(Mark One)
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
For the fiscal year ended December 31, 2008 | ||
OR
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o
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
For the transition period from to |
Maryland
(State or other jurisdiction of incorporation or organization) |
06-1798488
(I.R.S. Employer Identification No.) |
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3700 Glenwood Avenue, Suite 530
Raleigh, North Carolina (Address and zip code of principal executive offices) |
27612
(Zip Code) |
Title of Each Class
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Name of Each Exchange on Which Registered
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Common Stock, par value $0.001 per share | The NASDAQ Stock Market LLC |
Large accelerated filer o | Accelerated filer o | Non-accelerated filer þ | Smaller reporting company o |
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68
69
F-7
F-8
F-9
F-10
F-12
F-13
F-14
Item 1.
Business.
We acquired 100% of the limited partnership interests in the
Fund, which became our wholly owned subsidiary, retained its
license by the United States Small Business Administration (the
SBA) to operate as a small business investment
company (an SBIC), continued to hold its existing
investments and to make new investments with the net proceeds of
the IPO.
We acquired 100% of the equity interests in TML, the general
partner of the Fund.
(1)
Based on 6,686,760 shares of common stock outstanding
immediately after the IPO and consummation of the Formation
Transactions.
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Focusing on Underserved Markets.
We believe
that broad-based consolidation in the financial services
industry coupled with operating margin and growth pressures have
caused financial institutions to de-emphasize services to lower
middle market companies in favor of larger corporate clients and
capital market transactions. We believe these dynamics have
resulted in the financing market for lower middle market
companies to be underserved, providing us with greater
investment opportunities.
Providing Customized Financing Solutions.
We
offer a variety of financing structures and have the flexibility
to structure our investments to meet the needs of our portfolio
companies. Typically we invest in senior and subordinated debt
securities, coupled with equity interests. We believe our
ability to customize financing arrangements makes us an
attractive partner to lower middle market companies.
Leveraging the Experience of Our Management
Team.
Our senior management team has more than
100 years of combined experience advising, investing in,
lending to and operating companies across changing market
cycles. The members of our management team have diverse
investment backgrounds, with prior experience at investment
banks, specialty finance companies, commercial banks, and
privately and publicly held companies in the capacity of
executive officers. We believe this diverse experience provides
us with an in depth understanding of the strategic, financial
and operational challenges and opportunities of lower middle
market companies. We believe this understanding allows us to
select and structure better investments and to efficiently
monitor and provide managerial assistance to our portfolio
companies.
Applying Rigorous Underwriting Policies and Active Portfolio
Management.
Our senior management team has
implemented rigorous underwriting policies that are followed in
each transaction. These policies include a thorough analysis of
each potential portfolio companys competitive position,
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financial performance, management team operating discipline,
growth potential and industry attractiveness, allowing us to
better assess the companys prospects. After investing in a
company, we monitor the investment closely, typically receiving
monthly, quarterly and annual financial statements. We analyze
and discuss in detail the companys financial performance
with management in addition to attending regular board of
directors meetings. We believe that our initial and ongoing
portfolio review process allows us to monitor effectively the
performance and prospects of our portfolio companies.
Taking Advantage of Low Cost Debentures Guaranteed by the
SBA.
Our license to do business as an SBIC allows
us to issue fixed-rate, low interest debentures which are
guaranteed by the SBA and sold in the capital markets,
potentially allowing us to increase our net interest income
beyond the levels achievable by other BDCs utilizing traditional
leverage.
Maintaining Portfolio Diversification.
While
we focus our investments in lower middle market companies, we
seek to diversify across various industries. We monitor our
investment portfolio to ensure we have acceptable
diversification, using industry and market metrics as key
indicators. By monitoring our investment portfolio for
diversification we seek to reduce the effects of economic
downturns associated with any particular industry or market
sector. However, we may from time to time hold securities of a
single portfolio company that comprise more than 5.0% of our
total assets
and/or
more
than 10.0% of the outstanding voting securities of the portfolio
company. For that reason, we are classified as a non-diversified
management investment company under the 1940 Act.
Utilizing Long-Standing Relationships to Source
Deals.
Our senior management team maintains
extensive relationships with entrepreneurs, financial sponsors,
attorneys, accountants, investment bankers, commercial bankers
and other non-bank providers of capital who refer prospective
portfolio companies to us. These relationships historically have
generated significant investment opportunities. We believe that
our network of relationships will continue to produce attractive
investment opportunities.
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Established Companies With Positive Cash
Flow.
We seek to invest in established companies
with a history of generating revenues and positive cash flows.
We typically focus on companies with a history of profitability
and minimum trailing twelve month EBITDA of $2.0 million.
We do not invest in
start-up
companies, distressed situations, turn-around
situations or companies that we believe have unproven business
plans.
Experienced Management Teams With Meaningful Equity
Ownership.
Based on our prior investment
experience, we believe that a management team with significant
experience with a portfolio company or relevant industry
experience and meaningful equity ownership is more committed to
a portfolio company. We believe a management team with these
attributes is more likely to manage the portfolio company in a
manner that enhances the value of our investment.
Strong Competitive Position.
We seek to invest
in companies that have developed strong positions within their
respective markets, are well positioned to capitalize on growth
opportunities and compete in industries with barriers to entry.
We also seek to invest in companies that exhibit a competitive
advantage, which may help to protect their market position and
profitability.
Diversified Customer and Supplier Base.
We
prefer to invest in companies that have a diversified customer
and supplier base. Companies with a diversified customer and
supplier base are generally better able to endure economic
downturns, industry consolidation and shifting customer
preferences.
Significant Invested Capital.
We believe the
existence of significant underlying equity value provides
important support to investments. We will look for portfolio
companies that we believe have sufficient embedded equity or
franchise value.
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Origination
Due Diligence and Underwriting
Approval
Documentation and Closing
Portfolio Management and Investment Monitoring
A comprehensive financial model that we prepare based on
quantitative analysis of historical financial performance,
financial projections and pro forma financial ratios assuming
investment;
Competitive landscape surrounding the potential investment;
Strengths and weaknesses of the potential investments
business strategy and industry;
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Results of a broad qualitative analysis of the companys
products or services, market position, market dynamics and
customers and suppliers; and
Potential investment structures, certain financing ratios and
investment pricing terms.
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Monthly and quarterly review of actual financial performance
versus the corresponding period of the prior year and financial
projections;
Monthly and quarterly monitoring of all financial and other
covenants;
Review of senior lender loan compliance certificates, where
applicable;
Quarterly review of operating results, and general business
performance, including the preparation of a portfolio monitoring
report which is distributed to members of our investment
committee;
Periodic face-to-face meetings with management teams and
financial sponsors of portfolio companies;
Attendance at portfolio company board meetings through board
seats or observation rights; and
Application of our investment rating system to each investment.
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Investment
Investment is performing above original expectations and
possibly 30.0% or more above original projections provided by
the portfolio company. Investment has been positively influenced
by an unforeseen external event. Full return of principal and
interest is expected. Capital gain is expected.
Investment is performing above original expectations and
possibly 30.0% or more above original projections provided by
the portfolio company. Investment may have been or is soon to be
positively influenced by an unforeseen external event. Full
return of principal and interest is expected. Capital gain is
expected.
Investment is performing above original expectations and
possibly 21.0% to 30.0% above original projections provided by
the portfolio company. Full return of principal and interest is
expected. Capital gain is expected.
Investment is performing above original expectations and
possibly 11.0% to 21.0% above original projections provided by
the portfolio company. Full return of principal and interest is
expected. Depending on age of transaction, potential for capital
gain exists.
Investment is performing above original expectations and
possibly 5.0% to 11.0% above original projections provided by
the portfolio company. Full return of principal and interest is
expected. Depending on age of transaction, potential for capital
gain exists.
Investment is performing in line with expectations. Full return
of principal and interest is expected. Depending on age of
transaction, potential for nominal capital gain may be expected.
Investment is performing below expectations, but no covenant
defaults have occurred. Full return of principal and interest is
expected. Little to no capital gain is expected.
Investment is in default of transaction covenants but interest
payments are current. No loss of principal is expected.
Investment is in default of transaction covenants and interest
(and possibly principal) payments are not current. A principal
loss of between 1.0% and 33.0% is expected.
Investment is in default of transaction covenants and interest
(and possibly principal) payments are not current. A principal
loss of between 34.0% and 67.0% is expected.
Investment is in default and a principal loss of between 68.0%
and 100.0% is expected.
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financial standing of the issuer of the security;
comparison of the business and financial plan of the issuer with
actual results;
the size of the security held as it relates to the liquidity of
the market for such security;
pending public offering of common stock by the issuer of the
security;
pending reorganization activity affecting the issuer, such as
merger or debt restructuring;
ability of the issuer to obtain needed financing;
changes in the economy affecting the issuer;
financial statements and reports from portfolio company senior
management and ownership;
the type of security, the securitys cost at the date of
purchase and any contractual restrictions on the disposition of
the security;
discount from market value of unrestricted securities of the
same class at the time of purchase;
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special reports prepared by analysts;
information as to any transactions or offers with respect to the
security
and/or
sales
to third parties of similar securities;
the issuers ability to make payments and the type of
collateral;
the current and forecasted earnings of the issuer;
statistical ratios compared to lending standards and to other
similar securities; and
other pertinent factors.
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We report our investments at market value or fair value with
changes in value reported through our statement of
operations.
We generally will be required to pay income taxes only on the
portion of our taxable income we do not distribute to
stockholders (actually or constructively).
Our ability to use leverage as a means of financing our
portfolio of investments will be limited.
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We intend to distribute substantially all of our income to
our stockholders.
