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SECURITIES AND EXCHANGE COMMISSION
Exchange Act of 1934 (Amendment No. )
Filed by a Party other than the Registranto
o | Preliminary Proxy Statement | |
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þ | Definitive Proxy Statement | |
o | Definitive Additional Materials | |
o | Soliciting Material Pursuant to Sec. 240.14a-11(c) or Sec. 240.14a-12 |
þ | No fee required. | |
o | Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11. |
1. | Title of each class of securities to which transactions applies: | ||
2. | Aggregate number of securities to which transaction applies: | ||
3. | Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined): | ||
4. | Proposed maximum aggregate value of transaction: | ||
5. | Total fee paid: | ||
o | Fee paid previously with preliminary materials. | |
o | Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identity the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. |
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Houston, TX 77002
1-877-657-3863
(i) | the election of two directors of the Company; | ||
(ii) | a proposal to authorize the Company to sell shares of its common stock at a price below net asset value per share, subject to certain conditions, as more fully discussed in the enclosed proxy statement; | ||
(iii) | a proposal to authorize the Board of Directors to withdraw the Company’s election to be treated as a business development company under the Investment Company Act of 1940, as more fully described in the enclosed proxy statement; and | ||
(iv) | the ratification of the selection of PricewaterhouseCoopers LLP as the Company’s independent registered public accounting firm for its fiscal year ending November 30, 2010. |
![-s- Kavin S. McCarthy](https://capedge.com/proxy/DEF 14A/0000950123-10-052812/c01669c0166901.gif)
Chairman of the Board of Directors,
CEO and President
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Q. | WHAT AM I BEING ASKED TO VOTE “FOR” ON THIS PROXY? | |
A. | This proxy contains four proposals: |
• | Proposal One — the election of two Class I Directors to each serve until the Company’s 2013 Annual Meeting of Stockholders and until their successors are duly elected and qualified. The directors currently serving in Class I are Albert L. Richey and Robert V. Sinnott. Messrs. Richey and Sinnott each have terms that will expire at the Company’s 2010 Annual Meeting of Stockholders and the Company’s Board of Directors has nominated each of them for re-election at the meeting. | ||
The election of each of Mr. Richey and Mr. Sinnott as a Class I Director requires the affirmative vote of the holders of a majority of shares of common stock outstanding as of the Record Date. | |||
• | Proposal Two — a proposal to authorize the Company to sell shares of its common stock at a price below net asset value per share, subject to certain conditions, for a period expiring on the date of the Company’s 2011 Annual Meeting of Stockholders. | ||
Approval of Proposal Two requires: (1) the affirmative vote of a majority of all common stockholders on the records of the Company’s transfer agent as of the Record Date, which may not reflect the underlying beneficial owners, and (2) the affirmative vote of a majority of the votes cast by the holders of common stock. | |||
• | Proposal Three — a proposal to authorize the Board of Directors to withdraw the Company’s election to be treated as a business development company under the Investment Company Act of 1940. | ||
Approval of Proposal Three requires the affirmative vote of either (1) 67% or more of the votes cast by the holders of the Company’s common stock present at the Annual Meeting, if the holders of more than 50% of the outstanding shares of the Company’s common stock are present or represented by proxy, or (2) more than 50% of the outstanding shares of common stock, whichever is less. | |||
• | Proposal Four — the ratification of the selection of PricewaterhouseCoopers LLP as the Company’s independent registered public accounting firm for its fiscal year ending November 30, 2010. | ||
Approval of Proposal Four requires the affirmative vote of a majority of the votes cast by the holders of the Company’s common stock outstanding as of the Record Date. |
Q. | HOW DOES THE BOARD OF DIRECTORS SUGGEST THAT I VOTE? | |
A. | The Board of Directors of the Company unanimously recommends that you vote “FOR” all proposals on the enclosed proxy card. | |
Q. | HOW CAN I VOTE? | |
A. | If your shares are held in “Street Name” by a broker or bank, you will receive information regarding how to instruct your bank or broker to vote your shares. If you are a stockholder of record, you may authorize the persons named as proxies on the enclosed proxy card to cast the votes you are entitled to cast at the meeting by completing, signing, dating and returning the enclosed proxy card. Stockholders of record or their duly authorized proxies also may vote in person if able to attend the meeting. However, even if you plan to attend the meeting, we urge you to return your proxy card. That will ensure that your vote is cast should your plans change. |
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Q. | CAN I VIEW THE PROXY STATEMENT AND ANNUAL REPORT ON THE INTERNET? | |
A. | Yes. The proxy statement and Annual Report are available on the Internet at www.kaynefunds.com/KedSECFilings.php. |
detail in the proxy statement. We urge you to
read the proxy statement carefully.
