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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 3, 1996
REGISTRATION NO. 333-____________________
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-----------------------
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
BRANTLEY CAPITAL CORPORATION
(Exact Name of Registrant as Specified in Its Charter)
MARYLAND 34-1838462
(State of Incorporation) (I.R.S. Employer Identification No.)
20600 CHAGRIN BOULEVARD
SUITE 1150
CLEVELAND, OHIO 44122
(Address of Principal Executive Offices) (Zip Code)
THE BRANTLEY CAPITAL CORPORATION
1996 STOCK OPTION PLAN
FOR OFFICERS AND EMPLOYEES
(Full Title of the Plan)
-----------------------
MICHAEL J. FINN
BRANTLEY CAPITAL MANAGEMENT, LTD.
20600 CHAGRIN BOULEVARD
SUITE 1150
CLEVELAND, OHIO 44122
(Name and Address of Agent for Service)
(216) 283-4800
(Telephone Number, Including Area Code, of Agent for Service)
Copy to:
MARYANN A. WARYJAS, ESQ.
Jenner & Block
330 North Wabash
Chicago, Illinois 60611
(312) 222-9350
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Proposed Maximum Proposed Maximum
Amount to be Offering Price Aggregate Amount of
Title of Securities to be Registered Registered(1) Per Share(2) Offering Price(2) Registration Fee
Common Stock, $.01 par value 1,175,000 $10.00 $11,750,000 $4,051.72
</TABLE>
(1) Plus an indeterminate number of shares that may be issued to prevent
dilution from stock splits, stock dividends and similar transactions.
(2) Calculated in accordance with Rule 457(h)(l) under the Securities Act of
1933, as amended.
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PART I
INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS
ITEM 1. PLAN INFORMATION.
Not required to be included herewith.
ITEM 2. REGISTRANT INFORMATION AND EMPLOYEE PLAN ANNUAL INFORMATION.
Not required to be included herewith.
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
This Registration Statement on Form S-8 relates to the registration of
shares of common stock, $.01 par value (the "Common Stock"), of Brantley Capital
Corporation (the "Company" or the "Registrant").
The following documents heretofore filed by the Company with the
Securities and Exchange Commission (the "Commission") are incorporated by
reference into this Registration Statement and made a part hereof:
(a) The description of the Company's Common Stock contained in the
Company's Registration Statement on Form N-2 (1933 Act Registration
No. 333-10785, 1940 Act Registration No. 814-00127) as filed with
the Commission on October 30, 1996, including any amendments or
reports filed for the purpose of updating such description.
In addition, all documents subsequently filed by the Company pursuant
to Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act, prior to the filing
of a post-effective amendment to this Registration Statement which indicates
that all securities offered hereunder have been sold or which deregisters all
securities then remaining unsold, shall be deemed incorporated in this
Registration Statement by reference and to be a part hereof from the date of the
filing of such documents.
Any statement, including financial statements, contained in a document
incorporated or deemed to be incorporated by reference herein shall be deemed to
be modified or superseded for purposes of this Registration Statement to the
extent that a statement contained herein or incorporated or deemed to be
incorporated by reference herein modifies or supersedes said statement. Any
such statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of this Registration Statement.
ITEM 4. DESCRIPTION OF SECURITIES.
Not applicable. The class of securities to be offered is registered
under Section 12 of the Securities Exchange Act of 1934, as amended.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
Not applicable.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 2-418 of the Maryland General Corporation Law provides for
indemnification of the Company's directors, officers, employees, and agents
under specified circumstances, which may include indemnity against expenses,
including attorneys' fees and judgments, fines and amounts paid in settlement
under the Securities Act of 1933, as amended (the "Securities Act"). The
Company has purchased and maintains insurance as is permitted by said Section
2-418 on behalf of directors and officers, which insurance may cover liabilities
under the Securities Act. Article VIII of the Bylaws of the Company provides
for such indemnification to the extent and under the circumstances permitted by
said Section 2-418.
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Article EIGHTH of the Company's Articles of Amendment and Restatement of
the Charter provides as follows (in this excerpt, (i) Brantley Capital
Corporation is defined as the "Corporation," (ii) the Securities Act of 1933 is
referred to as the "Securities Act," and (iii) the Investment Company Act of
1940 is referred to as the "Investment Company Act"):
Section 1. To the fullest extent that limitations on the liability of
directors and officers is permitted by Maryland statutory or decisional
law, as amended or interpreted, no director or officer of the Corporation
shall have any liability to the Corporation or its stockholders for
monetary damages. This limitation on liability applies to events
occurring at the time a person serves as a director or officer of the
Corporation whether or not such person is a director or officer at the
time of any proceeding in which liability is asserted. No amendment of
these Articles of Incorporation or repeal of any of the provisions hereof
shall limit or eliminate the benefits provided to directors and officers
under this provision with respect to any act or omission which occurred
prior to such amendment or repeal.
Section 2. Any person who was or is a party or is threatened to be made a
party in any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative, by reason of the
fact that such person is a current or former director or officer of the
Corporation or is or was serving while a director or officer of the
Corporation at the request of the Corporation as a director, officer,
partner, trustee, employee, agent or fiduciary of another corporation,
partnership, joint venture, trust, enterprise or employee benefit plan,
shall be indemnified by the Corporation against judgments, penalties,
fines, excise taxes, settlements and reasonable expenses (including
attorneys' fees) actually incurred by such person in connection with such
action, suit or proceeding to the fullest extent permissible under the
General Corporation Law, the Securities Act and the Investment Company
Act, as such statutes are now or hereafter in force. In addition, the
Corporation shall also advance expenses to its currently acting and its
former directors and officers to the fullest extent that indemnification
of directors and officers is permitted by the General Corporation Law, the
Securities Act and the Investment Company Act. The Board of Directors may
by bylaw, resolution or agreement make further provisions for
indemnification of the directors, officers, employees and agents to the
fullest extent permitted by the General Corporation Law.
Section 3. No provision of this Article EIGHTH shall be effective to
protect or purport to protect any director or officer of the Corporation
against any liability to the Corporation or its stockholders to which he
or she would otherwise be subject by reason of willful misfeasance, bad
faith, gross negligence or reckless disregard of the duties involved in
the conduct of their respective offices.
Section A of Article VIII of the Bylaws of the Company provides as follows
(in this excerpt, (i) Brantley Capital Corporation is defined as the
"Corporation" and (ii) the Investment Company Act of 1940 is referred to as the
"Investment Company Act"):
The Corporation shall indemnify each person who was or is a party or is
threatened to be made a party to any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative (a "Proceeding"), by reason of the fact that he or she is
or was a director, officer, employee or agent of the Corporation or is or
was serving at the request of the Corporation as a director, officer,
employee, agent, partner or trustee of another corporation, partnership,
joint venture, trust or other enterprise, against all judgments,
penalties, fines and settlements and against all reasonable expenses,
including attorneys' fees, actually incurred by him or her in connection
with such Proceeding to the fullest extent permitted by law, provided
that:
3
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1. such person acted in good faith and (i) in the case of conduct in
such person's official capacity with the Corporation, in a manner
he or she reasonably believed to be in the best interests of the
Corporation and (ii) in all other cases, in a manner he or she
reasonably believed not opposed to the best interests of the
Corporation;
2. with respect to any criminal proceeding, such person had no
reasonable cause to believe his or her conduct was unlawful;
3. unless ordered or permitted by a court, indemnification shall be
made only as authorized in the specific case upon (i) a
determination that indemnification of such person is proper in the
circumstances because he or she has met the applicable standard of
conduct set forth in subparagraphs (a) and (b) above, and (ii) such
other authorizations and determinations as may be required by law
to be made, by (A) the Board of Directors of the Corporation by the
vote of a majority of a quorum consisting of directors who are
neither "interested persons" of the Corporation as defined in the
Investment Company Act nor parties to such Proceeding or if such
quorum cannot be obtained, by a majority vote of a committee of the
Board of Directors consisting solely of two or more such directors
who are duly designated to act in the matter by a majority vote of
the full Board of Directors, or (B) independent legal counsel in a
written opinion, which counsel shall be selected in accordance with
such procedures as may be required by law; provided, however, that
such counsel shall make only such determinations and authorizations
as are permitted by law to be made by independent counsel, or (C)
the stockholders of the Corporation acting in accordance with the
Articles and the Bylaws of the Corporation and applicable law;
4. in the case of a Proceeding by or in the right of the Corporation
to procure a judgment in its favor, no indemnification shall be
made except for the payment of expenses reasonably incurred by such
person in connection therewith; provided, however, that if such
person shall have been adjudged to be liable for negligence or
misconduct in the performance of his or her duties to the
Corporation, no indemnification shall be made with respect to the
expense incurred by such person in connection with such Proceeding
unless, and only to the extent that, the court in which such
Proceeding is brought, or a court of equity in the county or other
local jurisdiction in which the Corporation has its principal
office, shall determine upon application that, despite adjudication
of liability but in view of all the circumstances of the case, he
or she is fairly and reasonably entitled to indemnity for such
expenses which such court shall deem proper; and
5. no indemnification or other protection shall be made or given to
any director or officer of the Corporation against any liability to
the Corporation or to its stockholders to which he or she would
otherwise be subject by reason of willful misfeasance, bad faith,
gross negligence or reckless disregard of the duties involved in
the conduct of their respective offices.
Expenses (including attorneys' fees) incurred in defending a Proceeding
will be paid by the Corporation in advance of the final disposition
thereof to the fullest extent permitted by law.
The termination of any Proceeding by judgment, order, settlement,
conviction, or upon a plea of nolo contendere or its equivalent, shall
not, of itself, create a presumption that such person has not met the
applicable standard of conduct set forth in subparagraphs (a) and (b)
above.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.
Not applicable.
4
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ITEM 8. EXHIBITS.
NUMBER DESCRIPTION
4.1* Specimen Common Stock certificate
4.2* Articles of Amendment and Restatement of the Charter of the
Company
4.3* Bylaws of the Company
4.4* The Brantley Capital Corporation 1996 Stock Option Plan for
Officers and Employees
5.1* Opinion of Jenner & Block
23.1** Consent of Jenner & Block
23.2* Consent of Ernst & Young LLP
* Filed herewith.
** Filed as part of Exhibit 5.1.
5
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ITEM 9. UNDERTAKINGS.
A. SUBSEQUENT DISCLOSURE
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of this Registration Statement (or
the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental
change in the information set forth in this Registration
Statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar
value of securities offered would not exceed that which was
registered) and any deviation from the low or high and of the
estimated maximum offering range may be reflected in the form
of prospectus filed with the Commission pursuant to Rule
424(b) if, in the aggregate, the changes in volume and price
represent no more than 20 percent change in the maximum
aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective Registration
Statement;
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in this Registration
Statement or any material change to such information in this
Registration Statement;
provided however, that the undertakings set forth in paragraphs (i) and
(ii) above do not apply if the information required to be included in a
post-effective amendment by those paragraphs is contained in periodic
reports filed with or furnished to the Commission by the Registrant
pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
that are incorporated by reference in this Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
B. INCORPORATION BY REFERENCE
The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of
the Registrant's annual report pursuant to Section 13(a) or 15(d) of
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
Registration Statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
6
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C. COMMISSION POSITION ON INDEMNIFICATION
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, or
otherwise, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other
than the payment by the Registrant of expenses incurred or paid by a
director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities
being registered, the Registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act
and will be governed by the final adjudication of such issue.
7
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-8 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Cleveland, State of Ohio, on this 3rd day of
December, 1996.
BRANTLEY CAPITAL CORPORATION
By: /s/ ROBERT P. PINKAS
--------------------------
Robert P. Pinkas
Chairman of the Board, Chief Executive
Officer, Chief Financial Officer and
Treasurer
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities indicated on this 3rd day of December, 1996.
/s/ ROBERT P. PINKAS Chairman of the Board, Chief Executive
- ----------------------- Officer, Chief Financial Officer,
Robert P. Pinkas Treasurer and Director (principal
executive officer, principal financial
and accounting officer)
/s/ MICHAEL J. FINN President and Director
- -----------------------
Michael J. Finn
/s/ L. PATRICK BALES Director
- -----------------------
L. Patrick Bales
/s/ BENJAMIN F. BRYAN Director
- -----------------------
Benjamin F. Bryan
/s/ RICHARD MOODIE Director
- -----------------------
Richard Moodie
8
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EXHIBIT 4.1
FORM OF SHARE CERTIFICATE
BRANTLEY CAPITAL CORPORATION
INCORPORATED UNDER THE LAWS OF THE STATE OF MARYLAND
<TABLE>
<S> <C>
COMMON STOCK COMMON STOCK
THIS CERTIFICATE IS TRANSFERABLE IN CUSIP 105494 10 8
BOSTON, MA, OR NEW YORK, N.Y. SEE REVERSE FOR CERTAIN DEFINITIONS
</TABLE>
This certifies that
is the registered owner of
FULLY PAID AND NONASSESSABLE SHARES OF THE COMMON STOCK ($.01 PAR VALUE) OF
BRANTLEY CAPITAL CORPORATION
transferable on the books of the Corporation by the holder hereof in person or
by duly authorized attorney, upon surrender of this Certificate properly
endorsed.
This Certificate is not valid until countersigned by the Transfer Agent and
registered by the Registrar.
Witness the facsimile signatures of its duly authorized officers.
Dated:
<TABLE>
<S> <C>
/S/ PAUL H. CASCIO /S/ ROBERT P. PINKAS
VICE PRESIDENT AND SECRETARY CHAIRMAN OF THE BOARD, CHIEF EXECUTIVE OFFICER,
CHIEF FINANCIAL OFFICER AND TREASURER
</TABLE>
COUNTERSIGNED AND REGISTERED:
STATE STREET BANK AND TRUST COMPANY
TRANSFER AGENT
AND REGISTRAR
BY
AUTHORIZED SIGNATURE
<PAGE> 2
BRANTLEY CAPITAL CORPORATION
The following abbreviations, when used in the inscription on the face of
this certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
<TABLE>
<S> <C>
TEN COM -- as tenants in common UNIF GIFT MIN ACT --..........Custodian .........
TEN ENT -- as tenants by the entireties (Cust) (Minor)
JT TEN -- as joint tenants with right of under Uniform Gifts to Minors
survivorship and not as tenants in common Act........................
(State)
UNIF TRF MIN ACT --..... Custodian (until age.....)