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A citizen or individual resident of the United States;
A corporation or other entity treated as a corporation, for
U.S. federal income tax purposes, created or organized in
or under the laws of the United States or any political
subdivision thereof;
A trust if a court within the United States is asked to exercise
primary supervision over the administration of the trust and one
or more United States persons have the authority to control all
substantive decisions of the trust; or
A trust or an estate, the income of which is subject to
U.S. federal income taxation regardless of its source.
continue to qualify as a BDC under the 1940 Act at all times
during each taxable year;
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derive in each taxable year at least 90.0% of our gross income
from dividends, interest, payments with respect to certain
securities loans, gains from the sale of stock or other
securities, or other income derived with respect to our business
of investing in such stock or securities (the 90.0% Income
Test); and
diversify our holdings so that at the end of each quarter of the
taxable year:
at least 50.0% of the value of our assets consists of cash, cash
equivalents, U.S. Government securities, securities of
other RICs, and other securities if such other securities of any
one issuer do not represent more than 5.0% of the value of our
assets or more than 10.0% of the outstanding voting securities
of the issuer; and
no more than 25.0% of the value of our assets is invested in the
securities, other than U.S. government securities or
securities of other RICs, of one issuer or of two or more
issuers that are controlled, as determined under applicable
Internal Revenue Code rules, by us and that are engaged in the
same or similar or related trades or businesses (the
Diversification Tests).
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Item 1A.
Risk
Factors.
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Under the provisions of the 1940 Act, we are permitted, as a
BDC, to issue senior securities only in amounts such that our
asset coverage, as defined in the 1940 Act, equals at least 200%
after each issuance of senior securities. If the value of our
assets declines, we may be unable to satisfy this test. If that
happens, we may be required to sell a portion of our investments
and, depending on the nature of our leverage, repay a portion of
our debt at a time when such sales
and/or
repayments may be disadvantageous.
Any amounts that we use to service our debt or make payments on
preferred stock will not be available for dividends to our
common stockholders.
It is likely that any senior securities or other indebtedness we
issue will be governed by an indenture or other instrument
containing covenants restricting our operating flexibility.
Additionally, some of these securities or other indebtedness may
be rated by rating agencies, and in obtaining a rating for such
securities and other indebtedness, we may be required to abide
by operating and investment guidelines that further restrict
operating and financial flexibility.
We and, indirectly, our stockholders will bear the cost of
issuing and servicing such securities and other indebtedness.
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Preferred stock or any convertible or exchangeable securities
that we issue in the future may have rights, preferences and
privileges more favorable than those of our common stock,
including separate voting rights and could delay or prevent a
transaction or a change in control to the detriment of the
holders of our common stock.
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The annual distribution requirement for a RIC will be satisfied
if we distribute to our stockholders on an annual basis at least
90.0% of our net ordinary income and realized net short-term
capital gains in excess of realized net long-term capital
losses, if any. We will be subject to a 4.0% nondeductible
federal excise tax, however, to the extent that we do not
satisfy certain additional minimum distribution requirements on
a calendar year basis. See Material U.S. Federal
Income Tax Considerations. Because we use debt financing,
we are subject to certain asset coverage ratio requirements
under the 1940 Act and may in the future become subject to
certain financial covenants under loan and credit agreements
that could, under certain circumstances, restrict us from making
distributions necessary to satisfy the distribution requirement.
If we are unable to obtain cash from other sources, we could
fail to qualify for RIC tax treatment and thus become subject to
corporate-level income tax.
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The income source requirement will be satisfied if we obtain at
least 90.0% of our income for each year from distributions,
interest, gains from the sale of stock or securities or similar
sources.
The asset diversification requirement will be satisfied if we
meet certain asset diversification requirements at the end of
each quarter of our taxable year. To satisfy this requirement,
at least 50.0% of the value of our assets must consist of cash,
cash equivalents, U.S. Government securities, securities of
other RICs, and other acceptable securities; and no more than
25.0% of the value of our assets can be invested in the
securities, other than U.S. government securities or
securities of other RICs, of one issuer, of two or more issuers
that are controlled, as determined under applicable Code rules,
by us and that are engaged in the same or similar or related
trades or businesses or of certain qualified publicly
traded partnerships. Failure to meet these requirements
may result in our having to dispose of certain investments
quickly in order to prevent the loss of RIC status. Because most
of our investments will be in private companies, and therefore
will be relatively illiquid, any such dispositions could be made
at disadvantageous prices and could result in substantial losses.
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may have limited financial resources and may be unable to meet
their obligations under their debt instruments that we hold,
which may be accompanied by a deterioration in the value of any
collateral and a reduction in the likelihood of us realizing any
guarantees from subsidiaries or affiliates of our portfolio
companies that we may have obtained in connection with our
investment;
may have shorter operating histories, narrower product lines,
smaller market shares
and/or
significant customer concentration than larger businesses, which
tend to render them more vulnerable to competitors actions
and market conditions, as well as general economic downturns;
are more likely to depend on the management talents and efforts
of a small group of persons; therefore, the death, disability,
resignation or termination of one or more of these persons could
have a material adverse impact on our portfolio company and, in
turn, on us;
generally have less predictable operating results, may from time
to time be parties to litigation, may be engaged in rapidly
changing businesses with products subject to a substantial risk
of obsolescence, and may require substantial additional capital
to support their operations, finance expansion or maintain their
competitive position; and
generally have less publicly available information about their
businesses, operations and financial condition. If we are unable
to uncover all material information about these companies, we
may not make a fully informed investment decision, and may lose
all or part of our investment.
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significant volatility in the market price and trading volume of
securities of BDCs or other companies in our sector, which are
not necessarily related to the operating performance of these
companies;
changes in regulatory policies or tax guidelines, particularly
with respect to RICs, BDCs or SBICs;
loss of RIC status or the Funds status as an SBIC;
changes in earnings or variations in operating results;
changes in the value of our portfolio of investments;
any shortfall in investment income or net investment income or
any increase in losses from levels expected by investors or
securities analysts;
loss of a major funding source;
fluctuations in interest rates;
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the operating performance of companies comparable to us;
departure of our key personnel;
global or national credit market changes; and
general economic trends and other external factors.
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Item 1B.
Unresolved
Staff Comments.
Item 2.
Properties.
Item 3.
Legal
Proceedings.
Item 4.
Submission
of Matters to a Vote of Security Holders.
Item 5.
Market
for Registrants Common Equity, Related Stockholder Matters
and Issuer Purchases of Equity Securities.
High
Low
$
16.00
$
13.45
15.79
13.58
14.99
11.95
14.50
10.75
13.40
12.94
12.25
11.85
13.75
9.91
13.18
4.00
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Record
Payment
Amount
May 31, 2007
June 28, 2007
$
0.15
August 30, 2007
September 27, 2007
0.26
November 29, 2007
December 27, 2007
0.27
December 31, 2007
January 28, 2008
0.30
June 5, 2008
June 26, 2008
0.31
August 14, 2008
September 4, 2008
0.35
October 30, 2008
November 20, 2008
0.38
December 23, 2008
January 6, 2009
0.40
$
1.53
100.0
%
$
1.53
100.0
%
$
0.89
100.0
%
$
0.89
100.0
%
Ordinary income is reported on
Form 1099-DIV
as either qualified or non-qualified and capital gains are
reported on
Form 1099-DIV
in various subcategories which have differing tax treatments to
shareholders. Those subcategories are not presented herein.
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among Triangle Capital Corporation, the Triangle Capital
Corporation Peer
Group Index, and the Nasdaq Composite Index
2/15/07
3/31/07
6/30/07
9/30/07
12/31/07
100.00
91.03
95.43
93.44
89.40
100.00
96.03
97.44
96.63
76.06
100.00
100.27
107.82
111.83
109.88
3/31/08
6/30/08
9/30/08
12/31/08
85.94
84.29
90.74
83.45
74.22
54.38
52.64
12.41
94.14
94.77
86.70
65.17
(1)
From February 15, 2007, the date our common stock began to
trade on the Nasdaq Global Market in connection with our initial
public offering to December 31, 2008.
(2)
The Triangle Capital Corporation Peer Group consists of the
following internally-managed closed-end investment companies
that have elected to be regulated as BDCs under the 1940 Act:
Allied Capital Corporation, American Capital Strategies Ltd.,
Harris & Harris Group, Inc., Hercules Technology
Growth Capital, Inc., Kohlberg Capital Corporation, MCG Capital
Corporation and Patriot Capital Funding, Inc.
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Maximum
Number (or
Approximate
Dollar Value)
of Shares That
Total Number of
May Yet Be
Shares Purchased
Purchased
as Part of Publicly
Under the
Total Number of
Average Price Paid
Announced Plans
Plans or
Shares(1)
per Share
or Programs
Programs
78,674
$
10.7324
78,674
$
10.7324
(1)
All shares purchased in the open market pursuant to the terms of
our Dividend Reinvestment Plan.
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Item 6.
Selected
Financial Data.
