PUBLIC LAW 102-366—SEPT. 4, 1992 106 STAT. 1009 "(7) The Administration may guarantee debentures or may guarantee the payment of the redemption price and prioritized payments on participating securities under subsection (g) from a company operating under section 301(d) of this Act in amounts above $35,000,000 but not to exceed the maximum amounts specified in section 303(b) subject to the following: "(A) The interest rate on debentures and the rate of prioritized payments on peirticipating securities shall be that specified in subsection 303(g)(2) without any reductions. "(B) Any outstanding assistance under paragraphs (1) to (6) of this subsection shall be subtracted from such company's eligibility under section 303(b)(2)(A).*'. SEC. 403. PARTICIPATING SECURITIES. Section 303 of the Small Business Investment Act of 1958 (15 U.S.C. 683) is further amended by adding, the following new subsections: "(g) In order to encourage small business investment companies to provide equity capital to small businesses, the Administration is authorized to guaremtee the payment of the redemption price and prioritized pa3mients on participating securities issued by such companies which are Ucensed pursuant to section 301(c) of this Act, and a trust or a pool acting on behalf of the Administration is authorized to purchsise such securities. Such guarsuitees and Regulations, purchases shall be made on such terms and conditions as the Administration shall establish by regulation. For purposes of this section, (A) the term 'participating securities' includes preferred stock, a preferred limited partnership interest or a similar instrument, including debentures under the terms of which interest is payable only to the extent of earnings and (B) the term 'prioritized payments' includes dividends on stock, interest on qualifying debentures, or priority returns on preferred limited partnership interests which are paid only to the extent of earnings. Participating securities guaranteed under this subsection shall be subject to the following restrictions and limitations, in addition to such other restrictions and limitations as the Administration may determine: "(1) Participating securities shall be redeemed not later than 15 years after their date of issuance for an amount equed to 100 per centum of the original issue price plus the amount of any accrued prioritized payment: Provided, That if, at the time the securities sure redeemed, whether as scheduled or in advance, the issuing company (A) has not paid all accrued prioritized payments in full as provided in paragraph (2) below and (B) has not sold or otherwise disposed of all investments subject to profit distributions pursuant to paragraph (11), the company's obligation to pay accrued and unpaid prioritized payments shall continue and payment shall be made from the realized gain, if any, on the disposition of such investments, but if on disposition there is no realized gain, the obligation to pay accrued and unpaid prioritized payments shall be extinguished: Provided further. That in the interim, the company shall not make any in-kind distributions of such investments unless it pays to the Administration such sums, up to the amount of the unrealized appreciation on such investments, as may be necessary to pay in fiili the accrued prioritized payments. 59-194 O—93 5:QL3(Pt. 2)
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