

[Federal Register: December 31, 2007 (Volume 72, Number 249)]
[Notices]               
[Page 74366-74370]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr31de07-94]                         


[[Page 74366]]

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SECURITIES AND EXCHANGE COMMISSION

[Investment Company Act Release No. 28082; 812-13411]

 
Main Street Capital Corporation, et al.; Notice of Application

December 21, 2007.
AGENCY: Securities and Exchange Commission (``Commission'').

ACTION: Notice of an application for an order under sections 6(c), 
57(c) and 57(i) of the Investment Company Act of 1940 (the ``Act'') for 
an exemption from sections 18(a), 23(a), 23(b), 57(a)(1), 57(a)(2), 
61(a) and 63 of the Act, and under sections 57(a)(4) and 57(i) of the 
Act and rule 17d-1 under the Act permitting certain joint transactions 
otherwise prohibited by section 57(a)(4) of the Act.

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Summary of the Application: Applicants, Main Street Capital Corporation 
(the ``Company''), Main Street Mezzanine Fund, LP (``MSMF''), Main 
Street Capital Partners, LLC (the ``Investment Adviser''), and Main 
Street Mezzanine Management, LLC (the ``General Partner''), request an 
order to permit: (1) A business development company and its wholly-
owned subsidiaries to engage in certain transactions that otherwise 
would be permitted if the business development company and its 
subsidiaries were one company, (2) the business development company to 
adhere to a modified asset coverage requirement, and (3) the business 
development company to issue restricted shares of its common stock 
under the terms of its employee and director compensation plans.

Filing Dates: The application was filed on July 27, 2007, and amended 
on December 4, 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 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 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 January 15, 2008, and should be accompanied by proof of service 
on the 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, c/o Vincent D. 
Foster, Chief Executive Officer, Main Street Capital Corporation, 1300 
Post Oak Boulevard, Suite 800, Houston, TX 77056.

FOR FURTHER INFORMATION CONTACT: Jean E. Minarick, Senior Counsel, at 
(202) 551-6811, 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 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).

Applicants' Representations

    1. The Company, a Maryland corporation organized in March 2007, is 
an internally managed, non-diversified, closed-end investment company 
that has elected to be regulated as a business development company 
(``BDC'') under the Act.\1\ The Company will operate as a specialty 
investment company focused on providing customized financing solutions 
to companies with annual revenues between $10 million and $100 million. 
The Company's investment objective is to maximize total return by 
generating current income from debt investments and realizing capital 
appreciation from equity-related investments. The Company's investments 
generally will range in size from $2 million to $15 million. Shares of 
the Company's common stock are traded on The NASDAQ Global Select 
Market under the symbol ``MAIN.'' After the IPO which was completed in 
October 2007, there were 8,826,726 shares of the Company's common stock 
outstanding. As of October 2, 2007, the Company had 13 employees.
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    \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.
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    2. The Company has a six member board of directors (the ``Board'') 
of whom two are ``interested persons'' of the Company within the 
meaning of section 2(a)(19) of the Act and four are non-interested 
persons (``Non-interested Directors''). The Company has four directors 
who are neither employees nor officers of the Company (the ``Non-
Employee Directors'').
    3. MSMF, a Delaware limited partnership and an indirect wholly-
owned subsidiary of the Company, is a small business investment company 
(``SBIC'') licensed under the Small Business Administration (``SBA'') 
to operate under the Small Business Investment Act of 1958 (``SBIA''). 
MSMF relies on section 3(c)(7) of the Act. The General Partner, which 
is a wholly-owned subsidiary of the Company, owns a 0.7% general 
partnership interest in MSMF. The Investment Adviser, a Delaware 
limited liability company and a wholly-owned subsidiary of the Company, 
is the investment adviser to MSMF.
    4. The Company may in the future establish additional wholly-owned 
subsidiaries (together with MSMF, the ``Subsidiaries''), including 
Subsidiaries licensed by the SBA to operate under the SBIA as SBICs 
(``SBIC Subsidiaries'').
    5. The Company believes that its successful performance depends on 
its ability to offer compensation packages to its professionals that 
are competitive with those offered by other investment management 
businesses. The Company believes its ability to offer compensation 
plans providing for the periodic issuance of shares of restricted stock 
(i.e., stock that, at the time of issuance, is subject to certain 
forfeiture restrictions, and thus is restricted as to its 
transferability until such forfeiture restrictions have lapsed) (the 
``Restricted Stock'') is vital to its future growth and success. The 
Company wishes to adopt equity-based compensation plans for its Non-
Employee Directors (the ``Director Plan'') and its employees and 
employees of its Subsidiaries (the ``Employee Plan'', and together the 
``Plans'') (the ``Participants'').
    6. The Plans will authorize the issuance of shares of Restricted 
Stock subject to certain forfeiture restrictions. These restrictions 
may relate to continued employment or service on the Company's Board, 
as the case may be (lapsing either on an annual or other periodic basis 
or on a ``cliff'' basis, i.e., at the end of a stated period of time), 
the performance of the Company, or other restrictions deemed by the 
Board to be appropriate. The Restricted Stock will be subject to 
restrictions on transferability and other restrictions as required by 
the Board. Except to the extent restricted under the terms of a Plan, a 
Participant granted Restricted Stock will have all the rights of any 
other shareholder, including the right to vote the Restricted Stock and 
the right

