Federal Register / Vol. 76, No. 153 / Tuesday, August 9, 2011 / Notices 48929 

1Section 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. 

2The 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 

serve as the lead director of the Board receive an 

additional $25,000 per year retainer and Nonemployee Directors who chair a committee of the 

Board receive an additional $15,000 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. 

3The Board approved amendments to the Plan on 

April 28, 2011, and July 21, 2011. 

4The Plan would authorize the issuance of 

options only to Non-Employee Directors and not to 

employees or officers of applicant. 

will make a separate finding, reflected 

in the applicable Board minutes, that 

such change is in the best interests of 

the Fund and its shareholders, and does 

not involve a conflict of interest from 

which the Adviser or the Affiliated 

Subadviser derives an inappropriate 

advantage. 

7. The Adviser will provide general 

management services to each Fund that 

is subadvised, including overall 

supervisory responsibility for the 

general management and investment of 

the Fund’s assets, and, subject to review 

and approval of the Board, will: (i) Set 

each Fund’s overall investment 

strategies; (ii) evaluate, select and 

recommend Subadvisers to manage all 

or a part of a Fund’s assets; (iii) allocate 

and, when appropriate, reallocate a 

Fund’s assets among one or more 

Subadvisers; (iv) monitor and evaluate 

the performance of Subadvisers; and (v) 

implement procedures reasonably 

designed to ensure that the Subadvisers 

comply with the relevant Fund’s 

investment objective, policies, and 

restrictions. 

8. No trustee or officer of the Trust or 

a Fund, or director, manager or officer 

of the Adviser, will own, directly or 

indirectly (other than through a pooled 

investment vehicle that is not controlled 

by such person), any interest in a 

Subadviser, except for (a) ownership of 

interests in the Adviser or any entity 

that controls, is controlled by, or is 

under common control with the 

Adviser, or (b) ownership of less than 

1% of the outstanding securities of any 

class of equity or debt of any publicly 

traded company that is either a 

Subadviser or an entity that controls, is 

controlled by or is under common 

control with a Subadviser. 

9. In the event the Commission adopts 

a rule under the Act providing 

substantially similar relief to that in the 

order requested in the application, the 

requested order will expire on the 

effective date of that rule. 

For the Commission, by the Division of 

Investment Management, under delegated 

authority. 

Elizabeth M. Murphy, 

Secretary. 

[FR Doc. 2011–20102 Filed 8–8–11; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Investment Company Act Release No. 

29744; File No. 812–13853] 

American Capital, Ltd.; Notice of 

Application 

August 3, 2011. 

AGENCY: Securities and Exchange 

Commission (the ‘‘Commission’’). 

ACTION: Notice of an application for an 

order under section 61(a)(3)(B) of the 

Investment Company Act of 1940 (the 

‘‘Act’’). 

Summary of Application: Applicant, 

American Capital, Ltd. requests an order 

approving a proposal to grant stock 

options to directors who are not also 

employees or officers of the applicant 

(the ‘‘Non-employee Directors’’) under 

its 2010 Disinterested Director Stock 

Option Plan (the ‘‘Plan’’). 

DATES: Filing Dates: The application was 

filed on December 21, 2010, and 

amended on July 22, 2011, and July 26, 

2011. 

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 August 29, 2011, 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 Dalia Osman Blass, 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 

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 http:// 

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 (‘‘NAV’’) by investing its assets in 

senior debt, subordinated debt, with and 

without detachable warrants, and equity 

of small to medium sized businesses 

with attractive current yields and 

potential for equity appreciation. 

Applicant’s investment decisions are 

made either by its board of directors (the 

‘‘Board’’), based on recommendations of 

the executive officers of applicant, or, 

for investments that meet certain 

objective criteria established by the 

Board, by the executive officers of 

applicant, under authority delegated by 

the Board. Applicant does not have an 

external investment adviser within the 

meaning of section 2(a)(20) of the Act. 