(Cust)
..........under Uniform Transfers
(Minor)
to Minors Act ..................
(State)
</TABLE>
Additional abbreviations may also be used though not in the above list.
FOR VALUE RECEIVED, ______________ hereby sell, assign and transfer unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
- ---------------------------------------
- ---------------------------------------
______________________________________________________________________________
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS, INCLUDING ZIP CODE, OF ASSIGNEE)
_______________________________________________________________________________
_______________________________________________________________________________
_________________________________________________________________________ Shares
of the common stock represented by the within Certificate, and do hereby
irrevocably constitute and appoint
________________________________________________________________ Attorney
to transfer the said stock on the books of the within named Corporation with
full power of substitution in the premises.
Dated ________________________
X____________________________
X____________________________
NOTICE: THE SIGNATURE(S) TO THIS ASSIGNMENT
MUST CORRESPOND WITH THE NAME(S) AS WRITTEN
UPON THE FACE OF THE CERTIFICATE IN EVERY
PARTICULAR, WITHOUT ALTERATION OR ENLARGEMENT
OR ANY CHANGE WHATEVER.
Signature(s) Guaranteed
By __________________________________
THE SIGNATURE(S) SHOULD BE GUARANTEED
BY AN ELIGIBLE GUARANTOR INSTITUTION
(BANKS, STOCKBROKERS, SAVINGS AND LOAN
ASSOCIATIONS AND CREDIT UNIONS WITH
MEMBERSHIP IN AN APPROVED SIGNATURE
GUARANTEE MEDALLION PROGRAM), PURSUANT
TO S.E.C. RULE 17Ad-15.
<PAGE> 1
EXHIBIT 4.2
CORRECTED AND CONFORMED
ARTICLES OF AMENDMENT AND
RESTATEMENT OF THE CHARTER
OF
BRANTLEY CAPITAL CORPORATION
BRANTLEY CAPITAL CORPORATION, a Maryland corporation having its principal
office in the State of Maryland at 32 South Street, Baltimore, Maryland 21202
(hereinafter called the "Corporation") hereby certifies to the State Department
of Assessments and Taxation that:
1. The Corporation desires to amend and restate its charter.
2. The amendment and restatement of the Corporation's charter was advised
by the Board of Directors and approved by the initial stockholders.
3. The total number of all classes of stock which the Corporation was
heretofore authorized to issue is One Thousand (1,000) shares, all of one class,
of the par value of One Cent ($.01) each and of the aggregate par value of Ten
Dollars ($10.00).
4. The total number of shares of all classes of stock of the Corporation as
increased, and the number, par value and description of the shares are as set
forth in Article FOURTH of these Articles of Amendment and Restatement of the
Charter of the Corporation.
5. The following are the Articles of Incorporation of the Corporation as
amended and restated:
FIRST: NAME. The name of the Corporation is BRANTLEY CAPITAL CORPORATION.
SECOND: PURPOSE. The nature of the business or purposes to be conducted or
promoted is to engage in any lawful act or activity for which corporations may
be organized under the General Corporation Law, including, without limitation,
to act as a closed-end, non-diversified management investment company, electing
status as a business development company under the Investment Company Act of
1940, as amended (the "Investment Company Act"); provided, however, that the
Corporation may cease to be treated as a business development company upon
compliance with the requirements of the Investment Company Act with respect
thereto.
THIRD: PRINCIPAL OFFICE AND RESIDENT AGENT. The post office address of the
place at which the principal office of the Corporation in the State of Maryland
is located is c/o The Corporation Trust Incorporated, 32 South Street,
Baltimore, Maryland 21202. The name and post office address of the Corporation's
resident agent in the State of Maryland is The Corporation Trust Incorporated,
32 South Street, Baltimore, Maryland 21202.
<PAGE> 2
FOURTH: CAPITAL STOCK.
Section 1. The Corporation has authority to issue one class of capital
stock as follows: 25,000,000 shares of common stock of the par value of One Cent
($.01) per share the ("Common Stock"), having an aggregate par value of
$250,000.
Section 2. All preferences, rights, including rights to the dividends,
voting powers, restrictions and qualifications of or with respect to the shares
of Common Stock of the Corporation are and shall be in all respects subject and
subordinate to and limited, qualified and controlled by any and all
prohibitions, limitations, restrictions and qualifications with respect thereto
expressed in or resulting from compliance with (i) the laws of Maryland, (ii)
the terms and provisions of or with respect to any shares of any class of
preferred stock of the Corporation that are hereafter authorized and whether
before or after the classification thereof and whether the terms and provisions
thereof are those fixed by these Articles of Incorporation or by the Board of
Directors pursuant to any authority or power in these Articles of Incorporation,
or (iii) the other provisions of these Articles of Incorporation.
Section 3. Unless otherwise provided in these Articles of Incorporation,
the Board of Directors shall have the power to issue shares of capital stock of
the Corporation from time to time for such consideration and in such form as may
be fixed from time to time pursuant to the direction of the Board of Directors.
Section 4. Unless otherwise expressly provided in these Articles of
Incorporation, the holders of each share of capital stock of the Corporation
shall be entitled to one vote for each full share of capital stock, and a
fractional vote for each fractional share of capital stock then outstanding in
his or her name in the books of the Corporation. On any matter submitted to a
vote of stockholders, all shares of the Corporation then issued and outstanding
and entitled to vote, irrespective of the class of such shares, shall be voted
in the aggregate and not by class; provided, however, that (i) when otherwise
required by the General Corporation Law of the State of Maryland, (ii) when
required by the Investment Company Act, or (iii) when the matter does not affect
any interest of the particular class, then only stockholders of the affected
class shall be entitled to vote thereon unless otherwise expressly provided in
any amendment or supplement to these Articles. Stockholders of the Corporation
shall not be entitled to cumulative voting in the election of directors or on
any other matter unless otherwise expressly provided in any amendment or
supplement to these Articles creating any new class of stock.
Section 5. The presence in person or by proxy of the holders of record of
the majority of all shares of capital stock of the Corporation issued and
outstanding and entitled to vote thereat shall constitute a quorum for the
transaction of any business at all meetings of the stockholders of the
Corporation, except as otherwise provided by the Investment Company Act, the
General Corporation Law of the State of Maryland or in these Articles of
Incorporation.
Section 6. Except as otherwise provided in these Articles of Incorporation,
and notwithstanding any provision of the Laws of the State of Maryland requiring
action to be taken or authorized by the affirmative vote of the holders of a
designated proportion greater than a majority of the votes of all classes of
capital stock of the Corporation (or of any class entitled to vote thereon as a
separate class), such action shall be valid and effective if taken or authorized
-2-
<PAGE> 3
by the affirmative vote of the holders of a majority of the aggregate number of
shares of capital stock of the Corporation outstanding and entitled to vote
thereon.
Section 7. No holder of shares of capital stock of the Corporation shall,
as such holder, have any preemptive right to purchase or subscribe for any part
of any new or additional issue of stock of any class, or of rights or options to
purchase any stock, or of securities convertible into, or carrying rights or
options to purchase, stock of any class, whether now or hereafter authorized or
whether issued for money, for a consideration other than money or by way of a
dividend or otherwise, and all such rights are hereby waived by each holder of
Common Stock and of any other class of stock or securities of the Corporation
that may hereafter be created.
Section 8. The holders of capital stock of the Corporation may remove a
director for cause provided that the holders of at least 75% of the shares
entitled to be cast on the matter approve such action.
Section 9. The Corporation hereby elects to be subject to Title 3, Subtitle
7 of the General Corporation Law of the State of Maryland which governs the
Voting Rights of Certain Control Shares, provided, however, that the provisions
of Subtitle 7 shall not apply to any shares of the Corporation that are owned by
an employee stock ownership or similar plan.
Section 10. All persons who shall acquire capital stock in the Corporation
shall acquire the same subject to the provisions of these Articles of
Incorporation.
FIFTH: BOARD OF DIRECTORS. The directors shall initially be divided into
three classes, designated Class I, Class II and Class III. All classes shall be
as nearly equal in number as possible, and initially, Class I will consist of
one director, Class II will consist of two directors, and Class III will consist
of two directors. The directors as initially classified shall hold office for
terms as follows: the Class I director, Richard Moodie, shall hold office until
the date of the annual meeting of stockholders in 1997 or until a successor
shall be elected and qualified; the Class II directors, L. Patrick Bales and
Benjamin F. Bryan shall hold office until the date of the annual meeting of
stockholders in 1998 or until their successors shall be elected and qualified;
and the Class III directors, Robert P. Pinkas and Michael J. Finn shall hold
office until the date of the annual meeting of stockholders in 1999 or until
their successors shall be elected and qualified. Upon expiration of the term of
office of each class as set forth above, the directors in each such class shall
be elected for a term of three years to succeed the directors whose terms of
office expire. Each director shall hold office until the expiration of his or
her term and until his or her successor shall have been elected and qualified,
or until his or her death, or until he or she shall have resigned, or until he
or she shall have been removed as provided by these Articles of Incorporation,
the Corporation's Bylaws, the Investment Company Act or the General Corporation
Law of the State of Maryland. Any director may be removed for cause at any
meeting of stockholders by a vote of 75% of all of the votes entitled to be
cast for the election of directors at a meeting duly called for that purpose,
which meeting will be held upon the written request of the Chairman of the
Board, the Chief Executive Officer or the President of the Corporation.
-3-
<PAGE> 4
The Corporation may, through its Bylaws, fix the number of directors and
divide the directors into classes and prescribe the tenure of office of the
several classes.
SIXTH: MANAGEMENT OF THE AFFAIRS OF THE CORPORATION.
Section 1. All corporate powers and authority of the Corporation (except as
at the time otherwise provided by statute, by these Articles of Incorporation or
by the Corporation's Bylaws) shall be vested in and exercised by the Board of
Directors.
Section 2. The Board of Directors shall have the power to fix an initial
offering price for the shares of capital stock of the Corporation, which shall
yield to the Corporation not less than the par value thereof, at which price the
shares of capital stock of the Corporation shall be offered for sale, and to
determine from time to time thereafter the offering price which shall yield to
the Corporation not less than the par value thereof from sales of the shares of
its capital stock; provided, however, that sales by the Corporation of its
shares of capital stock for less than net asset value (as defined in the
Investment Company Act) shall be in accordance with the applicable requirements
of the Investment Company Act.
Section 3. The Board of Directors may from time to time declare and pay
dividends or distributions, in stock or in cash, on any or all classes of
capital stock; provided that dividends or distributions on shares of any class
of capital stock shall be paid only out of earnings, surplus, or other lawfully
available assets belonging to such class.
Section 4. The Board of Directors shall have the power in its discretion to
distribute to the stockholders of the Corporation in any fiscal year as
dividends, including dividends designated in whole or in part as capital gains
distributions, amounts sufficient, in the opinion of the Board of Directors, to
enable the Corporation to qualify as a "regulated investment company" under the
Internal Revenue Code of 1986, as amended, or any successor or comparable
statute thereof, and regulations promulgated thereunder (collectively, the
"Code"), and to avoid liability of the Corporation for federal income tax in
respect of that year and to make other appropriate adjustments in connection
therewith.
Section 5. The Board of Directors shall have the power, in its discretion,
to make such elections as to the tax status of the Corporation as may be
permitted or required under the Code, without the vote of stockholders of the
Corporation.
Section 6. The Board of Directors shall have exclusive authority to make,
alter or repeal from time to time any of the Bylaws of the Corporation, except
to the extent that these Articles of Incorporation, the Bylaws or the Investment
Company Act otherwise provide.
Section 7. The Board of Directors shall have the power from time to time to
determine whether and to what extent, and at what times and places and under
what conditions the accounts and books of the Corporation or any of them shall
be open to the inspection of stockholders, and no stockholder shall have any
right to inspect any account, book or document of the Corporation except to the
extent required by the General Corporation Law of the State of Maryland or
permitted by the Corporation's Bylaws.
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Section 8. To the extent permitted under the General Corporation Law of the
State of Maryland, the Corporation may purchase shares of its capital stock upon
such terms and conditions and for such consideration as the Board of Directors
shall deem advisable.
Section 9. The net asset value of the property and assets of the
Corporation shall be determined in accordance with the Investment Company Act,
and at such times as the Board of Directors may direct, by deducting from the
total market or appraised value of all of the property and assets of the
Corporation, all debts, obligations and liabilities of the company (including,
but without limitation of the generality of any of the foregoing, any or all
debts, obligations, liabilities or claims of any and every kind and nature,
whether fixed, accrued, or unmatured, and any reserves or charges, determined in
accordance with generally accepted accounting principles, for any or all
thereof, whether for taxes, including estimated taxes or unrealized book
profits, expenses, contingencies or otherwise).
Section 10. The Board of Directors from time to time may change the
Corporation's name, without the vote or consent of the stockholders of the
Corporation, in any manner and to the extent now or hereafter permitted by the
General Corporation Law of the State of Maryland and by these Articles of
Incorporation.
Section 11. The Corporation may be converted from a closed-end to an
open-end investment company by a vote of at least 75% of the Continuing
Directors (as defined below) and by the holders of at least 75% of the shares
entitled to be cast on the matter. A "Continuing Director" for these purposes is
any member of the Board of Directors who (i) is not a person or affiliate of a
person who enters or proposes to enter into a business combination, as defined
in the Maryland General Corporation Law, with the Corporation (an "Interested
Party") and (ii) who has been a member of the Board of Directors of the
Corporation for a period of at least 12 months, or is a successor of a
Continuing Director who is unaffiliated with an Interested Party and has been
recommended to succeed a Continuing Director by a majority of the Continuing
Directors then on the Board of Directors of the Corporation.
Section 12. In addition to the powers and authorities granted herein and by
statute expressly conferred upon it, the Board of Directors is authorized to
exercise all powers and do all acts that may be exercised or done by the
Corporation pursuant to the provisions of the General Corporation Law of the
State of Maryland, these Articles of Incorporation and the Bylaws of the
Corporation.
