC’’) within the meaning
of section 2(a)(48) of the Act.1 Kohlberg
Capital provides debt and equity growth
capital to privately-held middle market
companies and its investment objective
is to generate current income and
capital appreciation from the
investments made by those companies
in senior secured term loans, mezzanine
debt and selected equity investments.
Kohlberg Capital may also invest in
loans to larger, publicly traded
companies, high-yield bonds, distressed
debt securities and debt and equity
securities issued by collateralized debt
obligation funds. Kohlberg Capital’s
business and affairs are managed under
the direction of its board of directors
(‘‘Board’’). Kohlberg Capital does not
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.
VerDate Aug<31>2005
17:19 Apr 02, 2008
Jkt 214001
have an external investment adviser
within the meaning of section 2(a)(20) of
the Act.
2. Kohlberg Capital requests an order
under section 61(a)(3)(B) of the Act that
would approve the proposal under the
Plan to issue stock options to NonEmployee Directors to purchase shares
of Kohlberg Capital’s common stock,
$0.01 par value per share (‘‘Common
Stock’’). Kohlberg Capital has a seven
member Board, four of whom are not
‘‘interested persons’’ (as defined in
section 2(a)(19) of the Act)
(‘‘Disinterested Directors’’). The NonEmployee Directors are all Disinterested
Directors, but it is possible that
Kohlberg Capital may have NonEmployee Directors in the future who
are interested persons of Kohlberg
Capital.2 The Board approved the Plan
on February 5, 2008. Kohlberg Capital’s
shareholders will vote on the Plan at its
2008 annual meeting of shareholders.
3. Kohlberg Capital’s Non-Employee
Directors are eligible to receive stock
options under the Plan. The Plan
provides for the issuance of a maximum
of 75,000 shares of Kohlberg Capital’s
Common Stock, in the aggregate, to
Non-Employee Directors. The Plan also
provides that each Non-Employee
Director will automatically be granted
options to purchase 5,000 shares of
Kohlberg Capital’s Common Stock on
the date of each annual meeting of
shareholders of Kohlberg Capital during
the term of the Plan. One-half of the
grant of options will vest immediately
and the remaining one-half of the grant
of options will vest on the earlier of (a)
the first anniversary of the date of the
grant, or (b) the date immediately
preceding the next annual meeting of
shareholders. A Non-Employee Director
who is appointed to serve on the Board
outside the annual election cycle will
automatically be granted options for a
number of shares of Common Stock
equal to the product of (x) the number
of full months remaining until the next
annual meeting of shareholders divided
by 12 and (y) 5,000. One-half of the prorata grant will vest immediately and the
remaining one-half of the pro-rata grant
on the earlier of (a) the first anniversary
of the preceding annual meeting of
shareholders, or (b) the date
immediately preceding the next annual
meeting of shareholders.
2 Each Non-Employee Director receives an annual
fee of $25,000, $500 for each committee meeting
attended, and reimbursement of reasonable out-ofpocket expenses incurred in attending Board
meetings. Each Non-Employee Director who serves
as chairperson of a Board committee receives an
additional $5,000 per year, except that the
chairperson of the audit committee receives $10,000
per year.
PO 00000
Frm 00049
Fmt 4703
Sfmt 4703
18305
4. Under the terms of the Plan, the
exercise price of an option will not be
less than the current market value of, or
if no such market value exists, the
current net asset value per share of,
Kohlberg Capital’s Common Stock on
the date of the issuance of the option.3
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.
5. Kohlberg Capital’s officers and
employees have been eligible to receive
options under Kohlberg Capital’s 2006
equity incentive plan under which NonEmployee Directors are not entitled to
participate (the ‘‘Employee Plan’’). As of
December 31, 2007, Kohlberg Capital
had 18,017,699 shares of Common Stock
outstanding.4 The 75,000 shares of
Kohlberg Capital’s Common Stock that
may be issued to Non-Employee
Directors under the Plan represent
0.42% of Kohlberg Capital’s outstanding
voting securities as of December 31,
2007. As of the same date, Kohlberg
Capital had no outstanding warrants or
rights to purchase its voting securities
and the amount of voting securities that
would result from the exercise of all
outstanding options issued to Kohlberg
Capital’s officers and employees under
the Employee Plan would be 1,315,000
shares of Common Stock, or
approximately 7.30% of Kohlberg
Capital’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
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
3 Under the Plan, ‘‘current market value’’ is the
closing price of the Common Stock on the NASDAQ
Global Select Market on the date the option is
granted.
