11408 Federal Register / Vol. 72, No. 48 / Tuesday, March 13, 2007 / Notices 

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. 

technology. Consideration will be given 

to comments and suggestions submitted 

in writing within 60 days of this 

publication. 

Please direct your written comments 

to R. Corey Booth, Director/Chief 

Information Officer, Securities and 

Exchange Commission, C/O Shirley 

Martinson, 6432 General Green Way, 

Alexandria, Virginia, 22312; or send an 

e-mail to: PRA_Mailbox@sec.gov. 

Dated: March 5, 2007. 

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E7–4463 Filed 3–12–07; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Investment Company Act Release No. 

27748; 812–13238] 

Hercules Technology Growth Capital, 

Inc., et al.; Notice of Application 

March 7, 2007. 

AGENCY: Securities and Exchange 

Commission (the ‘‘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’’) and rule 17d–1 

thereunder 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. 

SUMMARY OF APPLICATION: Applicants, 

Hercules Technology Growth Capital, 

Inc. (‘‘HTGC’’), Hercules Technology II, 

L.P. (‘‘HTII’’), Hercules Technology 

SBIC Management, LLC (‘‘HTM’’), 

Hercules Funding I, LLC (‘‘HFI’’) and 

Hercules Funding Trust I (‘‘HFT’’), 

hereby apply for an order permitting 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, and 

permitting the business development 

company to adhere to a modified asset 

coverage requirement. 

FILING DATES: The application was filed 

on September 28, 2005 and amended on 

March 5, 2007. 

HEARING OR NOTIFICATION OF HEARING: An 

order granting the application will be 

issued unless the Commission orders a 

hearing. Interested persons may request 

a hearing by writing to the 

Commission’s Secretary and serving 

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 April 2, 2007, and 

should be accompanied by proof of 

service on applicants, in the form of an 

affidavit or, for lawyers, a certificate of 

service. Hearing requests should state 

the nature of the writer’s interest, the 

reason for the request, and the issues 

contested. Persons who wish to be 

notified of a hearing may request 

notification by writing to the 

Commission’s Secretary. 

ADDRESSES: Secretary, U.S. Securities 

and Exchange Commission, 100 F 

Street, NE., Washington, DC 20549–

1090. Applicants, c/o Manuel A. 

Henriquez, Chairman, President and 

Chief Executive Officer, Hercules 

Technology Growth Capital, Inc., 525 

University Avenue, Suite 700, Palo Alto, 

CA 94301. 

FOR FURTHER INFORMATION CONTACT: 

Emerson S. Davis, Sr., Senior Counsel, 

at (202) 551–6868, or Nadya B. Roytblat, 

Assistant Director, at (202) 551–6821 

(Division of Investment Management, 

Office of Investment Company 

Regulation). 

SUPPLEMENTARY INFORMATION: The 

following is a summary of the 

application. The complete application is 

available for a fee at the Commission’s 

Public Reference Branch, 100 F Street, 

NE., Washington, DC 20549–0102 (tel. 

202–551–5850). 

Applicants’ Representations 

1. HTGC, a Maryland corporation, is 

a closed-end, non-diversified 

management investment company that 

has elected to be regulated as a business 

development company (‘‘BDC’’) within 

the meaning of section 2(a)(48) of the 

Act.1 HTGC is a specialty finance 

company that provides debt and equity 

capital to technology-related and lifescience companies at all stages of 

development. HTGC’s business and 

affairs are managed under the direction 

of its board of directors (‘‘Board’’). 

2. HTII, a Delaware limited 

partnership and a wholly-owned 

subsidiary of HTGC, 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’’). HTII relies on 

section 3(c)(7) of the Act. HTM, a 

Delaware limited liability company and 

a wholly-owned subsidiary of HTGC, is 

the general partner and investment 

adviser to HTII. HTGC is the primary 

limited partner of HTII. Manuel A. 

Henriquez, an officer of HTGC, and H. 

Scott Harvey, an officer of HTGC, each 

have a nominal (0.001%) limited 

partnership investment in HTII 

pursuant to the advice of tax counsel in 

order to ensure that HTII is taxed as a 

partnership under the Internal Revenue 

Code of 1986, as amended. HFI, a 

Delaware limited liability company, and 

HFT, a Delaware statutory trust, and 

each wholly-owned subsidiary of HTGC, 

were created to facilitate debt financing 

collateralized by certain HTGC’s 

investments. HFT relies on rule 3a–7 

under the Act. HFT is a wholly-owned 

subsidiary of HFI. 