SEVENTH: DETERMINATIONS AS TO ACCOUNTING MATTERS. Any determination made in
good faith, so far as accounting matters are involved, in accordance with
generally accepted accounting principles by or pursuant to the authority or the
direction of the Board of Directors, (i) as to the amount of assets, obligations
or liabilities of the Corporation, (ii) as to the amount of net income of the
Corporation from dividends and interest for any period or amounts at any time
legally available for the payment of dividends, (iii) as to the amount of any
reserves or charges set up and the propriety thereof, (iv) as to the time of or
purpose for creating reserves or as to the use, alteration or cancellation of
any reserves or charges (whether or not any obligation or liability for which
such reserves or charges shall have been created, shall have been paid or
discharged or is then or thereafter required to be paid or discharged), (v) as
to the price of any security owned by the Corporation, (vi) as to any other
matters relating to the issuance,
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sales, redemption or other acquisition or disposition of any securities by the
Corporation or any securities or shares of capital stock of the Corporation, or
(vii) as to any reasonable determination made in good faith by the Board of
Directors as to whether any transaction constitutes a purchase of securities on
"margin," a sale of securities "short," or an underwriting or the sale of, or a
participation in any underwriting or selling group in connection with the public
distribution of, any securities, shall be final and conclusive, and shall be
binding upon the Corporation and all its stockholders, past, present and future,
and shares of capital stock of the Corporation are issued and sold on the
condition and understanding, evidenced by the purchase of shares of capital
stock or acceptance of share certificates, that any and all such determinations
shall be binding as aforesaid. No provision of these Articles of Incorporation
shall be effective to (a) require a waiver of compliance with any provision of
the Securities Act of 1933, as amended (the "Securities Act"), the Investment
Company Act or of any valid rule, regulation or order of the Securities and
Exchange Commission thereunder or (b) protect or purport to protect any director
or officer of the Corporation against any liability to the Corporation or its
security holders to which he or she would otherwise be subject by reason of
willful misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of his or her office.
EIGHTH: LIMITATIONS ON LIABILITY; INDEMNIFICATION.
Section 1. To the fullest extent that limitations on the liability of
directors and officers is permitted by Maryland statutory or decisional law, as
amended or interpreted, no director or officer of the Corporation shall have any
liability to the Corporation or its stockholders for monetary damages. This
limitation on liability applies to events occurring at the time a person serves
as a director or officer of the Corporation whether or not such person is a
director or officer at the time of any proceeding in which liability is
asserted. No amendment of these Articles of Incorporation or repeal of any of
the provisions hereof shall limit or eliminate the benefits provided to
directors and officers under this provision with respect to any act or omission
which occurred prior to such amendment or repeal.
Section 2. Any person who was or is a party or is threatened to be made a
party in any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative, by reason of the fact
that such person is a current or former director or officer of the Corporation
or is or was serving while a director or officer of the Corporation at the
request of the Corporation as a director, officer, partner, trustee, employee,
agent or fiduciary of another corporation, partnership, joint venture, trust,
enterprise or employee benefit plan, shall be indemnified by the Corporation
against judgments, penalties, fines, excise taxes, settlements and reasonable
expenses (including attorneys' fees) actually incurred by such person in
connection with such action, suit or proceeding to the fullest extent
permissible under the General Corporation Law, the Securities Act and the
Investment Company Act, as such statutes are now or hereafter in force. In
addition, the Corporation shall also advance expenses to its currently acting
and its former directors and officers to the fullest extent that indemnification
of directors and officers is permitted by the General Corporation Law, the
Securities Act and the Investment Company Act. The Board of Directors may by
bylaw, resolution or agreement make further provisions for indemnification of
the directors, officers, employees and agents to the fullest extent permitted by
the General Corporation Law.
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Section 3. No provision of this Article EIGHTH shall be effective to
protect or purport to protect any director or officer of the Corporation against
any liability to the Corporation or its stockholders to which he or she would
otherwise be subject by reason of willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct of their
respective offices.
NINTH: PERPETUAL EXISTENCE. The duration of the Corporation shall be
perpetual.
TENTH: AMENDMENTS. From time to time any of the provisions of these
Articles of Incorporation may be amended, altered or repealed (including any
amendment that changes the terms of any of the outstanding shares of capital
stock by classification, reclassification or otherwise), and other provisions
that may, under the General Corporation Law of the State of Maryland, the
Investment Company Act, securities law, or other laws in force at the time, be
lawfully contained in articles of incorporation may be added or inserted upon
the vote of a majority of the shares of capital stock of the Corporation
outstanding and entitled to vote thereon, including a majority of any class
entitled to vote thereon. All rights at any time conferred upon the stockholders
of the Corporation by these Articles of Incorporation are subject to the
provisions of this Article TENTH.
The term "Articles of Incorporation" or "Charter" as used herein and in the
Bylaws of the Corporation shall be deemed to mean these Articles of
Incorporation as from time to time amended, restated or supplemented.
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IN WITNESS WHEREOF, BRANTLEY CAPITAL CORPORATION has caused these presents
to be signed in its name and on its behalf by its Chief Executive Officer and
attested by its Secretary on October 29, 1996.
BRANTLEY CAPITAL CORPORATION
By /s/ ROBERT P. PINKAS
------------------------------
Chief Executive Officer
ATTEST:
/s/ PAUL H. CASCIO
- ------------------------------
Paul H. Cascio, Secretary
ACKNOWLEDGEMENT
The undersigned, Robert P. Pinkas, Chief Executive Officer of BRANTLEY
CAPITAL CORPORATION, who executed on behalf of said Corporation the foregoing
Articles of Amendment and Restatement of which this certificate is made a part,
hereby acknowledges, in the name and on behalf of said Corporation, the
foregoing Articles of Amendment and Restatement to be the corporate act of said
Corporation and further certifies that, to the best of his knowledge,
information and belief, the matters and facts set forth therein with respect to
the approval thereof are true in all material respects, under penalties of
perjury.
By /s/ ROBERT P. PINKAS
----------------------------------
Chief Executive Officer
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<PAGE> 1
EXHIBIT 4.3
BYLAWS
OF
BRANTLEY CAPITAL CORPORATION
(a Maryland Corporation)
(corrected and conformed as of November 21, 1996)
These bylaws ("Bylaws") are made as of the 29th day of October, 1996 and
adopted pursuant to the Articles of Incorporation establishing Brantley Capital
Corporation (the "Corporation") dated August 1, 1996, as from time to time
amended, restated or supplemented (hereinafter called the "Articles"). All words
and terms capitalized in these Bylaws shall have the meaning or meanings set
forth for such words or terms in the Articles unless otherwise noted.
ARTICLE I
Offices
-------
The registered office of the Corporation in the State of Maryland shall be
at 32 South Street, Baltimore, Maryland 21202.
The principal executive office of the Corporation shall be at 20600 Chagrin
Boulevard, Suite 1150, Cleveland, Ohio 44122.
The Corporation may have such other offices in such places as the Board of
Directors of the Corporation may from time to time determine.
ARTICLE II
Meetings of Stockholders
------------------------
Section 2.1. ANNUAL MEETING. An annual meeting of the stockholders of the
Corporation shall be held on such date and at such hour as may from time to time
be designated by the Board of Directors and stated in the notice of such meeting
for the purpose of electing directors and for the transaction of such other
business as may be properly brought before the meeting.
Section 2.2. SPECIAL MEETINGS. Special meetings of the stockholders for
any purpose or purposes may be called by the Chairman of the Board, the Chief
Executive officer, the President or the Board of Directors. Special meetings of
stockholders shall also be called by the Secretary upon receipt of the request
in writing signed by stockholders entitled to cast a majority of all votes
entitled to be cast at such meeting. Such request shall state the purpose or
purposes of the proposed meeting and the matters proposed to be acted on at
such proposed meeting. The Secretary shall inform the stockholders who make
such request of the reasonably estimated costs of preparing and mailing such
notice of
<PAGE> 2
meeting and upon payment to the Corporation of such costs, the Secretary shall
give notice as required in this Article to all stockholders entitled to notice
of such meeting. Unless requested by stockholders entitled to cast a majority of
all votes entitled to be cast at the meeting, a special meeting need not be
called to consider any matter which is substantially the same as a matter voted
upon at any special meeting of stockholders held during the preceding 12 months.
At a special meeting of stockholders, no business shall be transacted and no
corporate action taken other than that stated in the notice of said meeting
unless all of the stockholders of the Corporation entitled to vote thereat are
present in person or by proxy, in which case any and all business may be
transacted at the meeting even though the meeting is held without notice.
Section 2.3. PLACE OF MEETINGS. Any annual or special meeting of the
stockholders shall be held at such place within the United States as the Board
of Directors may from time to time designate.
Section 2.4. NOTICE OF MEETINGS; WAIVER OF NOTICES. Written notice of the
place, date and time of the holding of each annual and special meeting of the
stockholders and the purpose or purposes of each special meeting shall be given
personally or by mail, not less than 10 nor more than 60 days before the date of
such meeting, to each stockholder entitled to notice of the meeting. Notice by
mail shall be deemed to be duly given when deposited in the United States mail
or similar means addressed to the stockholder at the stockholder's address as it
appears on the records of the Corporation, with postage or any fees thereon
prepaid.
Notice of any meeting of stockholders shall be deemed waived by any
stockholder who shall attend such meeting in person or by proxy, or who shall,
either before or after the meeting, submit a signed waiver of notice which is
filed with the records of the meeting. When a meeting is adjourned to another
time and place, unless after the adjournment the Board of Directors shall fix a
new record date for any adjourned meeting or the adjournment is for more than 30
days, notice of such adjourned meeting need not be given if the time and place
to which the meeting shall be adjourned is announced at the meeting at which the
adjournment is taken.
Section 2.5. QUORUM AND ADJOURNMENT. At any meeting of the stockholders,
the holders of a majority in number of shares of stock of the Corporation
entitled to vote at the meeting present in person or by proxy shall constitute a
quorum for the transaction of any business, except as otherwise provided by
statute or by the Articles or these Bylaws. A meeting of stockholders convened
on the date for which it was called may be adjourned as permitted under the laws
of the State of Maryland. If a quorum shall not be present or represented at
such meeting of stockholders, a majority of the stockholders entitled to vote
thereat present in person or represented by proxy, shall have the power to
adjourn the meeting. At any adjourned session of a meeting at which a quorum
shall be present or represented, any business may be transacted that might have
been transacted at the meeting as originally noticed. The absence from any
meeting of holders of a number of shares of stock of the Corporation which may
be required by the General Corporation Law of the State of Maryland, the
Investment Company Act or any other applicable statute, the Articles,
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<PAGE> 3
or these Bylaws, for action on any given matter shall not prevent action at the
same meeting on any other matter or matters which may properly come before the
meeting if the holders of the number of shares of stock of the Corporation
required for action on such matters are present at such meeting in person or by
proxy.
Section 2.6. ORGANIZATION. At each meeting of the stockholders, the
Chairman of the Board, or in his or her absence or inability to act, the Chief
Executive Officer, or in his or her absence, the President, shall act as
chairman of the meeting. The Secretary, or in the Secretary's absence or
inability to act, any person appointed by the chairman of the meeting, shall act
as secretary of the meeting and keep the minutes thereof.
Section 2.7. ORDER OF BUSINESS. The order of business at all meetings of
the stockholders shall be as determined by the chairman of the meeting.
Section 2.8. VOTING. Except as otherwise provided by statute or the
Articles, each holder of record of shares of stock of the Corporation having
voting power shall be entitled at each meeting of the stockholders to one vote
for every share of such stock standing in the name of such stockholder on the
record of stockholders of the Corporation as of the record date determined
pursuant to Article X hereof.
Each stockholder entitled to vote at any meeting of stockholders may
authorize another person or persons to act for him by a proxy signed by such
stockholder or his attorney-in-fact. No proxy shall be valid after the
expiration of 11 months from the date thereof, unless otherwise provided in the
proxy. Every proxy shall be revocable at the pleasure of the stockholder
executing it, except in those cases where such proxy states that it is
irrevocable and where an irrevocable proxy is permitted by law. A proxy
purporting to be executed by or on behalf of a stockholder shall be deemed valid
unless challenged on or prior to its exercise. Except as otherwise provided by
applicable law, the Articles or these Bylaws, any corporate action to be taken
by vote of the stockholders shall be authorized by a majority of the total votes
cast at a meeting of stockholders by the stockholders present in person or
represented by proxy and entitled to vote on such action.
Section 2.9. INSPECTORS OF ELECTION. In advance of any meeting of the
stockholders, the Board of Directors may appoint inspectors of election to act
at the meeting or any adjournment thereof (the "Inspectors of Election"). If
Inspectors of Election are not so appointed, the chairman, if any, of any
meeting of the stockholders may, and on the request of any stockholder or his or
her proxy shall, appoint Inspectors of Election of the meeting. The number of
Inspectors of Election shall be either one or more. If appointed at the meeting
on the request of one or more stockholders or proxies, a majority of votes cast
shall determine whether one or more Inspectors of Election are to be appointed,
but failure to allow such determination by the stockholders shall not affect the
validity of the appointment of Inspectors of Election. In case any person
appointed as Inspector of Election fails to appear or fails or refuses to act,
the vacancy may be filled by appointment made by the Board of Directors in
advance of the convening of the meeting or at the meeting by the person acting
as chairman. Inspectors, before entering upon the discharge of their duties,
shall take and sign an oath to execute faithfully the duties of inspector at
such meeting with
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strict impartiality and according to the best of their ability. The Inspectors
of Election shall determine the number of outstanding shares of stock owned by
stockholders, the voting power of each, the shares of stock represented at the
meeting, the existence of a quorum, the authenticity, validity and effect of
proxies, shall receive votes, ballots or consents, shall hear and determine all
challenges and questions in any way arising in connection with the right to
vote, shall count and tabulate all votes or consents, determine the results, and
do such other acts as may be proper to conduct the election or vote with
fairness to all stockholders. If there are three or more Inspectors of Election,
the decision, act or certificate of a majority is effective in all respects as
the decision, act or certificate of all. On request of the chairman, if any, of
the meeting, or of any stockholder or his or her proxy, the Inspectors of
Election shall make a report in writing of any challenge or question or matter
determined by them and shall execute a certificate of any facts found by them.
No director or candidate for office of director shall act as inspector of an
election of directors. Inspectors of Election need not be stockholders.
Section 2.10. RECORDS OF MEETINGS OF STOCKHOLDERS. At each meeting of the
stockholders there shall be open for inspection the minutes of the last previous
meeting of stockholders and a list of the stockholders, certified to be true and
correct by the Secretary or other proper agent of the Corporation, as of the
record date of the meeting. Such list of stockholders shall contain the name of
each stockholder in alphabetical order, the stockholder's address and shares of
stock owned by such stockholder. Stockholders shall have the right to inspect
books and records of the Corporation during normal business hours for any
purpose not harmful to the Corporation.