4 Kohlberg Capital’s Common Stock constitutes
the only voting security of applicant currently
outstanding.
E:\FR\FM\03APN1.SGM
03APN1
rwilkins on PROD1PC63 with NOTICES
18306
Federal Register / Vol. 73, No. 65 / Thursday, April 3, 2008 / Notices
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. Kohlberg Capital 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). Kohlberg Capital
states that the Board is actively involved
in the oversight of its affairs and that it
relies extensively on the judgment and
experience of its Board. In addition to
their duties as Board members
generally, Kohlberg Capital states that
the Non-Employee Directors provide
guidance and advice on operational
matters, asset valuation and strategic
direction, as well as serving on
committees. Kohlberg Capital 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 Kohlberg Capital’s
success. Kohlberg Capital states that the
options will provide a means for the
Non-Employee Directors to increase
their ownership interests in Kohlberg
Capital, thereby ensuring close
identification of their interests with
those of Kohlberg Capital and its
shareholders. Kohlberg Capital asserts
that by providing incentives such as
options, it will be better able to
maintain continuity in the Board’s
membership and to attract and retain
the highly experienced, successful and
dedicated business and professional
people who are critical to Kohlberg
Capital’s success as a BDC.
4. Kohlberg Capital states that the
amount of voting securities that would
VerDate Aug<31>2005
17:19 Apr 02, 2008
Jkt 214001
result from the exercise of all
outstanding options issued to its officers
and employees under the Employee
Plan would be 1,315,000 shares of
Kohlberg Capital’s Common Stock, or
approximately 7.30% of its outstanding
voting securities as of December 31,
2007, which is below the percentage
limitations in the Act. Kohlberg Capital
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 Kohlberg Capital’s
Common Stock.
For the Commission, by the Division of
Investment Management, pursuant to
delegated authority.
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E8–6876 Filed 4–2–08; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–57576; File No. SR–CBOE–
2008–33]
Self-Regulatory Organizations;
Chicago Board Options Exchange,
Incorporated; Notice of Filing and
Immediate Effectiveness of Proposed
Rule Change, as Modified by
Amendment No. 1 Thereto, Relating to
the Penny Pilot Program
March 28, 2008.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934
(‘‘Act’’),1 and Rule 19b–4 thereunder,2
notice is hereby given that on March 25,
2008, the Chicago Board Options
Exchange, Incorporated (‘‘CBOE’’ or
‘‘Exchange’’) filed with the Securities
and Exchange Commission
(‘‘Commission’’) the proposed rule
change as described in Items I, II, and
III below, which Items have been
substantially prepared by the CBOE. On
March 27, 2008, the Exchange submitted
Amendment No. 1 to the proposed rule
change.3 The Exchange has designated
this proposal as one constituting a
stated policy, practice, or interpretation
with respect to the meaning,
administration, or enforcement of an
existing rule under Section
U.S.C. 78s(b)(1).
CFR 240.19b–4.
3 In connection with Amendment No. 1 the
Exchange submitted a Regulatory Circular that
CBOE disseminated on March 25, 2008, identifying
the twenty-eight option classes being added to the
Penny Pilot on March 28, 2008. The circular
constitutes changes to the text of CBOE’s rules.