3. Applicants may in the future 

establish additional wholly-owned 

subsidiaries of HTGC, (together with 

HTII, HTM, HFI and HFT, 

‘‘Subsidiaries’’), private investment 

companies that rely on section 3(c)(7) of 

the Act and some of which may be 

licensed by the SBA to operate under 

the SBIA as SBICs (together with HTII, 

‘‘SBIC Subsidiaries’’). 

Applicant’s Legal Analysis 

1. Applicants request an exemption 

pursuant to sections 6(c), 57(c) and 57(i) 

of the Act and rule 17d–1 under the Act 

from the provisions of sections 18(a), 

57(a)(1), 57(a)(2) and 61(a) of the Act to 

permit HTGC and the Subsidiaries to 

engage in certain transactions that 

otherwise would be permitted if HTGC 

and the Subsidiaries were one company 

and to permit HTGC to adhere 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 sections 

18(a)(1)(A) and (B). 

3. Applicants state that a question 

exists as to whether HTGC must comply 

with the asset coverage requirements of 

Section 18(a) (as modified by Section 

61(a)) solely on an individual basis or 

whether HTGC must also comply with 

the asset coverage requirements on a 

consolidated basis because HTGC may 

be deemed to be an indirect issuer of 

any class of senior securities issued by 

HTII or another SBIC Subsidiary. 

Applicants state that they wish to treat 


cprice-sewell on PROD1PC66 with NOTICES
Federal Register / Vol. 72, No. 48 / Tuesday, March 13, 2007 / Notices 11409 

HTII and other SBIC Subsidiaries as if 

each was a BDC subject to sections 18 

and 61 of the Act. Applicants state that 

companies operating under the SBIA, 

such as HTII, 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 HTGC is 

entitled to rely on section 18(k) for an 

exemption from the asset coverage 

requirements of sections 18(a) and 61(a), 

there is no policy reason to deny the 

benefit of that exemption when HTGC 

consolidates its assets with those of 

HTII 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 HTGC 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 HTGC. Applicants 

further state that any purchase and sales 

between (a) HTGC and one or more 

Subsidiaries, (b) Subsidiaries and 

downstream controlled affiliates of 

HTGC and another Subsidiary and (c) 

HTGC and a controlled portfolio affiliate 

of a Subsidiary may be prohibited. 

Applicants submit that the requested 

relief is to the extent to permit HTGC 

and its Subsidiaries, all of whom are 

owned, directly or indirectly, by the 

shareholders of HTGC, to do that which 

they would otherwise would 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 business development company 

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 persons of 

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 57(b). Section 57(i) 

of the Act provides that rules and 

regulations under sections 17(a) and (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 

HTGC or another Subsidiary may be 

prohibited under section 57(a)(4) 

because HTGC would not be a 

controlled affiliate of the Subsidiaries. 

Applicants request relief under section 

57(i) and rule 17d–1 to permit joint 

transactions in which the Subsidiaries 

to the extent that such transactions 

would not be prohibited if the 

Subsidiaries participating in the 

transactions were deemed to be part of 

HTGC and not separate companies. 

9. In determining whether to grant an 

order under section 57(i) and rule 17d–

1, the Commission may consider 

whether the participation of the BDC in 

the joint transaction is consistent with 

the provisions, policies, and purposes of 

the Act to 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 HTGC and 

its Subsidiaries to conduct their 

business as if they were one company. 

Applicants’ Conditions 

Applicants agree that any order 

granting the requested relief will be 

subject to the following conditions: 

1. Except for a nominal limited 

partnership interest in a Subsidiary to 

the extent necessary to accomplish the 

Subsidiary’s taxation goals as described 

in this Application, HTGC 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 HTII or another 

Subsidiary unless the HTGC Board and 

shareholders of HTGC have taken the 

action with respect thereto also required 

to be taken by the functional equivalent 

of the board of directors of HTII or 

another Subsidiary and shareholders of 

HTII or another Subsidiary as if HTII or 

another Subsidiary were a BDC. 

3. No person shall serve as managing 

member of HTM unless such person 

also shall be a member of the 

management of HTGC. The managing 

members of HTM will be elected or 

appointed by HTGC. 

4. HTGC will not issue or sell any 

senior security and HTGC will not cause 

or permit HTII or any other SBIC 

Subsidiary to issue or sell any senior 

security of which HTGC, HTII 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 HTGC, HTII or any other SBIC 

Subsidiary of any such senior security, 

HTGC 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 

HTGC 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 HTII 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. 

For the Commission, by the Division of 

Investment Management, pursuant to 

delegated authority. 

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E7–4521 Filed 3–12–07; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[File No. 500–1] 

In the Matter of Certain Companies 

Quoted on the Pink Sheets: Order of 

Suspension of Trading 

March 8, 2007. 

It appears to the Securities and 

Exchange Commission that there is a 


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