Section 2.11. ADVANCE NOTICE PROVISIONS FOR ELECTION OF DIRECTORS. Only
persons who are nominated in accordance with the following procedures shall be
eligible for election as directors of the Corporation. Nominations of persons
for election to the Board of Directors may be made at any annual meeting of
stockholders, or at any special meeting of stockholders called for the purpose
of electing directors, (a) by or at the direction of the Board of Directors (or
any duly authorized committee thereof), or (b) by any stockholder of the
Corporation (i) who is a stockholder of record on the date of the giving of the
notice provided for in this Section 2.11 and on the record date for the
determination of stockholders entitled to vote at such meeting, and (ii) who
complies with the notice procedures set forth in this Section 2.11.
In addition to any other applicable requirements, for a nomination to be
made by a stockholder such stockholder must have given timely notice thereof in
proper written form to the Secretary of the Corporation.
To be timely, a stockholder's notice to the Secretary must be delivered to
or mailed and received at the principal executive offices of the Corporation (a)
in the case of an annual meeting, not less than 60 days nor more than 90 days
prior to the date of the annual meeting; provided, however, that in the event
that less than 70 days notice or prior public disclosure of the date of the
annual meeting is given or made to stockholders, notice by the stockholders in
order to be timely must be so received not later than the close of business on
the tenth day following the day on which such notice of the date of the annual
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<PAGE> 5
meeting was mailed or such public disclosure of the date of the annual meeting
was made, whichever first occurs; and (b) in the case of a special meeting of
stockholders called for the purpose of electing directors, not later than the
close of business on the tenth day following the date on which notice of the
date of the special meeting was mailed or public disclosure of the date of the
special meeting was made, whichever first occurs.
To be in proper written form, a stockholder's notice to the Secretary must
set forth (a) as to each person whom the stockholder proposes to nominate for
election as a director (i) the name, age, business address and residence address
of the person, (ii) the principal occupation or employment of the person, (iii)
the class or series and number of shares of capital stock of the Corporation
which are owned beneficially or of record by the person, and (iv) any other
information relating to the person that would be required to be disclosed in a
proxy statement or other filings required to be made in connection with
solicitations of proxies for election of directors pursuant to Section 14 of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the rules
and regulations promulgated thereunder; and (b) as to the stockholder giving
notice (i) the name and record address of such stockholder, (ii) the class or
series and number of shares of capital stock of the Corporation which are owned
beneficially or of record by such stockholder, (iii) a description of all
arrangements or understandings between such stockholder and each proposed
nominee and any other person or persons (including their names) pursuant to
which the nomination(s) are to be made by such stockholder, (iv) a
representation that such stockholder intends to appear in person or by proxy at
the meeting to nominate the persons named in its notice, and (v) any other
information relating to such stockholder that would be required to be disclosed
in a proxy statement or other filings required to be made in connection with
solicitations of proxies for election of directors pursuant to Section 14 of the
Exchange Act and the rules and regulations promulgated thereunder. Such notice
must be accompanied by a written consent of each proposed nominee to being named
as a nominee and to serve as a director if elected.
No person shall be eligible for election as a director of the Corporation
unless nominated in accordance with the procedures set forth in this Section
2.11. If the chairman of the meeting determines that a nomination was not made
in accordance with the foregoing procedures, the chairman shall declare to the
meeting that the nomination was defective and such defective nomination shall be
disregarded.
Section 2.12. ADVANCE NOTICE PROVISIONS FOR BUSINESS TO BE TRANSACTED AT
ANNUAL MEETING. No business may be transacted at an annual meeting of
stockholders, other than business that is either (a) specified in the notice of
meeting (or any supplement thereto) given by or at the direction of the Board of
Directors (or any duly authorized committee thereof), (b) otherwise properly
brought before the annual meeting by or at the direction of the Board of
Directors (or any duly authorized committee thereof), or (c) otherwise properly
brought before the annual meeting by any stockholder of the Corporation (i) who
is a stockholder of record on the date of the giving of the notice provided for
in this Section 2.12 and on the record date for the determination of
stockholders entitled to vote at such annual meeting, and (ii) who complies with
the notice procedures set forth in this Section 2.12.
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<PAGE> 6
In addition to any other applicable requirements, for business to be
properly brought before an annual meeting by a stockholder, such stockholder
must have given timely notice thereof in proper written form to the Secretary of
the Corporation.
To be timely, a stockholder's notice to the Secretary must be delivered to
or mailed and received at the principal executive offices of the Corporation not
less than 60 days nor more than 90 days prior to the date of the annual meeting;
provided, however, that in the event that less than 70 days notice or prior
public disclosure of the date of the annual meeting is given or made to
stockholders, notice by the stockholder to be timely must be so received not
later than the close of business on the tenth day following the day on which
such notice of the date of the annual meeting was mailed or such public
disclosure of the date of the annual meeting was made, whichever first occurs.
To be in proper written form, a stockholder's notice to the Secretary must
set forth as to each matter such stockholder proposes to bring before the annual
meeting (i) a brief description of the business desired to be brought before the
annual meeting and the reasons for conducting such business at the annual
meeting, (ii) the name and record address of such stockholder, (iii) the class
or series and number of shares of capital stock of the Corporation which are
owned beneficially or of record by such stockholder, (iv) a description of all
arrangements or understandings between such stockholder and any other person or
persons (including their names) in connection with the proposal of such business
by such stockholder and any material interest of such stockholder in such
business, and (v) a representation that such stockholder intends to appear in
person or by proxy at the annual meeting to bring such business before the
meeting.
No business shall be conducted at the annual meeting of stockholders except
business brought before the annual meeting in accordance with the procedures set
forth in this Section 2.12; provided, however, that once business has been
properly brought before the annual meeting in accordance with such procedures,
nothing in this Section 2.12 shall be deemed to preclude discussion by any
stockholder of any such business. If the chairman of an annual meeting
determines that business was not properly brought before the annual meeting in
accordance with the foregoing procedures, the chairman shall declare to the
meeting that the business was not properly brought before the meeting and such
business shall not be transacted.
ARTICLE III
Board of Directors
------------------
Section 3.1. MANAGEMENT OF THE CORPORATION. The property, business and
affairs of the Corporation shall be managed under the direction of its Board of
Directors, and all of the powers of the Corporation may be exercised by or under
authority of the Board of Directors except as conferred upon or reserved to the
stockholders by law, by the Articles or by these Bylaws.
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Section 3.2. NUMBER OF DIRECTORS. The number of directors of the
Corporation shall, until further action is taken by the Board of Directors, be
five. By vote of a majority of the entire Board of Directors, the number of
directors fixed by the Articles or by these Bylaws may be increased or decreased
from time to time up to a maximum of seven, but shall never be less than three.
Section 3.3. TENURE AND CLASSES OF DIRECTORS. The directors shall be
divided into three classes, designated Class I, Class II and Class III. All
classes shall be as nearly equal in number as possible, and initially, Class I
will consist of one director, Class II will consist of two directors, and Class
III will consist of two directors. The directors as initially classified shall
hold office for terms as follows: the Class I director, Richard Moodie, shall
hold office until the date of the annual meeting of stockholders in 1997 or
until a successor shall be elected and qualified; the Class II directors, L.
Patrick Bales and Benjamin F. Bryan shall hold office until the date of the
annual meeting of stockholders in 1998 or until their successors shall be
elected and qualified; and the Class III directors, Robert P. Pinkas and Michael
J. Finn shall hold office until the date of the annual meeting of stockholders
in 1999 or until their successors shall be elected and qualified. Upon
expiration of the term of office of each class as set forth above, the directors
in each such class shall be elected for a term of three years to succeed the
directors whose terms of office expire. Each director shall hold office until
the expiration of his or her term and until his or her successor shall have been
elected and qualified, or until his or her death, or until he or she shall have
resigned, or until he or she shall have been removed as provided by the
Articles, these Bylaws, or by any other applicable state or federal laws.
Section 3.4. VACANCIES. Except as otherwise required by the Investment
Company Act, any vacancy occurring in the Board of Directors for any cause other
than by reason of an increase in the number of directors may be filled by a
majority of the remaining members of the Board of Directors, although such
majority is less than a quorum. Any vacancy occurring by reason of an increase
in the number of directors may be filled by an action of a majority of the
entire Board of Directors. A director elected by the Board of Directors to fill
a vacancy shall be elected to hold office until the next annual meeting of
stockholders or until a successor is elected and qualified. If at any time less
than 50% of all directors holding office were elected by the stockholders, a
meeting of the stockholders must be held within 60 days to fill vacancies.
At any annual meeting of stockholders, stockholders shall be entitled to
elect directors to fill any vacancies in the Board of Directors that have arisen
since the preceding annual meeting of stockholders (whether or not any such
vacancy has been filled by election of a new director by the Board of Directors)
and any director not elected by the stockholders shall hold office until his or
her successor shall be elected and shall qualify.
Section 3.5. REMOVAL. Any director may be removed with or without cause at
any time by written instrument signed by at least two-thirds of the other
directors. Any director who requests to be retired, or who has become physically
or mentally incapacitated or is otherwise unable to serve, may be retired by
written instrument signed by a majority of the other directors. Any director may
be removed with or without cause at any meeting
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of stockholders by a vote of at least 75% of all of the votes entitled to be
cast for the election of directors at a meeting duly called for that purpose,
which meeting will be held upon the written request of the Chairman of the
Board, the Chief Executive Officer or the President of the Corporation.
Section 3.6. COMPENSATION OF DIRECTORS. Directors may receive compensation
for services to the Corporation in their capacities as directors or otherwise in
such manner and in such amounts as may be fixed from time to time by the Board
of Directors.
Section 3.7. POWER TO ISSUE AND SELL STOCK. The Board of Directors may from
time to time authorize by resolution the issuance and sale of any of the
Corporation's authorized shares of stock to such persons as the Board of
Directors shall deem advisable.
Section 3.8. POWER TO DECLARE DIVIDENDS. The Board of Directors, from time
to time as it may deem advisable, may declare and the Corporation may pay
dividends, in cash, property, or shares of stock of the Corporation, out of any
source available for dividends, to the stockholders according to their
respective rights and interests.
ARTICLE IV
Meetings of the Board of Directors
----------------------------------
Section 4.1. PLACE OF MEETINGS. Meetings of the Board of Directors, regular
or special, may be held at any place in or out of the State of Maryland as the
Board of Directors may from time to time determine or as shall be specified in
the notice of such meeting.
Section 4.2. ANNUAL MEETINGS. The first meeting of each newly elected Board
of Directors shall be held as soon as practicable after the meeting of
stockholders at which the directors were elected or, in the absence of such
annual stockholders' meeting, at such time and place as the Board of Directors
may provide. No notice of such meeting shall be necessary, if held immediately
after the adjournment, and at the site, of the meeting of stockholders.
Section 4.3. REGULAR MEETINGS. Regular meetings of the Board of Directors
may be held without notice at such time and place as shall from time to time be
determined by the Board of Directors.
Section 4.4. SPECIAL MEETINGS. Special meetings of the Board of Directors
shall be held upon the call of the Chairman of the Board, the Chief Executive
Officer or the President, at such time, on such day and at such place, as shall
be designated in the notice of the meeting.
Section 4.5. NOTICE. Notice of every special meeting shall be given by mail
(which term shall include next business day courier service) or by electronic
transmission
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(which term shall include cablegram, telecopy or facsimile) or delivered
personally, to each director at his or her business address as set forth in the
records of the Corporation. Such notice shall be delivered not less than two
days preceding the meeting. Notice of a meeting of directors may be waived
before or after any meeting by signed written waiver. Neither the business to be
transacted at, nor the purpose of, any meeting of the Board of Directors need be
stated in the notice or waiver of notice of such meeting, and no notice need be
given of action proposed to be taken by written consent. The attendance of a
director at a meeting shall constitute a waiver of notice of such meeting.
Section 4.6. CHAIRMAN OF THE BOARD; RECORDS. The Board of Directors shall
elect a Chairman of the Board from among their number, pursuant to the
provisions of Article V of these Bylaws. Such Chairman of the Board shall act as
chairman at all meetings of the Board of Directors; in his or her absence the
Chief Executive Officer shall act as chairman; in the absence of the Chairman of
the Board and the Chief Executive Officer, the President shall act as chairman;
and, in the absence of the Chairman of the Board, the Chief Executive Officer
and the President, the directors present shall elect one of their number to act
as temporary chairman. The results of all actions taken at a meeting of the
Board of Directors, or by written consent of the directors, shall be recorded by
the Secretary.
Section 4.7. COMMITTEES. The Board of Directors may appoint from among its
members an Executive Committee and other committees composed of two or more
directors, and may delegate to such committees any or all of the powers of the
Board of Directors in the management of the business and affairs of the
Corporation except the power to declare dividends or distributions on stock, to
issue stock, to recommend to stockholders any action that requires stockholders'
approval, to fill a vacancy on the Board of Directors, to amend these Bylaws or
to approve any merger or share exchange which does not require stockholder
approval. In the absence of any member of any such committee, the members
thereof present at any meeting, whether or not they constitute a quorum, may
appoint a member of the Board of Directors to act in the place of such absent
member. Committees shall keep minutes of their proceedings and shall report the
same to the Board of Directors at the meeting next succeeding, and any action by
a committee shall be subject to revisions and alteration by the Board of
Directors, provided that no rights of third persons shall be affected by any
such revision or alteration.
Section 4.8. QUORUM. At all meetings of the Board of Directors, a majority
of the entire Board of Directors shall constitute a quorum for the transaction
of business and the action of a majority of the directors present at any meeting
at which a quorum is present shall be the action of the Board of Directors
unless the concurrence of a greater proportion is required for such action by
the General Corporation Law of the State of Maryland, the Articles or these
Bylaws. If a quorum shall not be present at any meeting of directors, the
directors present thereat may by a majority vote adjourn the meeting from time
to time, without notice other than announcement at the meeting, until a quorum
shall be present.
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Section 4.9. CONFERENCE TELEPHONE MEETINGS. Unless otherwise restricted by
the Articles of Incorporation or by these Bylaws, the members of the Board of
Directors or any committee designated by the Board of Directors, may participate
in a meeting of the Board of Directors or such committee, as the case may be, by
means of conference telephone or similar communications equipment by means of
which all persons participating in the meeting can hear each other, and such
participation shall constitute presence in person at such meeting.
