-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, TmeKDQCELhU+qVr9lVomqaKBh5tO/Q2SWhLhNdO/Cz5LPjNgosOKEIEp5duJEPta rP71NvyTZTkpMq4GiHA4Hg== 0000902664-09-001103.txt : 20090309 0000902664-09-001103.hdr.sgml : 20090309 20090309165627 ACCESSION NUMBER: 0000902664-09-001103 CONFORMED SUBMISSION TYPE: SC 13D/A PUBLIC DOCUMENT COUNT: 3 FILED AS OF DATE: 20090309 DATE AS OF CHANGE: 20090309 SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: MCG CAPITAL CORP CENTRAL INDEX KEY: 0001141299 IRS NUMBER: 541889518 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D/A SEC ACT: 1934 Act SEC FILE NUMBER: 005-78037 FILM NUMBER: 09666690 BUSINESS ADDRESS: STREET 1: 1100 WILSON BLVD STREET 2: SUITE 800 CITY: ARLINGTON STATE: VA ZIP: 22209 BUSINESS PHONE: 7032477500 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: SPRINGBOK CAPITAL MANAGEMENT, LLC CENTRAL INDEX KEY: 0001387508 IRS NUMBER: 000000000 FILING VALUES: FORM TYPE: SC 13D/A BUSINESS ADDRESS: STREET 1: 130 EAST 59TH STREET STREET 2: 11TH FLOOR CITY: NEW YORK STATE: NY ZIP: 10022 BUSINESS PHONE: 212-897-6732 MAIL ADDRESS: STREET 1: 130 EAST 59TH STREET STREET 2: 11TH FLOOR CITY: NEW YORK STATE: NY ZIP: 10022 SC 13D/A 1 p09-0552sc13da.txt MCG CAPITAL CORPORATION SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ------------- SCHEDULE 13D* (Rule 13d-101) INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT TO RULE 13d-1(a) AND AMENDMENTS THERETO FILED PURSUANT TO RULE 13d-2(a) Under the Securities Exchange Act of 1934 (Amendment No. 2)(1) MCG Capital Corporation - -------------------------------------------------------------------------------- (Name of Issuer) Common Stock, $0.01 Par Value Per Share - -------------------------------------------------------------------------------- (Title of Class of Securities) 58047P107 - -------------------------------------------------------------------------------- (CUSIP Number) Gavin Saitowitz Springbok Capital Management, LLC 405 Park Avenue, 6th Floor New York, NY 10022 (212) 415-6681 Jaime Lester Soundpost Partners, LP 405 Park Avenue, 6th Floor New York, NY 10022 (212) 920-8388 Jeffrey Keswin Lyrical Partners, L.P. 405 Park Avenue, 6th Floor New York, NY 10022 (212) 415-6640 With a copy to: Marc Weingarten, Esq. Schulte Roth & Zabel LLP 919 Third Avenue New York, New York 10022 (212) 756-2000 - -------------------------------------------------------------------------------- (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) March 5, 2009 - -------------------------------------------------------------------------------- (Date of Event which Requires Filing of This Statement) If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the following box. [ ] NOTE: Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See Rule 13d-7 for other parties to whom copies are to be sent. (Continued on following pages) (Page 1 of 17 Pages) - -------------------------- (1) The remainder of this cover page shall be filled out for a reporting person's initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page. The information required on the remainder of this cover page shall not be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange Act of 1934 ("Act") or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes) - ------------------------------ -------------------- CUSIP NO. 58047P107 SCHEDULE 13D/A PAGE 3 OF 17 PAGES - ------------------------------ -------------------- - ------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSON I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY) Springbok Capital Management, LLC - ------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [x] (b) [ ] - ------------------------------------------------------------------------------- 3 SEC USE ONLY - ------------------------------------------------------------------------------- 4 SOURCE OF FUNDS* AF - ------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDING IS REQUIRED PURSUANT TO ITEM 2(d) or 2(e) [ ] - ------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION Delaware - ------------------------------------------------------------------------------- 7 SOLE VOTING POWER -0- --------------------------------------------------------- NUMBER OF 8 SHARED VOTING POWER SHARES BENEFICIALLY 418,212 OWNED BY --------------------------------------------------------- EACH 9 SOLE DISPOSITIVE POWER REPORTING PERSON WITH -0- --------------------------------------------------------- 10 SHARED DISPOSITIVE POWER 418,212 - ------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH PERSON 7,554,600 (See Item 5) - ------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [ ] - ------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 9.9% - ------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON* IA - ------------------------------------------------------------------------------- * SEE INSTRUCTIONS BEFORE FILLING OUT! - ------------------------------ -------------------- CUSIP NO. 58047P107 SCHEDULE 13D/A PAGE 4 OF 17 PAGES - ------------------------------ -------------------- - ------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSON I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY) Springbok Capital Onshore, LLC - ------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [x] (b) [ ] - ------------------------------------------------------------------------------- 3 SEC USE ONLY - ------------------------------------------------------------------------------- 4 SOURCE OF FUNDS* WC - ------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDING IS REQUIRED PURSUANT TO ITEM 2(d) or 2(e) [ ] - ------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION Delaware - ------------------------------------------------------------------------------- 7 SOLE VOTING POWER -0- --------------------------------------------------------- NUMBER OF 8 SHARED VOTING POWER SHARES BENEFICIALLY 711,551 OWNED BY --------------------------------------------------------- EACH 9 SOLE DISPOSITIVE POWER REPORTING PERSON WITH -0- --------------------------------------------------------- 10 SHARED DISPOSITIVE POWER 711,551 - ------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH PERSON 7,554,600 (See Item 5) - ------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [ ] - ------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 9.9% - ------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON* 00 - ------------------------------------------------------------------------------- * SEE INSTRUCTIONS BEFORE FILLING OUT! - ------------------------------ -------------------- CUSIP NO. 58047P107 SCHEDULE 13D/A PAGE 5 OF 17 PAGES - ------------------------------ -------------------- - ------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSON I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY) Gavin Saitowitz - ------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [x] (b) [ ] - ------------------------------------------------------------------------------- 3 SEC USE ONLY - ------------------------------------------------------------------------------- 4 SOURCE OF FUNDS* PF; AF - ------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDING IS REQUIRED PURSUANT TO ITEM 2(d) or 2(e) [ ] - ------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION United States - ------------------------------------------------------------------------------- 7 SOLE VOTING POWER 1,000 --------------------------------------------------------- NUMBER OF 8 SHARED VOTING POWER SHARES BENEFICIALLY 1,129,763 OWNED BY --------------------------------------------------------- EACH 9 SOLE DISPOSITIVE POWER REPORTING PERSON WITH 1,000 --------------------------------------------------------- 10 SHARED DISPOSITIVE POWER 1,129,763 - ------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH PERSON 7,554,600 (See Item 5) - ------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [ ] - ------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 9.9% - ------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON* IN - ------------------------------------------------------------------------------- * SEE INSTRUCTIONS BEFORE FILLING OUT! - ------------------------------ -------------------- CUSIP NO. 58047P107 SCHEDULE 13D/A PAGE 6 OF 17 PAGES - ------------------------------ -------------------- - ------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSON I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY) Soundpost Partners, LP - ------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [x] (b) [ ] - ------------------------------------------------------------------------------- 3 SEC USE ONLY - ------------------------------------------------------------------------------- 4 SOURCE OF FUNDS* AF - ------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDING IS REQUIRED PURSUANT TO ITEM 2(d) or 2(e) [ ] - ------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION Delaware - ------------------------------------------------------------------------------- 7 SOLE VOTING POWER -0- --------------------------------------------------------- NUMBER OF 8 SHARED VOTING POWER SHARES BENEFICIALLY 3,229,098 OWNED BY --------------------------------------------------------- EACH 9 SOLE DISPOSITIVE POWER REPORTING PERSON WITH -0- --------------------------------------------------------- 10 SHARED DISPOSITIVE POWER 3,229,098 - ------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH PERSON 7,554,600 (See Item 5) - ------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [ ] - ------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 9.9% - ------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON* IA - ------------------------------------------------------------------------------- * SEE INSTRUCTIONS BEFORE FILLING OUT! - ------------------------------ -------------------- CUSIP NO. 58047P107 SCHEDULE 13D/A PAGE 7 OF 17 PAGES - ------------------------------ -------------------- - ------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSON I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY) Jaime Lester - ------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [x] (b) [ ] - ------------------------------------------------------------------------------- 3 SEC USE ONLY - ------------------------------------------------------------------------------- 4 SOURCE OF FUNDS* AF - ------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDING IS REQUIRED PURSUANT TO ITEM 2(d) or 2(e) [ ] - ------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION United States - ------------------------------------------------------------------------------- 7 SOLE VOTING POWER -0- --------------------------------------------------------- NUMBER OF 8 SHARED VOTING POWER SHARES BENEFICIALLY 3,229,098 OWNED BY --------------------------------------------------------- EACH 9 SOLE DISPOSITIVE POWER REPORTING PERSON WITH -0- --------------------------------------------------------- 10 SHARED DISPOSITIVE POWER 3,229,098 - ------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH PERSON 7,554,600 (See Item 5) - ------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [ ] - ------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 9.9% - ------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON* IN - ------------------------------------------------------------------------------- * SEE INSTRUCTIONS BEFORE FILLING OUT! - ------------------------------ -------------------- CUSIP NO. 58047P107 SCHEDULE 13D/A PAGE 8 OF 17 PAGES - ------------------------------ -------------------- - ------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSON I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY) Lyrical Partners, L.P. - ------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [x] (b) [ ] - ------------------------------------------------------------------------------- 3 SEC USE ONLY - ------------------------------------------------------------------------------- 4 SOURCE OF FUNDS* AF - ------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDING IS REQUIRED PURSUANT TO ITEM 2(d) or 2(e) [ ] - ------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION Delaware - ------------------------------------------------------------------------------- 7 SOLE VOTING POWER -0- --------------------------------------------------------- NUMBER OF 8 SHARED VOTING POWER SHARES BENEFICIALLY 3,194,739 OWNED BY --------------------------------------------------------- EACH 9 SOLE DISPOSITIVE POWER REPORTING PERSON WITH -0- --------------------------------------------------------- 10 SHARED DISPOSITIVE POWER 3,194,739 - ------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH PERSON 7,554,600 (See Item 5) - ------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [ ] - ------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 9.9% - ------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON* IA - ------------------------------------------------------------------------------- * SEE INSTRUCTIONS BEFORE FILLING OUT! - ------------------------------ -------------------- CUSIP NO. 58047P107 SCHEDULE 13D/A PAGE 9 OF 17 PAGES - ------------------------------ -------------------- - ------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSON I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY) Jeffrey Keswin - ------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [x] (b) [ ] - ------------------------------------------------------------------------------- 3 SEC USE ONLY - ------------------------------------------------------------------------------- 4 SOURCE OF FUNDS* AF - ------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDING IS REQUIRED PURSUANT TO ITEM 2(d) or 2(e) [ ] - ------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION United States - ------------------------------------------------------------------------------- 7 SOLE VOTING POWER -0- --------------------------------------------------------- NUMBER OF 8 SHARED VOTING POWER SHARES BENEFICIALLY 3,194,739 OWNED BY --------------------------------------------------------- EACH 9 SOLE DISPOSITIVE POWER REPORTING PERSON WITH -0- --------------------------------------------------------- 10 SHARED DISPOSITIVE POWER 3,194,739 - ------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH PERSON 7,554,600 (See Item 5) - ------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [ ] - ------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 9.9% - ------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON* IN - ------------------------------------------------------------------------------- * SEE INSTRUCTIONS BEFORE FILLING OUT! - ------------------------------ -------------------- CUSIP NO. 58047P107 SCHEDULE 13D/A PAGE 10 OF 17 PAGES - ------------------------------ -------------------- Item 1. Security and Issuer. This Amendment No. 2 ("Amendment No. 2") is filed with respect to shares of common stock, $0.01 par value per share (the "Common Stock"), of MCG Capital Corporation, a Delaware corporation (the "Issuer"), beneficially owned by Springbok Capital Management, LLC ("Springbok"), Springbok Capital Onshore, LLC ("Springbok Onshore"), Gavin Saitowitz, Soundpost Partners, LP ("Soundpost"), Jaime Lester, Lyrical Partners, L.P. ("Lyrical") and Jeffrey Keswin (together, the "Reporting Persons") as of March 6, 2009 and amends and supplements the Schedule 13D filed on November 20, 2008 as heretofore amended (the "Schedule 13D"). Except as set forth herein, the Schedule 13D is unmodified. Item 4. Purpose of Transaction. Item 4 are hereby amended and restated to include the following penultimate paragraphs: On February 11, 2009, Springbok Onshore, Gavin Saitowitz, Edward Gage and Robert S. Everett, individually, and Gavin Saitowitz and Springbok Onshore derivatively on behalf of the Issuer (collectively, the "Plaintiffs") filed a complaint in the Delaware Court of Chancery against the Issuer and each member of its Board of Directors (the "Board" and collectively with the Issuer, as used herein, the "Defendants") (the "Complaint"). The Complaint alleges, among other things, that the Defendants: (i) improperly adopted bylaw provisions upon learning of the interests of the Plaintiffs and/or their affiliates in the Issuer to prevent or deter them from bringing director nominations, including: (a) a bylaw purportedly requiring that nominating stockholders be in compliance with the applicable ownership limitations of the Investment Company Act of 1940 (the "1940 Act") (the "1940 Act Bylaw"); and (b) a bylaw requiring the disclosure of every compensatory arrangement between any nominating stockholder and their affiliates and associates, or others acting in concert with them, on the one hand, and any nominee and his or her respective affiliates or others acting in concert with them, on the other, for the last three years (the "Compensation Disclosure Bylaw"); and (ii) improperly rejected the nomination notice brought by Springbok Onshore and Gavin Saitowitz (the "Notice") and the nominations of Messrs. Saitowitz, Gage and Everett based on (a) alleged violations of the ownership limitations of the 1940 Act, and (b) failure to supply the information required by the Compensation Disclosure Bylaw with respect to Messrs. Saitowitz and Gage, notwithstanding that Messrs. Saitowitz and Gage offered to provide the requested information to the Company on a confidential basis. - ------------------------------ -------------------- CUSIP NO. 58047P107 SCHEDULE 13D/A PAGE 11 OF 17 PAGES - ------------------------------ -------------------- The Complaint seeks, among other things: (i) a declaration that Defendants' application of the 1940 Act By-Law to Mr. Saitowitz is impermissible and invalid because 1940 Act does not apply to Mr. Saitowitz; (ii) a declaration that Defendants application of the 1940 Act By-Law to Mr. Saitowitz and Springbok Onshore is impermissible and invalid because Mr. Saitowitz and Springbok Onshore are in compliance with the requirements of the 1940 Act By-Law; (iii) a declaration that, as adopted and applied, the 1940 Act By-Law and the Compensation Disclosure By-Law are invalid; (iv) an injunction against the Company's bar of the nominations brought by Springbok Onshore and Gavin Saitowitz and a decree that such nominations were validly brought; and (v) a declaration that the Board, in adopting the 1940 Act Bylaw and the Compensation Disclosure Bylaw, violated its fiduciary duties. A copy of the Complaint is filed herewith as Exhibit 99.8 and incorporated herein by reference, and any descriptions herein of the Complaint are qualified in their entirety by reference to the Complaint. The Defendants filed an answer to the Complaint on or about February 23, 2009, which denied the Plaintiffs' substantive allegations and raised affirmative defenses. On March 4, 2009, the Issuer filed a complaint against the Reporting Persons and Springbok Capital Master Fund, LP ("Springbok Master Fund") under Section 13(d) of the Securities and Exchange Act of 1934 (the "1934 Act") (the "13D Complaint") alleging, among other things, that the Reporting Persons and Springbok Master Fund violated Section 13(d) of the 1934 Act by jointly filing an erroneous and incomplete Schedule 13D on November 20, 2008 (the "Schedule 13D"). In particular, the Issuer alleged that: (a) Springbok Capital Management, LLC, Gavin Saitowitz and the other Springbok entities were 5% stockholders of the Issuer on or before September 22, 2008; (b) that certain information provided in the Schedule 13D pertaining to certain of the Reporting Persons' and Springbok Master Fund's MCG stock trading history and the timing of the formation of the 13D Group was incorrect; (c) that the Reporting Persons and Springbok Master Fund had certain "control plans" for the Issuer that ought to have been disclosed in the Schedule 13D; (d) that certain information regarding purchases of securities in the nomination notice were incorrect; and (e) that the Reporting Persons and Springbok Master Fund had an undisclosed relationship with Millennium Partners LP and certain of its affiliates with respect to the Issuer. The 13D Complaint seeks, among other things: (i) a declaration that the Schedule 13D violates Section 13(d) of the 1934 Act; (ii) an order that the Reporting Persons and Springbok Capital Master Fund: (a) correct any misstatements and omissions in the Schedule 13D, including by filing with the Securities and Exchange Commission, and sending to the Issuer, accurate disclosures; (b) be enjoined from being able to purchase, or vote any currently-owned, securities of the Issuer until corrective disclosure has been made and enough time has been given for the market to process the information; (c) be enjoined from voting any shares acquired while the Schedule 13D was inaccurate; and (d) be enjoined from bringing nominations before the annual meeting until any misstatements in the Schedule 13D have been corrected and processed by the public; (iii) an injunction against the Reporting Persons and Springbok Master Fund making any additional material misstatements or omissions in connection with the Issuer's securities; and (iv) any other relief deemed appropriate by the Court. A copy of the 13D Complaint is filed herewith as Exhibit 99.9 and incorporated herein by reference, and any descriptions herein of the 13D Complaint are qualified in their entirety by reference to the 13D Complaint. - ------------------------------ -------------------- CUSIP NO. 58047P107 SCHEDULE 13D/A PAGE 12 OF 17 PAGES - ------------------------------ -------------------- The Reporting Persons and Springbok Master Fund believe that the allegations contained in the 13D Complaint are without merit and intend to defend themselves vigorously. Any errors made in the Schedule 13D were typographical errors which have been corrected herein at Item 5(c). The other allegations made with respect to the trade information disclosed by the Reporting Persons and Springbok Master Fund, including the allegation that some or all of the Reporting Persons and Springbok Master Fund owned in excess of 5% of the Issuer's securities on or before September 22, 2008, are false. In addition, the 13D Complaint alleges that the Reporting Persons and Springbok Master Fund failed to abide by Section 13(d) and rules related thereto when the Reporting Persons and Springbok Master Fund, in the Issuer's words, "disclaim[ed]" any intent to present a plan to effect an extraordinary corporate action in the Schedule 13D, but then "brokered" meetings between the Issuer and/or the Board and two different Special Purpose Acquisition Companies (each a "SPAC" and together, the "SPACs"). This allegation is erroneous as the Reporting Persons and Springbok Capital Fund disclosed in the Schedule 13D dated November 10, 2008 that they intended "to seek to enter into discussions with the management of the Issuer in order to encourage the Issuer to pursue one or a combination of the strategic alternatives identified by the Springbok Entities", including specifically the sale of the Issuer. Furthermore, while the amendment to the Schedule 13D, filed on January 21, 2009, stated that the Reporting Persons (which did not include Springbok Master Fund, which no longer owned any of the Issuer's securities at that point) did not have any additional plans at the time, it specifically noted that they may "engage in discussions with management, the board of directors, other stockholders of the Issuer and other relevant parties concerning the business, operations, management, strategy and future plans of the Issuer." Consistent with this stated intention, Gavin Saitowitz, on behalf of the Reporting Persons, in late January and early February of 2009, introduced Steven Tunney, the Issuer's CEO, to two different SPACs. The Reporting Persons did not participate in the discussions between the Issuer and either SPAC and are not aware of the specific substance of those discussions. However, it is the Reporting Persons understanding that one of the SPACs may have discussed a potential transaction structure whereby the SPAC would acquire a portion of the Issuer's portfolio. The Reporting Persons do not know what actions, if any, were taken by the Issuer or the Board as a result of those introductions, but the Reporting Persons understand that no transactions were consummated. - ------------------------------ -------------------- CUSIP NO. 58047P107 SCHEDULE 13D/A PAGE 13 OF 17 PAGES - ------------------------------ -------------------- Item 5. Interest in Securities of the Company. Item 5(c) is hereby amended and restated to include the following final paragraph: (c) The Reporting Persons have not effected any transactions in the Common Stock of the Issuer since the filing of Amendment No. 1 to the Schedule 13D on January 21, 2009. Information concerning transactions in shares of the Issuer's Common Stock, as reported on Exhibit 99.4 of the Schedule 13D, contained typographical errors relating to certain trades effected by accounts under the management of Soundpost, although the total ownership reported was accurate. In addition, in Amendment No. 1 to the Schedule 13D, the Reporting Persons began presenting trade information by accounts under management. For the sake of consistency and to correct the earlier errors with respect to Soundpost, the tables set forth in Exhibits 99.2 - 99.4 of the Schedule 13D are amended and restated in their entirety by the revised Exhibits 99.2 - 99.4 attached hereto. Item 7. Material to be Filed as Exhibits. Exhibit 99.2 - Amended and Restated list of transactions in the Issuer's Common Stock by Springbok in the sixty (60) days preceding November 20, 2008. Exhibit 99.3 - Amended and Restated list of transactions in the Issuer's Common Stock by Lyrical in the sixty (60) days preceding November 20, 2008. Exhibit 99.4 - Amended and Restated list of transactions in the Issuer's Common Stock by Soundpost in the sixty (60) days preceding November 20, 2008. Exhibit 99.8 - Complaint filed by Springbok Onshore et al. on February 11, 2009. Exhibit 99.9 - Complaint filed by the Issuer on March 4, 2009. - ------------------------------ -------------------- CUSIP NO. 58047P107 SCHEDULE 13D/A PAGE 14 OF 17 PAGES - ------------------------------ -------------------- SIGNATURE After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. Dated: March 9, 2009 SPRINGBOK CAPITAL MANAGEMENT, LLC By:/s/ Gavin Saitowitz ------------------------------------ Name: Gavin Saitowitz Title: Managing Member SPRINGBOK CAPITAL ONSHORE, LLC By:/s/ Gavin Saitowitz ------------------------------------ Name: Gavin Saitowitz Title: Managing Member SOUNDPOST PARTNERS, LP By:/s/ Jaime Lester ------------------------------------ Name: Jaime Lester Title: Managing Member LYRICAL PARTNERS, L.P. By:/s/ Jeffrey Keswin ------------------------------------ Name: Jeffrey Keswin Title: Managing Partner /s/ Gavin Saitowitz ---------------------------------------- Gavin Saitowitz /s/ Jame Lester ---------------------------------------- Jaime Lester /s/ Jeffrey Keswin ---------------------------------------- Jeffrey Keswin - ------------------------------ -------------------- CUSIP NO. 58047P107 SCHEDULE 13D/A PAGE 15 OF 17 PAGES - ------------------------------ -------------------- EXHIBIT 99.2 TRANSACTIONS IN THE ISSUER'S COMMON STOCK BY THE REPORTING PERSONS(1) IN THE LAST SIXTY (60) DAYS The following tables set forth all transactions in Common Stock of the Issuer effected during the sixty (60) days prior to November 20, 2008 by the Springbok entities. Unless otherwise noted, all such transactions were effected in the open market with the personal or corporate funds of the respective account. The shares are held in either cash accounts or margin accounts in the ordinary course of business, and otherwise, no part of the purchase price or market value of such shares is represented by funds borrowed or otherwise obtained for the purpose of acquiring or holding such securities. Springbok Capital Master Fund, LP - ---------------------- --------------------------- -------------------------- Trade Date Amount Purchased (Sold) Price per Share ($) - ---------------------- --------------------------- -------------------------- 9/22/08 35,430 3.16 - ---------------------- --------------------------- -------------------------- 9/23/08 61,796 3.16 - ------------------------ -------------------------- -------------------------- 9/24/08 78,357 3.06 - ------------------------ -------------------------- -------------------------- 9/25/08 34,111 3.03 - ------------------------ -------------------------- -------------------------- 9/26/08 540,982 3.04 - ------------------------ -------------------------- -------------------------- 9/26/08 62,200 2.99 - ------------------------ -------------------------- -------------------------- 9/29/08 64,000 2.91 - ------------------------ -------------------------- -------------------------- 10/02/08 40,300 2.02 - ------------------------ -------------------------- -------------------------- 10/03/08 26,500 1.89 - ------------------------ -------------------------- -------------------------- 11/20/08 (2,623,837) 0.76 - ------------------------ -------------------------- -------------------------- DCM Limited - ------------------------- ------------------------- ---------------------------- Trade Date Amount Purchased (Sold) Price per Share ($) - ------------------------- ------------------------- ---------------------------- 9/22/08 7,570 3.16 - ------------------------- ------------------------- ---------------------------- 9/23/08 13,204 3.16 - ------------------------- ------------------------- ---------------------------- 9/24/08 16,743 3.06 - ------------------------- ------------------------- ---------------------------- 9/25/08 7,289 3.03 - ------------------------- ------------------------- ---------------------------- 9/26/08 (540,982) 3.04 - ------------------------- ------------------------- ---------------------------- (1) Includes accounts under management of the Reporting Persons which have purchased or sold the Issuer's securities during the relevant period. - ------------------------------ -------------------- CUSIP NO. 58047P107 SCHEDULE 13D/A PAGE 16 OF 17 PAGES - ------------------------------ -------------------- EXHIBIT 99.3 TRANSACTIONS IN THE ISSUER'S COMMON STOCK BY THE REPORTING PERSONS(2) IN THE LAST SIXTY (60) DAYS The following tables set forth all transactions in Common Stock of the Issuer effected during the sixty (60) days prior to November 20, 2008 by the Lyrical entities. Unless otherwise noted, all such transactions were effected in the open market with the personal or corporate funds of the respective account. The shares are held in either cash accounts or margin accounts in the ordinary course of business, and otherwise, no part of the purchase price or market value of such shares is represented by funds borrowed or otherwise obtained for the purpose of acquiring or holding such securities. Lyrical Opportunity Partners II, L.P. - ------------------------- ------------------------- ---------------------------- Trade Date Amount Purchased (Sold) Price per Share ($) - ------------------------- ------------------------- ---------------------------- 11/11/08 25,700 0.77 - ------------------------- ------------------------- ---------------------------- 11/12/08 34,100 0.73 - ------------------------- ------------------------- ---------------------------- 11/13/08 42,100 0.70 - ------------------------- ------------------------- ---------------------------- 11/14/08 86,500 0.78 - ------------------------- ------------------------- ---------------------------- 11/17/08 23,500 0.68 - ------------------------- ------------------------- ---------------------------- 11/18/08 38,100 0.68 - ------------------------- ------------------------- ---------------------------- 11/19/08 183,600 0.67 - ------------------------- ------------------------- ---------------------------- 11/20/08 396,000 0.66 - ------------------------- ------------------------- ---------------------------- 11/20/08 611,600 0.76 - ------------------------- ------------------------- ---------------------------- Lyrical Opportunity Partners II, Ltd. - ------------------------- ------------------------- ---------------------------- Trade Date Amount Purchased (Sold) Price per Share ($) - ------------------------- ------------------------- ---------------------------- 11/11/08 29,700 0.77 - ------------------------- ------------------------- ---------------------------- 11/12/08 39,300 0.73 - ------------------------- ------------------------- ---------------------------- 11/13/08 48,300 0.70 - ------------------------- ------------------------- ---------------------------- 11/14/08 99,800 0.78 - ------------------------- ------------------------- ---------------------------- 11/17/08 27,000 0.68 - ------------------------- ------------------------- ---------------------------- 11/18/08 43,900 0.68 - ------------------------- ------------------------- ---------------------------- 11/19/08 210,900 0.67 - ------------------------- ------------------------- ---------------------------- 11/20/08 454,305 0.66 - ------------------------- ------------------------- ---------------------------- 11/20/08 700,318 0.76 - ------------------------- ------------------------- ---------------------------- (2) Includes accounts under management of the Reporting Persons which have purchased or sold the Issuer's securities during the relevant period. - ------------------------------ -------------------- CUSIP NO. 58047P107 SCHEDULE 13D/A PAGE 17 OF 17 PAGES - ------------------------------ -------------------- EXHIBIT 99.4 TRANSACTIONS IN THE ISSUER'S COMMON STOCK BY THE REPORTING PERSONS(3) IN THE LAST SIXTY (60) DAYS The following tables set forth all transactions in Common Stock of the Issuer effected during the sixty (60) days prior to November 20, 2008 by the Soundpost entities. Unless otherwise noted, all such transactions were effected in the open market with the personal or corporate funds of the respective account. The shares are held in either cash accounts or margin accounts in the ordinary course of business, and otherwise, no part of the purchase price or market value of such shares is represented by funds borrowed or otherwise obtained for the purpose of acquiring or holding such securities. Soundpost Capital Offshore, Ltd. - ------------------------- ------------------------- ---------------------------- Trade Date Amount Purchased (Sold) Price per Share ($) - ------------------------- ------------------------- ---------------------------- 11/10/08 27,102 0.83 - ------------------------- ------------------------- ---------------------------- 11/11/08 31,490 0.79 - ------------------------- ------------------------- ---------------------------- 11/12/08 32,075 0.73 - ------------------------- ------------------------- ---------------------------- 11/13/08 27,961 0.69 - ------------------------- ------------------------- ---------------------------- 11/14/08 102,506 0.75 - ------------------------- ------------------------- ---------------------------- 11/17/08 30,689 0.68 - ------------------------- ------------------------- ---------------------------- 11/17/08 301 0.68 - ------------------------- ------------------------- ---------------------------- 11/18/08 69,400 0.68 - ------------------------- ------------------------- ---------------------------- 11/19/08 30,766 0.66 - ------------------------- ------------------------- ---------------------------- 11/19/08 75,454 0.64 - ------------------------- ------------------------- ---------------------------- 11/20/08 297,548 0.60 - ------------------------- ------------------------- ---------------------------- 11/20/08 593,573 0.76 - ------------------------- ------------------------- ---------------------------- 11/20/08 142,126 0.77 - ------------------------- ------------------------- ---------------------------- HFR HE Soundpost Master Trust - ------------------------- ------------------------- ---------------------------- Trade Date Amount Purchased (Sold) Price per Share ($) - ------------------------- ------------------------- ---------------------------- 11/10/08 5,265 0.83 - ------------------------- ------------------------- ---------------------------- 11/11/08 6,117 0.79 - ------------------------- ------------------------- ---------------------------- 11/12/08 6,231 0.73 - ------------------------- ------------------------- ---------------------------- 11/13/08 5,432 0.69 - ------------------------- ------------------------- ---------------------------- 11/14/08 19,913 0.75 - ------------------------- ------------------------- ---------------------------- 11/17/08 59 0.68 - ------------------------- ------------------------- ---------------------------- 11/17/08 5,962 0.68 - ------------------------- ------------------------- ---------------------------- 11/18/08 13,482 0.68 - ------------------------- ------------------------- ---------------------------- 11/19/08 14,658 0.64 - ------------------------- ------------------------- ---------------------------- 11/19/08 5,977 0.66 - ------------------------- ------------------------- ---------------------------- 11/20/08 27,610 0.77 - ------------------------- ------------------------- ---------------------------- 11/20/08 57,802 0.60 - ------------------------- ------------------------- ---------------------------- 11/20/08 115,307 0.76 - ------------------------- ------------------------- ---------------------------- (3) Includes accounts under management of the Reporting Persons which have purchased or sold the Issuer's securities during the relevant period. EX-99.8 2 p09-0552exhibit99_8.txt IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE SPRINGBOK CAPITAL ONSHORE, LLC, ) GAVIN SAITOWITZ, EDWARD GAGE ) and ROBERT S. EVERETT, individually, ) and GAVIN SAITOWITZ and ) SPRINGBOK CAPITAL ONSHORE, LLC, ) derivatively on behalf of MCG CAPITAL ) CORPORATION, ) ) Plaintiffs, ) ) v. ) ) STEVEN F. TUNNEY, JEFFREY ) Civil Action No. BUCHER, EDWARD CIVERA, A. JEFFREY HUGH ) --------- EWING, III, KIM D. KELLY, ROBERT J. ) MERRICK, WALLACE B. MILLNER, III, ) RICHARD W. NEU, KENNETH ) O'KEEFE, B. HAGEN SAVILLE, ) ) Defendants, ) ) and MCG CAPITAL CORPORATION, a ) Delaware corporation, ) ) Nominal Defendant VERIFIED COMPLAINT FOR DECLARATORY AND INJUNCTIVE RELIEF Plaintiffs Springbok Capital Onshore, LLC ("Springbok Onshore"), Gavin Saitowitz, Edward Gage and Robert S. Everett (collectively, "Plaintiffs"), by and through their attorneys, Richards, Layton & Finger, P.A. and Schulte Roth & Zabel LLP, plead as and for their Verified Complaint for Declaratory and Injunctive relief against Defendants: 1. This action for declaratory and injunctive relief arises from Defendants' brazen attempt to entrench themselves as directors of MCG Capital Corporation ("MCG" or the "Company") by implementing and applying unnecessary and illegitimate amendments to MCG's by-laws to bar Mr. Saitowitz and Springbok Onshore from nominating Messrs. Saitowitz, Gage and Everett for election to MCG's Board of Directors (the "Board") at the Company's upcoming annual shareholder meeting. On November 20, 2008, Springbok Capital Management, LLC, Springbok Capital Master Fund, LP, Soundpost Partners, LP ("Soundpost") and Lyrical Partners, L.P. ("Lyrical"), as well as their managing members (collectively, the "Group"), filed a Schedule 13-D with the United States Securities and Exchange Commission (the "SEC") in which they disclosed that they had formed a group, which collectively owned 9.7% of MCG's stock, and were considering taking steps to alter the composition of MCG's Board in order to better ensure that shareholders' interests were being afforded appropriate consideration by the Company. 