Year Ended December 31,
2004
2005
2006
2007
2008
(Dollars in thousands)
$
1,969
$
5,855
$
6,443
$
10,912
$
21,056
18
108
280
1,824
303
1,987
5,963
6,723
12,736
21,359
339
1,543
1,834
2,073
4,228
38
90
100
113
255
1,564
1,574
1,589
233
83
58
115
3,894
6,254
2,024
3,265
3,638
6,313
10,737
(37
)
2,698
3,085
6,423
10,622
(3,500
)
6,027
(760
)
(1,393
)
141
2,829
(1,225
)
3,975
(415
)
3,061
(4,286
)
(1,225
)
475
5,612
2,442
(2,850
)
(52
)
(133
)
$
(1,262
)
$
3,173
$
8,697
$
8,813
$
7,639
N/A
N/A
N/A
$
0.95
$
1.54
N/A
N/A
N/A
$
1.31
$
1.11
N/A
N/A
N/A
$
13.74
$
13.22
N/A
N/A
N/A
$
0.98
$
1.44
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Year Ended December 31,
2004
2005
2006
2007
2008
(Dollars in thousands)
$
19,415
$
36,617
$
54,247
$
113,037
$
182,105
2,849
6,067
2,556
21,788
27,193
98
50
135
305
680
47
95
1,021
34
48
823
1,085
985
999
3,546
$
23,185
$
43,819
$
58,944
$
136,210
$
213,667
$
$
13
$
825
$
1,144
$
1,609
230
566
606
699
1,882
532
2,041
2,767
52
30
251
75
25
31
1,760
844
17,700
31,800
31,800
37,010
115,110
18,181
32,454
33,788
42,737
122,242
5,004
11,365
25,156
93,473
91,425
$
23,185
$
43,819
$
58,944
$
136,210
$
213,667
15.5
%
14.2
%
13.3
%
12.6
%
13.2
%
6
12
19
26
34
32.2
%
21.3
%
8.3
%
4.4
%
6.6
%
7.4
21.4
9.5
2.4
4.7
39.6
%
42.7
%
17.8
%
6.8
%
11.3
%
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Item 7.
Managements
Discussion and Analysis of Financial Condition and Results of
Operations.
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Percentage of
Percentage of
Cost
Total Portfolio
Fair Value
Total Portfolio
$
147,493,871
82
%
$
143,015,291
79
%
16,269,628
9
16,269,628
9
13,684,269
8
17,301,372
9
1,829,370
1
4,644,600
3
874,400
874,400
$
180,151,538
100
%
$
182,105,291
100
%
$
80,902,982
76
%
$
80,902,982
72
%
14,728,958
14
14,728,958
13
9,699,689
9
15,335,900
13
548,172
1
1,870,500
2
197,900
$
105,879,801
100
%
$
113,036,240
100
%
(1)
We have changed our balance sheet presentation for all periods
to net deferred loan origination revenue against the associated
debt investments for all periods subsequent to the adoption of
SFAS 157 on January 1, 2008.
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Year Ended
December 31, 2008
$
113,036,240
93,054,022
(3,631,876
)
(1,686,996
)
(17,336,521
)
3,761,786
(1,978,498
)
169,548
484,664
1,435,608
(5,202,686
)
$
182,105,291
14.4
%
13.2
%
Year Ended
December 31, 2007(1)
$
54,247,212
64,159,172
(2,227,124
)
(875,905
)
(8,483,843
)
1,521,114
205,725
287,143
(618,620
)
4,821,366
$
113,036,240
13.9
%
12.6
%
(1)
We have changed our balance sheet presentation for all periods
to net deferred loan origination revenue against the associated
debt investments for all periods subsequent to the adoption of
SFAS 157 on January 1, 2008.
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financial standing of the issuer of the security;
comparison of the business and financial plan of the issuer with
actual results;
the size of the security held as it relates to the liquidity of
the market for such security;
pending public offering of common stock by the issuer of the
security;
pending reorganization activity affecting the issuer, such as
merger or debt restructuring;
ability of the issuer to obtain needed financing;
changes in the economy affecting the issuer;
financial statements and reports from portfolio company senior
management and ownership;
the type of security, the securitys cost at the date of
purchase and any contractual restrictions on the disposition of
the security;
discount from market value of unrestricted securities of the
same class at the time of purchase;
special reports prepared by analysts;
information as to any transactions or offers with respect to the
security
and/or
sales
to third parties of similar securities;
the issuers ability to make payments and the type of
collateral;
the current and forecasted earnings of the issuer;
statistical ratios compared to lending standards and to other
similar securities; and
other pertinent factors.
58
Table of Contents
59
Table of Contents
60
Table of Contents
61
Table of Contents
2010 to
2012 to
2014 and
Total
2009
2011
2013
Thereafter
$
115,110,000
$
$
$
$
115,110,000
50,901,420
5,933,709
11,534,358
11,550,158
21,883,195
271,746
271,746
1,440,236
275,124
569,214
595,899
$
167,723,402
$
6,480,579
$
12,103,572
$
12,146,057
$
136,993,195
(1)
We have a commitment to extend credit, in the form of loans, to
one of our portfolio companies which is undrawn as of
December 31, 2008. Since this commitment may expire without
being drawn upon, the total commitment amount does not
necessarily represent future cash requirements, however we have
chosen to present the amount of this unused commitment as an
obligation in this table.
(2)
We lease our corporate office facility under an operating lease
that terminates on December 31, 2013. We believe that our
existing facilities will be adequate to meet our needs at least
through 2009, and that we will be able to obtain additional
space when, where and as needed on acceptable terms.
Item 7A.
Quantitative
and Qualitative Disclosures About Market Risk.
Item 8.
Financial
Statements and Supplementary Data.
Item 9.
Changes
in and Disagreements with Accountants on Accounting and
Financial Disclosure.
62
Table of Contents
Item 9A(T).
Controls
and Procedures.
63
Table of Contents
Item 9B.
Other
Information
Clarify that notice of stockholder director nominations or other
business proposals must be timely and that any proposed business
must be a proper matter for stockholder action;
Update
and/or
clarify the information required to be provided to the Company
by stockholders that desire to make a director nomination or
business proposal to be considered at an annual or special
meeting of stockholders to include:
disclosure of all information relating to a proposed director
nominee that would be required to be disclosed in connection
with the solicitation of proxies for the election of the
proposed director nominee in an election contest (even if an
election contest is not involved), or would otherwise be
required in connection with such a solicitation;
disclosure of any proposed business, the interests of the
proponent in the proposed business and any agreements with
others (including any proposed director nominee) regarding the
proposed business;
disclosure of all direct and indirect ownership interests of the
proponent in the Company;
disclosure of the name and address of the proponent, as well as
the investment strategy and a copy of any prospectus, offering
memorandum or other similar document sent to investors or
potential investors of the proponent if the proponent is not an
individual;
disclosure of the name and address of any other stockholders
supporting any director nominations or other business proposals;
Clarify that stockholder director nominations or other business
proposals must be submitted in accordance with the advance
notice requirements of the Amended Bylaws to be considered at
special meetings of stockholders;
Clarify that material inaccuracies contained in notices provided
by a stockholder in connection with director nominations or
business proposals may cause such notice to be deemed not to
have been provided in accordance with the advance notice
requirements and that a stockholder must notify the Company of
any inaccuracy or change in any information disclosure; and
Clarify that the right to indemnification and the advancement of
expenses paid by the Company shall vest immediately upon the
election of a director or officer.
Removal of outdated provisions with respect to director
liability for any loss of deposits and any obligation to provide
surety bonds;
Specification of notice and quorum requirements for board
meetings conducted in emergency situations;
Clarification that stockholders are not entitled to certificates
evidencing shares of stock held by them;
Requirement that a written statement of information be provided
to a stockholder without charge upon a request of the
stockholder; and
Requirement that the board of directors set a record date for
the purpose of determining stockholders entitled to notice of or
to vote at any meeting of stockholders, receive payment of any
dividend, or any allotment of other rights.
64
Table of Contents
Item 10.
Directors,
Executive Officers and Corporate Governance.
Item 11.
Executive
Compensation.
65
Table of Contents
Item 12.
Security
Ownership of Certain Beneficial Owners and Management and
Related Stockholder Matters.
Item 13.
Certain
Relationships and Related Transactions, and Director
Independence.
Item 14.
Principal
Accountant Fees and Services.
66
Table of Contents
Item 15.
Exhibits
and Financial Statement Schedules
Page
F-1
F-2
F-3
F-4
F-5
F-6
F-11
F-15
3
.1
Articles of Amendment and Restatement of the Registrant (Filed
as Exhibit(a)(3) to the Registrants Registration Statement
on
Form N-2/N-5
(File
No. 333-138418)
filed with the Securities and Exchange Commission on
December 29, 2006 and incorporated herein by reference).
3
.2
Certificate of Limited Partnership of Triangle Mezzanine
Fund LLLP (Filed as Exhibit(a)(4) to the Registrants
Registration Statement on
Form N-2/N-5
(File
No. 333-138418)
filed with the Securities and Exchange Commission on
February 13, 2007 and incorporated herein by reference).
3
.3
Second Amended and Restated Agreement of Limited Partnership of
Triangle Mezzanine Fund LLLP (Filed as Exhibit 3.4 to
the Registrants Quarterly Report on
Form 10-Q
filed with the Securities and Exchange Commission on
November 11, 2007 and incorporated herein by reference).
3
.4
Second Amended and Restated Bylaws of the Registrant.
4
.1
Form of Common Stock Certificate (Filed as Exhibit(d) to
the Registrants Registration Statement on
Form N-2/N-5
(File
No. 333-138418)
filed with the Securities and Exchange Commission on
February 15, 2007 and incorporated herein by reference).
4
.2
Triangle Capital Corporation Dividend Reinvestment Plan (Filed
as Exhibit 4.2 to the Registrants Annual Report on
Form 10-K
filed with the Securities and Exchange Commission on
March 12, 2008 and incorporated herein by reference).
4
.3
Debenture No. 0800219 dated March 27, 2008 by and
between Triangle Mezzanine Fund LLLP and the U.S. Small
Business Administration (Filed as Exhibit(f)(1) to the
Registrants Registration Statement on
Form N-2
File
No. 333-151930,
filed with the Securities and Exchange Commission on
June 25, 2008 and incorporated herein by reference).
67
Table of Contents
4
.4
Debenture No. 0800216 dated April 11, 2008 by and
between Triangle Mezzanine Fund LLLP and the U.S. Small
Business Administration (Filed as Exhibit(f)(2) to the
Registrants Registration Statement on
Form N-2
File
No. 333-151930,
filed with the Securities and Exchange Commission on
June 25, 2008 and incorporated herein by reference).