[[Page 74367]]

to receive dividends. During the restriction period, the Restricted 
Stock generally may not be sold, transferred, pledged, hypothecated, 
margined, or otherwise encumbered by the Participant. Except as the 
Board otherwise determines, upon termination of a Participant's 
employment or service on the Board during the applicable restriction 
period, Restricted Stock for which forfeiture restrictions have not 
lapsed at the time of such termination shall be forfeited.
    7. The maximum number of shares that may be issued under the Plans 
will be 10% of the outstanding shares of the Company's common stock on 
the effective date of the Plans plus 10% of the number of shares of the 
Company's common stock issued or delivered by the Company (other than 
pursuant to compensation plans) during the term of the Plans.\2\ The 
Employee Plan limits the total number of shares that may be awarded to 
any single Participant in a single year to 500,000 shares. In addition, 
no Participant may be granted more than 25% of the shares reserved for 
issuance under the Plans. The Employee Plan will be administered by the 
Board, which will award shares of Restricted Stock to the Participants 
from time to time as part of the Participants' compensation based on a 
Participant's actual or expected performance and value to the Company.
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    \2\ For purposes of calculating compliance with this limit, the 
Company will count as Restricted Stock all shares of the Company's 
common stock that are issued pursuant to the Plans less any shares 
that are forfeited back to the Company and cancelled as a result of 
forfeiture restrictions not lapsing.
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    8. Under the Director Plan, the Company's Non-Employee Directors 
will each receive a grant of $30,000 worth of shares of Restricted 
Stock at the beginning of each one-year term of service on the Board, 
for which forfeiture restrictions will lapse at the end of that year. 
The Director Plan will be administered by the Board, and the grants of 
Restricted Stock under the Director Plan will be automatic and will not 
be changed without Commission approval.
    9. The Plans have been approved by the Board. The Plans will be 
submitted for approval to the Company's shareholders, and will become 
effective upon such approval, subject to the issuance of the requested 
order.

Applicants' Legal Analysis

A. Relief for the Company and Its Subsidiaries To Engage in Certain 
Transactions and for the Company To Adhere to a Modified Asset Coverage 
Requirement