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Houston, TX 77002
1-877-657-3863
1. | To elect two Class I Directors of the Company, each such director to hold office until the 2013 Annual Meeting of Stockholders and until his successor is duly elected and qualified; | ||
2. | To approve a proposal to authorize the Company to sell shares of its common stock at a price below net asset value per share, subject to certain conditions; | ||
3. | To approve a proposal to authorize the Board of Directors to withdraw the Company’s election to be treated as a business development company under the Investment Company Act of 1940; | ||
4. | To ratify the selection of PricewaterhouseCoopers LLP as the Company’s independent registered public accounting firm for its fiscal year ending November 30, 2010; and | ||
5. | To transact any other business that may properly come before the meeting or any adjournment or postponement thereof. | ||
Stockholders of record as of the close of business on May 25, 2010 are entitled to notice of and to vote at the meeting (or any adjournment or postponement of the meeting). |
![s- David J. Shladovsky](https://capedge.com/proxy/DEF 14A/0000950123-10-052812/c01669c0166902.gif)
Secretary
Houston, Texas
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Houston, TX 77002
1-877-657-3863
JUNE 30, 2010
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Class | Term* | Directors | ||
I | 3-year term until 2010 | Albert L. Richey | ||
Robert V. Sinnott | ||||
II | 3-year term until 2011 | William R. Cordes | ||
Barry R. Pearl | ||||
III | 3-year term until 2012 | Kevin S. McCarthy | ||
William L. Thacker |
* | Each director serves a three-year term until the Annual Meeting of Stockholders for the designated year and until his successor has been duly elected and qualified. |
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Position(s) Held with | Number of | |||||||||
Registrant, | Portfolios in | |||||||||
Proposed Term of | Fund Complex(1) | Other Directorships | ||||||||
Name | Office/ | Principal Occupations During Past | Overseen by | Held by Director During | ||||||
(Year Born) | Time of Service | Five Years | Director | Past Five Years | ||||||
Albert L. Richey (born 1949) | Director. 3-year term (until the 2013 Annual Meeting of Stockholders). Served since 2006. | Vice President of Anadarko Petroleum Corporation since 2008; Vice President of Corporate Development from 2005 to 2008; Vice President and Treasurer from 1995 to 2005; and Treasurer from 1987 to 1995. | 1 | Current: • Boys & Girls Clubs of Houston • Boy Scouts of America |
(1) | The 1940 Act requires the term “Fund Complex” to be defined to include registered investment companies advised by the Company’s investment adviser, KAFA, and, as a result, as of February 28, 2010, the Fund Complex included Kayne Anderson MLP Investment Company (“KYN”) and Kayne Anderson Energy Total Return Fund, Inc. (“KYE”), both closed-end investment companies registered under the 1940 Act that are managed by KAFA. |
Position(s) Held with | Number of | |||||||||
Registrant, | Portfolios in | |||||||||
Proposed Term of | Fund Complex | Other Directorships | ||||||||
Name | Office/ | Principal Occupations During Past | Overseen by | Held by Director During | ||||||
(Year Born) | Time of Service | Five Years | Director | Past Five Years | ||||||
Robert V. Sinnott (1) (born 1949) | Director. 3-year term (until the 2013 Annual Meeting of Stockholders). Served since 2006. | President, Chief Investment Officer and Senior Managing Director of Energy Investments of KACALP since 1992. | 1 | Current: • Plains All American Pipeline, L.P. (pipeline MLP) |
(1) | Mr. Sinnott is an “interested person” of the Company because he is employed as the President of KACALP. |
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Position(s) Held with | Number of | |||||||||
Registrant, | Portfolios in | |||||||||
Proposed Term of | Fund Complex | Other Directorships | ||||||||
Name | Office/ | Principal Occupations During Past | Overseen by | Held by Director During | ||||||
