American Capital, Ltd.; Notice of Application, 57310-57312 [2010-23408]
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57310
Federal Register / Vol. 75, No. 181 / Monday, September 20, 2010 / Notices
CQ Plan’’), and reflects changes
unanimously adopted by the
Participants. The Sixteenth Amendment
to the CTA Plan and the Twelfth
Amendment to the CQ Plan
(‘‘Amendments’’) propose to add EDGA
Exchange, Inc. and EDGX Exchange, Inc.
to the Plans. The Commission is
publishing this notice to solicit
comments from interested persons on
the proposed Amendments.
I. Terms and Conditions of Access
See Item I(A) above.
I. Rule 608(a)
L. Dispute Resolution
Not applicable.
A. Purpose of the Amendments
A. Reporting Requirements
Not applicable.
B. Governing or Constituent Documents
Not applicable.
C. Implementation of the Amendments
Because the Amendments constitute
‘‘Ministerial Amendments’’ under both
clause (1) of Section IV(b) of the CTA
Plan and clause (1) of Section IV(c) of
the CQ Plan, the Chairman of the CTA
Plan and the CQ Plan’s Operating
Committee may submit these
amendments to the Commission on
behalf of the Participants in the CTA
Plan and the CQ Plan. Because the
Participants designate the amendments
as concerned solely with the
administration of the Plans, the
amendments become effective upon
filing with the Commission.
D. Development and Implementation
Phases
E. Analysis of Impact on Competition
The proposed amendment does not
impose any burden on competition that
is not necessary or appropriate in
furtherance of the purposes of the
Exchange Act. The Participants do not
believe that the proposed plan
amendment introduces terms that are
unreasonably discriminatory for the
purposes of Section 11A(c)(1)(D) of the
Exchange Act.
F. Written Understanding or Agreements
relating to Interpretation of, or
Participation in, Plan
jdjones on DSK8KYBLC1PROD with NOTICES
Not applicable.
G. Approval by Sponsors in Accordance
with Plan
See Item I(C) above.
H. Description of Operation of Facility
Contemplated by the Proposed
Amendment
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B. Manner of Collecting, Processing,
Sequencing, Making Available and
Disseminating Last Sale Information
Not applicable.
C. Manner of Consolidation
Not applicable.
D. Standards and Methods Ensuring
Promptness, Accuracy and
Completeness of Transaction Reports
Not applicable.
E. Rules and Procedures Addressed to
Fraudulent or Manipulative
Dissemination
Not applicable.
F. Terms of Access to Transaction
Reports
Not applicable.
G. Identification of Marketplace of
Execution
Not Applicable.
Not applicable.
VerDate Mar<15>2010
K. Method and Frequency of Processor
Evaluation
Not applicable.
II. Rule 601(a) (Solely in its Application
to the Amendments to the CTA Plan)
The amendment proposes to add
EDGA Exchange, Inc. and EDGX
Exchange, Inc. as new Participants to
each Plan.
Not applicable.
J. Method of Determination and
Imposition, and Amount of, Fees and
Charges
See Item I(A) above.
III. Solicitation of Comments
Interested persons are invited to
submit written data, views, and
arguments concerning the foregoing,
including whether the proposed
Amendments are consistent with the
Act. Comments may be submitted by
any of the following methods:
Electronic Comments
• Use the Commission’s Internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an e-mail to rulecomments@sec.gov. Please include File
Number SR–CTA/CQ–2010–03 on the
subject line.
Paper Comments
• Send paper comments in triplicate
to Elizabeth M. Murphy, Secretary,
Securities and Exchange Commission,
100 F Street, NE., Washington, DC
20549–1090.
PO 00000
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All submissions should refer to File
Number SR–CTA/CQ–2010–03. This file
number should be included on the
subject line if e-mail is used. To help the
Commission process and review your
comments more efficiently, please use
only one method. The Commission will
post all comments on the Commission’s
Internet Web site (https://www.sec.gov/
rules/sro.shtml). Copies of the
submission, all subsequent
amendments, all written statements
with respect to the Amendments that
are filed with the Commission, and all
written communications relating to the
Amendments between the Commission
and any person, other than those that
may be withheld from the public in
accordance with the provisions of
5 U.S.C. 552, will be available for
website viewing and printing in the
Commission’s Public Reference Room,
100 F Street, NE., Washington, DC
20549, on official business days
between the hours of 10 a.m. and 3 p.m.