4
.5
Debenture No. 0800218 dated April 28, 2008 by and
between Triangle Mezzanine Fund LLLP and the U.S. Small
Business Administration (Filed as Exhibit (f)(3) to the
Registrants Registration Statement on
Form N-2
File
No. 333-151930,
filed with the Securities and Exchange Commission on
June 25, 2008 and incorporated herein by reference).
4
.6
Debenture No. 0800403 dated May 29, 2008 by and
between Triangle Mezzanine Fund LLLP and the U.S. Small
Business Administration (Filed as Exhibit (f)(4) to the
Registrants Registration Statement on
Form N-2
File
No. 333-151930,
filed with the Securities and Exchange Commission on
June 25, 2008 and incorporated herein by reference).
4
.7
Debenture No. 0800404 dated May 29, 2008 by and
between Triangle Mezzanine Fund LLLP and the U.S. Small
Business Administration (Filed as Exhibit (f)(5) to the
Registrants Registration Statement on
Form N-2
File
No. 333-151930,
filed with the Securities and Exchange Commission on
June 25, 2008 and incorporated herein by reference).
4
.8
Debenture No. 0800405 dated June 11, 2008 by and
between Triangle Mezzanine Fund LLLP and the U.S. Small
Business Administration (Filed as Exhibit (f)(6) to the
Registrants Registration Statement on
Form N-2
File
No. 333-151930,
filed with the Securities and Exchange Commission on
June 25, 2008 and incorporated herein by reference).
4
.9
Debenture No. 0800406 dated June 24, 2008 by and
between Triangle Mezzanine Fund LLLP and the U.S. Small
Business Administration.
4
.10
Debenture No. 0800527 dated August 28, 2008 by and
between Triangle Mezzanine Fund LLLP and the U.S. Small
Business Administration.
4
.11
Debenture No. 0800528 dated August 28, 2008 by and
between Triangle Mezzanine Fund LLLP and the U.S. Small
Business Administration.
4
.12
Debenture No. 0800531 dated August 28, 2008 by and
between Triangle Mezzanine Fund LLLP and the U.S. Small
Business Administration.
4
.13
Debenture No. 0800847 dated October 24, 2008 by and
between Triangle Mezzanine Fund LLLP and the U.S. Small
Business Administration.
4
.14
Debenture No. 0800848 dated October 28, 2008 by and
between Triangle Mezzanine Fund LLLP and the U.S. Small
Business Administration.
4
.15
Debenture No. 0800849 dated October 31, 2008 by and
between Triangle Mezzanine Fund LLLP and the U.S. Small
Business Administration.
4
.16
Debenture No. 0800850 dated October 31, 2008 by and
between Triangle Mezzanine Fund LLLP and the U.S. Small
Business Administration.
4
.17
Debenture No. 0800851 dated November 4, 2008 by and
between Triangle Mezzanine Fund LLLP and the U.S. Small
Business Administration.
4
.18
Debenture No. 0800861 dated November 4, 2008 by and
between Triangle Mezzanine Fund LLLP and the U.S. Small
Business Administration.
4
.19
Agreement to Furnish Certain Instruments.
10
.1
Employment Agreement between Triangle Capital Corporation and
Garland S. Tucker, III dated February 21, 2007 (Filed
as Exhibit 10.1 to the Registrants Annual Report on
Form 10-K
for the year ended December 31, 2006 filed with the
Securities and Exchange Commission on March 29, 2007 and
incorporated herein by reference).
10
.2
Employment Agreement between Triangle Capital Corporation and
Brent P.W. Burgess dated February 21, 2007 (Filed as
Exhibit 10.2 to the Registrants Annual Report on
Form 10-K
for the year ended December 31, 2006 filed with the
Securities and Exchange Commission on March 29, 2007 and
incorporated herein by reference).
Table of Contents
10
.3
Employment Agreement between Triangle Capital Corporation and
Steven C. Lilly dated February 21, 2007 (Filed as
Exhibit 10.3 to the Registrants Annual Report on
Form 10-K
for the year ended December 31, 2006 filed with the
Securities and Exchange Commission on March 29, 2007 and
incorporated herein by reference).
10
.4
Triangle Capital Corporation Amended and Restated 2007 Equity
Incentive Plan (Filed as Exhibit 10.1 to the
Registrants Current Report on
Form 8-K
filed with the Securities and Exchange Commission on May 9,
2008 and incorporated herein by reference).
10
.5
Triangle Capital Corporation form of Non-employee Director
Restricted Share Award Agreement (Filed as Exhibit 10.2 to
the Registrants Current Report on
Form 8-K
filed with the Securities and Exchange Commission on May 9,
2008 and incorporated herein by reference).
10
.6
Triangle Capital Corporation form of Executive Officer
Restricted Share Award Agreement (Filed as Exhibit 10.3 to
the Registrants Current Report on
Form 8-K
filed with the Securities and Exchange Commission on May 9,
2008 and incorporated herein by reference).
10
.7
Custodian Agreement with U.S. Bank National Association (Filed
as Exhibit 10.7 to the Registrants Annual Report on
Form 10-K
for the year ended December 31, 2006 filed with the
Securities and Exchange Commission on March 29, 2007 and
incorporated herein by reference).
10
.8
Amendment to Custody Agreement between the Registrant and U.S.
Bank National Association dated February 5, 2008 (Filed as
Exhibit 10.9 to the Registrants Annual Report on
Form 10-K
for the year ended December 31, 2007 filed with the
Securities and Exchange Commission on March 12, 2008 and
incorporated herein by reference).
10
.9
Stock Transfer Agency Agreement between Triangle Capital
Corporation and The Bank of New York (Filed as
Exhibit 10.11 to the Registrants Annual Report on
Form 10-K
for the year ended December 31, 2007 filed with the
Securities and Exchange Commission on March 12, 2008 and
incorporated herein by reference).
10
.10
Office Lease Agreement between 3700 Glenwood LLC and Triangle
Capital Corporation dated March 27, 2008 (Filed as
Exhibit(k)(6) to the Registrants Registration Statement on
Form N-2
(File
No. 333-151930)
filed with the Securities and Exchange Commission on
August 13, 2008 and incorporated herein by reference).
14
.1
Code of Conduct.
21
.1
List of Subsidiaries.
23
.1
Consent of Ernst & Young LLP.
31
.1
Chief Executive Officer Certification Pursuant to
Rule 13a-14
of the Securities Exchange Act of 1934, as adopted pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002.
31
.2
Chief Financial Officer Certification Pursuant to
Rule 13a-14
of the Securities Exchange Act of 1934, as adopted pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002.
32
.1
Chief Executive Officer Certification pursuant to
Section 1350, Chapter 63 of Title 18, United
States Code, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
32
.2
Chief Financial Officer Certification pursuant to
Section 1350, Chapter 63 of Title 18, United
States Code, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
Management contract or compensatory plan or arrangement.