(Year Born) | Time of Service | Five Years | Director | Past Five Years | ||||||
William R. Cordes | Director. 3-year term | Retired from Northern Border Pipeline | 1 | Current: | ||||||
(born 1948) | (until the 2011 Annual Meeting of Stockholders). Served since 2008. | Company in April 2007 after serving as President from October 2000 to April 2007. Chief Executive Officer of Northern Border Partners, L.P. from October 2000 to April 2006. President of Northern Natural Gas Company from 1993 to 2000. President of Transwestern Pipeline Company from 1996 to 2000. | • Boardwalk Pipeline Partners, LP (pipeline MLP) Prior: • Northern Border Partners, L.P. (midstream MLP) | |||||||
Barry R. Pearl | Director. 3-year term | Executive Vice President of Kealine, LLC, | 1 | Current: | ||||||
(born 1949) | (until the 2011 Annual Meeting of Stockholders). Served since 2006. | a private developer and operator of petroleum infrastructure facilities (and its affiliate WesPac Energy LLC, an energy infrastructure developer), since February 2007. Provided management consulting services from January 2006 to February 2007. President of Texas Eastern Products Pipeline Company, LLC (the general partner of TEPPCO Partners, L.P.) from February 2001 to December 2005. Chief Executive Officer and director of TEPPCO Partners, L.P. from May 2002 to December 2005; and Chief Operating Officer from February 2001 to May 2002. | • Targa Resources Partners LP (midstream MLP) • Magellan Midstream Partners, L.P. (midstream MLP) Prior: • Seaspan Corporation (containership chartering) • TEPPCO Partners, L.P. (midstream MLP) | |||||||
William L. Thacker | Director. 3-year term | Retired from the Board of Texas Eastern | 1 | Current: | ||||||
(born 1945) | (until the 2011 Annual Meeting of Stockholders). Served since 2006. | Products Pipeline Company, LLC in May 2002 after serving as Chairman from March 1997 to May 2002; Chief Executive Officer from January 1994 to May 2002; and President, Chief Operating Officer and Director from September 1992 to January 1994. | • Copano Energy, L.L.C. (midstream MLP) • Mirant Corporation (electricity generation and sales) Prior: | |||||||
• Pacific Energy Partners, L.P. (midstream MLP) |
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Position(s) Held with | Number of | |||||||||
Registrant, | Portfolios in | |||||||||
Proposed Term of | Fund Complex | Other Directorships | ||||||||
Name | Office/ | Principal Occupations During Past | Overseen by | Held by Director During | ||||||
(Year Born) | Time of Service | Five Years | Director | Past Five Years | ||||||
Kevin S. McCarthy | Chairman of the Board of | Senior Managing Director of KACALP | 3 | Current: | ||||||
(1)(2) (born 1959) | Directors, President and Chief Executive Officer. 3-year term as a director (until the 2012 Annual Meeting of Stockholders), elected annually as an officer. Served since 2006. | since June 2004 and of KAFA since 2006. President and Chief Executive Officer of KYN and KYE since inception (KYN inception in 2004 and KYE inception in 2005). Global Head of Energy at UBS Securities LLC from November 2000 to May 2004. | • KYN • KYE • Range Resources Corporation (oil and natural gas company) • Clearwater Natural Resources, LLC (coal mining) • Direct Fuels Partners, L.P. (transmix refining and fuels distribution) • ProPetro Services, Inc. (oilfield services) |
(1) | Mr. McCarthy is an “interested person” of the Company because he is employed as a Senior Managing Director with KACALP and KAFA. | |
(2) | Mr. McCarthy currently serves on the Boards of Directors of KYN and KYE. |
Fees Earned or | ||||
Paid in Cash | ||||
Name | (Total Compensation) | |||
Independent Directors | ||||
William R. Cordes | $ | 71,000 | ||
Barry R. Pearl | $ | 72,000 | ||
Albert L. Richey | $ | 67,000 | ||
William L. Thacker | $ | 71,000 | ||
Interested Directors | ||||
Kevin S. McCarthy(1) | None | |||
Robert V. Sinnott | None |
(1) | Mr. McCarthy is the only one of our directors who also serves on the Boards of Directors of KYN and KYE, the other funds in the fund complex. |