    1. Applicants request an order pursuant to sections 6(c), 57(c) and 
57(i) of the Act and rule 17d-1 under the Act granting exemptions from 
sections 18(a), 57(a)(1), 57(a)(2) and 61(a) of the Act and permitting 
certain transactions otherwise prohibited by section 57(a)(4) of the 
Act to permit the Company and the Subsidiaries to engage in certain 
transactions that otherwise would be permitted if the Company and the 
Subsidiaries were one company and to permit the Company to adhere to a 
modified asset coverage requirement.
    2. Section 18(a) of the Act prohibits a registered closed-end 
investment company from issuing any class of senior security or selling 
any such security of which it is the issuer unless the company complies 
with the asset coverage requirements set forth in that section. Section 
61(a) of the Act makes section 18 applicable to BDCs, with certain 
modifications. Section 18(k) exempts an investment company operating as 
an SBIC from the asset coverage requirements for senior securities 
representing indebtedness that are contained in section 18(a)(1)(A) and 
(B).
    3. Applicants state that a question exists as to whether the 
Company must comply with the asset coverage requirements of section 
18(a) (as modified by section 61(a)) solely on an individual basis or 
whether the Company must also comply with the asset coverage 
requirements on a consolidated basis because the Company may be deemed 
to be an indirect issuer of any class of senior securities issued by 
MSMF or another SBIC Subsidiary. Applicants state that they wish to 
treat MSMF and other SBIC Subsidiaries as if each were a BDC subject to 
sections 18 and 61 of the Act. Applicants state that companies 
operating under the SBIA, such as MSMF, will be subject to the SBA's 
substantial regulation of permissible leverage in its capital 
structure.
    4. Section 6(c) of the Act, in relevant part, permits the 
Commission to exempt any transaction or class of transactions from any 
provision of the Act if, and to the extent that, such exemption is 
necessary or appropriate in the public interest and consistent with the 
protection of investors and the purposes fairly intended by the policy 
and provisions of the Act. Applicants state that the requested relief 
satisfies the section 6(c) standard. Applicants contend that, to the 
extent that the Company is entitled to rely on section 18(k) for an 
exemption from the asset coverage requirements of section 18(a) and 
61(a), there is no policy reason to deny the benefit of that exemption 
when the Company consolidates its assets with those of MSMF and other 
SBIC Subsidiaries for the purpose of compliance with those 
requirements.
    5. Sections 57(a)(1) and (2) of the Act generally prohibit, with 
certain exceptions, sales or purchases or other property between BDCs 
and certain of their affiliates as described in section 57(b) of the 
Act. Section 57(b) includes a person, directly or indirectly, either 
controlling, controlled by or under common control of the BDC. 
Applicants state that the Company owns or will directly or indirectly 
own more than 99.9% of the voting securities of each Subsidiary and 
each Subsidiary is or will be under the common control of the Company. 
Applicants further state that any purchase or sale between (a) the 
Company and one or more subsidiaries, (b) Subsidiaries and downstream 
controlled affiliates of the Company and another subsidiary and (c) the 
Company and a controlled portfolio affiliate of a Subsidiary may be 
prohibited. Applicants submit that the requested relief is to permit 
the Company and its Subsidiaries, all of whom are owned, directly or 
indirectly, by the shareholders of the Company, to do that which they 
would otherwise be permitted to do if they were one company.
    6. Section 57(c) provides that the Commission will exempt a 
proposed transaction from the terms of the proposed transactions, 
including the consideration to be paid or received, if they are 
reasonable and fair and do not involve overreaching of any person 
concerned, and the proposed transaction is consistent with the policy 
of the BDC concerned and the general purposes of the Act. Applicants 
submit that the requested relief meets this standard.
    7. Section 17(d) of the Act and rule 17d-1 under the Act prohibit 
affiliated persons of a registered investment company, or an affiliated 
person of such person, acting as principal, from participating in any 
joint transaction or arrangement in which the registered company or a 
company it controls is a participant, unless the Commission has issued 
an order authorizing the arrangement. Section 57(a)(4) of the Act 
imposes substantially the same prohibitions on joint transactions 
involving BDCs and certain affiliates of their affiliates as described 
in section

[[Page 74368]]

57(b). Section 57(i) of the Act provides that rules and regulations 
under sections 17(a) and 17(d) and rule 17d-1 will apply to 
transactions subject to section 57(a)(4) in the absence of rules under 
the section. The Commission has not adopted rules under section 
57(a)(4) with respect to joint transactions and, accordingly, the 
standard set forth in rule 17d-1 governs applicants' request for 
relief.
    8. Applicants state that a joint transaction in which a Subsidiary 
and the Company or another Subsidiary are participants may be 
prohibited under section 57(a)(4) because the Company would not be a 
controlled affiliate of the Subsidiaries. Applicants request relief 
under sections 57(i) and rule 17d-1 to permit joint transactions in 
which a Subsidiary and the Company or another Subsidiary participate to 
the extent that such transactions would not be prohibited if the 
Subsidiaries participating in the transactions were deemed to be part 
of the Company and not separate companies.
    9. In determining whether to grant an order under section 57(i) and 
rule 17d-1, the Commission considers whether the participation of the 
BDC in the joint transaction is consistent with the provisions, 
policies and purposes of the Act and the extent to which such 
participation is on a basis different from or less advantageous than 
that of other participants in the transaction. Applicants state that 
the standard is satisfied because the requested relief would be simply 
to permit the Company and its Subsidiaries to conduct their business as 
if they were one company.