2. The following day, November 21, Mr. Saitowitz, the managing member of Springbok, forwarded the 13-D to the Company and, on behalf of the Group, requested a meeting with senior management. In response, the Company acknowledged receipt of the letter, deferred scheduling a meeting, and asserted that the Group was not in compliance with certain shareholder ownership limitations imposed by the Investment Company Act of 1940 (the "1940 Act"), which was applicable to the Company because it was a Business Development Company. Then, before meeting with the Group, Defendants hastily amended the Company's by-laws to require, among other things, that (1) shareholders nominating persons for election to the Board be in compliance with the ownership limitations set forth in the 1940 Act (the "1940 Act By-Law") and (2) nominees for election to the Board must disclose all compensation arrangements they have with 2 the nominating shareholder, or any of its affiliates (the "Compensation Disclosure By-Law" and, with the 1940 Act By-Law, the "Nomination By-Laws"). 3. The primary purpose of the Nomination By-Laws was to prevent the Group, consisting of private investment funds, from challenging the composition of the Board. Defendants have purportedly relied upon the Nomination By-Laws in discriminatorily finding that Mr. Saitowitz and Springbok Onshore are ineligible to make director nominations, and that two of the Group's three nominees are ineligible to stand for election for failure to disclose compensation-related information. However, the Company's application of the 1940 Act By-Law's requirement that director nominations be made only by a shareholder in compliance with the 1940 Act is plainly improper with respect to Mr. Saitowitz, because Mr. Saitowitz is an individual who is not subject to the 1940 Act. Moreover, even if the 1940 Act did apply to Mr. Saitowitz, Defendants' use of the 1940 Act By-Law to block the nominations by Mr. Saitowitz and Springbok Onshore is patently improper: Mr. Saitowitz and Springbok Onshore are in compliance with the 1940 Act as the by-law requires, and the by-law serves principally as a mechanism of entrenchment. 4. Similarly, there is no legitimate basis for the Company to use the Compensation Disclosure By-Law to block Mr. Saitowitz's and Mr. Gage's nominations, because all relevant information about their affiliations has been disclosed to the Company and its shareholders, and the primary purpose accomplished by the by-law is to discriminatorily require Mr. Saitowitz and Mr. Gage to disclose their confidential, proprietary compensation information in order to deter them from challenging Defendants' incumbency. Furthermore, Mr. Saitowitz, in an attempt to address any concerns Defendants may have had regarding Mr. Saitowitz's and Mr. Gage's compensation arrangements, and to permit the Company to 3 determine whether in fact the requested information would be relevant to the other shareholders - which Plaintiffs do not believe it would be - Mr. Saitowitz offered to disclose his and Mr. Gage's compensation arrangements to the Company, provided MCG executed a confidentiality and non-disclosure agreement. The Company refused, proving that it had no interest in the actual information, but instead sought to prevent the Plaintiffs from challenging Defendants. 5. The Nomination By-Laws are nothing more than mechanisms of entrenchment that Defendants manufactured to inequitably disenfranchise the Group. As such, they should be declared inapplicable and/or unenforceable against Plaintiffs, and Defendants should be permanently enjoined from utilizing those by-laws to block the nomination of Messrs. Saitowitz, Gage and Everett for election to the Board. THE PARTIES 6. Plaintiff Springbok Onshore is a limited liability company organized under Delaware law. Springbok Onshore is the record owner of 100 shares of MCG common stock, par value $.01 per share, and the beneficial owner of 711,551 shares of MCG common stock. Springbok Onshore, individually and jointly with Mr. Saitowitz, is the nominating shareholder of Messrs. Saitowitz, Gage and Everett, and brings this action both on its own behalf and derivatively on behalf of the Company. 7. Plaintiff Gavin Saitowitz is a nominee for election to the Board and, individually and jointly with Springbok Onshore, is the nominating shareholder for himself, Mr. Gage and Mr. Everett. Mr. Saitowitz is the record owner of 1,000 shares of MCG common stock, par value $.01 per share. Mr. Saitowitz is a Managing Member of Plaintiff Springbok Onshore, as well as the Managing Member of Springbok Capital Management, LLC, the investment manager of Springbok Capital Investors, LP, Springbok Capital Offshore, Ltd. and Springbok Capital Master Fund, L.P. (collectively, the "Springbok Entities"), which collectively 4 beneficially own 1,129,763 shares of MCG common stock, or approximately 1.5% of MCG's outstanding common shares. Mr. Saitowitz, as principal of the Springbok Entities, is the beneficial owner of all of the shares of MCG common stock owned by the Springbok Entities. Mr. Saitowitz is not an investment company within the meaning of the 1940 Act; he brings this action both in his individual capacity and derivatively on behalf of the Company. 8. Both Mr. Saitowitz and Springbok Onshore are part of a group of MCG shareholders that was formed to cooperate with respect to their investments in MCG. The Group presently consists of Springbok Onshore, the Springbok Entities, Lyrical and Soundpost, as well as their respective principals Gavin Saitowitz, Jaime Lester and Jeffrey Keswin. In the aggregate, the Group beneficially owns 7,554,600 shares of MCG common stock, or approximately 9.9% of the Company's outstanding shares. No individual or individual entity within the Group own in excess of 3% of MCG's outstanding common stock. All relevant information relating to the Group's beneficial ownership of MCG's common stock, as well as the Group's agreement with respect to the shares they beneficially own, are set forth in a Form 13-D filed by the Group with the SEC on November 20, 2008 (the "13-D"), and a Form 13-D/A filed by the Group with the SEC on January 21, 2009 (the "Amended 13-D"). As described therein, all of the Group members may be deemed to be the beneficial owners of all of the shares beneficially owned by the Group. 9. Plaintiff Edward Gage is a nominee for election to the Board. Mr. Gage is Chief Financial Officer of Lyrical, and brings this action in his individual capacity. 10. Plaintiff Robert S. Everett is a nominee for election to the Board. Mr. Everett is a business consultant, and has no affiliation with any member of the Group. He also brings this action in his individual capacity. 5 11. Each of the Defendants is a director of the Company. In addition, Defendant Tunney is Chief Executive Officer of MCG, Defendant Merrick is the Company's Chief Investment Officer, and Defendant Saville is its Executive Vice President of Business Development. The terms of three of the Board's non-management directors - Defendants Bucher, Ewing, and O'Keefe - expire in 2009. On information and belief, those directors intend to run for re-election to the Board at the Company's upcoming annual shareholder meeting and thus have a direct interest in whether Messrs. Saitowitz, Gage and Everett are eligible for election at that meeting. All of the Defendants are being sued in their capacity as directors. 12. Nominal Defendant MCG is a business development company incorporated under the laws of Delaware. The Company has announced that it expects to hold its annual meeting for the election of directors in May 2009, but no specific date has been noticed at this time. FACTUAL BACKGROUND 13. Mr. Saitowitz and the Springbok Entities have been shareholders of MCG since approximately August 13, 2008, when they began acquiring MCG shares in the belief that they were undervalued and represented an attractive investment opportunity. Over the past year, MCG's shareholders have witnessed a precipitous decline in the value of their investment. Indeed, since February 27, 2008, when MCG's common stock closed at $13.61 per share, MCG's share price has plummeted 95% to close at $0.68 per share on February 6, 2009. This decline is MORE THAN 50% greater than the average decline experienced by MCG's peers during that same period. 14. Extensive due diligence by the Group has revealed there to be numerous and substantial missteps and faults by the officers of the Company and under the authority of the Board that have led to such a stunning diminution of value (both absolutely and relatively). 6 Aggrieved shareholders deserve to hear the details of mismanagement, fiscal irresponsibility, unjust compensation, destruction of capital market confidence and breach of fiduciary duties that have left the Company where it is today. Those arguments deserve to be aired during a democratic election contest, which Defendants seek to prevent. 15. In light of the dramatic deterioration in the value of MCG's common stock, in November 2008 Mr. Saitowitz, together with the principals of Lyrical and Soundpost, formed the Group. The Group's primary objective was to engage management and/or the Board in a discussion of strategic alternatives identified by Mr. Saitowitz and the Springbok Entities that were aimed at enhancing shareholder value. 16. To that end, on November 21, 2008, Mr. Saitowitz wrote Defendant Tunney and Stephen Bacica, Executive Vice President and Chief Financial Officer of MCG, requesting a meeting between management and representatives of the Group "to discuss various alternatives to significantly enhance stockholder value." Mr. Saitowitz also attached a copy of the Group's 13-D, which plainly set forth the alternatives the Group was considering, including potentially altering the composition of the Board and/or replacing management. 17. Defendant Tunney responded on November 25, 2008 to Mr. Saitowitz's request for a meeting, indicating that someone would contact Mr. Saitowitz "next week to arrange a mutually convenient date and other details." In his letter, Defendant Tunney did not mention anything having to do with the enhancement of stockholder value. Instead, he made a thinly-veiled accusation that the Springbok Entities, Lyrical and Soundpost were in violation of the 1940 Act's prohibition against an investment company owning more than 3% of a business development company (such as MCG), and restrictions against certain affiliated transactions. 7 18. In response, by letter dated December 3, 2008, Mr. Saitowitz assured Defendant Tunney that the Group was well aware of the 3% ownership limitation imposed by Section 12(d)(1)(A) of the 1940 Act, and explained that the Group was in compliance with those limitations because (1) "no single private investment fund in our group, either alone or together with any fund it controls, owns more than 3% of the company's stock"; (2) the 1940 Act does not require aggregation among funds' ownership simply because they are affiliated; and (3) the Group did not meet the "affiliated person" definition in the 1940 Act and, in any event, no affiliated transaction restriction was implicated by the Group's ownership of MCG shares. Moreover, Mr. Saitowitz reiterated his request for a meeting to discuss strategic alternatives for the Company. 19. Defendant Tunney finally contacted Mr. Saitowitz on Friday, December 5, 2008, offering to schedule a meeting, which was tentatively arranged for December 18, 2008. Prior thereto, on December 10, 2008, MCG's outside counsel, Wachtell, Lipton, Rosen & Katz ("Wachtell"), sent a letter on MCG's behalf, asserting that Soundpost and Lyrical, individually, and the Group, collectively, violated the 1940 Act because they allegedly beneficially owned more than 3% of MCG's outstanding stock (the "Wachtell Letter"). DEFENDANTS ADOPT THE NOMINATION BY-LAWS TO PREVENT PLAINTIFFS FROM CHALLENGING THE COMPOSITION OF THE BOARD 20. Unbeknownst to Plaintiffs, at or about the same time Defendants were engaging Mr. Saitowitz in a dialogue about the Group's alleged noncompliance with the 1940 Act, Defendants were hastily and, without appropriate deliberation, working to re-write the Company's by-laws to prevent Mr. Saitowitz and the Group from exercising their rights as shareholders to nominate candidates to replace certain of the current directors. 8 21. As reflected in a Form 8-K filed by the Company on December 16, 2008, effective as of December 10, 2008 - the same date on which the Wachtell Letter was sent to Mr. Saitowitz and only three weeks after the Group initially contacted the Company - Defendants adopted the Amended and Restated Bylaws of MCG Capital Corporation (the "Amended By-Laws"). The Amended By-Laws contain, among other things, two amendments that were adopted specifically in an effort to block and/or deter the Group from nominating any person for election to the Board - the 1940 Act By-Law and the Compensation Disclosure By-Law. Neither by-law serves any legitimate or compelling business purpose, and both were plainly adopted primarily to entrench Defendants and disenfranchise the Group. THE 1940 ACT BY-LAW 22. Prior to the Group's disclosure that it might nominate individuals for election to the Board of Directors, such nominations could be made pursuant to Article II, Section 11 of the Company's by-laws "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 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 11." However, subsequent to the Group's disclosure of its intentions, and seizing upon the meritless allegation that the Group does not comply with the ownership limitations of the 1940 Act, Defendants hastily added to the nomination eligibility requirements of the by-laws a purported requirement that nominating stockholders be in compliance with the 1940 Act, in an effort to entrench themselves and prevent the Group from nominating persons to the Board. 