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• | the candidate’s knowledge in matters relating to the investment company and to the energy industry; | ||
• | any experience possessed by the candidate as a director or senior officer of public companies; |
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• | the candidate’s educational background; | ||
• | the candidate’s reputation for high ethical standards and personal and professional integrity; | ||
• | any specific financial, technical or other expertise possessed by the candidate, and the extent to which such expertise would complement the Board’s existing mix of skills and qualifications; | ||
• | the candidate’s perceived ability to contribute to the ongoing functions of the Board, including the candidate’s ability and commitment to attend meetings regularly and work collaboratively with other members of the Board; | ||
• | the candidate’s ability to qualify as an independent director for purposes of the 1940 Act, the candidate’s independence from our service providers and the existence of any other relationships that might give rise to a conflict of interest or the appearance of a conflict of interest; and | ||
• | such other factors as the Committee determines to be relevant in light of the existing composition of the Board and any anticipated vacancies or other transitions (e.g., whether or not a candidate is an “audit committee financial expert” under the federal securities laws). |
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Board of Directors | 4 | |||
Audit Committee | 4 | |||
Valuation Committee | 4 | |||
Nominating, Corporate Governance and Compensation Committee. | 1 |
EXPERIENCE, ATTRIBUTES OR SKILLS
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APPROVAL TO SELL SHARES OF COMMON STOCK AT A PRICE BELOW
NET ASSET VALUE PER SHARE
Closing | Premium/ | |||||||||||
Date | NAV | Price | (Discount) | |||||||||
February 28, 2010 | $ | 17.03 | $ | 15.07 | (12 | )% | ||||||
November 30, 2009 | 16.58 | 13.53 | (18 | ) | ||||||||
August 31, 2009 | 16.02 | 11.64 | (27 | ) | ||||||||
May 31, 2009 | 15.70 | 12.33 | (21 | ) | ||||||||
February 28, 2009 | 15.23 | 9.09 | (40 | ) | ||||||||
November 30, 2008 | 16.10 | 9.63 | (40 | ) | ||||||||
August 31, 2008 | 22.19 | 22.85 | 3 | |||||||||
May 31, 2008 | 23.51 | 23.87 | 2 | |||||||||
February 29, 2008 | 23.41 | 23.76 | 1 | |||||||||
November 30, 2007 | 24.39 | 23.14 | (5 | ) | ||||||||
August 31, 2007 | 24.65 | 25.10 | 2 | |||||||||
May 31, 2007 | 25.52 | 26.41 | 3 | |||||||||
February 28, 2007 | 25.01 | 24.95 | 0 | |||||||||
November 30, 2006 | 24.19 | 22.32 | (8 | ) |
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1. | A majority of the Company’s Independent Directors makes a determination, based on information and a recommendation from KAFA, that the investment(s) to be made with the net proceeds of such issuance will lead to a long-term increase in NAV. | ||
2. | Immediately following the offering of common stock, after deducting offering expenses and underwriting fees and commissions, the NAV per share of the Company’s common stock, as determined at any time within two business days of pricing of the common stock to be sold, would not have been diluted by greater than a total of 5% of such value per share of all outstanding common stock. The Company will not be subject to a maximum number of shares that can be sold or a defined minimum sales price per share in any offering so long as the aggregate number of shares offered and the price at which such shares are sold in one transaction (or a series of related transactions) together would not result in dilution of the NAV per share of the Company’s common stock in excess of the 5% limitation. |
Example of Dilutive Effect of Issuance of Shares Below NAV
The following tables illustrates the reduction to NAV and the dilution experienced by Stockholder A following the sale of 1,000,000 shares of common stock at $15.75 per share (10% below NAV) and that underwriting fees, commissions and expenses are equal to 5% of the gross offering price per share.