19(b)(3)(A)(i) of the Act 4 and Rule 19b–
4(f)(1) thereunder,5 which renders the
proposal effective upon filing with the
Commission. The Commission is
publishing this notice to solicit
comments on the proposed rule change,
as modified by Amendment No. 1, from
interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
CBOE proposes to implement the
second phase of the expansion of the
industry-wide Penny Pilot Program. The
text of the proposed rule change is
available on the Exchange’s Web site
(https://www.cboe.org/legal), at the
CBOE’s Office of the Secretary, and at
the Commission’s Public Reference
Room.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
Exchange included statements
concerning the purpose of, and basis for,
the proposed rule change and discussed
any comments it received on the
proposed rule change. The text of these
statements may be examined at the
places specified in Item IV below. The
CBOE has prepared summaries, set forth
in Sections A, B, and C below, of the
most significant aspects of such
statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
CBOE proposes to amend its rules in
connection with the second phase of the
expansion of the industry-wide Penny
Pilot Program on March 28, 2008. The
Penny Pilot Program commenced on
January 26, 2007, and was later
expanded (Phase I) on September 27,
2007 with the addition of twenty-two
option classes. Currently, thirty-five
option classes participate in the Penny
Pilot Program.6
Phase II of the expansion will begin
on March 28, 2008, last for one year
until March 27, 2009, and add the
following twenty-eight option classes to
1 15
2 17
PO 00000
Frm 00050
Fmt 4703
Sfmt 4703
4 15
U.S.C. 78s(b)(3)(A)(i).
CFR 240.19b–4(f)(1).
6 CBOE also quotes and trades two index option
classes, XSP and DJX, in the same minimum
increments as the Pilot classes (except for options
on the QQQQs, in which the minimum increment
is $0.01 for all option series).
5 17
E:\FR\FM\03APN1.SGM
03APN1
]]>Agencies
[Federal Register Volume 73, Number 65 (Thursday, April 3, 2008)]
[Notices]
[Pages 18304-18306]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E8-6876]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Investment Company Act Release No. 28228; 812-13368]
Kohlberg Capital Corporation; Notice of Application
March 28, 2008.
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, Kohlberg Capital Corporation
(``Kohlberg Capital''), requests an order approving the proposal to
grant stock options to directors who are not also employees or officers
of Kohlberg Capital (the ``Non-Employee Directors'') under its 2008
Non-Employee Director Plan (the ``Plan'').
Filing Dates: The application was filed on February 27, 2007, and
amended on February 13, 2008, and March 21, 2008. Applicants have
agreed to file an amendment to the application during the notice
period, the substance of which is reflected in this notice.
Hearing or Notification of Hearing: An order granting the application
will be
[[Page 18305]]
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 April 22,
2008, 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 Exchange Commission, 100 F
Street, NE., Washington, DC 20549-1090; Applicant, 295 Madison Avenue,
6th Floor, New York, NY, 10017.
FOR FURTHER INFORMATION CONTACT: Bruce R. MacNeil, Senior Counsel, at
(202) 551-6817, or Julia Kim Gilmer, Branch Chief, 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. Kohlberg Capital, a Delaware corporation, is a business
development company (``BDC'') within the meaning of section 2(a)(48) of
the Act.\1\ Kohlberg Capital provides debt and equity growth capital to
privately-held middle market companies and its investment objective is
to generate current income and capital appreciation from the
investments made by those companies in senior secured term loans,
mezzanine debt and selected equity investments. Kohlberg Capital may
also invest in loans to larger, publicly traded companies, high-yield
bonds, distressed debt securities and debt and equity securities issued
by collateralized debt obligation funds. Kohlberg Capital's business
and affairs are managed under the direction of its board of directors
(``Board''). Kohlberg Capital 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. Kohlberg Capital requests an order under section 61(a)(3)(B) of
the Act that would approve the proposal under the Plan to issue stock
options to Non-Employee Directors to purchase shares of Kohlberg
Capital's common stock, $0.01 par value per share (``Common Stock'').
Kohlberg Capital has a seven member Board, four of whom are not
``interested persons'' (as defined in section 2(a)(19) of the Act)
(``Disinterested Directors''). The Non-Employee Directors are all
Disinterested Directors, but it is possible that Kohlberg Capital may
have Non-Employee Directors in the future who are interested persons of
Kohlberg Capital.\2\ The Board approved the Plan on February 5, 2008.
Kohlberg Capital's shareholders will vote on the Plan at its 2008
annual meeting of shareholders.
---------------------------------------------------------------------------
\2\ Each Non-Employee Director receives an annual fee of
$25,000, $500 for each committee meeting attended, and reimbursement
of reasonable out-of-pocket expenses incurred in attending Board
meetings. Each Non-Employee Director who serves as chairperson of a
Board committee receives an additional $5,000 per year, except that
the chairperson of the audit committee receives $10,000 per year.