Table of Contents
By:
Title:
President, Chief Executive Officer and Chairman of the Board of
Directors
President, Chief Executive Officer and Chairman of the Board
(Principal Executive Officer)
February 25, 2009
Chief Financial Officer, Treasurer, Secretary and Director
(Principal Financial Officer)
February 25, 2009
Controller (Principal Accounting Officer)
February 25, 2009
Chief Investment Officer and Director
February 25, 2009
Director
February 25, 2009
Director
February 25, 2009
Director
February 25, 2009
Director
February 25, 2009
70
Page
F-1
F-2
F-3
F-4
F-5
F-6
F-11
F-15
Table of Contents
F-1
Table of Contents
F-2
Table of Contents
Years Ended December 31,
2008
2007
2006
(Consolidated)
(Consolidated)
(Combined)
$
12,381,411
$
6,258,670
$
4,488,831
3,478,644
1,808,664
638,318
1,434,687
1,323,876
293,532
17,294,742
9,391,210
5,420,681
2,657,281
871,184
815,408
665,817
225,622
40,208
438,688
424,308
166,690
3,761,786
1,521,114
1,022,306
302,970
1,823,519
279,817
21,359,498
12,735,843
6,722,804
4,227,851
2,073,311
1,833,458
255,273
112,660
99,920
232,423
1,589,070
6,254,096
3,894,240
115,040
10,737,220
6,312,634
3,637,488
10,622,278
6,423,209
3,085,316
(1,393,139
)
(759,634
)
6,026,948
141,014
2,828,747
(4,286,375
)
3,061,107
(414,924
)
(2,850,767
)
2,442,487
5,612,024
133,010
52,598
$
7,638,501
$
8,813,098
$
8,697,340
$
1.54
$
0.95
N/A
$
1.11
$
1.31
N/A
$
1.44
$
0.98
N/A
6,877,669
6,728,733
N/A
N/A
N/A
$
1,739,386
N/A
N/A
$
6,957,954
F-3
Table of Contents
Investment
Accumulated
Net
Capital
Income
Realized
Unrealized
General
Limited
Contribution
Common Stock
Additional
in Excess of
Gains
Appreciation
Total
Partners
Partners
Commitment
Number
Par
Paid In
(Less Than)
(Losses) on
(Depreciation) of
Net
Capital
Capital
Receivable
of Shares
Value
Capital
Distributions
Investments
Investments
Assets
$
100
$
21,250,000
$
(10,625,000
)
$
$
$
1,489,447
$
(3,500,000
)
$
2,750,000
$
11,364,547
10,625,000
10,625,000
3,085,316
3,085,316
6,026,948
6,026,948
(414,924
)
(414,924
)
(3,004,628
)
(2,526,948
)
(5,531,576
)
100
1,500
1,500
$
100
$
21,250,000
$
100
$
$
1,500
$
1,570,135
$
$
2,335,076
$
25,156,811
4,770,000
4,770
64,723,267
64,728,037
(100
)
(21,250,000
)
1,916,660
1,917
21,248,183
6,423,209
6,423,209
(618,620
)
1,111,306
492,686
1,949,801
1,949,801
(52,598
)
(52,598
)
(649,856
)
649,856
117,103
117
1,626,095
(6,631,758
)
(5,005,546
)
(220,047
)
(220,047
)
$
$
$
6,803,863
$
6,804
$
86,949,189
$
1,738,797
$
(618,620
)
$
5,396,183
$
93,472,353
10,622,278
10,622,278
275,311
275,311
1,435,608
(1,269,437
)
166,171
(3,016,938
)
(3,016,938
)
(133,010
)
(133,010
)
612,399
(151,906
)
(460,493
)
(9,961,002
)
(9,961,002
)
113,500
113
(113
)
$
$
$
6,917,363
$
6,917
$
87,836,786
$
2,115,157
$
356,495
$
1,109,808
$
91,425,163
F-4
Table of Contents
Years Ended December 31,
2008
2007
2006
(Consolidated)
(Consolidated)
(Combined)
$
7,638,501
$
8,813,098
$
8,697,340
(93,054,022
)
(64,159,172
)
(21,458,478
)
20,968,397
10,470,803
9,965,446
1,686,996
1,272,002
607,794
(1,435,608
)
618,620
(6,026,948
)
3,516,855
(4,821,366
)
414,923
769,519
1,760,259
(1,783,288
)
(1,280,950
)
(578,724
)
255,273
112,660
99,920
(515,289
)
(677,615
)
(435,492
)
(169,548
)
(205,725
)
(169,036
)
16,681
7,814
275,311
(374,669
)
(170,340
)
(85,236
)
(47,848
)
(47,477
)
464,687
349,239
781,757
1,183,026
92,439
40,228
(22,162
)
52,598
(30,000
)
30,000
(60,627,188
)
(47,843,113
)
(8,116,506
)
(30,535
)
(41,980
)
(30,535
)
(41,980
)
78,100,000
5,210,000
(2,801,524
)
(126,342
)
1,500
64,728,037
1,020,646
(1,020,646
)
10,625,000
(9,235,216
)
(2,964,387
)
(751,613
)
(5,000,010
)
66,063,260
67,116,341
4,605,844
5,405,537
19,231,248
(3,510,662
)
21,787,750
2,556,502
6,067,164
$
27,193,287
$
21,787,750
$
2,556,502
$
3,044,825
$
1,980,872
$
1,793,230
$
2,766,945
$
2,041,159
$
$
$
$
531,566
F-5
Table of Contents
Type of
Principal
Fair
Value(3)
Specialty Trade
Contractors
Subordinated
Note-AAC (14%, Due
03/11)
$
3,182,231
$
3,074,633
$
3,074,633
Subordinated
Note-AAC (18%,
Due 03/11)
1,917,045
1,888,343
1,888,343
Common Stock-PHM
(126,634 shares)
126,634
126,634
Common Stock
Warrants-AAC (455
shares)
142,361
600,100
5,099,276
5,231,971
5,689,710
Wholesale and
Distribution
Subordinated Note
(15.25%, Due 10/13)
8,208,166
8,064,571
6,894,500
8,208,166
8,064,571
6,894,500
Direct Marketing
Services
Subordinated Note
(15%, Due 03/15)
4,035,038
3,957,113
3,957,113
4,035,038
3,957,113
3,957,113
Commercial and
Consumer
Subordinated Note
(14%, Due 03/13)
1,993,336
1,907,664
1,907,664
Marketing Products
Unit purchase
warrant (87,302
Class C units)
25,200
1,033,400
1,993,336
1,932,864
2,941,064
Remediation Services
Subordinated Note
(19%, Due 11/10)
2,528,587
2,508,276
2,508,276
2,528,587
2,508,276
2,508,276
Retail, Wholesale
and Distribution
Subordinated Note
(14%, Due 01/10)
2,333,488
2,309,951
2,309,951
Membership unit
warrants (15% of
units (150 units))
40,800
2,333,488
2,350,751
2,309,951
Auto Components /
Metal Fabrication
Subordinated Note
(17%, Due 03/12)
4,026,884
3,985,742
3,261,800
Common Stock (57
shares)
257,143
4,026,884
4,242,885
3,261,800
Specialty
Healthcare Products
Subordinated Note
(16%, Due 09/13)
10,776,412
9,780,508
9,780,508
Manufacturer
Royalty rights
874,400
874,400
10,776,412
10,654,908
10,654,908
Data Center
Services Provider
Senior Note
(6%, Due 07/13)
5,539,867
5,524,881
5,524,881
2nd Lien Note
(9%, Due 01/14)
1,196,809
1,196,809
1,196,809
Revolving Line of
Credit (6)%
253,144
253,144
253,144
6,989,820
6,974,834
6,974,834
F-6
Table of Contents
Type of
Principal
Fair
Value(3)
Satellite
Communication
Manufacturer
Common Stock
(210,263 shares)
$
$
101,500
$
101,500
Power Protection
Systems
Subordinated Note
(14%, Due 12/15)
3,059,267
3,032,533
3,032,533
Manufacturing
Senior Note
(6%, Due 01/14)
930,635
930,635
930,635
Common Stock
(500 shares)
285,000
285,000
3,989,902
4,248,168
4,248,168
Machined Parts
Distribution
Voting Units (4,833
units)
4,833
292,300
4,833
292,300
Commercial Printing
Services
Senior Note
(8%, Due 5/12)
1,669,200
1,663,083
1,663,083
Senior Note
(12%, Due 5/13)
2,000,000
1,993,191
1,993,191
2nd Lien Note
(18%, Due 11/13)
3,393,186
3,382,162
3,382,162
7,062,386
7,038,436
7,038,436
Specialty Trade
Contractors
Subordinated Notes
(12%, Due 04/11)
2,388,362
2,356,781
1,000,000
Common Stock (283
shares)
282,905
11,719
2,388,362
2,639,686
1,011,719
Restaurant
2nd Lien Note
(11%, Due 12/11)
3,000,000
3,000,000
3,000,000
Membership Units
(5,000 units)
500,000
583,600
3,000,000
3,500,000
3,583,600
Specialty Woven
Fabrics
Subordinated Note
(14%, Due 08/11)
3,161,439
3,092,786
1,865,000
Manufacturer
Common Stock
Warrants (56,559
shares)
83,414
3,161,439
3,176,200
1,865,000
Cleaning and Repair
Services
Subordinated Note
(14%, Due 01/14)
8,095,149
7,422,265
7,422,265
Membership Interest
Purchase Warrant
(2.5%)
563,300
1,407,300
8,095,149
7,985,565
8,829,565
Restoration Services
Subordinated Note
(17.5%, Due 04/14)
8,411,172
8,266,277
8,266,277
Convertible Note
(10%, Due 04/14)
1,375,000
1,336,993
1,336,993
9,786,172
9,603,270
9,603,270
Table of Contents
Type of
Principal
Fair
Value(3)
Municipal Business
Services
Subordinated Note
(12%, Due 03/11)
$
2,000,000
$
1,948,573
$
1,948,573
Common Stock
Warrants (112
shares)
58,995
802,500
2,000,000
2,007,568
2,751,073
Specialty
Manufacturing
Subordinated Note
(16%, Due 04/15)
7,048,222
6,880,696
6,880,696
Preferred Units
(600 units)
600,000
600,000
Common Units
(22,960 units)
150,000
150,000
7,048,222
7,630,696
7,630,696
Specialty Chemical
Manufacturer
Senior Note (7%,
Due 08/12-02/14)
4,632,500
4,602,773
4,602,773
Common Units (2,114
units)
1,000,000
532,700
4,632,500
5,602,773
5,135,473
Food Management
Services
Subordinated Note
(14%, Due 09/15)
4,264,494
4,186,542
4,186,542
Class A Units
(1,495 units)
475,000
207,500
Class B Units
(79 units)
25,000
4,264,494
4,686,542
4,394,042
Consumer Home
Furnishings
Subordinated Note
(15%, Due 04/14)
4,500,000
4,439,137
4,439,137
Manufacturer
Senior Note (8%,
Due 04/13)
1,301,921
1,301,921
1,301,921
5,801,921
5,741,058
5,741,058
Environmental and
Facilities Services
Subordinated Note
(15.5%, Due 01/13)
9,106,995
8,935,266
8,935,266
Class A Preferred
Units (300 Units)
2,251,100
2,251,100
Common Unit
Purchase Warrant
(1,170,083 Units)
748,900
748,900
Common Units
(153,219 Units)
153,219
153,219
9,106,995
12,088,485
12,088,485
Commercial Services
Subordinated Note
(14%, Due 06/14)
3,500,000
3,341,947
3,341,947
Membership Interest
Purchase Warrant
(4.0)%
132,800
3,500,000
3,474,747
3,341,947
Landscaping Services
Subordinated Note
(15%, Due 04/14)
13,261,710
12,965,889
12,965,889
13,261,710
12,965,889
12,965,889
133,090,259
138,413,589
135,712,877
Table of Contents
Type of
Principal
Fair
Value(3)
Asset Management
Software Provider
Subordinated Note
(15%, Due 03/13)
$
5,123,925
$
5,035,428
$
5,035,428
Membership Units
(10 units)
500,000
371,400
5,123,925
5,535,428
5,406,828
Industrial Equipment
Manufacturer
Subordinated Note
(14%, Due 01/11)
2,124,037
2,103,277
2,103,277
Common Stock
(34,100 shares)
200,000
408,900
Common Stock Warrant
(1,000 shares)
10,600
2,124,037
2,303,277
2,522,777
LLC (Brantley
Transportation) and Pine
Street Holdings, LLC (Pine Street)(4) (4%)*
Oil and Gas Services
Subordinated Note
Brantley
Transportation
(14%, Due 12/12)
3,800,000
3,690,525
3,690,525
Common Unit
Warrants-
Brantley
Transportation
(4,560 common
units)
33,600
41,800
Preferred Units
Pine Street (200
units)
200,000
139,200
Common Unit
Warrants Pine
Street (2,220
units)
3,800,000
3,924,125
3,871,525
Custom Forging and
Fastener
Subordinated Note
(15%, Due 12/13)
10,318,750
10,123,339
10,123,339
Supplies
Class A Units
(1,000,000 units)
1,000,000
964,700
10,318,750
11,123,339
11,088,039
Energy Products and
Services
Subordinated Note
(15%, Due 04/12)
6,319,315
6,226,387
6,226,387
Class A Units
(500,000 units)
500,000
2,322,400
6,319,315
6,726,387
8,548,787
Corporation (2%)*
Specialty Chemical
Manufacturer
Preferred Stock
(9,875 shares)
308,333
1,984,500
308,333
1,984,500
Lab Testing Services
Genapure Common
Stock (5,594
shares)
563,602
472,100
563,602
472,100
27,686,027
30,484,491
33,894,556
Table of Contents
Type of
Principal
Fair
Value(3)
Packaging and
Materials Handling
Subordinated Note
(16.5%, Due 05/13)
$
7,184,066
$
7,053,458
$
7,053,458
Equipment
Manufacturer
Membership Units
(4,200,000 units)
4,200,000
5,444,400
7,184,066
11,253,458
12,497,858
7,184,066
11,253,458
12,497,858
$
167,960,352
$
180,151,538
$
182,105,291
*
Value as a percent of net assets
(1)
All debt investments are income producing. Common stock,
preferred stock and all warrants are non income
producing.