Prior to Sale | Following Sale | Percentage | ||||||||||
Below NAV | Below NAV | Change | ||||||||||
Reduction to NAV | ||||||||||||
Total Shares Outstanding | 10,000,000 | 11,000,000 | 10.00 | % | ||||||||
NAV per Share | $ | 17.50 | $ | 17.27 | -1.31 | % | ||||||
Dilution to Stockholder A | ||||||||||||
Shares Held by Stockholder A (1) | 100,000 | 100,000 | 0.00 | % | ||||||||
Percentage Held by Stockholder A | 1.00 | % | 0.91 | % | -9.09 | % | ||||||
NAV Attributable to Interests of Stockholder A | $ | 1,750,000 | $ | 1,727,000 | -1.31 | % |
(1) Assumes that Stockholder A does not purchase additional shares in the equity offering of shares below NAV.
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TO BE TREATED AS A BUSINESS DEVELOPMENT COMPANY
UNDER THE INVESTMENT COMPANY ACT OF 1940
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Amount | Percent of Long-Term | |||||||||||
($ in millions) | Investments | Considered an EPC | ||||||||||
Private MLPs | $ | 94 | 45 | % | Yes | |||||||
Publicly Traded MLP and MLP Affiliates | 72 | 34 | No(1) | |||||||||
Debt Investments | 45 | 21 | Yes | |||||||||
$ | 211 | 100 | % |
(1) | Certain of the Company’s publicly-traded MLP and MLP affiliate investments are considered EPCs (i.e., they had a market capitalization of less than $250 million at the time of purchase). As of February 28, 2010, $9.0 million of such investments met this criterion. |
Before Proposed Change | After Proposed Change | |||
Type of Fund | BDC | Closed-end fund | ||
Governed by the 1940 Act | Yes | Yes | ||
Subject to the 70% Test | Yes | No | ||
Annual Base Management Fee(1) | 1.75% | 1.75% | ||
Incentive Management Fee | Yes | No | ||
Maximum Leverage under 1940 Act(2) | 50% | 33% | ||
Independent Directors | Majority | Majority | ||
Tax Status | C-corporation | C-corporation | ||
Distribution Policy | Quarterly | Quarterly | ||
Tax Reporting | Form 1099-DIV | Form 1099-DIV | ||
Unrelated Business Taxable Income (UBTI) | No | No |
(1) | As a percentage of average total assets | |
(2) | Under the 1940 Act, the Company’s outstanding indebtedness may not exceed 50% of its total assets as a BDC and 33% of its total assets as a closed-end fund. |
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Albert L. Richey
William L. Thacker
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Position(s) Held with | Number of | |||||||||
Registrant, | Portfolios in | |||||||||
Proposed Term of | Fund Complex | Other Directorships | ||||||||
Name | Office/ | Principal Occupations During Past | Overseen by | Held by Director During | ||||||
(Year Born) | Time of Service | Five Years | Director | Past Five Years | ||||||
Kevin S. McCarthy (born 1959) | Chairman of the Board of Directors; President and Chief Executive Officer.3-year term as a director (until the 2012 Annual Meeting of Stockholders), elected annually as an officer. Served since inception. | Senior Managing Director of KACALP since June 2004 and of KAFA since 2006. President and Chief Executive Officer of KYN and KYE since inception (KYN inception in 2004 and KYE inception in 2005). Global Head of Energy at UBS Securities LLC from November 2000 to May 2004. | 3 | • KYN • KYE • Range Resources Corporation (oil and natural gas company) • Clearwater Natural Resources, LLC (coal mining) • Direct Fuels Partners, L.P. (transmix refining and fuels distribution) • ProPetro Services, Inc. (oilfield services) | ||||||
Terry A. Hart (born 1969) | Chief Financial Officer and Treasurer. Elected annually. Served since inception. | Chief Financial Officer and Treasurer of KYN and KYE since December 2005. Director of Structured Finance, Assistant Treasurer, Senior Vice President and Controller of Dynegy, Inc. from 2000 to 2005. | 3 | None | ||||||