2. Applicant requests an order under 

section 61(a)(3)(B) of the Act approving 

its proposal to grant 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 29, 

2010,3 and applicant’s stockholders 

approved the Plan at the annual meeting 

of stockholders held on September 15, 

2010. 

3. Non-employee Directors are eligible 

to receive options under the Plan.4

Under the Plan, a maximum of 

1,250,000 shares of applicant’s common 


sroberts on DSK5SPTVN1PROD with NOTICES
48930 Federal Register / Vol. 76, No. 153 / Tuesday, August 9, 2011 / Notices 

5The 1997 Disinterested Director Plan has 

expired, and, therefore, no additional options may 

be issued under it. The 2000 Disinterested Director 

Plan, the 2006 Option Plan, the 2007 Option Plan 

and the 2008 Option Plan have been amended so 

that no further options will be awarded to Nonemployee Directors under any of them. The Board 

has voted to terminate the granting of any further 

options to Non-employee Directors under the 2009 

Option Plan upon receipt of an order granting the 

requested relief. 

6Applicant’s common stock constitutes the only 

voting security of applicant currently outstanding. 

stock, in the aggregate, may be issued to 

Non-employee Directors and options to 

purchase 156,250 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 September 15, 2010, 

will be granted options to purchase 

156,250 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 

September 15, 2010. Any person who 

becomes a Non-employee Director after 

September 15, 2010, will be entitled to 

receive options to purchase 156,250 

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 of the Shares on the date of 

issuance of the option, or if no such 

market value exists, the current NAV of 

the Shares on the date of issuance of the 

options. The Initial Grants will expire 

on September 15, 2020, 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 

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, 

including directors who are employees, 

are eligible or have been eligible to 

receive options under stock option 

plans that exclude Non-employee 

Directors as participants (the ‘‘Employee 

Plans’’). Non-employee Directors have 

been eligible to receive options under 

applicant’s two Disinterested Director 

stock option plans (the ‘‘1997 

Disinterested Director Plan’’ and the 

‘‘2000 Disinterested Director Plan’’, 

together the ‘‘Disinterested Director 

Plans’’). Additionally, applicant’s 

officers and employees, as well as Nonemployee Directors, are eligible or have 

been eligible to receive options under 

applicant’s 2006 stock option plan (the 

‘‘2006 Option Plan’’), applicant’s 2007 

stock option plan (the ‘‘2007 Option 

Plan’’), applicant’s 2008 stock option 

plan (the ‘‘2008 Option Plan’’), and 

applicant’s 2009 stock option plan 

(‘‘2009 Option Plan’’) (collectively, the 

2009 Option Plan, the 2008 Option Plan, 

the 2007 Option Plan, the 2006 Option 

Plan, the Disinterested Director Plans 

and the Employee Plans are the ‘‘Other 

Plans’’). Non-employee Directors are 

now eligible to receive options only 

under the Plan.5 As of July 14, 2011, 

applicant had 350,309,123 shares of 

common stock outstanding.6 The 

1,250,000 shares of applicant’s common 

stock that may be issued to Nonemployee Directors under the Plan 

represent 0.3% of applicant’s 

outstanding voting securities as of July 

14, 2011. As of July 14, 2011, 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 50,200,843 shares of 

applicant’s common stock, or 14.3% of 

applicant’s outstanding voting 

securities. As of July 14, 2011, 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 

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 stock options to Nonemployee 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 directors. In 

addition to their duties as Board 

members generally, applicant states that 

the Non-employee Directors provide 

guidance and advice on operational 


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Federal Register / Vol. 76, No. 153 / Tuesday, August 9, 2011 / Notices 48931 

1 15 U.S.C. 78s(b)(1). 

2 17 CFR 240.19b–4. 