(2)
Interest rates on subordinated debt include cash interest rate
and, where applicable, paid in kind
interest rate.
(3)
All investments are restricted as to resale and were valued at
fair value as determined in good faith by the Board of Directors.
(4)
Pine Street Holdings, LLC is the majority owner of Brantley
Transportation, LLC and its sole business purpose is its
ownership of Brantley Transportation, LLC.
Table of Contents
Type of
Principal
Fair
Value(3)
Non - Affiliate Investments:
Specialty Trade
Contractors
Subordinated Note
(12%, Due 03/11)
$
3,144,654
$
2,997,686
$
2,997,686
Subordinated Note
(14%, Due 03/11)
1,872,075
1,833,206
1,833,206
Common Stock
Warrants (455
shares)
142,361
929,700
5,016,729
4,973,253
5,760,592
Commercial and
Consumer
Subordinated Note
(14%, Due 03/13)
4,315,262
4,214,957
4,214,957
Marketing Products
Unit purchase
warrant (87,302
Class C units)
25,200
199,000
4,315,262
4,240,157
4,413,957
Retail, Wholesale
and Distribution
Subordinated Note
(14%, Due 01/10)
2,441,824
2,397,556
2,397,556
Membership unit
warrants (15% of
units (150 units))
40,800
9,800
2,441,824
2,438,356
2,407,356
Auto Components /
Metal Fabrication
Subordinated Note
(17%, Due 03/12)
3,828,527
3,776,608
3,776,608
Common Stock (200
shares)
200,000
3,828,527
3,976,608
3,776,608
Plastic Component
Manufacturing
Subordinated Note
(14%, Due 10/11)
1,500,000
1,371,527
1,371,527
Common Stock
Warrants (12% of
common stock)
108,534
1,500,000
1,480,061
1,371,527
Specialty
Healthcare Products
Subordinated Note
(16%, Due 03/10)
4,976,360
4,932,535
4,932,535
Manufacturer
Royalty rights
197,900
4,976,360
4,932,535
5,130,435
Data Center
Services Provider
Senior Note
(9%, Due 07/13)
4,382,257
4,364,705
4,364,705
2nd Lien Note
(12%, Due 01/14)
907,663
907,663
907,663
Revolving Line of
Credit (9)%
70,880
70,880
70,880
5,360,800
5,343,248
5,343,248
Satellite
Communication
Manufacturer
Common Stock
(210,263 shares)
101,500
576,400
101,500
576,400
F-11
Table of Contents
Type of
Principal
Fair
Value(3)
Specialty Health
Care Services
Subordinated Note
(13%, Due 03/11)
$
1,000,000
$
958,715
$
958,715
Common Stock
Warrants (6% of
common stock)
55,268
7,400
Common Stock
(30 shares)
30,000
1,900
1,000,000
1,043,983
968,015
Machined Parts
Distribution
Subordinated Note
(14.5%, Due 10/12)
3,265,142
3,196,108
3,196,108
Junior Subordinated
Note
(8%, Due 10/12)
207,667
207,667
207,667
3,472,809
3,403,775
3,403,775
Commercial Printing
Services
Senior Note
(9%, Due 5/12)
1,920,000
1,912,331
1,912,331
Senior Note
(13%, Due 5/13)
2,000,000
1,992,061
1,992,061
2nd Lien Note
(18%, Due 11/13)
3,145,481
3,133,096
3,133,096
7,065,481
7,037,488
7,037,488
Specialty Trade
Contractors
Subordinated Notes
(13%17.5%, Due
04/11)
2,517,986
2,474,943
2,474,943
Common Stock (250
shares)
250,000
41,700
2,517,986
2,724,943
2,516,643
Specialty Chemical
Manufacturer
Subordinated Note
(12.5%, Due 09/09)
3,750,000
3,719,770
3,719,770
Preferred Stock
(9,875 shares)
308,333
1,074,100
3,750,000
4,028,103
4,793,870
Restaurant
2nd Lien Note
(13%, Due 12/11)
3,000,000
3,000,000
3,000,000
Membership Units
(5,000 units)
500,000
446,600
3,000,000
3,500,000
3,446,600
Specialty Woven
Fabrics
Manufacturer
Subordinated Note
(14%, Due 08/11)
3,114,063
3,017,205
3,017,205
Common Stock
Warrants (56,559
shares)
83,414
84,500
3,114,063
3,100,619
3,101,705
Municipal Business
Services
Subordinated Note
(12%, Due 03/11)
2,000,000
1,927,075
1,927,075
Common Stock
Warrants (112
shares)
58,995
594,300
2,000,000
1,986,070
2,521,375
Table of Contents
Type of
Principal
Fair
Value(3)
Specialty Chemical
Manufacturer
Senior Note (9%,
Due 08/12-2/14)
$
4,932,500
$
4,896,481
$
4,896,481
Common Units (2,114
units)
1,000,000
1,000,000
4,932,500
5,896,481
5,896,481
Consumer Home
Furnishings
Subordinated Note
(13%, Due 04/14)
4,500,000
4,429,439
4,429,439
Manufacturer
Senior Note (8%,
Due 04/13)
1,492,500
1,492,500
1,492,500
5,992,500
5,921,939
5,921,939
64,284,841
66,129,119
68,388,014
Industrial Equipment
Subordinated Note
(14%, Due 01/11)
2,081,321
2,051,882
2,051,882
Manufacturer
Common Stock
(34,100 shares)
200,000
543,600
Common Stock Warrant
(1,000 shares)
12,200
2,081,321
2,251,882
2,607,682
Oil and Gas Services
Subordinated Note
Brantley
Transportation
(14%, Due 12/12)
3,800,000
3,670,336
3,670,336
Common Unit
Warrants
Brantley
Transportation
(4,560 common
units)
33,600
33,600
Preferred Units
Pine Street (200
units)
200,000
200,000
Common Unit
Warrants Pine
Street (2,220
units)
3,800,000
3,903,936
3,903,936
Custom Forging and
Fastener
Subordinated Note
(15%, Due 12/13)
10,009,167
9,789,167
9,789,167
Supplies
Class A Units
(1,000,000 units)
1,000,000
1,000,000
10,009,167
10,789,167
10,789,167
Energy Products and
Services
Subordinated Note
(15%, Due 04/12)
6,129,723
6,014,677
6,014,677
Class A Units
(500,000 units)
500,000
500,000
6,129,723
6,514,677
6,514,677
Table of Contents
Type of
Principal
Fair
Value(3)
Lab Testing Services
Genapure Common
Stock (4,286
shares)
$
500,000
$
675,122
Genpref Preferred
Stock (455 shares)
63,602
85,878
563,602
761,000
22,020,211
24,023,264
24,576,462
Remediation Services
Subordinated Note
(19%, Due 11/10)
2,403,521
2,373,358
2,373,358
Membership Units
(3,000 units)
175,000
118,700
2,403,521
2,548,358
2,492,058
Packaging and
Materials Handling
Subordinated Note
(16.5%, Due 05/13)
8,660,723
8,507,806
8,507,806
Equipment
Manufacturer
Membership Units
(4,200,000 units)
4,200,000
4,200,000
8,660,723
12,707,806
12,707,806
Metal Fabrication
Membership Units
(4,730 units)
471,254
4,871,900
471,254
4,871,900
11,064,244
15,727,418
20,071,764
December 31, 2007 (121%)*
$
97,369,296
$
105,879,801
$
113,036,240
*
Value as a percent of net assets
(1)
All debt investments are income producing. Common stock,
preferred stock and all warrants are non income
producing.
(2)
Interest rates on subordinated debt include cash interest rate
and, where applicable, paid in kind
interest rate.
(3)
All investments are restricted as to resale and were valued at
fair value as determined in good faith by the Board of Directors.
(4)
Pine Street Holdings, LLC is the majority owner of Brantley
Transportation, LLC and its sole business purpose is its
ownership of Brantley Transportation, LLC.