Copies of the Amendments also will be
available for inspection and copying at
the principal office of the CTA. All
comments received will be posted
without change; the Commission does
not edit personal identifying
information from submissions. You
should submit only information that
you wish to make available publicly. All
submissions should refer to File
Number SR–CTA/CQ–2010–03 and
should be submitted on or before
October 12, 2010.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.5
Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010–23360 Filed 9–17–10; 8:45 am]
BILLING CODE 8010–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Investment Company Act Release No.
29416; File No. 812–13714]
American Capital, Ltd.; Notice of
Application
September 14, 2010.
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:
Applicant, American Capital, Ltd.
requests an order approving a proposal
to grant certain stock options to
SUMMARY:
5 17
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Federal Register / Vol. 75, No. 181 / Monday, September 20, 2010 / Notices
jdjones on DSK8KYBLC1PROD with NOTICES
directors who are not also employees or
officers of the applicant (the ‘‘Nonemployee Directors’’) under its 2009
Stock Option Plan (the ‘‘Plan’’).
DATES: Filing Dates: The application was
filed on November 5, 2009, and
amended on January 25, 2010, and
September 7, 2010. 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 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 7, 2010, 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:
Deepak T. Pai, Senior Counsel, at (202)
551–6876, or Michael W. Mundt,
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
may be obtained via the Commission’s
Web site by searching for the file
number, or for an applicant using the
Company name box, at https://
www.sec.gov/search/search.htm, or by
calling (202) 551–8090.
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
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 Mar<15>2010
15:00 Sep 17, 2010
Jkt 220001
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 with one current
vacancy. 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’’). All
of the current Non-employee Directors
are Disinterested Directors. The Board
approved the Plan at a meeting of the
Board held on April 6, 2009 and
applicant’s stockholders approved the
Plan at the annual meeting of
stockholders held on June 11, 2009.3
3. Applicant’s officers, employees,
and Non-employee Directors are eligible
to receive options under the Plan. Under
the Plan, a maximum of 750,000 shares
of applicant’s common stock, in the
aggregate, may be issued to Nonemployee Directors and options to
purchase 93,750 shares of applicant’s
common stock may be issued to any one
Non-employee Director. On the date that
the Commission issues an order on the
application (‘‘Order Date’’), each of the
seven Non-employee Directors serving
on the Board as of June 11, 2009 will be
granted options to purchase 93,750
shares of applicant’s common stock (the
‘‘Initial Grants’’), provided that the Non2 The Non-employee Directors receive a $100,000
per year retainer payment and $3,000 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.
3 At a Board meeting held on January 14, 2010,
the Board approved an amendment to the Plan. At
such meeting, the Board determined that the
amendment did not require stockholder approval
under Section 10 of the Plan or applicable law or
NASDAQ listing requirements. The Company
acknowledges that the Commission is not taking a
position as to whether the Company is required to
seek stockholder approval for the amendment.
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57311
employee Director is a member of the
Board on the Order Date. The options
issued under the Initial Grants will vest
in three equal parts on each of the first
three anniversaries of June 11, 2009.
Any person who becomes a Nonemployee Director after June 11, 2009
will be entitled to receive options to
purchase 93,750 shares of applicant’s
common stock (the ‘‘Other Grants’’), if
and to the extent that there are options
available for grant to Non-employee
Directors under the Plan. Each Other
Grant will be effective 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, or if no such market value exists,
the current net asset value (‘‘NAV’’) per
share of applicant’s common stock on
the date of the issuance of the option
(‘‘Fair Market Value’’).4 The Initial
Grants will expire on June 11, 2019, and
the Other Grants will expire on the
tenth anniversary of the date the person
becomes a Non-employee Director.
Options granted under the Plan 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 (as defined in the Plan) 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 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
4 Under the Plan, ‘‘Fair Market Value’’ is defined
as follows: (a) if applicant’s common stock is listed
on any established exchange or traded on the
NASDAQ Global Select Market, the closing sales
price of the common stock as quoted on such
exchange or market (or if the common stock is
traded on multiple exchanges or markets, the
exchange or market with the greatest volume of
trading in the common stock) on the date on which
an option is granted under the Plan, as reported in
The Wall Street Journal or such other source as the
Board deems reliable; or (b) in the absence of
closing sales prices on such exchanges or markets
for the common stock, the Fair Market Value will
be determined in good faith by the Board, but in
no event shall be less than the current NAV per
share of common stock.