Section 4.10. CONSENT OF DIRECTORS IN LIEU OF MEETING. Any action required
or permitted to be taken at any meeting of the Board of Directors or of any
committee thereof may be taken without a meeting, if a written consent to such
action is signed by all members of the Board of Directors or of such committee,
as the case may be, and such written consent is filed with the minutes of
proceedings of the Board of Directors or committee.
ARTICLE V
Officers
--------
Section 5.1. OFFICERS OF THE CORPORATION; COMPENSATION. The officers of the
Corporation shall be elected by the Board of Directors and shall consist of a
Chairman of the Board, a Chief Executive Officer, a President, a Secretary, a
Treasurer and such other officers or assistant officers, including Vice
Presidents, as may be designated from time to time by the Board of Directors.
Any two or more of the offices may be held by the same person, provided,
however, that no one person may serve as both President and Vice President, if
any, and provided further, that any person who holds more than one office in the
Corporation may not act in more than one capacity to execute, acknowledge or
verify any instrument required by law to be executed, acknowledged or verified
by more than one officer. The Board of Directors may designate a Vice President,
if any, as an Executive Vice President and may designate the order in which any
other Vice Presidents may act. No officer of the Corporation need be a director.
The Board of Directors may determine what, if any, compensation shall be paid to
officers of the Corporation.
Section 5.2. ELECTION AND TENURE. The Board of Directors shall elect the
Chairman of the Board, Chief Executive Officer, President, Secretary, Treasurer
and such other officers as the Board of Directors shall deem necessary or
appropriate in order to carry out the business of the Corporation. The Chairman
of the Board and such officers shall hold office until resignation or removal in
accordance with Section 5.3 and until their successors have been duly elected
and qualified. The Board of Directors may fill any vacancy in or add any
additional officers at any time.
Section 5.3. REMOVAL OF OFFICERS; RESIGNATION. Any officer may be removed
at any time, with or without cause, by action of a majority of the directors
whenever in the judgment of the Board of Directors the best interests of the
Corporation will be served thereby. This provision shall not prevent the making
of a contract of employment for a
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definite term with any officer and shall have no effect upon any cause of action
which any officer may have as a result of removal in breach of a contract of
employment. Any officer may resign at any time by notice in writing signed by
such officer and delivered or mailed to the Chairman of the Board of the Chief
Executive Officer, and such resignation shall take effect immediately, or at a
later date according to the terms of such notice in writing.
Section 5.4. BONDS AND SURETY. Any officer may be required by the Board of
Directors to be bonded for the faithful performance of his or her duties in such
amount and with such sureties as the Board of Directors may determine.
Section 5.5. CHAIRMAN OF THE BOARD. The Chairman of the Board shall, if
present, preside at meetings of the stockholders and, if present, meetings of
the Board of Directors of the Corporation. The Chairman of the Board may sign
and execute in the name of the Corporation deeds, mortgages, bonds, contracts or
other instruments. The Chairman shall, when requested, counsel with and advise
the other officers of the Corporation and shall perform such other duties as he
may agree with the President or as the Board of Directors may from time to time
determine.
Section 5.6. CHIEF EXECUTIVE OFFICER. The Chief Executive Officer shall be
the chief executive officer of the Corporation, and shall have the powers and
perform the duties incident to that position. Subject to the Board of Directors,
the Chief Executive Officer shall be in general and active charge of the entire
business and affairs of the Corporation, and shall be its chief policy-making
officer. The Chief Executive Officer shall have such other powers and perform
such other duties as may be prescribed by the Board of Directors or as provided
in these Bylaws. In the absence of the Chairman of the Board, the Chief
Executive Officer shall preside at all meetings of the stockholders and at all
meetings of the Board of Directors. The Chief Executive Officer shall be, ex
officio, a member of all standing committees. Subject to direction of the Board
of Directors, the Chief Executive Officer shall have the power, in the name and
on behalf of the Corporation, to execute any and all loan documents, contracts,
agreements, deeds, mortgages, and other instruments in writing, and to employ
and discharge employees and agents of the Corporation. Unless otherwise directed
by the Board of Directors, the Chief Executive Officer shall have full authority
and power, on behalf of all of the directors, to attend and to act and to vote,
on behalf of the Corporation at any meetings of business organizations in which
the Corporation holds an interest, or to confer such powers upon any other
persons, by executing any proxies duly authorizing such persons.
Section 5.7. PRESIDENT AND VICE-PRESIDENTS. The President shall be the
chief operating officer of the Corporation and, subject to the Board of
Directors, shall have general supervision, direction and control of the business
of the Corporation and of its employees and shall exercise such general powers
of management as are usually vested in the office of president of a corporation.
In the absence of the Chairman of the Board and the Chief Executive Officer, the
President shall preside at all meetings of the stockholders and at all meetings
of the Board of Directors. The President shall be, ex officio, a member of all
standing committees. Subject to direction of the Board of Directors, the
President shall have the power, in the name and on behalf of the Corporation, to
execute any and all
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loan documents, contracts, agreements, deeds, mortgages, and other instruments
in writing, and to employ and discharge employees and agents of the Corporation.
Unless otherwise directed by the Board of Directors, the President shall have
full authority and power, on behalf of all of the directors, to attend and to
act and to vote, on behalf of the Corporation at any meetings of business
organizations in which the Corporation holds an interest, or to confer such
powers upon any other persons, by executing any proxies duly authorizing such
persons. The President shall have such further authorities and duties as the
Board of Directors shall from time to time determine. In the absence or
disability of the President, the Vice Presidents in order of their rank or the
Vice President, if any, designated by the Board of Directors, shall perform all
of the duties of the President, and when so acting shall have all the powers of
and be subject to all of the restrictions upon the President. Subject to the
direction of the Chairman of the Board, the Chief Executive Officer, the
President and the Treasurer, any Vice President shall have the power in the name
and on behalf of the Corporation to execute any and all loan documents,
contracts, agreements, deeds, mortgages and other instruments in writing, and,
in addition, shall have such other duties and powers as shall be designated from
time to time by the Board of Directors, the Chairman of the Board, the Chief
Executive Officer, or the President.
Section 5.7. SECRETARY. The Secretary shall keep the minutes of all
meetings of, and record all votes of, stockholders, Board of Directors and any
committees of directors, provided that, in the absence or disability of the
Secretary, the Board of Directors may appoint any other person to keep the
minutes of a meeting and record votes. The Secretary shall attest the signature
or signatures of the officer or officers executing any instrument on behalf of
the Corporation. The Secretary shall also perform any other duties commonly
incident to such office in a Maryland corporation and shall have such other
authorities and duties as the Board of Directors shall from time to time
determine.
Section 5.8. TREASURER. Except as otherwise directed by the Board of
Directors, the Treasurer shall have the general supervision of the monies,
funds, securities, notes receivable and other valuable papers and documents of
the Corporation, and shall have and exercise under the supervision of the Board
of Directors, the Chairman of the Board and the President all powers and duties
normally incident to his or her office. He or she may endorse for deposit or
collection all notes, checks and other instruments payable to the Corporation or
to its order. He or she shall deposit all funds of the Corporation as may be
ordered by the Board of Directors, the Chairman of the Board, the Chief
Executive Officer or the President. He or she shall keep accurate account of the
books of the Corporation's transactions which shall be the property of the
Corporation and which, together with all other property of the Corporation in
his or her possession, shall be subject at all times to the inspection and
control of the Board of Directors. Unless the Board of Directors shall otherwise
determine, the Treasurer shall be the principal accounting officer of the
Corporation and shall also be the principal financial officer of the
Corporation. He or she shall have such other duties and authorities as the Board
of Directors shall from time to time determine. Notwithstanding anything to the
contrary herein contained, the Board of Directors may authorize any adviser or
administrator to maintain bank accounts and deposit and disburse funds on behalf
of the Corporation.
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Section 5.9. OTHER OFFICERS AND DUTIES. The Board of Directors may elect
such other officers and assistant officers as they shall from time to time
determine to be necessary or desirable in order to conduct the business of the
Corporation. Assistant officers shall act generally in the absence of the
officer whom they assist and shall assist that officer in the duties of his or
her office. Each officer, employee and agent of the Corporation shall have such
other duties and authority as may be conferred upon him or her by the Board of
Directors or delegated to him or her by the Chairman of the Board, the Chief
Executive Officer or the President.
ARTICLE VI
Custody of Securities
---------------------
Section 6.1. EMPLOYMENT OF CUSTODIAN. The Corporation shall have the option
to act as a self-custodian in accordance with the provisions set forth in
Section 17(f) of the Investment Company Act and Rule 17f-2 thereunder or place,
and at all times maintain, in the custody of a custodian (including any
sub-custodian for the custodian) all funds, securities and similar investments
owned by the Corporation. The custodian, if any, (and any sub-custodian) shall
be an institution conforming to the requirements of Section 17(f) of the
Investment Company Act and the rules of the United States Securities and
Exchange Commission (the "Commission") thereunder. The custodian, if any, shall
be appointed from time to time by the Board of Directors which shall fix its
remuneration.
Section 6.2. APPOINTMENT AND DUTIES. The Board of Directors may at any time
employ a custodian or custodians with authority as its agent, but subject to
such restrictions, limitations and other requirements, if any, as may be
contained in these Bylaws:
(1) to hold the securities owned by the Corporation and deliver the
same upon written order;
(2) to receive and receipt for any moneys due to the Corporation and
deposit the same in its own banking affiliate or elsewhere as the Board of
Directors may direct;
(3) to disburse such funds upon orders or vouchers;
(4) if authorized to do so by the Board of Directors, to keep the
books and accounts of the Corporation and furnish clerical and accounting
services; and
(5) if authorized to do so by the Board of Directors, to compute the
net income and net assets of the Corporation;
all upon such basis of compensation as will be agreed upon between the Board of
Directors and the custodian. The Board of Directors may also authorize the
custodian to employ one
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or more sub-custodians, from time to time, to perform such of the acts and
services of the custodian and upon such terms and conditions as may be agreed
upon between the custodian and such sub-custodian and approved by the Board of
Directors.
Section 6.3. CENTRAL CERTIFICATE SYSTEM. Subject to such rules, regulations
and orders as the Commission may adopt, the Board of Directors may direct the
custodian to deposit all or any part of the securities owned by the Corporation
in a system for the central handling of securities established by a national
securities exchange or a national securities association registered with the
Commission under the Securities Exchange Act of 1934, as amended, or with any
such other person or entity with which the Board of Directors may authorize
deposit in accordance with the Investment Company Act, pursuant to which system
all securities of any particular class or series of any issuer deposited within
the system are treated as fungible and may be transferred or pledged by
bookkeeping entry without physical delivery of such securities. All such
deposits shall be subject to withdrawal only upon the order of the Corporation.
Section 6.4. TERMINATION OF CUSTODIAN AGREEMENT. Upon termination of the
custodian agreement, if any, or inability of the custodian to continue to serve,
the Board of Directors shall promptly appoint a successor custodian, but in the
event that no successor custodian can be found who has the required
qualifications and is willing to serve, the Board of Directors shall call as
promptly as possible a special meeting of the stockholders to determine whether
the Corporation shall function without a custodian or shall be liquidated. If so
directed by vote of the holders of a majority of the outstanding shares of stock
of the Corporation entitled to vote, the custodian shall deliver and pay over
all property of the Corporation held by it as specified in such vote.
ARTICLE VII
Capital Stock
-------------
Section 7.1. ISSUANCE OF CERTIFICATES. A certificate or certificates
representing the number of shares of stock of the Corporation owned by
stockholders shall be available upon request to each stockholder. A certificate
shall state (i) the name of the Corporation, (ii) the name of the stockholder or
other person to whom it is issued and (iii) the class of stock and number of
shares represented by the certificate.
Section 7.2. STOCK LEDGER; TRANSFER OF STOCK. The Corporation shall
maintain at the offices of its transfer agent an original stock ledger
containing the names and addresses of all stockholders and the number of shares
of stock held by each stockholder. Such stock ledger may be in written form or
any other form capable of being converted into written form within a reasonable
time for visual inspection.
The Corporation shall be entitled to recognize the exclusive rights of a
person registered on its books as the owner of shares of stock, and shall not be
bound to recognize any legal, equitable or other claim to or interest in such
shares of stock on the part of any
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other person, whether or not it shall have received express or other notice
thereof, except as otherwise provided by the laws of the State of Maryland.
Transfers of shares of stock of the Corporation shall be made on the stock
records of the Corporation only by the registered holder thereof, or by his or
her attorney thereunto authorized by power of attorney duly executed and filed
with the Secretary or with the transfer agent or transfer clerk and accompanied
by a duly executed stock transfer power and the payment of all taxes thereon.
ARTICLE VIII
Indemnification and Insurance
-----------------------------
Section 8.1. INDEMNIFICATION OF OFFICERS, DIRECTORS, EMPLOYEES AND AGENTS.
The Corporation shall indemnify each person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative (a
"Proceeding"), by reason of the fact that he or she is or was a director,
officer, employee or agent of the Corporation or is or was serving at the
request of the Corporation as a director, officer, employee, agent, partner or
trustee of another corporation, partnership, joint venture, trust or other
enterprise, against all judgments, penalties, fines and settlements and against
all reasonable expenses, including attorneys' fees, actually incurred by him or
her in connection with such Proceeding to the fullest extent permitted by law,
provided that:
(a) such person acted in good faith and (i) in the case of conduct in
such person's official capacity with the Corporation, in a manner he or she
reasonably believed to be in the best interests of the Corporation and (ii)
in all other cases, in a manner he or she reasonably believed not opposed
to the best interests of the Corporation;
(b) with respect to any criminal proceeding, such person had no
reasonable cause to believe his or her conduct was unlawful;
(c) unless ordered or permitted by a court, indemnification shall be
made only as authorized in the specific case upon (i) a determination that
indemnification of such person is proper in the circumstances because he or
she has met the applicable standard of conduct set forth in subparagraphs
(a) and (b) above, and (ii) such other authorizations and determinations as
may be required by law to be made, by (A) the Board of Directors of the
Corporation by the vote of a majority of a quorum consisting of directors
who are neither "interested persons" of the Corporation as defined in the
Investment Company Act nor parties to such Proceeding or if such quorum
cannot be obtained, by a majority vote of a committee of the Board of
Directors consisting solely of two or more such directors who are duly
designated to act in the matter by a majority vote of the full Board of
Directors, or (B) independent legal counsel in a written opinion, which
counsel shall be selected
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in accordance with such procedures as may be required by law; provided,
however, that such counsel shall make only such determinations and
authorizations as are permitted by law to be made by independent counsel,
or (C) the stockholders of the Corporation acting in accordance with the
Articles and the Bylaws of the Corporation and applicable law;
(d) in the case of a Proceeding by or in the right of the Corporation
to procure a judgment in its favor, no indemnification shall be made except
for the payment of expenses reasonably incurred by such person in
connection therewith; provided, however, that if such person shall have
been adjudged to be liable for negligence or misconduct in the performance
of his or her duties to the Corporation, no indemnification shall be made
with respect to the expense incurred by such person in connection with such
Proceeding unless, and only to the extent that, the court in which such
Proceeding is brought, or a court of equity in the county or other local
jurisdiction in which the Corporation has its principal office, shall
determine upon application that, despite adjudication of liability but in
view of all the circumstances of the case, he or she is fairly and
reasonably entitled to indemnity for such expenses which such court shall
deem proper; and
(e) no indemnification or other protection shall be made or given to
any director or officer of the Corporation against any liability to the
Corporation or to its stockholders to which he or she would otherwise be
subject by reason of willful misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in the conduct of their
respective offices.