B. Relief for the Company To Issue Restricted Stock

Sections 23(a) and (b), Section 63
    1. Under section 63 of the Act, the provisions of section 23(a) of 
the Act generally prohibiting a registered closed-end investment 
company from issuing securities for services or for property other than 
cash or securities are made applicable to BDCs. This provision would 
prohibit the issuance of Restricted Stock as a part of the Plans.
    2. Section 23(b) generally prohibits a closed-end investment 
company from selling its common stock at a price below its current net 
asset value (``NAV''). Section 63(2) makes section 23(b) applicable to 
BDCs unless certain conditions are met. Because Restricted Stock that 
would be granted under the Plans would not meet the terms of section 
63(2), sections 23(b) and 63 prohibit the issuance of the Restricted 
Stock.
    3. Section 6(c) provides that the Commission may, by order upon 
application, conditionally or unconditionally exempt any person, 
security, or transaction, or any class or classes of persons, 
securities or transactions, from any provision of the Act, if and to 
the extent that the exemption is necessary or appropriate in the public 
interest and consistent with the protection of investors and the 
purposes fairly intended by the policy and provisions of the Act.
    4. The Company requests an order pursuant to section 6(c) of the 
Act granting an exemption from the provisions of sections 23(a) and (b) 
and section 63 of the Act. The Company states that the concerns 
underlying those sections include: (i) Preferential treatment of 
investment company insiders and the use of options and other rights by 
insiders to obtain control of the investment company; (ii) complication 
of the investment company's structure that makes it difficult to 
determine the value of the company's shares; and (iii) dilution of 
shareholders' equity in the investment company. The Company states that 
the Plans do not raise the concern about preferential treatment of the 
Company's insiders because the Plans are bona fide compensation plans 
of the type that is common among corporations generally. In addition, 
section 61(a)(3)(B) of the Act permits a BDC to issue to its officers, 
directors and employees, pursuant to an executive compensation plan, 
warrants, options and rights to purchase the BDC's voting securities, 
subject to certain requirements. The Company states that, for reasons 
that are unclear, section 61 and its legislative history do not address 
the issuance by a BDC of restricted stock as incentive compensation. 
The Company states, however, that the issuance of Restricted Stock is 
substantially similar, for purposes of investor protection under the 
Act, to the issuance of warrants, options, and rights as contemplated 
by section 61. The Company also asserts that the Plans would not become 
a means for insiders to obtain control of the Company because the 
number of shares of the Company issuable under the Plans would be 
limited as set forth in the application. The Company's current 
intention is to issue only shares of Restricted Stock as incentive 
compensation; however, if the Company issues stock options in the 
future, it will do so pursuant to section 61. Moreover, no individual 
Participant could be issued more than 25% of the shares reserved for 
issuance under the Plans.
    5. The Company further states that the Plans will not unduly 
complicate the Company's structure because equity-based employee 
compensation arrangements are widely used among corporations and 
commonly known to investors. The Company notes that the Plans will be 
submitted to the Company's shareholders for their approval. The Company 
represents that a concise, ``plain English'' description of the Plans, 
including their potential dilutive effect, will be provided in the 
proxy materials that will be submitted to the Company's shareholders. 
The Company also states that it will comply with the proxy disclosure 
requirements in Item 10 of Schedule 14A under the Securities Exchange 
Act of 1934 (the ``Exchange Act''). The Company further notes that the 
Plans will be disclosed to investors in accordance with the 
requirements of the Form N-2 registration statement for closed-end 
investment companies, and pursuant to the standards and guidelines 
adopted by the Financial Accounting Standards Board for operating 
companies. In addition, the Company will comply with the disclosure 
requirements for executive compensation plans applicable to operating 
companies under the Exchange Act.\3\ The Company thus concludes that 
the Plans will be adequately disclosed to investors and appropriately 
reflected in the market value of the Company's shares.
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    \3\ In addition, Applicant will comply with the amendments to 
the disclosure requirements for executive and director compensation, 
related party transactions, director independence and other 
corporate governance matters, and security ownership of officers and 
directors to the extent adopted and applicable to BDCs. See 
Executive Compensation and Related Party Disclosure, Release No. 34-
53185 (Jan. 27, 2006).
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    6. The Company acknowledges that, while awards granted under the 
Plans would have a dilutive effect on the shareholders' equity in the 
Company, that effect would be outweighed by the anticipated benefits of 
the Plans to the Company and its shareholders. The Company asserts that 
it needs the flexibility to provide the requested equity-based employee 
compensation in order to be able to compete effectively with other 
financial services firms for talented professionals. These 
professionals, the Company suggests, in turn are likely to increase the 
Company's performance and shareholder value. The Company also asserts 
that equity-based compensation would more closely align the interests 
of the Company's employees with those of the Company's shareholders. 
The Company believes that the granting of shares of Restricted Stock to 
Non-Employee Directors under the Director Plan is fair and reasonable 
because of