David J. Shladovsky (born 1960) | Secretary and Chief Compliance Officer. Elected annually. Served since inception. | Managing Director and General Counsel of KACALP since 1997 and of KAFA since 2006. Secretary and Chief Compliance Officer of KYN since 2004 and of KYE since 2005. | 3 | None | ||||||
J.C. Frey (born 1968) | Executive Vice President, Assistant Treasurer and Assistant Secretary. Elected annually. Served as Assistant Treasurer and Assistant Secretary since inception; served as Executive Vice President since June 2008. | Senior Managing Director of KACALP since 2004 and of KAFA since 2006, and Managing Director of KACALP since 2000. Portfolio Manager of KACALP since 2000. Portfolio Manager, Vice President, Assistant Secretary and Assistant Treasurer of KYN since 2004 and of KYE since 2005. Executive Vice President of KYE since June 2008 | 3 | None | ||||||
Ron M. Logan (born 1960) | Senior Vice President. Elected annually. Served since September 2006. | Managing director KACALP and KAFA since September 2006. Independent consultant to several leading energy firms. Senior Vice President of Ferrellgas Inc. from 2003 to 2005. Vice President of Dynegy Midstream Services from 1997 to 2002. | 1 | • VantaCore Partners, LP (aggregates MLP) • Clearwater Natural Resources, LLC (coal mining) | ||||||
James C. Baker (born 1972) | Executive Vice President. Elected annually. Served as Vice President from June 2005 to June 2008; served as Executive Vice President since June 2008. | Senior Managing Director of KACALP and KAFA since February 2008, Managing Director of KACALP and KAFA since December 2004 and 2006, respectively. Executive Vice President of KYN and KYE since June 2008 and Vice President of KYN from 2005 to 2008 and of KYE from 2005 to 2008. | 3 | • ProPetro Services, Inc. (oilfield services) • Petris Technology, Inc. (data management for energy companies) |
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Number of | Percent of | |||||||
Name of Beneficial Owner of Common Stock | Shares | Class(1) | ||||||
Independent Directors | ||||||||
William R. Cordes | 2,000 | * | ||||||
Barry R. Pearl | 4,537 | * | ||||||
Albert L. Richey | 12,561 | * | ||||||
William L. Thacker | 2,000 | * | ||||||
Interested Director | ||||||||
Kevin S. McCarthy(2) | 25,540 | * | ||||||
Robert V. Sinnott(2) | 29,000 | * | ||||||
Executive Officers | ||||||||
Terry A. Hart | 1,256 | * | ||||||
David. J. Shladovsky | 1,739 | * | ||||||
J.C. Frey | 11,764 | * | ||||||
Ron M. Logan, Jr. | 497 | |||||||
James C. Baker | 9,790 | * | ||||||
All Directors and Executive Officers as a Group (11 persons) | 100,684 | * | ||||||
Cedar Hill and Associates 120 South LaSalle St, Suite 1750 Chicago, IL 60603-3447 | 1,027,328 | 10.1 | % | |||||
Burgundy Asset Management Ltd. 181 Bay Street, Suite 4510 Toronto, Ontario M5J 2T3 Canada | 800,266 | 7.9 | % |
* | Less than 1% of class. | |
(1) | Based on 10,190,383 shares of common stock outstanding as of March 31, 2010. | |
(2) | Does not include 60 shares of our common stock held by KAFA, a subsidiary of KACALP, a limited partnership in which Messrs. McCarthy and Sinnott are each a Senior Managing Director and each have ownership interests, because neither of them individually or acting together may exercise voting or investment power with respect to such shares. We believe by virtue of these arrangements Messrs. McCarthy and Sinnott should not be deemed to have indirect beneficial ownership of such shares. |