9 23. Defendants amended Article II, Section 11 of the Company's by-laws as follows (emphasis added): For nominations of persons for election to the Board of Directors to be properly made at any annual meeting of stockholders, or at any special meeting of stockholders called for the purpose of electing directors as provided under Section 3 of this Article II, ... (b) by any stockholder of the [Company] (i) who is a stockholder of record on the date of the giving of the notice provided for in this Section 11 and on the record date for the determination of stockholders entitled to vote at such meeting, (ii) is entitled to vote at such meeting, (iii) for so long as the [Company] elects to be a "business development company" (as such term is used in the [1940 Act]), WHO COMPLIES WITH ALL APPLICABLE LIMITATIONS ON OWNERSHIP CONTAINED IN THE 1940 ACT AND RULES AND REGULATIONS PROMULGATED THEREUNDER and (iv) who complies with the procedures set forth in Article II of these Bylaws. 24. The 1940 Act By-Law was enacted to provide Defendants with a pretext for denying the members of the Group the ability to exercise their statutory right to participate in the corporate democracy. That purpose is neither legitimate nor compelling. Given that the 1940 Act By-Law was adopted at exactly the same time that Defendant Tunney and Wachtell were challenging the Group's compliance with the 1940 Act, there can be no question that the 1940 Act By-Law was specifically, and discriminatorily, directed at the Group. THE COMPENSATION DISCLOSURE BY-LAW 25. In addition to the 1940 Act By-Law, Defendants inserted into the Amended By-Laws a requirement that each person nominated for election to the Board must disclose, among other things, all compensation received by such person from the beneficial owner making the nominations during the past three years. This disclosure requirement also appears in Article II, Section 11 of the Amended By-Laws, and provides that: To be in proper written form, a stockholder's notice to the Secretary must set forth . . . (c) a description of all direct and indirect compensation and other material monetary agreements, arrangements and understandings during the past three years, and 10 any other material relationships, between or among such stockholder and beneficial owner, if any, and their respective affiliates and associates, or others acting in concert therewith, on the one hand, and each proposed nominee, and his or her respective affiliates and associates, or others acting in concert therewith, on the other hand, including without limitation all information that would be required to be disclosed pursuant to Rule 404 promulgated under Regulation S-K if the stockholder making the nomination and any beneficial owner on whose behalf the nomination is made, if any, or any affiliate or associate thereof or person acting in concert therewith, were the "registrant" for purposes of such rule and the nominee were a director or executive officer of such registrant ... . 26. As written and applied by Defendants, the Compensation Disclosure By-Law requires any nominating shareholder to disclose every compensatory and monetary arrangement between themselves and their affiliates and associates, on the one hand, and their nominees, on the other, including such things as health care packages and other non-monetary forms of indirect compensation. However, this requirement grossly exceeds any disclosure requirement imposed under the law, and, as adopted and applied by Defendants, serves no legitimate purpose. 27. Prior to the amendment of the Company's by-laws, no such broad compensation disclosure requirement was imposed on non-management director nominees. It was only after three private investment funds indicated an intention to exercise their right to make director nominations that Defendants all of a sudden took the view that compensation information was relevant to a person's suitability to serve on the Board. 28. The adoption of the Compensation Disclosure By-Law was plainly aimed at chilling Plaintiffs' participation in the corporate democracy, as it is well known that private investments funds, such as the members of the Group, consider compensation information proprietary and highly confidential. 11 29. What is more, because compensation in the private investment fund setting is largely based on the performance of the underlying fund(s), there is no way to make a meaningful compensation disclosure without effectively revealing how the fund has performed, which again is highly confidential, proprietary information that generally is not disclosed absent a non-disclosure agreement. Indeed, as Defendants most certainly know, it is standard practice in the private investment fund industry to require non-disclosure agreements before any such information will be shared with prospective investors. In fact, Mr. Saitowitz offered to disclose his and Mr. Gage's compensation arrangements to the Company, provided MCG executed a confidentiality and non-disclosure agreement. The Company refused, demonstrating that it had no interest in the actual information, but instead sought to prevent Plaintiffs from challenging Defendants. 30. The Compensation Disclosure By-Law was designed for the purpose of discriminating against shareholders who are private investment funds, like the members of the Group, because it requires them to fundamentally change the way they conduct their OWN business as a prerequisite to exercising one of their most fundamental rights as shareholders of the Company - the right to effect the composition of the Board by presenting their own director nominees. 31. The information required to be disclosed pursuant to the Compensation Disclosure By-Law far exceeds any information necessary to permit the Company's shareholders to appropriately evaluate the nominees for election to the Board. The only information necessary for a shareholder to make an informed decision about a nominee is the fact of the nominee's employment by or affiliation with the nominating shareholder. Where such an affiliation is disclosed, the shareholders are made aware of the nominee's lack of independence. The 12 additional disclosure of the AMOUNT of money the nominee makes in connection with that affiliation serves nothing but the idle curiosity of the voting shareholders. 32. The Compensation Disclosure By-Law might make some sense with respect to nominees who purportedly are independent of the nominating shareholder, as the disclosure requirement would permit the Company to confirm the independence of the nominee. However, when such a disclosure requirement is applied to concededly affiliated nominees - as Defendants have done here - the requirement acts as a significant deterrent to making nominations of affiliated persons for election to the Board. 33. In this case, Mr. Everett has no affiliation with the Group. He has confirmed that he receives no compensation from them, and fully answered all applicable questions raised in the Directors' and Officers' Questionnaire (the "Questionnaire"). 34. Mr. Saitowitz's affiliation with Springbok Onshore and Mr. Gage's affiliation with Lyrical are plainly disclosed in the Group's 13-D and/or the nomination documents, which provide more than sufficient information to permit MCG's shareholders to determine whether or not to vote for Mr. Saitowitz and/or Mr. Gage on the ground that they are not independent of the Group. Requiring Mr. Saitowitz or Mr. Gage to disclose how much they have been paid over each of the preceding three years by Springbok and Lyrical, respectively, for their services to those entities adds nothing of relevance to the pool of information already available to the Company's shareholders, and is nothing more than a mechanism to dissuade the Group from seeking to unseat the current directors. DEFENDANTS HAVE IMPROPERLY BARRED PLAINTIFFS FROM THE DIRECTOR ELECTION PROCESS 35. On December 18, 2008, AFTER Defendants had voted to adopt the Amended By-Laws, Defendant Tunney, along with the Company's Chief Financial Officer, finally made 13 themselves available to meet with Mr. Saitowitz and Cisco del Valle of the Springbok Entities, Mr. Lester of Soundpost, and Mr. Keswin and Jeff Moses of Lyrical. However, the fact that Defendant Tunney did not meet with Mr. Saitowitz and the others until after the by-laws were amended in an attempt to effectively disenfranchise the Group, plainly reflects Defendants' order of priorities - Defendants' interests first, shareholders' interests a very distant second. 36. Unable to engage Defendants in any meaningful discussion of strategic alternatives that might enhance shareholder value, and with the deadline for making director nominations about to expire, Mr. Saitowitz and Springbok Onshore gave notice to the Company on January 16, 2009 that they wished, individually and jointly, to nominate Messrs. Saitowitz, Gage and Everett for election to the Board at MCG's 2009 annual stockholders meeting (tentatively scheduled for May 2009) (the "Nomination Notices"). This notice included completed Questionnaires for each of the Plaintiff nominees, and fully and completely complied with the Company's by-laws as they existed before Defendants improperly re-wrote them for their own purposes, as well as with the Amended By-Laws, save for Mr. Saitowitz's and Mr. Gage's legitimate unwillingness to disclose publicly the details of their compensation arrangements. 37. On January 21, 2009, Defendants, acting through Wachtell, rejected Mr. Saitowitz's and Springbok Onshore's nominations because they purportedly did not comply with the 1940 Act By-Law and the Compensation Disclosure By-Law (the "Ineligibility Notice"). For good measure, Defendants also contrived a number of other purported deficiencies in the Nomination Notices, such as objecting to Plaintiffs' qualification of certain information as being to their "best knowledge," and Plaintiffs' failure to indicate that an entity Mr. Everett once advised was not part of the Group, even though the members of the Group are clearly delineated 14 in documents attached to the Nomination Notices and the Group's 13-D and 13-D/A filings, and the entity at issue was not, and never had been, a member of the Group. 38. Those purported deficiencies have no bearing on either Mr. Saitowitz's or Springbok Onshore's suitability to make nominations for the Board, or Messrs. Saitowitz's, Gage's or Everett's suitability to serve as directors of the Company. Nevertheless, on January 22, 2009, Mr. Saitowitz replied to the Ineligibility Notice and addressed each of the purported deficiencies raised by Defendants, eliminating any qualifications and making confirmations where required. With regard to the Group's purported noncompliance with the 1940 Act, Mr. Saitowitz reiterated that no individual entity within the Group owns in excess of 3% of MCG's common stock, and pointed out that he is an individual and therefore is not limited by the 3% ownership restriction in any event. 39. Moreover, in an attempt to address any concerns Defendants may have had regarding Mr. Saitowitz's and Mr. Gage's compensation arrangements, and to permit the Company to evaluate the relevance of the information to shareholders, Mr. Saitowitz offered to disclose his and Mr. Gage's compensation arrangements to the Company, provided MCG executed a confidentiality and non-disclosure agreement. In this way, if Defendants, after reviewing the compensation information, believed there was a potential issue, they could have discussed the issue with Plaintiffs and potentially worked out a solution that addressed Defendants' concern, without unnecessarily disclosing private, confidential information. 40. Defendants, however, had no interest in finding a solution that would permit Mr. Saitowitz and Springbok Onshore to exercise their right to make nominations for the Board. On January 23, 2009, Defendants effectively conceded the overwhelming majority of the purported deficiencies raised in the Ineligibility Notice had been resolved. Nevertheless, 15 Defendants continued to assert incorrectly that Mr. Saitowitz and Springbok Onshore were in violation of the 1940 Act. Moreover, Defendants flatly rejected Mr. Saitowitz's offer to provide his and Mr. Gage's compensation information on a confidential basis, and stated "the Company's intention to make such information public," presumably to have maximum deterrent value. Defendants' refusal to even look at Mr. Saitowitz's and Mr. Gage's compensation information to determine the purported relevance of the information makes clear that Defendants were not actually interested in seeing the information, but rather were merely attempting to use the Compensation Disclosure By-Law as a means of coercing the Group to discontinue their challenge of Defendants. 