---------------------------------------------------------------------------
3. Kohlberg Capital's Non-Employee Directors are eligible to
receive stock options under the Plan. The Plan provides for the
issuance of a maximum of 75,000 shares of Kohlberg Capital's Common
Stock, in the aggregate, to Non-Employee Directors. The Plan also
provides that each Non-Employee Director will automatically be granted
options to purchase 5,000 shares of Kohlberg Capital's Common Stock on
the date of each annual meeting of shareholders of Kohlberg Capital
during the term of the Plan. One-half of the grant of options will vest
immediately and the remaining one-half of the grant of options will
vest on the earlier of (a) the first anniversary of the date of the
grant, or (b) the date immediately preceding the next annual meeting of
shareholders. A Non-Employee Director who is appointed to serve on the
Board outside the annual election cycle will automatically be granted
options for a number of shares of Common Stock equal to the product of
(x) the number of full months remaining until the next annual meeting
of shareholders divided by 12 and (y) 5,000. One-half of the pro-rata
grant will vest immediately and the remaining one-half of the pro-rata
grant on the earlier of (a) the first anniversary of the preceding
annual meeting of shareholders, or (b) the date immediately preceding
the next annual meeting of shareholders.
4. Under the terms of the Plan, the exercise price of an option
will not be less than the current market value of, or if no such market
value exists, the current net asset value per share of, Kohlberg
Capital's Common Stock on the date of the issuance of the option.\3\
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.
---------------------------------------------------------------------------
\3\ Under the Plan, ``current market value'' is the closing
price of the Common Stock on the NASDAQ Global Select Market on the
date the option is granted.
---------------------------------------------------------------------------
5. Kohlberg Capital's officers and employees have been eligible to
receive options under Kohlberg Capital's 2006 equity incentive plan
under which Non-Employee Directors are not entitled to participate (the
``Employee Plan''). As of December 31, 2007, Kohlberg Capital had
18,017,699 shares of Common Stock outstanding.\4\ The 75,000 shares of
Kohlberg Capital's Common Stock that may be issued to Non-Employee
Directors under the Plan represent 0.42% of Kohlberg Capital's
outstanding voting securities as of December 31, 2007. As of the same
date, Kohlberg Capital had no outstanding warrants or rights to
purchase its voting securities and the amount of voting securities that
would result from the exercise of all outstanding options issued to
Kohlberg Capital's officers and employees under the Employee Plan would
be 1,315,000 shares of Common Stock, or approximately 7.30% of Kohlberg
Capital's outstanding voting securities.
---------------------------------------------------------------------------
\4\ Kohlberg Capital's Common Stock constitutes the only voting
security of applicant currently outstanding.
---------------------------------------------------------------------------
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
[[Page 18306]]
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. Kohlberg Capital 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). Kohlberg Capital states that the
Board is actively involved in the oversight of its affairs and that it
relies extensively on the judgment and experience of its Board. In
addition to their duties as Board members generally, Kohlberg Capital
states that the Non-Employee Directors provide guidance and advice on
operational matters, asset valuation and strategic direction, as well
as serving on committees. Kohlberg Capital 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 Kohlberg Capital's success. Kohlberg
Capital states that the options will provide a means for the Non-
Employee Directors to increase their ownership interests in Kohlberg
Capital, thereby ensuring close identification of their interests with
those of Kohlberg Capital and its shareholders. Kohlberg Capital
asserts that by providing incentives such as options, it will be better
able to maintain continuity in the Board's membership and to attract
and retain the highly experienced, successful and dedicated business
and professional people who are critical to Kohlberg Capital's success
as a BDC.
4. Kohlberg Capital states that the amount of voting securities
that would result from the exercise of all outstanding options issued
to its officers and employees under the Employee Plan would be
1,315,000 shares of Kohlberg Capital's Common Stock, or approximately
7.30% of its outstanding voting securities as of December 31, 2007,
which is below the percentage limitations in the Act. Kohlberg Capital
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 Kohlberg Capital's Common Stock.
For the Commission, by the Division of Investment Management,
pursuant to delegated authority.
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E8-6876 Filed 4-2-08; 8:45 am]
BILLING CODE 8011-01-P