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Aggregate Dollar | ||||||||
Range (1) of Equity | ||||||||
Securities in All | ||||||||
Registered Investment | ||||||||
Dollar Range (1) of | Companies (2) | |||||||
Our Equity | Overseen by Director | |||||||
Director | Securities | in Fund Complex(3) | ||||||
Independent Directors | ||||||||
William R. Cordes | $ | 10,001-$50,000 | $ | 10,001-$50,000 | ||||
Barry R. Pearl | $ | 50,001-$100,000 | $ | 50,001-$100,000 | ||||
Albert L. Richey | Over $100,000 | Over $100,000 | ||||||
William L. Thacker | $ | 10,001-$50,000 | $ | 10,001-$50,000 | ||||
Interested Director | ||||||||
Kevin S. McCarthy | Over $100,000 | Over $100,000 | ||||||
Robert V. Sinnott | Over $100,000 | Over $100,000 |
(1) | Dollar ranges are as follows: none; $1-$10,000; $10,001-$50,000; $50,001-$100,000 or over $100,000. | |
(2) | For purposes of this table, amounts in this column include our equity securities even though we are not a registered investment company. | |
(3) | Mr. McCarthy is the only one of our directors who also serves on the Boards of Directors of KYN and KYE, both registered investment companies advised by KAFA. |
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Barry R. Pearl
Albert L. Richey
William L. Thacker
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• | As of March 31, 2010, there were two entities holding beneficially more than 5% of our outstanding Common Stock. | ||
• | As of March 31, 2010, none of our directors owned 1% or more of our outstanding Common Stock. | ||
• | As of March 31, 2010, our officers and directors owned, as a group, less than 1% of our outstanding Common Stock. |
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By Order of the Board of Directors | ||||
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David J. Shladovsky Secretary | ||||
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AUDIT COMMITTEE CHARTER
(Adopted September 5, 2006)
• | assist the Board in its oversight of (1) the integrity, quality and objectivity of the Company’s financial statements and the independent audit thereof, (2) the Company’s compliance with legal and regulatory requirements, (3) the independent auditor’s qualifications and independence, and (4) the performance of the Company’s internal audit function and the Company’s independent auditor (the “Auditor”), (5) the Company’s accounting and financial reporting policies and practices by reviewing disclosures made to the Audit Committee by the Company’s certifying officers and the Auditor about any significant deficiency in, or material change in the operation of, the Company’s internal controls or material weaknesses therein, and any fraud involving KA Fund Advisors, LLC (the “Advisor”) or any employees or other persons who have a significant role in the Company’s internal controls; | ||
• | prepare an audit committee report as required by the Securities and Exchange Commission to be included in the Company’s annual proxy statement; | ||
• | select, oversee and approve the compensation of the Auditor and to act as liaison between the Auditor and the Board; and | ||
• | conduct an annual performance evaluation of the Audit Committee. |
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1 | Notwithstanding any such identification, each member of the Audit Committee is expected to contribute significantly to the work of the Committee. Moreover, identification as an “audit committee financial expert” will not increase the duties, obligations or liability of the identified person as compared to the duties, obligations and liability imposed on that person as a member of the Audit Committee and of the Board. | |