41. However, there is no question that both Mr. Saitowitz and Springbok Onshore are in compliance with the 1940 Act. As to Mr. Saitowitz, the 1940 Act does not even apply to him because he is an INDIVIDUAL and therefore is not covered by the statute. There can be no question therefore that his individual nomination of himself, Mr. Gage and Mr. Everett is in compliance with the 1940 Act By-Law. As to Springbok Onshore, both a federal court AND THE SEC specifically have rejected Defendants' contention that the beneficial ownership of individual investment funds should be aggregated for purposes of the 1940 Act's 3% ownership limitation. SEE MEVC DRAPER FISHER JURVETSON FUND I, INC. V. MILLENNIUM PARTNERS, L.P., 260 F. Supp. 2d 616, 627-31 (S.D.N.Y. 2003) ("Congress in enacting the [1940 Act] was clearly cognizant of the myriad relationships investment companies might bear to one another, and chose to apply the 3% restriction of ss. 12(d)(1)(A)(i) only to companies that controlled each other, and not to companies under common control."); Mutual Series Fund, Inc., SEC No-Action Letter, 1995 WL 693304 (Nov. 7, 1995) ("By its terms, Section 12(d)(1)(A) does not require the investments of one registered investment company to be aggregated with the investments of any other registered 16 investment company, including another investment company in the same fund complex or advised by the same investment advisor or manager.") 42. Moreover, there is no basis for denying either Mr. Saitowitz or Mr. Gage nomination to the Board simply because of their reasonable refusal to share their confidential compensation information with the world. Mr. Saitowitz's and Mr. Gage's respective affiliations with the Springbok Entities and Lyrical have been disclosed in numerous documents, which is more than sufficient to permit the Company's shareholders to make an informed decision about whether to elect Mr. Saitowitz or Mr. Gage to the Board. 43. In a final effort to resolve this dispute amicably, on January 27, 2009, Mr. Saitowitz wrote a letter to Defendants requesting that they reconsider their position and permit Mr. Saitowitz and Springbok Onshore to make their director nominations. However, Defendants, after indicating that a response would be forthcoming by February 6, 2006, have refused even to respond to that request. 44. At bottom, Defendants have determined to prevent Mr. Saitowitz and Springbok Onshore from nominating Messrs. Saitowitz, Gage and Everett for election to the Board because they are trying to protect their positions with the Company. There is no legitimate business reason, let alone a compelling business reason, for their conduct, and it is clear that Defendants have elected to put their own self interest ahead of the interests of the shareholders at whose pleasure they serve. COUNT I - DECLARATORY JUDGMENT (1940 ACT BY-LAW) (Individually as to Springbok Onshore, Mr. Saitowitz, Mr. Gage and Mr. Everett) 45. Plaintiffs repeat and reallege paragraphs 1-43 of the Complaint as if fully set forth herein. 17 46. The interests of the parties are adverse and the controversy is ripe for determination. 47. As adopted and applied, the 1940 Act By-Law is invalid. 48. FIRST, Defendants' application of the 1940 Act By-Law to prevent Mr. Saitowitz from making director nominations is invalid and improper under Delaware law because the 1940 Act By-Law does not apply to Mr. Saitowitz, as he is not an investment company within the meaning of the statute. Therefore, Mr. Saitowitz cannot be barred from nominating himself and Messrs. Gage and Everett for election to the Board on the basis of the 1940 Act By-Law. 49. SECOND, even if the 1940 Act By-Law were applicable to Mr. Saitowitz, Defendants have impermissibly applied the by-law to prohibit Mr. Saitowitz and Springbok Onshore from making director nominations because neither Mr. Saitowitz nor Springbok Onshore owns in excess of 3% of the Company's outstanding voting stock. They therefore are in full compliance with the 1940 Act. 50. THIRD, the 1940 Act By-Law was enacted by Defendants in an effort to entrench themselves and prohibit the Group from nominating individuals for election to the Board. Accordingly, the 1940 Act Bylaw, which Defendants have applied to bar the nominations by Mr. Saitowitz and Springbok Onshore, is invalid. 51. The 1940 Act By-Law is inequitable and unreasonable and its application should be enjoined permanently. 52. Plaintiffs have no adequate remedy at law. COUNT II - DECLARATORY JUDGMENT (COMPENSATION DISCLOSURE BY-LAW) (Individually as to Springbok Onshore, Mr. Saitowitz, Mr. Gage and Mr. Everett) 53. Plaintiffs repeat and reallege paragraphs 1-52 of the Complaint as if fully set forth herein. 18 54. The interests of the parties are adverse and the controversy is ripe for determination. 55. As adopted and applied, the Compensation Disclosure By-Law is invalid. 56. Defendants' adoption and application of the Compensation Disclosure By-Law is inequitable and unreasonable, and its application should be enjoined permanently. 57. The Compensation Disclosure By-Law, as adopted and applied, imposes requirements that are unrelated to legitimate business interests of the Company and its stockholders in an attempt to prevent or otherwise chill the exercise of the rights of stockholders such as Mr. Saitowitz and Springbok Onshore to nominate individuals for election to the Company's Board. 58. Plaintiffs have no adequate remedy at law. COUNT III - INJUNCTION (Individually as to Springbok Onshore, Mr. Saitowitz, Mr. Gage and Mr. Everett) 59. Plaintiffs hereby repeat and reallege the allegations of Paragraphs 1-58 of the Complaint as if fully set forth herein. 60. Application of the 1940 Act By-Law and the Compensation Disclosure By-Law to the nominations of Mr. Saitowitz and Springbok Onshore is inequitable and illegal, since the 1940 Act By-Law and the Compensation Disclosure By-Law are not justified by any compelling business justification, do not respond to any legally cognizable threat to corporate policy and effectiveness, and, as applied here are preclusive. 61. In addition, even assuming ARGUENDO that the 1940 Act By-Law and the Compensation Disclosure By-Law were determined not to be inequitable in application in this instance, the Company's interpretation of the 1940 Act is clearly contrary to existing law, and the application of that interpretation to the 1940 Act By-Law and the Compensation Disclosure By- 19 Law demonstrates that those By-Laws were not adopted for any valid business purpose, but instead for the blatantly self-interested purpose of entrenchment. 62. As applied to Plaintiffs in this case, the 1940 Act By-Law and the Compensation Disclosure By-Law are inequitable and Defendants should be enjoined from relying upon them to bar Plaintiffs from nominating and/or being nominated for election to the Board. 63. The Company's prohibition of the nominations for the Board of Directors constitutes irreparable injury. 64. Plaintiffs have no adequate remedy at law. COUNT IV - BREACH OF FIDUCIARY DUTY (Derivatively by Springbok Onshore and Mr. Saitowitz) 65. Mr. Saitowitz and Springbok Onshore repeat and reallege the allegations of Paragraphs 1-64 of the Complaint as if fully set forth herein. 66. Mr. Saitowitz and Springbok Onshore bring this count derivatively in order to address the breach of fiduciary duty of each and every member of the Board of the Company and to vindicate all stockholders' rights to a full and fair opportunity to nominate directors. 67. No demand on the Board was necessary because there is more than a reasonable doubt regarding the independence of the Board in connection with the action of the directors in adopting the 1940 Act By-Law and the Compensation Disclosure By-Law at a time when they knew that such by-laws would be used to preclude substantial stockholders from exercising their right to challenge the incumbency of the Board. Indeed, six of the ten director Defendants are interested in the validity of the Group's nominations. Three of the Defendants - Tunney, Merrick and Saville - are management insiders who may eventually be replaced in 20 connection with Plaintiffs' proxy contest. Moreover, the terms of an additional three directors - Bucher, Ewing and O'Keefe - expire this year, and they likely will be running for re-election to the Board at the upcoming annual meeting of shareholders. Those directors stand to be removed from the Board if the Group's nominees are elected. 68. The discriminatory features of the 1940 Act By-Law and the Compensation Disclosure By-Law, and the Company's interpretation of the 1940 Act By-Law, as well as the manner and timing in which those measures were asserted, demonstrate that Defendants have acted in a manner that attempts to preserve their position and perquisites as directors and officers. There is no legitimate basis for imposing the 1940 Act requirement or the Compensation Disclosure requirement on Mr. Saitowitz's and Springbok's director nominations. 69. Adopting and purporting to apply the 1940 Act By-Law and the Compensation Disclosure By-Law at a time when the Board knew that the Group was likely to nominate individuals for election to the Board constituted a breach of the duty of loyalty of each and every member of the Board, since the challenged action was designed primarily to preserve the incumbency of Board members against a challenge from the Group and/or will have that effect if applied in the manner advocated by Defendants. 70. All stockholders are currently suffering harm as a result of the 1940 Act By-Law and the Compensation Disclosure By-Law in that no stockholder other than those deemed to be in compliance with the 1940 Act By-Law may nominate candidates for election to the Board, and no nominee who declines to comply with the Compensation Disclosure By-Law may stand for election to the Board. If this Court were not to intervene to prevent the self-interested enforcement of these by-laws, all stockholders will be deprived of having the choice of electing Messrs. Saitowitz, Gage or Everett. 21 71. Plaintiffs have no adequate remedy at law. WHEREFORE, Plaintiffs demand that the Court enter its Orders, Judgments and Decrees: (a) declaring and decreeing that Defendants' application of the 1940 Act By-Law to Mr. Saitowitz is impermissible and invalid because 1940 Act does not apply to Mr. Saitowitz; (b) declaring and decreeing that Defendants application of the 1940 Act By-Law to Mr. Saitowitz and Springbok Onshore is impermissible and invalid because Mr. Saitowitz and Springbok Onshore are in compliance with the requirements of the 1940 Act By-Law; (c) declaring and decreeing that, as adopted and applied, the 1940 Act By-Law and the Compensation Disclosure By-Law are invalid; (d) preliminarily and permanently enjoining the application of the 1940 Act By-Law and the Compensation Disclosure By-Law to the nominations by Mr. Saitowitz or Springbok Onshore; (e) preliminarily and permanently enjoining the application of the Compensation By Law to the nominations of Messrs. Saitowitz, Gage and Everett; (f) preliminarily and permanently enjoining the application of the 1940 Act By-Law and the Compensation Disclosure By-Law to any attempt by Mr. Saitowitz or Springbok Onshore to nominate one or more individuals as candidates for director; 22 (g) declaring and decreeing that each of Mr. Saitowitz, Mr. Gage, and Mr. Everett has been properly nominated in accordance with the by-laws of the Company and are therefore qualified to stand for election as directors of the Company at its 2009 annual shareholders' meeting; (h) declaring and decreeing that the action of the Board of Directors of the Company in adopting the 1940 Act By-Law and the Compensation Disclosure By-Law constituted a breach of fiduciary duty of such directors; (i) awarding Plaintiffs their costs and expenses incurred in bringing and prosecuting this action, including their attorneys' fees, based on, among other things, any corporate benefit conferred by this litigation; and (j) awarding such other and further relief as may be just and equitable in the circumstances. /s/ Daniel A. Dreisbach ------------------------------------ OF COUNSEL: Gregory V. Varallo (#2242) Michael E. Swartz Daniel A. Dreisbach (#2583) Schulte Roth & Zabel LLP Meredith M. Stewart (#4960) 919 Third Avenue Richards, Layton & Finger, P.A. New York, NY 10022 One Rodney Square 920 North King Street Wilmington, DE 19801 Telephone: (302) 651-7700 Dated: February 10, 2009 ATTORNEYS FOR PLAINTIFFS 23 EX-99.9 3 p09-0552exhibit99_9.txt UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK - -----------------------------------------------------x : : : MCG CAPITAL CORPORATION, : : Plaintiff, : : No. : --------- v. : : SPRINGBOK CAPITAL MANAGEMENT, LLC; : SPRINGBOK CAPITAL MASTER FUND, LP; SPRINGBOK : CAPITAL ONSHORE, LLC; GAVIN SAITOWITZ; : SOUNDPOST PARTNERS, LP; JAIME LESTER; LYRICAL : PARTNERS, LP; JEFFREY KESWIN, : Defendants. : - -----------------------------------------------------x COMPLAINT Plaintiff MCG Capital Corporation ("MCG" or the "Company"), by its undersigned counsel, alleges upon knowledge to its own acts, and upon information and belief as to all other matters, as follows: NATURE OF THE ACTION 1. This is an action brought under Section 13(d) of the Securities and Exchange Act of 1934 (the "Exchange Act"), 15 U.S.C. ss. 78m(d). In order to ensure transparency in financial markets with respect to the accumulation of large share positions, Section 13(d) requires any person who obtains five percent or more of the outstanding stock of a registered security to disclose to the investing public details of the securities acquisition and its purpose on a Schedule 13D. Section 13(d) equally applies to any "group of persons" who, acting in concert or with a common plan, collectively acquire five percent of more of the stock of any registered company. 