(5)
Genpref is the sole owner of Genapures preferred stock and
its sole business purpose is its ownership of Genapures
preferred stock.
Table of Contents
1.
Organization,
Basis of Presentation and Summary of Significant Accounting
Policies
The Company acquired 100% of the limited partnership interests
in the Fund in exchange for approximately 1.9 million
shares of the Companys common stock. The Fund became a
wholly owned subsidiary of the Company, retained its license
under the authority of the United States Small Business
Administrations (SBA) to operate as a Small Business
Investment Company (SBIC) and continues to hold its
existing investments and make new investments with the proceeds
of the IPO; and
The Company acquired 100% of the equity interests in TML, and
the management agreement between the Fund and Triangle Capital
Partners, LLC was terminated.
F-15
Table of Contents
F-16
Table of Contents
F-17
Table of Contents
F-18
Table of Contents
F-19
Table of Contents
F-20
Table of Contents
F-21
Table of Contents
2.
Investments
F-22
Table of Contents
Percentage of
Percentage of
Cost
Total Portfolio
Fair Value
Total Portfolio
$
147,493,871
82
%
$
143,015,291
79
%
16,269,628
9
16,269,628
9
13,684,269
8
17,301,372
9
1,829,370
1
4,644,600
3
874,400
874,400
$
180,151,538
100
%
$
182,105,291
100
%
$
80,902,982
76
%
$
80,902,982
72
%
14,728,958
14
14,728,958
13
9,699,689
9
15,335,900
13
548,172
1
1,870,500
2
197,900
$
105,879,801
100
%
$
113,036,240
100
%
Fair Value at December 31, 2008
Level 1
Level 2
Level 3
Total
$
$
$
182,105,291
$
182,105,291
$
$
$
182,105,291
$
182,105,291
F-23
Table of Contents
Year Ended
December 31,
2008
$
113,036,240
93,054,022
(3,631,876
)
(1,686,996
)
(17,336,521
)
3,761,786
(1,978,498
)
169,548
484,664
1,435,608
(5,202,686
)
$
182,105,291
F-24
Table of Contents
3.
Long -
Term Debt
Prioritized
December 31,
December 31,
Maturity Date
Return Rate
2008
2007
September 1, 2014
5.539
%
$
8,700,000
$
8,700,000
March 1, 2015
5.893
%
13,600,000
13,600,000
September 1, 2015
5.796
%
9,500,000
9,500,000
March 1, 2017
6.231
%
4,000,000
4,000,000
March 1, 2018
6.191
%
6,410,000
1,210,000
September 1, 2018
6.580
%
4,840,000
September 1, 2018
6.442
%
9,400,000
September 1, 2018
6.442
%
15,160,000
September 1, 2018
6.442
%
5,000,000
September 1, 2018
6.442
%
5,000,000
September 1, 2018
6.442
%
5,000,000
September 1, 2018
6.442
%
2,500,000
September 1, 2018
6.442
%
1,000,000
September 1, 2018
6.442
%
2,000,000
September 1, 2018
6.442
%
1,000,000
March 1, 2019
4.545
%
4,000,000
March 1, 2019
4.500
%
4,000,000
March 1, 2019
4.099
%
4,000,000
March 1, 2019
4.099
%
4,000,000
March 1, 2019
3.861
%
4,000,000
March 1, 2019
3.861
%
2,000,000
$
115,110,000
$
37,010,000
F-25
Table of Contents
4.
Income
Taxes
$
612,399
$
(151,906
)
$
(460,493
)
$
649,856
$
(649,856
)
$
9,817,002
$
9,817,002
$
5,993,469
$
5,993,469
(a)
Ordinary income is reported on
form 1099-DIV
as non-qualified.
F-26
Table of Contents
$
634,803
356,495
1,975,543
(317,111
)
931,730
$
3,581,460
$
(618,620
)
1,834,692
34,166
5,266,122
$
6,516,360
5.
Equity
Compensation Plan
F-27
Table of Contents
6.
Commitments
and Contingencies
F-28
Table of Contents
7.
Financial
Highlights
Year Ended December 31,
2008
2007
2006(1)
2005(1)
2004(1)
(Consolidated)
(Consolidated)
(Combined)
(Combined)
(Combined)
$
13.74
$
13.44
N/A
N/A
N/A
1.54
0.96
N/A
N/A
N/A
0.21
(0.09
)
N/A
N/A
N/A
(0.62
)
0.45
N/A
N/A
N/A
1.13
1.32
N/A
N/A
N/A
(1.44
)
(0.98
)
N/A
N/A
N/A
0.24
N/A
N/A
N/A
(0.03
)
N/A
N/A
N/A
(0.02
)
(0.01
)
N/A
N/A
N/A
(0.19
)
(0.24
)
N/A
N/A
N/A
$
13.22
$
13.74
N/A
N/A
N/A
$
10.20
$
12.40
N/A
N/A
N/A
6,917,363
6,803,863
N/A
N/A
N/A
$
91,514,982
$
93,472,353
$
25,156,811
$
11,364,547
$
5,003,825
$
94,584,281
$
92,765,399
$
20,447,456
$
7,654,010
$
5,104,796
11
%
7
%
18
%
43
%
40
%
11
%
7
%
15
%
35
%
(1
)%
N/A
N/A
100
%
50
%
35
%
13
%
13
%
7
%
39
%
0
%
(6
)%
(11
)%
18
%
4
%
(29
%)
(1)
Per share data for the years ended December 31, 2006, 2005,
and 2004 is not presented as there were no shares of Triangle
Capital Corporation outstanding during the period.
(2)
Average net assets for the year ended December 31, 2007 are
presented as if the IPO and Formation Transactions had occurred
on January 1, 2007. See Note 1 for a further
description of the basis of presentation of the Companys
financial statements.
(3)
Weighted average basic per share data.
(4)
Represents the impact of the different share amounts used in
calculating per share data as a result of calculating certain
per share data based upon the weighted average basic shares
outstanding during the period and certain per share data based
on the shares outstanding as of a period end or transaction date.
(5)
Represents the closing price of the Companys common stock
on the last day of the period.
F-29
Table of Contents
(6)
The total return for the year ended December 31, 2008
equals the change in the ending market value of the
Companys common stock during the period, plus dividends
declared per share during the period, divided by the market
value of the Companys common stock on the first day of the
period. The total return for the year ended December 31,
2007 equals the change in the ending market value of the
Companys common stock from the IPO price of $15.00 per
share plus dividends declared per share during the period,
divided by the IPO price. Total return is not annualized.
8.
Selected
Quarterly Financial Data (Unaudited)
Quarter Ended
March 31,
June 30,
September 30,
December 31,
2008
2008
2008
2008
$
3,863,984
$
5,020,091
$
5,869,637
$
6,605,786
1,913,695
2,542,442
3,211,706
2,954,435
765,391
2,848,507
2,476,346
1,548,257
$
0.28
$
0.37
$
0.46
$
0.43
Quarter Ended
March 31,
June 30,
September 30,
December 31,
2007
2007
2007
2007
$
2,112,116
$
3,287,224
$
3,594,287
$
3,742,216
804,730
1,643,998
1,992,001
1,982,480
1,065,835
2,230,084
3,366,681
2,150,498
$
0.12
$
0.25
$
0.30
$
0.29
9.
Subsequent
Event
F-30
Table of Contents
Exhibit
3
.1
Articles of Amendment and Restatement of the Registrant (Filed
as Exhibit (a)(3) to the Registrants Registration
Statement on Form N-2/N-5 (File No. 333-138418) filed with the
Securities and Exchange Commission on December 29, 2006 and
incorporated herein by reference).
3
.2
Certificate of Limited Partnership of Triangle Mezzanine Fund
LLLP (Filed as Exhibit (a)(4) to the Registrants
Registration Statement on Form N-2/N-5 (File No. 333-138418)
filed with the Securities and Exchange Commission on February
13, 2007 and incorporated herein by reference).
3
.3
Second Amended and Restated Agreement of Limited Partnership of
Triangle Mezzanine Fund LLLP (Filed as Exhibit 3.4 to the
Registrants Quarterly Report on Form 10-Q filed with the
Securities and Exchange Commission on November 11, 2007 and
incorporated herein by reference).
3
.4
Second Amended and Restated Bylaws of the Registrant.
4
.1
Form of Common Stock Certificate (Filed as Exhibit (d) to the
Registrants Registration Statement on Form N-2/N-5 (File
No. 333-138418) filed with the Securities and Exchange
Commission on February 15, 2007 and incorporated herein by
reference).
4
.2
Triangle Capital Corporation Dividend Reinvestment Plan (Filed
as Exhibit 4.2 to the Registrants Annual Report on Form
10-K filed with the Securities and Exchange Commission on March
12, 2008 and incorporated herein by reference).
4
.3
Debenture No. 0800219 dated March 27, 2008 by and between
Triangle Mezzanine Fund LLLP and the U.S. Small Business
Administration (Filed as Exhibit (f)(1) to the Registrants
Registration Statement on Form N-2 File No. 333-151930, filed
with the Securities and Exchange Commission on June 25, 2008 and
incorporated herein by reference).
4
.4
Debenture No. 0800216 dated April 11, 2008 by and between
Triangle Mezzanine Fund LLLP and the U.S. Small Business
Administration (Filed as Exhibit (f)(2) to the Registrants
Registration Statement on Form N-2 File No. 333-151930, filed
with the Securities and Exchange Commission on June 25, 2008 and
incorporated herein by reference).
4
.5
Debenture No. 0800218 dated April 28, 2008 by and between
Triangle Mezzanine Fund LLLP and the U.S. Small Business
Administration (Filed as Exhibit (f)(3) to the Registrants
Registration Statement on Form N-2 File No. 333-151930, filed
with the Securities and Exchange Commission on June 25, 2008 and
incorporated herein by reference).