2 | For purposes of this finding of independence only, in order to be considered “independent,” any such expert must not only be independent for purposes of the Investment Company Act but also must satisfy the additional requirement that he or she may not, other than in his or her capacity as a member of the Audit Committee, the Board, or any other Board committee, accept directly or indirectly any consulting, advisory, or other compensatory fee from the Company. for appropriate funding, as determined by the Audit Committee, to compensate the Auditor for any authorized service provided to the Company. |
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3 | “Investment Company Complex” means the Company, the Advisor and any entity controlled by, controlling or under common control with the Advisor if such entity is an investment adviser or is engaged in the business of providing administrative, custodian, underwriting or transfer agent services to the Company or the Advisor. written report to the Audit Committee concerning these matters prior to the date the audited financial statements are filed with the Securities and Exchange Commission and released to the public. |
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4 | This report shall include any issues that arise with respect to the quality or integrity of the Company’s financial statements, the Company’s compliance with legal or regulatory requirements, the performance and independence of the Auditor, or the performance of the Company’s internal compliance function. |
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THE 2010 ANNUAL MEETING OF STOCKHOLDERS — JUNE 30, 2010
PROXY PROMPTLY USING THE ENCLOSED POSTMARKED ENVELOPE.
ANNUAL MEETING PROXY CARD
AUTHORIZED SIGNATURES | ||||
— THIS SECTION MUST BE COMPLETED | ||||
Please sign exactly as your name appears. If the shares are held jointly, each holder should sign. When signing as an attorney, executor, administrator, trustee, guardian, officer of a corporation or other entity or in another representative capacity, please indicate your full title under signature(s). | ||||
Signature | Date | |||
Signature(s)(if held jointly) | Date |
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ANNUAL MEETING PROXY CARD
BELOW AND, IF NO CHOICE IS INDICATED, WILL BE VOTED “FOR” EACH PROPOSAL.
1. | THE ELECTION OF CLASS I DIRECTORS FOR TERMS OF THREE YEARS AND UNTIL THEIR SUCCESSORS ARE ELECTED AND QUALIFIED. |
o | FOR THE NOMINEE LISTED BELOW NOMINEE: ALBERT L. RICHEY | o | WITHHOLD FROM THE NOMINEE LISTED BELOW | |||||
o | FOR THE NOMINEE LISTED BELOW NOMINEE: ROBERT V. SINNOTT | o | WITHHOLD FROM THE NOMINEE LISTED BELOW |
2. | THE APPROVAL OF A PROPOSAL TO AUTHORIZE THE COMPANY TO SELL SHARES OF ITS COMMON STOCK AT A PRICE LESS THAN THE NET ASSET VALUE PER SHARE. |
o FOR | o AGAINST | o ABSTAIN |
3. | THE APPROVAL OF A PROPOSAL TO AUTHORIZE THE BOARD OF DIRECTORS TO WITHDRAW THE COMPANY’S ELECTION TO BE TREATED AS A BUSINESS DEVELOPMENT COMPANY UNDER THE INVESTMENT COMPANY ACT OF 1940. |
o FOR | o AGAINST | o ABSTAIN |
4. | THE RATIFICATION OF THE SELECTION OF PRICEWATERHOUSECOOPERS LLP AS THE COMPANY’S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE FISCAL YEAR ENDING NOVEMBER 30, 2010. |
o FOR | o AGAINST | o ABSTAIN |
5. | TO VOTE AND OTHERWISE REPRESENT THE UNDERSIGNED ON ANY OTHER MATTER THAT MAY PROPERLY COME BEFORE THE MEETING OR ANY ADJOURNMENT OR POSTPONEMENT THEREOF IN THE DISCRETION OF THE PROXY HOLDER. |
www.kaynefunds.com/KedSECFilings.php.