Expenses (including attorneys' fees) incurred in defending a Proceeding
will be paid by the Corporation in advance of the final disposition thereof to
the fullest extent permitted by law.
The termination of any Proceeding by judgment, order, settlement,
conviction, or upon a plea of nolo contendere or its equivalent, shall not, of
itself, create a presumption that such person has not met the applicable
standard of conduct set forth in subparagraphs (a) and (b) above.
Section 8.2. INSURANCE OF DIRECTORS, OFFICERS, EMPLOYEES AND AGENTS. The
Corporation may purchase and maintain insurance on behalf of any person who is
or was a director, officer, employee or agent of the Corporation, or is or was
serving at the request of the Corporation as a director, officer, employee,
partner, trustee or agent of another corporation, partnership, joint venture,
trust or other enterprise against any liability asserted against him or her and
incurred by him or her in or arising out of his or her position, whether or not
the Corporation would have the power to indemnify him or her against such
liability. However, any insurance purchased will not protect or purport to
protect any officer or director against liabilities for willful misfeasance, bad
faith, gross negligence or reckless disregard of the duties involved in the
conduct of his or her office.
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ARTICLE IX
Corporate Seal
--------------
The Corporation shall not have or use a corporate seal.
ARTICLE X
Record Date
-----------
The Board of Directors may fix, in advance, a date as the record date for
the purpose of determining stockholders entitled to notice of, or to vote at,
any meeting of stockholders, or stockholders entitled to receive payment of any
dividend or distribution or the allotment of any rights, or in order to make a
determination of stockholders for any other purpose. Such date in any case shall
be not more than 90 days, and in case of a meeting of stockholders not less than
10 days, prior to the date on which the particular action requiring such
determination of stockholders is to be taken.
ARTICLE XI
Miscellaneous
-------------
Section 11.1. DEPOSITORIES. In accordance with Article VI of these Bylaws,
the funds of the Corporation shall be deposited in such depositories as the
Board of Directors shall designate and shall be drawn out on checks, drafts or
other orders signed by such officer, officers, agent or agents (including any
adviser or administrator), as the Board of Directors may from time to time
authorize.
Section 11.2. SIGNATURE. All contracts and other instruments shall be
executed an behalf of the Corporation by such officer, officers, agent or
agents, as provided in these Bylaws or as the Board of Directors may from time
to time by resolution or authorization provide.
Section 11.3. FISCAL YEAR. The fiscal year of the Corporation shall end on
December 31 of each year, subject, however, to change from time to time by the
Board of Directors.
Section 11.4. BOOKS AND RECORDS. The books and records of the Corporation
shall be kept at such places as the Board of Directors may determine, provided
however, that the original or a certified copy of these Bylaws, including any
amendments thereto, shall be kept at the Corporation's principal executive
office.
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Section 11.5. NET ASSET VALUE. The value of the Corporation's net assets
shall be determined at such times and by such method as set forth in the
Corporation's Articles of Incorporation.
ARTICLE XII
Amendment of Bylaws
-------------------
Section 12.1. AMENDMENT AND REPEAL OF BYLAWS. In accordance with Article
TENTH of the Articles, the Board of Directors shall have the power to alter,
amend or repeal these Bylaws or adopt new bylaws at any time. The Board of
Directors shall in no event adopt bylaws that are in conflict with the Articles,
the General Laws of the State of Maryland, the Investment Company Act or other
applicable federal securities laws.
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<PAGE> 1
Exhibit 4.4
BRANTLEY CAPITAL CORPORATION
1996 STOCK OPTION PLAN
FOR OFFICERS AND EMPLOYEES
Brantley Capital Corporation, a Maryland corporation (the "Company")
hereby establishes the Brantley Capital Corporation 1996 Stock Option Plan (the
"Plan") effective upon the date of the closing of the initial public offering
of the shares of $.01 par value common stock (the "Common Stock") of the
Company (the "Effective Date"). Grants may be made hereunder prior to
stockholder approval, provided that any such grants shall be subject to such
stockholder approval.
1. Purpose of Plan
The purpose of the Plan is to advance the best interests of the
Company by providing those persons who have a substantial responsibility for
the management of the Company with additional incentives to exert their best
efforts on behalf of the Company, to increase their proprietary interest in the
success of the Company, to reward outstanding performance and to attract and
retain executive personnel of outstanding ability.
2. Definitions
Unless the context clearly indicates otherwise, capitalized terms used
and not elsewhere defined in this Plan shall have the meanings ascribed to such
terms in this Section 2:
"1940 Act" shall mean the Investment Company Act of 1940, as amended.
"Board" shall mean the Board of Directors of the Company.
"Cause" shall mean (i) a Participant's theft or embezzlement, or
attempted theft or embezzlement, of money or property of the Company, a
Participant's perpetration or attempted perpetration of fraud, or a
Participant's participation in a fraud or attempted fraud, on the Company or a
Participant's unauthorized appropriation of, or a Participant's attempt to
misappropriate, any tangible or intangible assets or property of the Company,
(ii) any act or acts of disloyalty, dishonesty, misconduct, moral turpitude, or
any other act or acts by a Participant injurious to the interest, property,
operations, business or reputation of the Company, (iii) a Participant's
commission of a felony or conviction of any crime the commission of which
results in injury to the Company, (iv) a Participant's failure or inability to
carry out effectively his duties and obligations to the Company or to
participate effectively and actively in the management of the Company, or (v)
any material violation of any restriction on the disclosure or use of
confidential information of the Company or on competition with the Company or
its current or future affiliates, in each case as determined in the reasonable
judgment of the Committee or the Board.
<PAGE> 2
"Code" shall mean the Internal Revenue Code of 1986, as amended, and
any successor statute.
"Committee" shall mean the Compensation Committee of the Board which
shall consist of not less than two persons each of whom shall be both a
Non-Employee Director and an Outside Director. The members of the Committee
shall be appointed from time to time by the Board. Members of the Committee
shall not participate in the Plan and, at any time within one year prior to the
first anniversary of the Effective Date of the Plan or within one year prior to
appointment to the Committee, as the case may be, (a) shall not have been
eligible to receive options under the Plan and (b) shall not have been a person
to whom stock options could be granted pursuant to any other plan of the
Company or any of its subsidiaries, except for the Disinterested Director
Option Plan.
"Commission" shall mean the Securities and Exchange Commission.
"Common Stock" shall mean the Company's common stock, par value $.01
per share.
"Company" shall mean Brantley Capital Corporation, a Maryland
corporation.
"Current Market Value" or "fair market value" of shares of Common
Stock shall be the average of the closing sales prices, as reported in The Wall
Street Journal, at which shares of Common Stock of the Company were traded on
the last five days on which trading in the shares of Common Stock was reported
to have taken place on the Nasdaq National Market System prior to the grant of
the Option Shares.
"Disability" shall mean the inability, due to illness, accident,
injury, physical or mental incapacity or other disability, of any Participant
to carry out effectively his duties and obligations to the Company or to
participate effectively and actively in the management of the Company for a
period of at least 90 consecutive days or for shorter periods aggregating at
least 120 days (whether or not consecutive) during any 12 month period, as
determined in the reasonable judgment of the Committee.
"Disinterested Director Option Plan" shall mean the stock option plan
that has been adopted by the Company, subject to receipt of an order of the
Commission approving such plan, solely for the Non-Employee Directors of the
Company.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
"IRS" shall mean the Internal Revenue Service.
"Non-Employee Director" shall have the same meaning as that term is
defined in Rule 16b-3(b) of the rules of the Commission promulgated under the
Exchange Act.
"Outside Director" shall have the same meaning as that term is
defined in Section 162(m) of the Code and the regulations of the IRS adopted
thereunder, as such section and regulations may from time to time be amended or
interpreted.
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<PAGE> 3
"Participant" shall mean any officer or employee of the Company who
has been selected to participate in the Plan by the Committee.
"Sale of the Company" shall mean a merger or consolidation or a sale
of all or substantially all of the Company's Common Stock or assets.
3. Administration
The Plan shall be administered by the Committee. Subject to the
limitations of the Plan, the Committee shall have the sole and complete
authority to: (a) select Participants, (b) grant Options (as defined in Section
4 below) to Participants in such forms and amounts as it shall determine, (c)
impose such limitations, restrictions and conditions upon such Options as it
shall deem appropriate, (d) interpret the Plan and adopt, amend and rescind
administrative guidelines and other rules and regulations relating to the Plan,
(e) correct any defect or omission or reconcile any inconsistency in the Plan
or in any Option granted hereunder, and (f) make all other determinations and
take all other actions necessary or advisable for the implementation and
administration of the Plan. The Committee's determinations on matters within
its authority shall be conclusive and binding upon the Participants, the
Company and all other persons. All expenses associated with the administration
of the Plan shall be borne by the Company. The Committee may delegate to one
or more of its members or to one or more agents such non-discretionary
administrative duties as it may deem advisable, and the Committee or any person
to whom it has delegated any such duties may employ one or more persons to
render advice with respect to any responsibility the Committee or such person
may have under the Plan.
The Committee may employ attorneys, consultants, accountants or other
persons, and the Committee, the Company and its officers, employees and
directors shall be entitled to rely upon the advice, opinions or valuations of
any such person. No member of the Committee shall be personally liable for any
action, determination or interpretation made with respect to the Plan or awards
made pursuant to the Plan, and all members of the Committee shall be fully
protected by the Company in respect of any such action, determination or
interpretation.
To the extent that any provision of the Plan does not conform with the
requirements under the 1940 Act, the General Corporation Law of the State of
Maryland or any other applicable statutes or rules, the Committee may make such
modifications to the Plan or to any Option granted pursuant to the Plan so as
to conform this Plan and any Options granted pursuant to the Plan to such
requirements.
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<PAGE> 4
4. Scope of Plan; Limitation on Aggregate Shares
The aggregate number of shares of Common Stock with respect to which
Options may be granted under the Plan and which may be issued upon the exercise
thereof shall not exceed 1,175,000 shares of Common Stock; provided, however,
that the type and the aggregate number of shares which may be subject to
Options shall be subject to adjustment in accordance with the provisions of
Section 7(i) below; and provided, further, that to the extent any Options
expire unexercised or are cancelled, terminated or forfeited in any manner
without the issuance of Common Stock, as the case may be, thereunder, such
shares shall again be available for issuance under the Plan. The shares of
Common Stock available under the Plan may be either authorized and unissued
shares, treasury shares or a combination thereof, as the Committee shall
determine.
Notwithstanding any other provision of the Plan, the maximum number of
shares of Common Stock with respect to which Options may be granted under the
Plan to any individual Participant, in any fiscal year, is 400,000. The
Committee at any time may in its sole discretion limit the number of Options
that can be exercised in any taxable year of the Company, to the extent
necessary to prevent the application of Section 162(m) of the Code (or any
similar or successor provision), provided that the Committee may not postpone
the earliest date on which Options can be exercised beyond the last day of the
stated term of such Options.
5. Eligibility
Options may be granted only to officers and employees of the Company.
A director of the Company who is not also an employee of the Company shall not
be eligible to receive any Options under the Plan. In determining the
employees to whom Options shall be granted and the number and type of shares to
be awarded, the Committee may take into account the nature of the services
provided by the respective employees, their present and potential contributions
to the success of the Company, the anticipated number of years of effective
service remaining, and such other factors as the Committee shall deem relevant
in connection with accomplishing the purposes of the Plan. An employee who has
been granted an Option under the Plan may be granted additional Options if the
Committee shall so determine. Nothing contained in the Plan shall be construed
to limit the right of the Company to grant Options otherwise than under the
Plan in connection with the acquisition by purchase, lease, merger,
consolidation or otherwise of the business and assets of any corporation, firm
or association, including Options granted employees thereof who become
employees of the Company, or for any other proper corporate purpose.
6. Awards
(a) Options. The Committee may grant Options to Participants in
accordance with this Section 6. Each Option granted under the Plan shall be
evidenced by a written agreement in such form as the Board shall approve and
shall be subject to Section 5 above and to the terms and conditions in this
Section 6.
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<PAGE> 5
(b) Form of Option. Options granted under this Plan shall be
non-qualified stock options and are not intended to be "incentive stock
options" within the meaning of Section 422 of the Code or any successor
provision.
(c) Exercise Price. The Exercise Price of Option Shares will be
the greater of (i) the Current Market Value on the date of the Option grant
(the "Grant Date") and (ii) the current net asset value of the shares of Common
Stock. The net asset value of the shares of Common Stock shall be determined
by the Board pursuant to the procedures described in Appendix A to this Plan.
(d) Exercisability. Options shall be exercisable at such time or
times as the Committee shall determine at or subsequent to grant; provided,
however, that no Option shall be exercisable in whole or in part for a period
of at least six months commencing on the date of grant. If an employee has
more than one Option grant, it will not be necessary to exercise in any
particular sequence. No Option may be exercised more than 10 years after the
Grant Date.