2. Plaintiff MCG is a publicly traded, internally managed, non-diversified closed-end investment company that has elected to be regulated as a business development company under the Investment Company Act of 1940. Defendants Springbok Capital Management, LLC ("Springbok"); Springbok Capital Master Fund, LP ("Springbok Master Fund"); Springbok Capital Onshore, LLC ("Springbok Onshore"); Gavin Saitowitz; Soundpost Partners, LP; Jaime Lester; Lyrical Partners, LP; and Jeffrey Keswin (collectively, the "Defendants" or the "Springbok Group"), concededly acting as a Section 13(d) group, have acquired more than five percent of the outstanding shares of MCG and are therefore subject to Section 13(d) and SEC rules promulgated thereunder. Indeed, these defendants have made clear their intent to change or influence control of MCG. Defendants, and their activity with respect to MCG, thus fall within the heartland of conduct Section 13(d) is designed to regulate. 3. Defendants violated Section 13(d) when they jointly filed an erroneous and incomplete Schedule 13D on November 20, 2008 (as amended on January 21, 2009, the "Springbok 13D"). Specifically, as detailed herein, the Springbok 13D contains numerous apparent errors or omissions pertaining to Defendants' MCG stock trading activity. The Springbok 13D disclaims any present plan or purpose to effect an extraordinary transaction involving MCG or any discussions with any other persons regarding such a transaction, notwithstanding that the Springbok Group has promoted at least two such plans since filing the Springbok 13D. Relief from this Court is therefore necessary to ensure that MCG stockholders have the complete information mandated by the Exchange Act. 4. The need for relief is especially acute here because defendants Springbok and Saitowitz, in addition to rapidly accumulating a substantial position in MCG stock, have aggressively injected themselves into matters relating to the Company's management 2 and control. On January 16, 2009, Saitowitz and Springbok delivered to MCG a notice of intent to nominate three persons -- including Saitowitz himself and Robert S. Everett, an individual who has been affiliated with Millennium Partners LP (together with its affiliates, "Millenium") -- to stand for election as directors of MCG at its upcoming 2009 annual meeting of stockholders. Springbok and Saitowitz thus commenced a "proxy fight" to seize control of MCG - -- partially on the strength of their erroneous 13D filings. Consistent with the "control purpose" of their group, all of the Defendants have declared their support for the Springbok/Saitowitz slate of nominees. 5. Moreover, through this proxy contest and otherwise, Saitowitz and the rest of the Springbok Group have acted so as to involve Millennium and/or many of its historical allies in the control of MCG. As detailed below, (1) one of Springbok's nominees for the MCG board (Everett) is a long-time Millennium collaborator; (2) Millennium has indirectly acquired a substantial stake in MCG through an affiliated investment vehicle called Ironsides Holdings, LLC, which is managed by Robert C. Knapp, who has previously collaborated with Everett in at least one prior Millennium-backed investment company takeover effort; (3) indeed, in a prior and highly analogous proxy contest situation, Millennium -- much like Springbok here -- nominated Everett and Knapp together in an attempt to seize control of another closed-end investment company; and (4) in January 2009, Saitowitz proposed and arranged a meeting between MCG and a special purpose investment company in which Millennium was the largest investor, with the stated purpose of facilitating the sale of MCG to this investment company. Saitowitz's proposal to effect a sale of control of MCG must be, but is not, disclosed in the Springbok 13D, and this omission alone requires an immediate injunctive order of supplemental disclosure. 3 Although the Springbok Group has denied any connection with Millennium, these facts indicate that the Springbok-led group is considering delivering MCG to affiliates of Millennium -- and yet they all remain improperly undisclosed to MCG stockholders. 6. Because MCG anticipates holding a shareholder meeting in the near future, and because the Defendants have stated, both to MCG management and in their 13D filings, that they intend to seek managerial control of MCG, it is imperative that the Defendants accurately disclose their trading activity in MCG stock; any contracts, arrangements, or understandings, if any, with Millennium or other third parties they have regarding MCG stock; and their intention to execute any extraordinary transactions involving MCG. 7. Accordingly, the Defendants should be required to file an amended Schedule 13D disclosing the complete and accurate information that the Defendants should have disclosed in their original Schedule 13D filing on November 20, 2008. Moreover, to ensure the integrity of the corporate election process, the Defendants should be barred from acquiring more MCG securities, voting the securities they already own, and nominating directors to the MCG board until they file a complete and accurate Schedule 13D correcting the errors and omissions contained in their present 13D filings. JURISDICTION AND VENUE 8. This action arises under Section 13(d) of the Exchange Act, 15 U.S.C. ss. 78m(d), and the rules and regulations promulgated thereunder by the SEC. 9. This court has jurisdiction over this lawsuit pursuant to Section 27 of the Exchange Act, 15 U.S.C. ss. 78aa. 10. Venue in this district is proper pursuant to Section 27 of the Exchange Act, 15 U.S.C. ss. 78aa. 4 11. This court may grant declaratory relief pursuant to 28 U.S.C. ss. 2201 because an actual controversy exists regarding the accuracy of the Defendants' statements and disclosures under Section 13(d) of the Exchange Act. THE PARTIES 12. MCG is a publicly traded, internally managed, non-diversified closed-end investment company that has elected to be regulated as a business development company under the Investment Company Act of 1940. MCG is incorporated in Delaware and headquartered in Arlington, Virginia. Its shares are publicly traded on the NASDAQ Global Select Market. A majority of its board members are independent of management. 13. Springbok is a limited liability company incorporated in Delaware. Its principal place of business is New York, New York. Its offices are located at 405 Park Avenue, Sixth Floor, New York, New York. 14. Springbok Capital Master Fund, LP, is a limited partnership registered in the Cayman Islands. 15. Springbok Capital Onshore, LLC, is a limited liability company incorporated in Delaware. Its principal place of business is New York, New York. Its offices are located at 405 Park Avenue, Sixth Floor, New York, New York. It is advised by Springbok. 16. Gavin Saitowitz is a principal and managing member of Springbok Capital Management, LLC, and the managing partner of Springbok Capital Master Fund, LP. He has also been proposed, by himself and Springbok Onshore, as a director nominee at the 2009 annual meeting of MCG stockholders. 5 17. Soundpost Partners, LP ("Soundpost"), is a limited partnership registered in Delaware. Its principal place of business is New York, New York. Its offices are located at 405 Park Avenue, Sixth Floor, New York, New York. 18. Jaime Lester is a principal of Soundpost. 19. Lyrical Partners, LP ("Lyrical") is a limited partnership registered in Delaware. Its principal place of business is New York, New York. Like Springbok and Soundpost, Lyrical's offices are located at 405 Park Avenue, Sixth Floor, New York, New York. 20. Jeffrey Keswin is a principal of Lyrical. FACTUAL BACKGROUND THE SPRINGBOK GROUP TAKES AIM AT MCG 21. The Springbok 13D wrongfully fails to disclose how and under what circumstances the members of the Springbok Group obtained their reportable position in MCG stock. The Springbok 13D indicates, however, that by September 22, 2008, Springbok and Saitowitz already owned at least five percent of MCG's outstanding common stock. 22. In October of 2008 -- well after Saitowitz and Springbok apparently had crossed the five percent ownership line that presumptively imposes Schedule 13D reporting requirements -- Saitowitz approached Lester and proposed working together to implement plans to alter the strategic direction of MCG. These plans included the sale or liquidation of MCG, changes in the composition of its board of directors, the hiring of an outside investment manager, and the replacement of its management. During the course of October and early November, Saitowitz, Lester, and Keswin formed a group with the objective of coordinating their efforts to alter the strategic direction of MCG. Defendants concede that, at least as early as November 10, 2008, the Defendants reached an agreement to so coordinate their efforts. 6 23. On November 12, 2008, Springbok, Soundpost, and Lyrical entered into a binding term sheet governing the terms of their cooperation with respect to their plans to alter the strategic direction of MCG. Under the term sheet, Springbok, Lyrical, and Soundpost agreed to share dispositive and voting power over certain MCG shares held by them and their affiliates. As of November 20, 2008, these shares numbered 7,454,484. On November 19, 2008, Springbok, Lyrical, and Soundpost entered into an amended and restated term sheet that superseded the November 12, 2008 term sheet. 24. On November 20, 2008, the Defendants filed a Schedule 13D disclosing that they had formed a group for the purpose of holding or acquiring MCG stock. The Schedule 13D contained several apparent errors or omissions, including a failure to accurately report when Saitowitz and Springbok formed a control purpose with respect to MCG and an incomplete list of transactions in MCG stock effected by the Defendants within the previous 60 days. 25. On January 16, 2009, Saitowitz and Springbok Onshore, an entity affiliated with Springbok, delivered to MCG a notice of intent to nominate Saitowitz, Robert S. Everett, and Edward Gage as directors at the 2009 annual meeting of MCG stockholders. On January 21, 2009, the Defendants filed an amended Schedule 13D stating that the Defendants supported the three director nominees proposed by Saitowitz and Springbok Onshore. The amended Schedule 13D failed to cure any of the material errors or omissions in the original Schedule 13D filed on November 20, 2008. 26. To the contrary, the Springbok 13D as amended compounded Defendants' disclosure violation. In the amended filing, the Springbok Group specifically disclaimed any "present plan or proposal that would relate to or result in" an extraordinary corporate transaction. But in late January and early February 2009, Saitowitz proposed and arranged two telephonic 7 meetings between MCG management and potential buyers -- both of which included clear plans and proposals for extraordinary corporate transactions involving MCG. At the first of these Springbok-sponsored telephonic meetings, on or about February 5, 2009, an acquisition company of which Millennium is the largest investor proposed to purchase MCG. At the second of these meetings, on or about February 11, 2009, another special purpose acquisition company proposed to purchase a large proportion of MCG's assets in an extraordinary transaction. 27. In late January and early February, MCG informed Saitowitz and Springbok Onshore that, pursuant to MCG's bylaws, they were ineligible to nominate directors. On February 10, 2009, Saitowitz, Springbok Onshore, Robert S. Everett, and Edward Gage sued MCG and its directors in the Chancery Court of Delaware, seeking a declaration that the Springbok Group was entitled to nominate directors. That litigation is pending. THE DEFENDANTS HAVE NOT ACCURATELY DISCLOSED THEIR CONTROL PURPOSE AND MCG STOCK TRADING HISTORY - --------------------------------------------- 28. On November 20, 2008, the Defendants filed with the SEC a Schedule 13D, in which they disclosed that they shared voting and dispositive power over 7,454,484 shares of MCG. The timing and contents of this filing violated Section 13(d) in the following respects. 