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57312
Federal Register / Vol. 75, No. 181 / Monday, September 20, 2010 / Notices
jdjones on DSK8KYBLC1PROD with NOTICES
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 stock option
plans that exclude Non-employee
Directors as participants (the ‘‘Employee
Plans’’), applicant’s 2006 stock option
plan (the ‘‘2006 Option Plan’’),
applicant’s 2007 stock option plan (the
‘‘2007 Option Plan’’), and applicant’s
2008 stock option plan (the ‘‘2008
Option Plan’’). Non-employee Directors
have been eligible to receive options
under applicant’s two Disinterested
Director stock option plans (the
‘‘Disinterested Director Plans’’), the 2006
Option Plan, the 2007 Option Plan and
the 2008 Option Plan (collectively, the
2008 Option Plan, the 2007 Option Plan,
the 2006 Option Plan, the Disinterested
Director Plans and the Employee Plans
are the ‘‘Other Plans’’). As of August 18,
2010, applicant had 350,309,123 shares
of common stock outstanding.5 The
750,000 shares of applicant’s common
stock that may be issued to Nonemployee Directors under the Plan
represent 0.2% of applicant’s
outstanding voting securities as of
August 18, 2010. As of August 18, 2010,
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 33,553,256 shares of
applicant’s common stock, or 9.5% of
applicant’s outstanding voting
securities. As of August 18, 2010,
applicant had no outstanding warrants,
options, or rights 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.
Applicant’s Legal Analysis
1. Section 63(3) of the Act permits a
BDC to sell its common stock at a price
below current NAV 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 voting securities at the
date of the issuance of the options, or if
5 Applicant’s common stock constitutes the only
voting security of applicant currently outstanding.
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15:00 Sep 17, 2010
Jkt 220001
no market value exists, the current NAV
of the underlying 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 any 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
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and to attract and retain the highly
experienced, successful and dedicated
business and professional people who
are critical to applicant’s success as a
BDC.
4. As noted above, 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 33,553,256 shares of
applicant’s common stock, or 9.5% of
applicant’s outstanding voting
securities, as of August 18, 2010.
However, applicant represents that 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 Plan
and the Other Plans would be
70,981,813 shares of applicant’s
common stock, or 20.2% of applicant’s
outstanding voting securities, as of
August 18, 2010. Applicant states that to
the extent the number of shares of
common stock that would be issued
upon the exercise of options issued
under the Other Plans and the Plan
exceeds 15% of applicant’s outstanding
voting securities, applicant will comply
with the 20% limit in section 61(a)(3) of
the Act.
5. 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 NAV 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. 2010–23408 Filed 9–17–10; 8:45 am]
BILLING CODE 8010–01–P
SECURITIES AND EXCHANGE
COMMISSION
Sunshine Act Meeting
Notice is hereby given, pursuant to
the provisions of the Government in the
Sunshine Act, Public Law 94–409, that
the Securities and Exchange
Commission will hold a Closed Meeting
on Thursday, September 23, 2010 at 2
p.m.
Commissioners, Counsel to the
Commissioners, the Secretary to the
Commission, and recording secretaries
will attend the Closed Meeting. Certain
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]]>Agencies
[Federal Register Volume 75, Number 181 (Monday, September 20, 2010)]
[Notices]
[Pages 57310-57312]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2010-23408]
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SECURITIES AND EXCHANGE COMMISSION
[Investment Company Act Release No. 29416; File No. 812-13714]
American Capital, Ltd.; Notice of Application
September 14, 2010.
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: Summary of Application: Applicant, American Capital, Ltd.
requests an order approving a proposal to grant certain stock options
to
[[Page 57311]]
directors who are not also employees or officers of the applicant (the
``Non-employee Directors'') under its 2009 Stock Option Plan (the
``Plan'').
DATES: Filing Dates: The application was filed on November 5, 2009, and
amended on January 25, 2010, and September 7, 2010. 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
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 7, 2010, 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: Deepak T. Pai, Senior Counsel, at
(202) 551-6876, or Michael W. Mundt, 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 may be obtained via the
Commission's Web site by searching for the file number, or for an
applicant using the Company name box, at https://www.sec.gov/search/search.htm, or by calling (202) 551-8090.
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 with
one current vacancy. 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''). All of the current
Non-employee Directors are Disinterested Directors. The Board approved
the Plan at a meeting of the Board held on April 6, 2009 and
applicant's stockholders approved the Plan at the annual meeting of
stockholders held on June 11, 2009.\3\
---------------------------------------------------------------------------
\2\ The Non-employee Directors receive a $100,000 per year
retainer payment and $3,000 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.