(e) Exercise of Options. An Option, or portion thereof, shall be
exercised by delivery of a written notice of exercise to the Secretary of the
Company and payment of the Exercise Price for the Option Shares being purchased
pursuant to the Option. Option Shares under the Plan must be paid for in cash
or by delivery of a number of shares of Common Stock with an aggregate fair
market value equal to the aggregate Exercise Price of the Option Shares, or any
combination thereof.
In order to facilitate the purchase of Option Shares, the Company may
make arms-length loans to Participants in the Plan in accordance with Sections
57(j)(2) and 62(1) of the 1940 Act, under the following terms. Each such loan
must: (i) have a term of not more than 10 years; (ii) become due within a
reasonable time, not to exceed 60 days, after the termination of such
Participant's employment or service; (iii) bear interest at no less than the
prevailing rate applicable to 90-day U.S. Treasury bills at the time such loan
is made; (iv) at all times be fully collateralized (such collateral may include
any securities issued by the Company); and (v) be approved by a majority of the
Independent Directors of the Company on the basis that such loan is in the best
interests of the Company and its stockholders.
Subject to Section 7(i), below, upon receipt of notice and payment,
and where requested by the Participant, the Company shall issue and deliver to
the Participant (or other person entitled to exercise the Option) a certificate
or certificates for the number of shares as to which the exercise is made.
Options may not be exercised for fractional shares of Common Stock.
(f) Terms of Options. The Committee shall determine the term of
each Option, which term shall in no event exceed 10 years from the Grant Date.
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<PAGE> 6
7. General Provisions
(a) Conditions and Limitations on Exercise. An Option may be made
exercisable in one or more installments, upon the happening of certain events,
upon the passage of a specified period of time, upon the fulfillment of certain
conditions or upon the achievement by the Company of certain performance goals,
as the Committee shall decide in each case when the Option is granted.
(b) Sale of the Company. In the event of a Sale of the Company,
the Committee may provide, in its sole discretion, that any Option which was
granted at least six months prior to such Sale shall become immediately
exercisable by any Participant who is employed by the Company at the time of
the Sale of the Company and that such Option shall terminate if not exercised
as of the date of the Sale of the Company or other prescribed period of time.
(c) Written Agreement. Each Option granted hereunder to a
Participant shall be embodied in a written agreement (an "Option Agreement")
which shall be signed by the Participant and by the Company and shall be
subject to the terms and conditions prescribed herein (including, but not
limited to, (i) the right of the Company to repurchase from each Participant
and such Participant's transferees, all shares of Common Stock issued or
issuable to such Participant on the exercise of an Option in the event of such
Participant's termination of employment, (ii) holdback and other registration
right restrictions in the event of a public registration of any equity
securities of the Company and (iii) any other terms and conditions which the
Committee shall deem necessary and desirable).
(d) Listing, Registration and Compliance with Laws and
Regulations. Options shall be subject to the requirement that if at any time
the Committee shall determine, in its discretion, that the listing,
registration or qualification of the shares subject to the Options upon any
securities exchange or under any state or federal securities or other law or
regulation, or the consent or approval of any governmental regulatory body, is
necessary or desirable as a condition to or in connection with the granting of
the Options or the issuance or purchase of shares thereunder, no Options may be
granted or exercised, in whole or in part, unless such listing, registration,
qualification, consent or approval shall have been effected or obtained free of
any conditions not acceptable to the Committee. The holders of such Options
will supply the Company with such certificates, representations and information
as the Company shall request and shall otherwise cooperate with the Company in
obtaining such listing, registration, qualification, consent or approval.
In the case of officers and other persons subject to Section 16(b) of
the Exchange Act the Committee may at any time impose any limitations upon the
exercise of an Option that, in the Committee's discretion, are necessary or
desirable in order to comply with such Section 16(b) and the rules and
regulations thereunder. If the Company, as part of an offering of securities
or otherwise, finds it desirable because of federal or state regulatory
requirements to reduce the period during which any Options may be exercised,
the Committee, may, in its discretion and without the Participant's consent, so
reduce such period on not less than 15 days' written notice to the holders
thereof.
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<PAGE> 7
With respect to this Plan and any other option plan of the Company, if
the amount of voting securities that would result from the exercise of all
outstanding options issued to the Company's directors, officers and employees
pursuant to such option plans would, at the time of issuance, exceed 15% of the
outstanding voting securities of the Company, then the total amount of voting
securities that would result from the exercise of these and any other
outstanding warrants, options and rights at the time of issuance shall not
exceed 20% of the outstanding voting securities of the Company. These
limitations are imposed by the current provisions of the 1940 Act and are
subject to change.
(e) Nontransferability. Options may not be transferred other than
by will or the laws of descent and distribution and, during the lifetime of the
Participant, may be exercised only by such Participant (or his or her legal
guardian or legal representative). In the event of the death of a Participant,
exercise of Options granted hereunder shall be made only to the extent that the
deceased Participant was entitled thereto at the date of his or her death,
unless otherwise provided by the Committee in such Participant's Option
Agreement.
(f) Expiration of Options.
(i) Normal Expiration. In no event shall any part of any
Option be exercisable after the date of expiration thereof (the
"Expiration Date"), as determined by the Committee pursuant to Section
6(f) above.
(ii) Early Expiration Upon Termination of Employment.
Except as otherwise provided by the Committee in the Option Agreement,
any portion of a Participant's Option that was not vested and
exercisable on the date of the termination of such Participant's
employment for whatever reason shall expire and be forfeited as of
such date; provided, however, that: (1) if any Participant dies or
becomes subject to any Disability, such Participant's Option will
expire 90 days after the date of death or Disability, but in no event
after the Expiration Date, (2) if any Participant retires, such
Participant's Option will expire 90 days after the date of his or her
retirement, but in no event after the Expiration Date, and (3) if any
Participant is discharged for any reason other than for Cause, such
Participant's Option will expire 30 days after the date of discharge,
but in no event after the Expiration Date.
(g) Rights of Participants. Nothing in the Plan shall interfere
with or limit in any way the right of the Company to terminate any
Participant's employment at any time (with or without Cause), nor confer upon
any Participant any right to continue in the employ of the Company for any
period of time or to continue his or her present (or any other) rate of
compensation and, except as otherwise provided under this Plan or by the
Committee in the Option Agreement, in the event of any Participant's
termination of employment (including, but not limited to, the termination of a
Participant's employment by the Company without Cause) any portion of such
Participant's Option that was not previously vested and exercisable will expire
and be forfeited as of the date of such termination. No employee shall have a
right to be selected as a Participant or, having been so selected, to be
selected again as a Participant.
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<PAGE> 8
(h) Withholding of Taxes. The Company shall be entitled, if
necessary or desirable, to withhold from any Participant from any amounts due
and payable by the Company to such Participant (or secure payment from such
Participant in lieu of withholding) the amount of any withholding or other tax
due from the Company with respect to any shares of Common Stock issuable under
the Plan, and the Company may defer issuance of any shares of Common Stock
pursuant to an Option unless indemnified to its satisfaction. An Option
Agreement may provide that any Participant may satisfy any withholding tax
obligation by a cash payment to the Company or by delivery of previously owned
shares of Common Stock (which the Participant has held for at least six months
and to which the Participant has good title, free and clear of all liens and
encumbrances); provided, however, that the method of satisfying any withholding
tax obligation shall be in compliance with Section 16 of the Exchange Act and
the rules and regulations thereunder.
(i) Adjustments. In the event of a reorganization,
recapitalization, stock dividend or stock split, or combination or other change
in the shares of Common Stock, as the case may be, the Committee may, in order
to prevent the dilution or enlargement of rights under outstanding Options,
make such adjustments in the number and type of shares authorized by the Plan,
the number and type of shares covered by outstanding Options and the exercise
prices specified therein as may be determined to be appropriate and equitable.
(j) Amendment, Suspension and Termination of Plan. The Committee
may suspend or terminate the Plan or any portion thereof at any time and may
amend it from time to time in such respects as the Committee may deem
advisable; provided, however, that no such amendment shall be made without
stockholder approval to the extent any such amendment would (i) materially
increase the benefits accruing to Participants under the Plan, (ii) materially
increase the number of securities which may be issued pursuant to the Plan
other than pursuant to Section 7(i), (iii) materially modify the requirements
of the Plan, (iv) change the manner of determining the minimum Option Price
other than to change the manner of determining the Current Market Value or net
asset value of the Common Stock, (v) change the period during which Options may
be granted or exercised, (vi) provide for the administration of the Plan other
than by a committee of Non-Employee Directors within the meaning of Rule 16b-3
of the Commission promulgated under the Exchange Act, or (vii) otherwise cause
the Plan to fail to comply with the requirements of Rule 16b-3 of the
Commission promulgated under the Exchange Act or any law, agreement or the
rules of any exchange upon which the Common Stock is listed, and no such
amendment, suspension or termination shall impair the rights of Participants
under outstanding Options without the consent of the Participants affected
thereby. No Options shall be granted hereunder after the tenth anniversary of
the adoption of the Plan.
(k) Amendment, Modification and Cancellation of Outstanding
Options. The Committee may amend or modify any Option in any manner to the
extent that the Committee would have had the authority under the Plan initially
to grant such Option; provided that no such amendment or modification shall
impair the rights of any Participant under any Option without the consent of
such Participant. With the Participant's consent the Committee may cancel any
Option and issue a new Option to such Participant.
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<PAGE> 9
(l) Governing Law. The General Corporation Law of the State of
Maryland shall govern all issues concerning the relative rights of the Company
and its stockholders and the construction, validity and interpretation of this
Plan.
(m) Successors and Assigns. The Plan shall be binding upon all
successors and assigns of a Participant, including, without limitation, the
estate of such Participant and the executor, administrator or trustee of such
estate, or any receiver or trustee in bankruptcy or representative of such
Participant's creditors, or any other legal representative of such Participant.
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<PAGE> 10
FORM OF OPTION GRANT LETTER
____________, 199__
[Name and Address of Officer or Employee]
Re: Grant of Non-Qualified Stock Option Under the
Brantley Capital Corporation 1996 Stock Option Plan
for Officers and Employees
Dear ________:
Brantley Capital Corporation (the "Company") is pleased to advise you
that in consideration for your service as an [officer/employee] of the Company,
the Company hereby grants to you a stock option (the "Option") under the
Brantley Capital Corporation 1996 Stock Option Plan for Officers and Employees
(the "Plan"), a copy of which is attached hereto. This letter sets forth the
terms of that grant, which is effective as of ________________, 199__ (the
"Effective Date").
1. Definitions. Unless the context clearly indicates otherwise,
capitalized terms used and not elsewhere defined in this letter agreement (the
"Agreement") shall have the meanings set forth below:
"Board" shall mean the Board of Directors of Brantley Capital
Corporation.
"Code" shall mean the Internal Revenue Code of 1986, as
amended, and any successor statute.
"Common Stock" shall mean the Company's Common Stock, par
value $.01 per share.
"Company" shall mean Brantley Capital Corporation, a Maryland
corporation.
"Current Market Value" or "fair market value" of shares of
Common Stock shall be the average of the closing sales prices, as reported in
The Wall Street Journal, at which shares of Common Stock of the Company were
traded on the last five days on which trading in the shares of Common Stock was
reported to have taken place on the Nasdaq National Market System prior to the
grant of the Option Shares.
"Disability" shall mean your inability, due to illness,
accident, injury, physical or mental incapacity or other disability, to carry
out effectively your duties and obligations as an officer or employee.
"Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended.
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<PAGE> 11
"Option Shares" shall mean (i) all shares of Common Stock
issued or issuable upon the exercise of Options and (ii) all shares of Common
Stock, or other equity securities, issued with respect to the Common Stock
referred to in clause (i) above by way of stock dividend or stock split or in
connection with any conversion, merger, consolidation or recapitalization or
other reorganization affecting the Common Stock. Option Shares will continue
to be Option Shares in the hands of any holder other than you (except for
purchasers pursuant to a public offering under the Securities Act), and each
such transferee thereof will succeed to the rights and obligations of a holder
of Option Shares hereunder.
"Participant" shall mean the recipient of Options pursuant to
this letter.
"Securities Act" shall mean the Securities Act of 1933, as
amended, and any successor statute.
2. Option.
(a) Terms. Your Option is to purchase up to _______
shares of Common Stock (the "Option Shares") at an exercise price per share of
$________ (the "Exercise Price"), which Exercise Price is equal to the greater
of (i) the Current Market Value on the date first written above and (ii) the
current net asset value of the shares of Common Stock. The net asset value of
the shares of Common Stock shall be determined by the Board pursuant to the
procedures described in Appendix A to the Plan. The Exercise Price shall be
payable upon exercise as set forth in Section 2(b) below. Your Option will
expire at the close of business on _________________, 200__ (the "Expiration
Date"), subject to earlier expiration in connection with the termination of
your service as a director of the Company as provided in Sections 3(a) and
3(b)(ii) below. Your Option is not intended to be an "incentive stock option"
within the meaning of Section 422 of the Code.
(b) Payment of Exercise Price. Subject to Section 3
below, your Option may be exercised in whole or in part upon payment of the
Exercise Price multiplied by the number of Option Shares to be acquired.
Payment shall be made in cash (including certified or cashier's check, or money
order) or, in the discretion of the Board, by delivery of a number of shares of
Common Stock already owned by you for at least six months and to which you have
good title, free and clear of all liens and encumbrances, with an aggregate
fair market value equal to the aggregate Exercise Price of the Option Shares,
or any combination of cash and previously owned shares.
3. Exercisability.
(a) Normal Vesting. Your Option shall be exercisable in
whole or in part as to one-third of the Option Shares on the first anniversary
of the Grant Date, as to an additional one-third of the Option Shares on the
second anniversary of the Grant Date and as to the remaining one-third of the
Option Shares on the third anniversary of the Grant Date. No Option may be
exercised more than 10 years after the Grant Date.
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<PAGE> 12
(b) Effect of Termination of Service as an Officer or
Employee. Any portion of your Option that is not vested and exercisable on the
date of the termination of your employment for whatever reason shall expire and
be forfeited as of such date; provided, however, that: (1) if you die or your
employment terminates because of Disability, your Option will expire 90 days
after such termination of employment, but in no event after the Expiration
Date, (2) if you retire, your Option will expire 90 days after the date of your
retirement, but in no event after the Expiration Date, and (3) if you are
discharged for any reason other than for Cause, your Option will expire 30 days
after the date of such discharge, but in no event after the Expiration Date.