3CBOE Rule 8.3(e) provides that the Exchange 

may establish one or more types of tier 

appointments. In accordance with CBOE Rule 

8.3(e), a tier appointment is an appointment to trade 

one or more options classes that must be held by 

a Market-Maker to be eligible to act as a MarketMaker in the options class or options classes subject 

to that appointment. CBOE currently assesses a 

$1,000 monthly VIX Tier Appointment fee. The VIX 

Tier Appointment fee is assessed to any MarketMaker Trading Permit Holder that either (a) has a 

VIX Tier Appointment at any time during a 

calendar month; or (b) conducts any transactions in 

VIX at any time during a calendar month. 

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 50,200,843 shares of 

applicant’s common stock, or 14.3% of 

applicant’s outstanding voting 

securities, as of July 14, 2011. 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 

68,698,074 shares of applicant’s 

common stock, or 19.6% of applicant’s 

outstanding voting securities, as of July 

14, 2011. 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. 

Elizabeth M. Murphy, 

Secretary. 

[FR Doc. 2011–20103 Filed 8–8–11; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–65019; File No. SR–CBOE– 

2011–073] 

Self-Regulatory Organizations; 

Chicago Board Options Exchange, 

Incorporated; Notice of Filing and 

Immediate Effectiveness of Proposed 

Rule Change To Amend its Fees 

Schedule and Circular Regarding 

Trading Permit Holder Application and 

Other Related Fees 

August 3, 2011. 

Pursuant to Section 19(b)(1) of the 

Securities Exchange Act of 1934 (the 

‘‘Act’’) 1 and Rule 19b–4 thereunder,2

notice is hereby given that on August 1, 

2011, the Chicago Board Options 

Exchange, Incorporated (‘‘CBOE’’ or the 

‘‘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 

prepared by CBOE. The Commission is 

publishing this notice to solicit 

comments on the proposed rule change 

from interested persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

Chicago Board Options Exchange, 

Incorporated (‘‘CBOE’’ or ‘‘Exchange’’) 

proposes to amend its Fees Schedule 

and circular regarding Trading Permit 

Holder application and other related 

fees (‘‘Trading Permit Fee Circular’’) to 

amend the fee assessed to Floor Broker 

Trading Permit Holders that conduct a 

certain level of activity in CBOE 

Volatility Index (‘‘VIX’’) options. The 

text of the proposed rule change is 

available on the Exchange’s Web site 

(http://www.cboe.org/legal), at the 

Exchange’s Office of the Secretary and 

at the Commission. 

II. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

In its filing with the Commission, 

CBOE 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. 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 Rule 2.20 grants the Exchange 

the authority to, from time to time, fix 

the fees and charges payable by Trading 

Permit Holders. CBOE is proposing to 

amend its Fees Schedule and Trading 

Permit Fee Circular effective August 1, 

2011 to amend the fee assessed to Floor 

Broker Trading Permit Holders that 

conduct a certain level of activity in VIX 

(‘‘VIX Floor Broker Fee’’) to assess one 

$1,000 fee monthly to each Trading 

Permit Holder and TPH organization 

that maintains one or more Floor Broker 

Trading Permits that collectively meet 

the criteria for the assessment of the VIX 

Floor Broker Fee rather than assessing 

the Fee to each Floor Broker Trading 

Permit Holder. CBOE is also proposing 

to eliminate one of the requirements 

used to calculate the minimum level of 

activity in VIX that subjects a Floor 

Broker Trading Permit Holder to this 

fee. 

CBOE assesses a tier appointment fee 

to CBOE Market-Maker Trading Permit 

Holders for certain proprietary classes 

in recognition of the cost to develop 

those products and of the profit 

potential in those classes.3 Additionally, 

TPH organizations frequently staff more 

than one Market-Maker in the VIX 

trading crowd, as in doing so, each 

Market-Maker present in the trading 

crowd may participate on a trade. 

In January 2011, CBOE amended its 

Fees Schedule to establish a fee (the VIX 

Floor Broker Fee) to be assessed to any 

Floor Broker Trading Permit Holder (a) 

that executes more than 20,000 VIX 

contracts during the month and (b) 

whose aggregate VIX executed contracts 

during the month comprise more than 


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