\3\ At a Board meeting held on January 14, 2010, the Board
approved an amendment to the Plan. At such meeting, the Board
determined that the amendment did not require stockholder approval
under Section 10 of the Plan or applicable law or NASDAQ listing
requirements. The Company acknowledges that the Commission is not
taking a position as to whether the Company is required to seek
stockholder approval for the amendment.
---------------------------------------------------------------------------
3. Applicant's officers, employees, and Non-employee Directors are
eligible to receive options under the Plan. Under the Plan, a maximum
of 750,000 shares of applicant's common stock, in the aggregate, may be
issued to Non-employee Directors and options to purchase 93,750 shares
of applicant's common stock may be issued to any one Non-employee
Director. On the date that the Commission issues an order on the
application (``Order Date''), each of the seven Non-employee Directors
serving on the Board as of June 11, 2009 will be granted options to
purchase 93,750 shares of applicant's common stock (the ``Initial
Grants''), provided that the Non-employee Director is a member of the
Board on the Order Date. The options issued under the Initial Grants
will vest in three equal parts on each of the first three anniversaries
of June 11, 2009. Any person who becomes a Non-employee Director after
June 11, 2009 will be entitled to receive options to purchase 93,750
shares of applicant's common stock (the ``Other Grants''), if and to
the extent that there are options available for grant to Non-employee
Directors under the Plan. Each Other Grant will be effective 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, or if no such
market value exists, the current net asset value (``NAV'') per share of
applicant's common stock on the date of the issuance of the option
(``Fair Market Value'').\4\ The Initial Grants will expire on June 11,
2019, and the Other Grants will expire on the tenth anniversary of the
date the person becomes a Non-employee Director. Options granted under
the Plan 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 (as defined in the Plan) 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
[[Page 57312]]
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, ``Fair Market Value'' is defined as follows:
(a) if applicant's common stock is listed on any established
exchange or traded on the NASDAQ Global Select Market, the closing
sales price of the common stock as quoted on such exchange or market
(or if the common stock is traded on multiple exchanges or markets,
the exchange or market with the greatest volume of trading in the
common stock) on the date on which an option is granted under the
Plan, as reported in The Wall Street Journal or such other source as
the Board deems reliable; or (b) in the absence of closing sales
prices on such exchanges or markets for the common stock, the Fair
Market Value will be determined in good faith by the Board, but in
no event shall be less than the current NAV per share of common
stock.
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5. Applicant's officers and employees are eligible or have been
eligible to receive options under stock option plans that exclude Non-
employee Directors as participants (the ``Employee Plans''),
applicant's 2006 stock option plan (the ``2006 Option Plan''),
applicant's 2007 stock option plan (the ``2007 Option Plan''), and
applicant's 2008 stock option plan (the ``2008 Option Plan''). Non-
employee Directors have been eligible to receive options under
applicant's two Disinterested Director stock option plans (the
``Disinterested Director Plans''), the 2006 Option Plan, the 2007
Option Plan and the 2008 Option Plan (collectively, the 2008 Option
Plan, the 2007 Option Plan, the 2006 Option Plan, the Disinterested
Director Plans and the Employee Plans are the ``Other Plans''). As of
August 18, 2010, applicant had 350,309,123 shares of common stock
outstanding.\5\ The 750,000 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 18, 2010. As of
August 18, 2010, 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 33,553,256 shares of applicant's common stock, or 9.5% of
applicant's outstanding voting securities. As of August 18, 2010,
applicant had no outstanding warrants, options, or rights 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.
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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 NAV 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 voting securities at
the date of the issuance of the options, or if no market value exists,
the current NAV of the underlying 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 any 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 experienced, successful and dedicated business and
professional people who are critical to applicant's success as a BDC.
4. As noted above, 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 33,553,256 shares of applicant's
common stock, or 9.5% of applicant's outstanding voting securities, as
of August 18, 2010. However, applicant represents that 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 Plan and the Other Plans
would be 70,981,813 shares of applicant's common stock, or 20.2% of
applicant's outstanding voting securities, as of August 18, 2010.
Applicant states that to the extent the number of shares of common
stock that would be issued upon the exercise of options issued under
the Other Plans and the Plan exceeds 15% of applicant's outstanding
voting securities, applicant will comply with the 20% limit in section
61(a)(3) of the Act.
5. 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
NAV 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. 2010-23408 Filed 9-17-10; 8:45 am]
BILLING CODE 8010-01-P