4. Procedure for Exercise. You may exercise all or any portion
of your Option, to the extent it has vested and is outstanding, at any time
after six months following the Grant Date and from time to time prior to its
expiration, by delivering written notice to the Company (to the attention of
the Company's Secretary), together with payment of the Exercise Price in
accordance with the provisions of Section 2(b) above. As a condition to any
exercise of your Option, you will make all customary investment representations
and covenants which the Company requires. All of such representations and
covenants shall be made in a form satisfactory to the Company and its counsel.
5. Conformity with Plan. Your Option is intended to conform in
all respects with, and is subject to all applicable provisions of, the Plan,
which is incorporated herein by reference. Inconsistencies between this
Agreement and the Plan shall be resolved in accordance with the terms of the
Plan. By executing and returning the enclosed copy of this Agreement, you
acknowledge your receipt of this Agreement and the Plan and agree to be bound
by all of the terms of this Agreement and the Plan.
6. Withholding of Taxes. The Company shall be entitled, if
necessary or desirable, to withhold from you from any amounts due and payable
by the Company to you (or secure payment from you in lieu of withholding) the
amount of any withholding or other tax due from the company with respect to any
Option Shares issuable under this Plan, and the Company may defer such issuance
unless indemnified by you to its satisfaction.
7. Adjustments. In the event of a reorganization,
recapitalization, stock dividend or stock split, or combination or other change
in the shares of Common Stock, the Board may, in order to prevent the dilution
or enlargement of rights under your Option, make such adjustments in the number
and type of shares authorized by the Plan, the number and type of shares
covered by your Option and the Exercise Price specified herein, as the Board
may determine to be appropriate and equitable, subject, in each case, to
compliance with the terms and provisions of the Plan and Rule 16b-3 of the
Exchange Act.
8. Securities Laws Restrictions on Transfer of Option Shares.
You represent that when you exercise your Option you will be purchasing Option
Shares for your own account and not on behalf of others. You understand and
acknowledge that federal and state securities laws govern and restrict your
right to offer, sell or otherwise dispose of any Option Shares unless your
offer, sale or other disposition thereof is registered under the Securities Act
and state securities laws, or in the opinion of the Company's counsel, such
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<PAGE> 13
offer, sale or other disposition is exempt from registration or qualification
thereunder. You agree that you will not offer, sell or otherwise dispose of
any Option Shares in any manner which would: (i) require the Company to file
any registration statement with the Securities and Exchange Commission (or any
similar filing under state law) or to amend or supplement any such filing or
(ii) violate or cause the Company to violate the Securities Act, the rules and
regulations promulgated thereunder or any other state or federal law. You
further understand that the certificates for any Option Shares you purchase
will bear such legends as the Company deems necessary or desirable in
connection with the Securities Act or other rules, regulations or laws. You
may not sell, transfer or dispose of any Option Shares (except pursuant to an
effective registration statement under the Securities Act) without first
delivering to the Company an opinion of counsel reasonably acceptable in form
and substance to the Company and its counsel that registration under the
Securities Act or any applicable state securities law is not required in
connection with such transfer.
9. Non-Transferability of Option. Your Option is personal to you
and is not transferable by you other than by will or intestacy. During your
lifetime only you (or your guardian or legal or personal representative) may
exercise your Option. In the event of your death, your Option may be exercised
only by the executor or administrator of your estate, or your heirs, legatees
or legal or personal representative.
10. Holdback. You agree not to effect any public sale or
distribution of any equity securities of the Company, or any securities
convertible into or exchangeable or exercisable for such securities, during the
seven days prior to and the 180 days after the effectiveness of any
underwritten public offering of any of the Company's equity securities, except
as part of such underwritten registration or public offering if otherwise
permitted.
11. Transfers in Violation of Agreement. Any transfer or
attempted transfer of the Option or any Option Shares in violation of any
provision of this Agreement shall be void, and the Company shall not record
such transfer on its books or treat any purported transferee of the Option or
such Option Shares as the owner of the Option or such Option Shares for any
purpose.
12. Remedies. The parties hereto will be entitled to enforce
their rights under this Agreement specifically, to recover damages by reason of
any breach of any provision of this Agreement and to exercise all other rights
existing in their favor. The parties hereto acknowledge and agree that money
damages may not be an adequate remedy for any breach of the provisions of this
Agreement and that any party hereto may, in its sole discretion, apply to any
court of law or equity of competent jurisdiction for specific performance
and/or injunctive relief (without posting bond or other security) in order to
enforce or prevent any violation of the provisions of this Agreement.
13. Amendment. Except as otherwise provided herein or in the
Plan, any provision of this Agreement may be amended or waived only with the
prior written consent of you and the Company.
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<PAGE> 14
14. Successors and Assigns. Except as otherwise expressly
provided herein, all covenants and agreements contained in this Agreement by or
on behalf of any of the parties hereto will bind and inure to the benefit of
the respective successors and permitted assigns of the parties hereto whether
so expressed or not.
15. Severability. Whenever possible, each provision of this
Agreement will be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be prohibited
by or invalid under applicable law, such provision will be ineffective only to
the extent of such prohibition or invalidity, without invalidating the
remainder of this Agreement.
16. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall constitute an original, but all of which
taken together shall constitute one and the same Agreement.
17. Descriptive Headings. The descriptive headings of this
Agreement are inserted for convenience only and do not constitute a part of
this Agreement.
18. Governing Law. The General Corporation Law of the State of
Maryland shall govern all questions concerning the relative rights of the
Company and its stockholders and the construction, validity and interpretation
of this Agreement.
19. Notices. All notices, demands or other communications to be
given or delivered under or by reason of the provisions of this Agreement shall
be in writing and shall be deemed to have been given when delivered personally
or five business days after mailing by certified or registered mail, return
receipt requested and postage prepaid, to the recipient. Such notices, demands
and other communications shall be sent to you at your address first written
above and to the Company at the address indicated below:
Brantley Capital Corporation
20600 Chagrin Boulevard
Suite 1150
Cleveland, Ohio 44122
Attention: Secretary of the Company
or to such other address or to the attention of such other person as the
recipient party has specified by prior written notice to the sending party.
20. Entire Agreement. This Agreement constitutes the entire
understanding between you and the Company, and supersedes all other agreements,
whether written or oral, with respect to the acquisition by you of Common Stock
of the Company.
Please execute the extra copy of this Agreement in the space below and
return it to the Company's Secretary at its executive offices to confirm your
understanding and acceptance of the agreements contained in this Agreement.
Upon receipt of your executed copy of this Agreement, this Agreement shall be
effective as of the Effective Date.
-5-
<PAGE> 15
Very truly yours,
BRANTLEY CAPITAL CORPORATION
By _______________________________
Name _____________________________
Title ____________________________
Enclosures: 1. Extra copy of this Agreement
2. Copy of the Plan
The undersigned hereby acknowledges having read this Agreement and the
Plan and hereby agrees to be bound by all provisions set forth herein and in
the Plan effective as of the date first written above.
PARTICIPANT
_________________________________
[Name]
-6-
<PAGE> 16
APPENDIX A
VALUATION OF PORTFOLIO SECURITIES
On a quarterly basis, and at such other times as deemed appropriate
under the circumstances, the Board will prepare a valuation of the assets of
the Company using the methods described below.
As a general principle, the current "fair value" of an investment
being valued by the Company's Board would be the amount which the Company might
reasonably expect to receive for it upon its current sale. There is a range of
values that are reasonable for such investments at any particular time.
Generally, pursuant to procedures established by the Board, the fair value of
each such investment initially will be based primarily upon its original cost
to the Company. Cost will be the primary factor used to determine fair value
until significant developments or other factors affecting the portfolio company
(such as results of operations, changes in general market conditions,
subsequent financings or the availability of market quotations) provide a basis
for value other than a cost valuation.
The Company anticipates that many future investments made in
securities for which a public market exists may be "restricted securities" by
virtue of the Securities Act of 1933. Generally, in such instances, the
Company will negotiate for securities registration rights necessary for a
public offering thereof on specified terms whenever deemed to be reasonably
feasible by management. The value for restricted stock investments for which
no public market exists cannot be precisely determined. Generally, such
investments will be valued on a "going concern" basis without giving effect to
any disposition costs. There is likely to be a range of values that is
reasonable for such investments at any particular time.
Portfolio investments for which market quotations are readily
available and which are freely transferable will be valued as follows: (i)
securities traded on a securities exchange or the Nasdaq National Market System
will be valued at the closing price on the last trading day prior to the date
of valuation; and (ii) securities traded in the over-the-counter market (pink
sheets) will be valued at the average of the closing bid and asked prices for
the last trading day prior to the date of valuation. Securities for which
market quotations are readily available but are restricted from free trading in
the public securities markets (such as Rule 144 stock) will be valued by
discounting the closing price or the closing bid and asked prices, as the case
may be, for the last trading day prior to the date of valuation to reflect the
illiquidity caused by such restrictions, but taking into consideration the
existence, or lack thereof, of any contractual right to have the securities
registered and freed from such trading restrictions. For this purpose, an
investment that is exercisable for or convertible into a security for which
market quotations are readily available or otherwise contains the right to
acquire such a security will be deemed to be an investment for which market
quotations are readily available, but the value of any such security will be
reduced by any consideration to be paid by the Company in connection with the
exercise or conversion of such security.
A-1
<PAGE> 17
Debt securities with maturities of 60 days or less remaining will be
valued under the amortized cost method. The amount to be amortized will be the
value on the 61st day if the security was obtained with more than 60 days
remaining to maturity. Securities with maturities of more than 60 days
remaining for which there is a market and which are freely transferable will be
valued at the most recent bid price or yield equivalent as obtained from
dealers that make markets in such securities. Certificates of deposit
purchased by the Company generally will be valued at their face value, plus
interest accrued to the date of valuation.
The fair value of investments for which no market exists and for which
the Board has determined that the original cost of the investment is no longer
an appropriate valuation will be determined on the basis of appraisal
procedures established in good faith by the Board. Appraisal valuations will
be based upon such factors as the portfolio company's earnings and net worth,
the market prices for similar securities of comparable companies and an
assessment of the company's future financial prospects. In the case of
unsuccessful operations, the appraisal may be based upon liquidation value.
Appraisal valuations are necessarily subjective.
The Company may also use, when available, third-party transactions in
a portfolio company's securities as the basis of valuation (the "private market
method"). The private market method will be used only with respect to
completed transactions or firm offers made by sophisticated, independent
investors. Securities with legal, contractual or practical restrictions on
transfer may be valued at a discount from their value determined by the
foregoing methods to reflect such restrictions.
The Board will review the Company's valuation policies from time to
time to determine their appropriateness. The Board may also hire independent
firms to review the investment adviser's methodology of valuation or to conduct
a valuation, which shall be binding and conclusive.
In order to determine the net asset value per share of the Common
Stock, (i) the value of the assets of the Company, including its portfolio
securities, will be determined by the Board; (ii) the Company's liabilities, if
any, will be subtracted therefrom; and (iii) the difference will be divided by
the number of outstanding shares of Common Stock. However, there can be no
assurance that such value will represent the return that might ultimately be
realized by the Company from the investments or that stockholders might
ultimately realize on their holdings.
The value of portfolio securities may be very difficult to ascertain.
Valuation of portfolio securities by the Board is, by necessity, subjective and
may not be indicative of the price at which such securities may ultimately be
sold. The net asset value, as determined by the Board, may not be reflective
of the price at which an investor could sell his, her or its shares of Common
Stock in the open market.
A-2
<PAGE> 1
EXHIBIT 5.1
[JENNER & BLOCK LETTERHEAD]
MARYANN A. WARYJAS
December 3, 1996
Brantley Capital Corporation
20600 Chagrin Boulevard
Suite 1150
Cleveland, Ohio 44122
Re: Brantley Capital Corporation (the "Company")
Registration Statement on Form S-8
1,175,000 Shares of Common Stock
Gentlemen/Ladies:
We have served as your special securities counsel in connection with the
registration pursuant to a Registration Statement on Form S-8 (the
"Registration Statement"), to be filed with the Securities and Exchange
Commission (the "Commission") under the Securities Act of 1933, as amended (the
"Act"), relating to the sale of up to 1,175,000 shares of the Company's Common
Stock, $.01 par value ("Common Stock"), pursuant to The Brantley Capital
Corporation 1996 Stock Option Plan for Officers and Employees (the "Plan").
We have examined originals (or copies certified or otherwise identified to
our satisfaction) of such instruments, certificates and documents and have
reviewed such questions of law as we have deemed necessary or appropriate for
the purpose of the opinions rendered below. In such examination, we have
assumed the genuineness of all signatures, the authenticity of all documents
submitted to us as originals and the conformity to the original documents of
all documents submitted to us as copies. As to any facts material to our
opinion we have, when relevant facts were not independently established, relied
upon the aforesaid certificates.
Based upon the foregoing, it is our opinion that:
1. The Company is a legally organized and validly existing corporation in
good standing under the laws of the State of Maryland.
2. The 1,175,000 shares of Common Stock covered by the Registration
Statement when issued and delivered by the Company in accordance with the Plan
will be validly issued, fully paid and non-assessable.
This opinion is limited in all respects to the General Corporation Law of
the State of Maryland and the federal laws of the United States of America, and
we express no opinion as to the law of any other jurisdiction or the effect
thereof. Our opinions expressed herein are limited to the specific issues
addressed and are limited in all respects to laws and facts existing on the
date hereof. By rendering this opinion, we do not undertake to advise you of
any changes in such laws or facts which occur after the date hereof.
We hereby consent to the inclusion of this opinion as Exhibit 5.1 to the
Registration Statement and to any and all references to our firm in the
Registration Statement. In giving this consent, we do not hereby admit that we
are in the category of persons whose consent is required under Section 7 of the
Act or the rules and regulations of the Commission.
Very truly yours,
/s/ MARYANN A. WARYJAS
----------------------
JENNER & BLOCK
By: Maryann A. Waryjas
<PAGE> 1
EXHIBIT 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in this Registration
Statement on Form S-8 of our report dated October 30, 1996 with respect to the
Statement of Assets and Liabilities of Brantley Capital Corporation as of
October 29, 1996, included in the Registration Statement on Form N-2 (1933 Act
Registration No. 333-10785, 1940 Act Registration No. 814-00127) filed with the
Securities and Exchange Commission.
/s/ ERNST & YOUNG LLP
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ERNST & YOUNG LLP
Cleveland, Ohio
December 3, 1996