[[Page 74369]]

the skills and experience that such directors provide to the Company. 
Such skills and experience are necessary for the management and 
oversight of the Company's investments and operations. The Company 
believes that granting the shares of Restricted Stock will provide 
significant incentives for Non-Employee Directors to remain on the 
Board and to devote their best efforts to the success of the Company's 
business in the future. The issuance of shares of Restricted Stock will 
also provide a means for the Company's Non-Employee Directors to 
increase their ownership interest in the Company, thereby helping to 
ensure a close identification of their interests with those of the 
Company and its shareholders.
    7. In addition, the Company states that the Company's shareholders 
will be further protected by the conditions to the requested order that 
assure continuing oversight of the operation of the Plans by the 
Company's Board. The full Board and the Committee will review 
periodically the potential impact that the issuance of Restricted Stock 
could have on the Company's earnings and NAV per share, such review to 
take place prior to any decisions to issue Restricted Stock under the 
Plans, but in no event less frequently than annually. Adequate 
procedures and records will be maintained to permit such review. The 
Board will be authorized to take appropriate steps to ensure that the 
grant of Restricted Stock under the Plans would not have an effect 
contrary to the interests of the Company's shareholders. This authority 
will include the authority to prevent or limit the grant of additional 
Restricted Stock under the Plans.
Section 57(a)(4), Rule 17d-1
    8. Section 57(a) proscribes certain transactions between a BDC and 
persons related to the BDC in the manner described in section 57(b) 
(``57(b) persons''), absent a Commission order. Section 57(a)(4) 
generally prohibits a 57(b) person from effecting a transaction in 
which the BDC is a joint participant absent such an order. Rule 17d-1, 
made applicable to BDCs by section 57(i), proscribes participation in a 
``joint enterprise or other joint arrangement or profit-sharing plan,'' 
which includes a stock option or purchase plan. Employees and directors 
of a BDC are 57(b) persons. Thus, the issuance of shares of Restricted 
Stock could be deemed to involve a joint transaction involving a BDC 
and a 57(b) person in contravention of section 57(a)(4). Rule 17d-1(b) 
provides that, in considering relief pursuant to the rule, the 
Commission will consider (i) whether the participation of the BDC in a 
joint enterprise is consistent with the Act's policies and purposes and 
(ii) the extent to which that participation is on a basis different 
from or less advantageous than that of other participants.
    9. The Company requests an order pursuant to section 57(a)(4) and 
rule 17d-1 to permit the Plans. The Company states that the Plans, 
although benefiting the Participants and the Company in different ways, 
are in the interests of the Company's shareholders because the Plans 
will help the Company attract and retain talented professionals, help 
align the interests of the Company's employees with those of its 
shareholders, and in turn help produce a better return to the Company's 
shareholders. Thus, the Company asserts that the Plans are consistent 
with the policies and purposes of the Act and that the Company's 
participation in the Plans will be on a basis no less advantageous than 
that of other participants.