29. First, Saitowitz and Springbok violated Section 13(d) by failing to report their MCG ownership position promptly after developing an interest in exercising control over MCG's affairs. As five percent holders of MCG since (at the latest) September 22, 2008, Saitowitz and Springbok were required to disclose their MCG holding on Schedule 13D promptly and within 10 days at most. Moreover, even if Springbok holds itself out as a registered investment advisor (and thus claimed permission to delay filing a Schedule 13G until 45 days after the end of the calendar year so long as it does not have a control purpose with 8 respect to MCG), Springbok and Saitowitz would have been legally required to disclose their position on Schedule 13D within 10 days of developing any such control purpose, pursuant to governing regulations. The November 20, 2008 13D concedes that Saitowitz and Springbok entered into discussions evincing a control purpose as of mid-October 2008. Accordingly, their failure to file a Schedule 13D until November 20, 2008 violated Section 13(d). To cure this violation, Saitowitz and Springbok must disclose when they conceived a control purpose in MCG, what that control purpose was, and detail all transactions in MCG stock since their holding in MCG common stock exceeded five percent. Moreover, because this violation permitted members of the Springbok Group to acquire shares of MCG stock while they themselves were withholding material and disclosable information about their intentions from the marketplace, the Springbok Group should be barred from voting any shares of MCG stock they acquired after crossing the five percent threshold. 30. Second, the 13D is inconsistent with documents Saitowitz and Springbok Onshore submitted to MCG in connection with their proposed nomination of directors at the 2009 annual MCG stockholders' meeting (the "Nominating Documents"). The Nominating Documents recited that Soundpost Capital Offshore, Ltd., HFR HE Soundpost Master Trust, and Soundpost Capital, LP (collectively, the "Soundpost Entities"), all entities managed by Soundpost, purchased 68,496 shares of MCG stock on November 17, 2008; 153,388 shares of MCG stock on November 18, 2009; and 234,768 shares of MCG stock on November 19, 2008. The Defendants did not report any of these trades in their Schedule 13D, even though they were required under 17 C.F.R. ss. 240.13d-101 to report all trades effected in the 60 days before the filing date. Defendants must disclose these trades and any other undisclosed transactions involving MCG securities in the relevant period. 9 31. Third, the Defendants reported in their Schedule 13D filing that Soundpost Partners, LP, purchased 67,829 shares of MCG stock on November 15, 2008, but they reported no such purchase when they submitted to MCG on January 16, 2009, as part of the Nominating Documents, a list of all transactions in MCG stock effected within the past two years by the Soundpost Entities. This and any other inconsistencies pertaining to the MCG holdings of Soundpost must be corrected for the 13D to be compliant with law. 32. Fourth, the Springbok 13D filing is internally inconsistent with respect to the number of shares beneficially owned by Soundpost Partners, LP, Jaime Lester, Lyrical Partners, LP, and Jeffrey Keswin. The cover pages of the 13D report that Soundpost Partners, LP, and Jaime Lester each beneficially own 3,229,098 MCG shares over which they share voting and dispositive power with the other Defendants, and that Lyrical Partners, LP, and Jeffrey Keswin each beneficially own 3,094,723 MCG shares over which they share voting and dispositive power with the other Defendants. In Item 5, however, the Defendants state that Soundpost Partners, LP, and Jaime Lester each beneficially own 3,094,723 MCG shares over which they share voting and dispositive power with the other Defendants, and that Lyrical Partners, LP, and Jeffrey Keswin each beneficially own 3,229,098 MCG shares over which they share voting and dispositive power with the other Defendants. 33. Fifth, the Springbok 13D states that Soundpost Partners, LP, and Lyrical Partners, LP, are "investment manager[s] with respect to certain private investment funds" and are filing the 13D "with respect to shares of [MCG's] common Stock owned by such private investment funds." The Springbok 13D does not, however, disclose the names or any other identifying information of these funds, nor does it disclose whether any of the transactions in MCG stock listed as effected by Soundpost Partners, LP, or Lyrical Partners, LP, were in fact 10 effected by these private investment funds. The Nominating Documents disclose that some of the transactions listed in the 13D as effected by Soundpost Partners, LP, or Lyrical Partners, LP, were in fact effected by the private investment funds managed by these partnerships. The Defendants' failure to disclose in the Springbok 13D which particular entities effected trades in MCG stock violates 17 C.F.R. ss. 240.13d-101, which requires reporting groups to disclose "[t]he identity of the person . . . who effected the transaction." THE SPRINGBOK GROUP'S UNDISCLOSED PLANS AND RELATIONSHIPS WITH RESPECT TO MCG - -------------------------------------------- 34. The 13D does not disclose any apparent intention to facilitate a sale of MCG to certain identified persons although any such intention is required to be disclosed under Section 13(d) and 17 C.F.R. ss. 240.13d-101, which requires 13D filers to, among other things, describe any plan or purpose such a filer may have with respect to "[a]n extraordinary corporate transaction, such as a merger, reorganization or liquidation, involving the issuer or any of its subsidiaries." Developments since the Springbok group was formed (allegedly only in November 2008) strongly indicate an intention to enter into specific extraordinary transactions that must be disclosed to MCG shareholders. 35. On or about January 23, 2009, Saitowitz proposed a meeting between Steven Tunney, the chief executive officer of MCG, and representatives of a special purpose acquisition vehicle (called a "SPAC") whose largest owner is an affiliate of Millenium. According to the terms of the certificate of incorporation of this Millenium-affiliated SPAC, it, must either complete a business combination by August 2009 or liquidate. The telephonic meeting took place on February 5, 2009. At the meeting, representatives from the Millenium-affiliated SPAC proposed a purchase of MCG. A similar extraordinary transaction was proposed at another Springbok-brokered meeting approximately one week later with a different SPAC. 11 Thus, Springbok and Saitowitz have already acted on plans to broker an extraordinary MCG transaction, and have sponsored a proposal concerning an extraordinary transaction whereby a Millennium-affiliated entity would purchase MCG in its entirety. These plans have not been publicly disclosed. 36. Compounding the disclosure failure, an individual who is upon belief a relative of Gavin Saitowitz is employed by and affiliated with the sponsor of the Millenium-affiliated SPAC. On belief, the sponsor of this SPAC and its participants have unique incentives to complete an acquisition transaction before the SPAC's August 2009 liquidation deadline. The Springbok Group's consideration and promotion of a transaction with this entity must be disclosed, especially in light of these special incentives. 37. The Millenium connections do not end there. Thus, in addition to Saitowitz himself, the Springbok group has purportedly nominated Robert S. Everett to the MCG board. Everett has a long-standing history with Millennium, including in circumstances highly analogous to those here. In 2003, Millennium directly waged a proxy contest to take control of MVC Capital, Inc., which, like MCG, is a closed-end investment company registered under the Investment Company Act of 1940. Millennium nominated Everett to the MVC board, and then, after facilitating Everett's election as an MVC director, Millennium took control of MVC and Mr. Everett was installed as its chief executive officer. 38. The Millennium-MVC-MCG connection also runs deeper. Along with Everett, Millennium elected Robert S. Knapp as an MVC director in its 2003 proxy fight. Knapp and Everett thereafter served together as Millennium-supported representatives on the MVC board, thereby ensuring Millennium's influence over MVC. Now, Knapp and Ironsides 12 Holdings have simultaneously emerged as activist investors in MCG, at the same time Springbok seeks to nominate Knapp's long-time Millennium collaborator Everett as a director of MCG. 39. Springbok and Saitowitz must disclose their apparent intention to facilitate a sale of MCG. The Springbok Group must also disclose any other interests it may have, whether through affiliates, family members or otherwise, in brokering a potential transaction, and the full extent of its relationship with Millennium or any other third parties with whom it may be collaborating in connection with its efforts to influence control of MCG. To the extent the Springbok Group is pursuing a course of conduct that is designed to or will have the potential effect of delivering MCG to Millennium or to any entity, MCG and its stockholders have the right to be so informed immediately. INJUNCTIVE RELIEF IS NECESSARY 40. Until the Defendants' filing is corrected, the Defendants will be able to seek control of MCG by buying additional MCG shares and waging a proxy fight, while MCG stockholders will be deprived of the benefit of 13D filings that provide an accurate accounting of Defendants' holdings and trading activity and information sufficient to evaluate whether Defendants' interests are aligned with those of other MCG shareholders. MCG and its shareholders suffer irreparable harm for each day that the Springbok Group's incomplete and inaccurate disclosures remain in the market place. Injunctive relief to force corrective disclosures is necessary and appropriate. 41. Ordering the Defendants to correct their 13D filings, however, is not a complete remedy. The Defendants should not be able to benefit from their misleading disclosures by continuing to purchase MCG shares, vote MCG shares, or nominate directors to the MCG board while their disclosures remain uncorrected. An order barring the Defendants' 13 from purchasing additional MCG shares, voting their MCG shares, or nominating directors to the MCG board until they file a corrected Schedule 13D is the only way to prevent MCG shareholders from selling their securities to the Defendants or voting for the Defendants' director nominees based on the Defendants' inadequate and misleading disclosure of their trading activity in MCG stock and their strategic plans if they gain control of MCG. AS AND FOR A CAUSE OF ACTION (VIOLATION OF SECTION 13(D) OF THE EXCHANGE ACT AND SEC RULES PROMULGATED THEREUNDER) 42. MCG repeats the allegations of the preceding paragraphs 1 though 41 as if fully set forth herein. 43. The Schedule 13D filed by the Defendants on November 20, 2008 and as amended since is materially false and misleading because it misstates or omits material information that is required to be disclosed. 44. The Defendants are obligated to correct as soon as possible the material misstatements or omissions so that MCG shareholders have a complete and accurate understanding of the Defendant's actions and intentions regarding MCG. Unless the Defendants immediately correct their misleading disclosures and MCG shareholders are protected by appropriate interim relief, MCG shareholders will continue to be irreparably harmed and their to vote in a fair and fully informed corporate election contest will be impaired. WHEREFORE, MCG prays for judgment against the Defendants as follows: (a) declaring that the Springbok 13D filed by the Defendants violates Section 13(d) of the Exchange Act; (b) ordering that the Defendants, their officers, agents, and those persons or entities in active concert with them: 14 (i) correct their misstatements and omissions, including by filing with the SEC and sending to MCG, complete and accurate disclosures required by Section 13(d) of the Exchange Act; (ii) are enjoined from purchasing or making any arrangement to purchase any MCG securities until they have filed with the SEC and sent to MCG complete and accurate disclosures required by Section 13(d) of the Exchange Act and shareholders have had sufficient time to digest the corrected information; (iii) are enjoined from voting any MCG securities they currently own until they have filed with the SEC and sent to MCG complete and accurate disclosures required by Section 13(d) of the Exchange Act and shareholders have had sufficient time to digest the corrected information; (iv) are enjoined from voting any MCG securities they currently own that were acquired while their inaccurate Schedule 13D filings were disclosed to the marketplace; (v) are enjoined from nominating directors to the MCG board until they have filed with the SEC and sent to MCG complete and accurate disclosures required by Section 13(d) of the Exchange Act and shareholders have had sufficient time to digest the corrected information; and (c) are enjoined from making any additional material misstatements or omissions in connection with MCG securities; and 15 (d) granting such other, further, or different relief as the Court may deem just and proper. March 4, 2009 WACHTELL, LIPTON, ROSEN & KATZ By: /s/ William Savitt ------------------------------ William Savitt (WS 5236) Attorneys for Plaintiffs 51 W. 52nd Street New York, NY (212) 403-1000 16 -----END PRIVACY-ENHANCED MESSAGE-----