Applicants' Conditions

    Applicants agree that the order granting the requested relief will 
be subject to the following conditions:

A. Relief for the Company and Its Subsidiaries To Engage in Certain 
Transactions and for the Company To Adhere to a Modified Asset Coverage 
Requirement

    1. The Company will at all times be the sole limited partner of any 
Subsidiary and the sole owner of the Subsidiary's general partner, or 
otherwise own and hold beneficially, all of the outstanding voting 
securities or other equity interests in the Subsidiary.
    2. No person shall serve or act as investment adviser to MSMF or 
another Subsidiary unless the Company's Board and shareholders of the 
Company shall have taken the action with respect thereto also required 
to be taken by the functional equivalent of the board of directors of 
MSMF or another Subsidiary and shareholders of MSMF or another 
Subsidiary as if MSMF or another Subsidiary were a BDC.
    3. The managers of a Subsidiary will be the Company, a Subsidiary 
of the Company, or a person elected or appointed by the Company.
    4. The Company will not issue or sell any senior security and the 
Company will not cause or permit MSMF or any other SBIC Subsidiary to 
issue or sell any senior security of which the Company, MSMF or any 
other SBIC Subsidiary is the issuer except to the extent permitted by 
section 18 (as modified for BDCs by section 61) of the Act; provided 
that immediately after issuance or sale by any of the Company, MSMF or 
any other SBIC Subsidiary of any such senior security, the Company 
individually and on a consolidated basis, shall have the asset coverage 
required by section 18(a) of the Act (as modified by section 61(a)), 
except that, in determining whether the Company on a consolidated basis 
has the asset coverage required by section 18(a) of the Act (as 
modified by section 61(a)), any senior securities representing 
indebtedness of MSMF or another SBIC Subsidiary shall not be considered 
senior securities and, for purposes of the definition of ``asset 
coverage'' in section 18(h), will be treated as indebtedness not 
represented by senior securities.

B. Relief for the Company To Issue Restricted Stock

    1. The Employee Plan will be authorized in accordance with section 
61(a)(3)(A)(iv) of the Act, and each Plan will be approved by the 
Company's shareholders.
    2. Each issuance of Restricted Stock to employees, officers and 
Non-Employee Directors will be approved by the Required Majority, as 
defined in section 57(o) of the Act, of the Company's directors on the 
basis that such issuance is in the best interests of the Company and 
its shareholders.
    3. The amount of voting securities that would result from the 
exercise of all of the Company's outstanding warrants, options, and 
rights, together with any Restricted Stock issued pursuant to the 
Plans, at the time of issuance shall not exceed 25% of the outstanding 
voting securities of the Company, except that if the amount of voting 
securities that would result from the exercise of all of the Company's 
outstanding warrants, options, and rights issued to the Company's 
directors, officers, and employees, together with any Restricted Stock 
issued pursuant to the Plans, would exceed 15% of the outstanding 
voting securities of the Company, then the total amount of voting 
securities that would result from the exercise of all outstanding 
warrants, options, and rights, together with any Restricted Stock 
issued pursuant to the Plans, at the time of issuance shall not exceed 
20% of the outstanding voting securities of the Company.
    4. The maximum amount of Restricted Stock that may be issued under 
the Plans will be 10% of the outstanding shares of common stock of the 
Company on the effective date of the Plans plus 10% of the number of 
shares of the Company's common stock issued or delivered by the Company 
(other than pursuant to compensation plans) during the term of the 
Plans.

[[Page 74370]]

    5. Both the full Board and the Committee will review periodically 
the potential impact that the issuance of Restricted Stock under the 
Plans could have on the Company's earnings and NAV per share, such 
review to take place prior to any decisions to grant Restricted Stock 
under the Plans, but in no event less frequently than annually. 
Adequate procedures and records will be maintained to permit such 
review. The Board will be authorized to take appropriate steps to 
ensure that the grant of Restricted Stock under the Plans would not 
have an effect contrary to the interests of the Company's shareholders. 
This authority will include the authority to prevent or limit the 
granting of additional Restricted Stock under the Plans. All records 
maintained pursuant to this condition will be subject to examination by 
the Commission and its staff.

    For the Commission, by the Division of Investment Management, 
pursuant to delegated authority.
Florence E. Harmon,
Deputy Secretary.
 [FR Doc. E7-25357 Filed 12-28-07; 8:45 am]

BILLING CODE 8011-01-P