4
.6
Debenture No. 0800403 dated May 29, 2008 by and between Triangle
Mezzanine Fund LLLP and the U.S. Small Business Administration
(Filed as Exhibit (f)(4) to the Registrants Registration
Statement on Form N-2 File No. 333-151930, filed with the
Securities and Exchange Commission on June 25, 2008 and
incorporated herein by reference).
4
.7
Debenture No. 0800404 dated May 29, 2008 by and between Triangle
Mezzanine Fund LLLP and the U.S. Small Business Administration
(Filed as Exhibit (f)(5) to the Registrants Registration
Statement on Form N-2 File No. 333-151930, filed with the
Securities and Exchange Commission on June 25, 2008 and
incorporated herein by reference).
4
.8
Debenture No. 0800405 dated June 11, 2008 by and between
Triangle Mezzanine Fund LLLP and the U.S. Small Business
Administration (Filed as Exhibit (f)(6) to the Registrants
Registration Statement on Form N-2 File No. 333-151930, filed
with the Securities and Exchange Commission on June 25, 2008 and
incorporated herein by reference).
4
.9
Debenture No. 0800406 dated June 24, 2008 by and between
Triangle Mezzanine Fund LLLP and the U.S. Small Business
Administration.
4
.10
Debenture No. 0800527 dated August 28, 2008 by and between
Triangle Mezzanine Fund LLLP and the U.S. Small Business
Administration.
4
.11
Debenture No. 0800528 dated August 28, 2008 by and between
Triangle Mezzanine Fund LLLP and the U.S. Small Business
Administration.
4
.12
Debenture No. 0800531 dated August 28, 2008 by and between
Triangle Mezzanine Fund LLLP and the U.S. Small Business
Administration.
4
.13
Debenture No. 0800847 dated October 24, 2008 by and between
Triangle Mezzanine Fund LLLP and the U.S. Small Business
Administration.
Table of Contents
Exhibit
4
.14
Debenture No. 0800848 dated October 28, 2008 by and between
Triangle Mezzanine Fund LLLP and the U.S. Small Business
Administration.
4
.15
Debenture No. 0800849 dated October 31, 2008 by and between
Triangle Mezzanine Fund LLLP and the U.S. Small Business
Administration.
4
.16
Debenture No. 0800850 dated October 31, 2008 by and between
Triangle Mezzanine Fund LLLP and the U.S. Small Business
Administration.
4
.17
Debenture No. 0800851 dated November 4, 2008 by and between
Triangle Mezzanine Fund LLLP and the U.S. Small Business
Administration.
4
.18
Debenture No. 0800861 dated November 4, 2008 by and between
Triangle Mezzanine Fund LLLP and the U.S. Small Business
Administration.
4
.19
Agreement to Furnish Certain Instruments.
10
.1
Employment Agreement between Triangle Capital Corporation and
Garland S. Tucker, III dated February 21, 2007 (Filed as
Exhibit 10.1 to the Registrants Annual Report on Form 10-K
for the year ended December 31, 2006 filed with the Securities
and Exchange Commission on March 29, 2007 and incorporated
herein by reference).
10
.2
Employment Agreement between Triangle Capital Corporation and
Brent P.W. Burgess dated February 21, 2007 (Filed as Exhibit
10.2 to the Registrants Annual Report on Form 10-K for the
year ended December 31, 2006 filed with the Securities and
Exchange Commission on March 29, 2007 and incorporated herein by
reference).
10
.3
Employment Agreement between Triangle Capital Corporation and
Steven C. Lilly dated February 21, 2007 (Filed as Exhibit 10.3
to the Registrants Annual Report on Form 10-K for the year
ended December 31, 2006 filed with the Securities and Exchange
Commission on March 29, 2007 and incorporated herein by
reference).
10
.4
Triangle Capital Corporation Amended and Restated 2007 Equity
Incentive Plan (Filed as Exhibit 10.1 to the Registrants
Current Report on Form 8-K filed with the Securities and
Exchange Commission on May 9, 2008 and incorporated herein by
reference).
10
.5
Triangle Capital Corporation form of Non-employee Director
Restricted Share Award Agreement (Filed as Exhibit 10.2 to the
Registrants Current Report on Form 8-K filed with the
Securities and Exchange Commission on May 9, 2008 and
incorporated herein by reference).
10
.6
Triangle Capital Corporation form of Executive Officer
Restricted Share Award Agreement (Filed as Exhibit 10.3 to the
Registrants Current Report on Form 8-K filed with the
Securities and Exchange Commission on May 9, 2008 and
incorporated herein by reference).
10
.7
Custodian Agreement with U.S. Bank National Association (Filed
as Exhibit 10.7 to the Registrants Annual Report on Form
10-K for the year ended December 31, 2006 filed with the
Securities and Exchange Commission on March 29, 2007 and
incorporated herein by reference).
10
.8
Amendment to Custody Agreement between the Registrant and U.S.
Bank National Association dated February 5, 2008 (Filed as
Exhibit 10.9 to the Registrants Annual Report on Form 10-K
for the year ended December 31, 2007 filed with the Securities
and Exchange Commission on March 12, 2008 and incorporated
herein by reference).
10
.9
Stock Transfer Agency Agreement between Triangle Capital
Corporation and The Bank of New York (Filed as Exhibit 10.11 to
the Registrants Annual Report on Form 10-K for the year
ended December 31, 2007 filed with the Securities and Exchange
Commission on March 12, 2008 and incorporated herein by
reference).
10
.10
Office Lease Agreement between 3700 Glenwood LLC and Triangle
Capital Corporation dated March 27, 2008 (Filed as Exhibit
(k)(6) to the Registrants Registration Statement on Form
N-2 (File No. 333-151930) filed with the Securities and
Exchange Commission on August 13, 2008 and incorporated herein
by reference).
14
.1
Code of Conduct.
21
.1
List of Subsidiaries.
23
.1
Consent of Ernst & Young LLP.
31
.1
Chief Executive Officer Certification Pursuant to Rule 13a-14 of
the Securities Exchange Act of 1934, as adopted pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002.
Table of Contents
Exhibit
31
.2
Chief Financial Officer Certification Pursuant to Rule 13a-14 of
the Securities Exchange Act of 1934, as adopted pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002.
32
.1
Chief Executive Officer Certification pursuant to Section 1350,
Chapter 63 of Title 18, United States Code, as adopted pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002.
32
.2
Chief Financial Officer Certification pursuant to Section 1350,
Chapter 63 of Title 18, United States Code, as adopted pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002.
Management contract or compensatory plan or arrangement.
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
|
TRIANGLE CAPITAL CORPORATION | |||
|
||||
|
By: | /s/ Steven C. Lilly | ||
|
||||
|
Name: | Steven C. Lilly | ||
|
Title: | Chief Financial Officer and Secretary |
I. |
Introduction
|
II. |
Implementing Guidance and Procedures
|
1. |
Is it legal?
|
||
2. |
Would doing it make me feel bad or ashamed in any way?
|
||
3. |
Is it consistent with our Core Values?
|
||
4. |
Would I want my family or friends to read about it in the newspaper?
|
||
5. |
Would failing to act make the situation worse or allow a wrong to continue?
|
||
6. |
Does it follow the Golden Rule set out below?
|
III. |
Core Values:
|
A. |
Golden Rule and Respect
|
a. |
Following the Golden Rule means we will strive to always do the
right thing ... the thing we would want others to do to us.
|
||
b. |
Treating others the way we would like to be treated is our
foundational value and the golden rule is a good summary of our other core
values.
|
||
c. |
Respect means we respect the rights, opinions and beliefs of
others so long as they are consistent with our other core values.
|
Amplifying and implementing guidance
:
|
- |
Be a good listener, encourage diverse opinions and be willing to accept them.
|
||
- |
Recognize the achievement of others.
|
||
- |
Dont prejudge another persons qualities or intentions.
|
||
- |
Respect confidences.
|
||
- |
Recognize each individuals human dignity and value.
|
B. |
Honesty and Openness
|
a. |
Honesty means we refuse to lie, cheat, steal or deceive in any
way.
|
||
b. |
We will never deliberately mislead, or misrepresent the truth.
|
||
c. |
We will always strive to do the legal and fair thing,
fulfilling both the letter and intent of our commitments and the law.
|
||
d. |
Openness means we will be free, forthright and sincere in our
discussions, as candid as possible, and will openly share appropriate
information in each relationship.
|
Amplifying and implementing guidance
:
|
- |
Be forthright and never use information as a source of power.
|
||
- |
Strive for clarity.
|
||
- |
Focus on issues, not personalities.
|
||
- |
Carry no hidden agendas.
|
||
- |
Be willing to admit your own mistakes and be tolerant of others mistakes.
|
C. |
Integrity
|
a. |
Integrity means we will refuse to be corrupted or unfaithful to
our values.
|
||
b. |
We will do what we say we will do, and we will conduct
ourselves in accordance with our values and our code of ethics.
|
||
c. |
We will always try to do the right thing.
|
||
d. |
We will operate within both the letter and the spirit of the
law.
|
Amplifying and implementing guidance
:
|
- |
Act and speak ethically.
|
||
- |
What you do when no one is looking should agree with your professed ethics.
|
D. |
Teamwork and Innovation
|
a. |
Teamwork means working together to achieve our goals and values
as a group and not working at cross purposes.
|
||
b. |
Innovation means encouraging each other to seek new ways of
doing our business to improve our quality and efficiency.
|
Amplifying and
implementing guidance
:
|
- |
Acknowledge all co-workers as valuable team members.
|
||
- |
Show confidence in the character and truthfulness of others.
|
||
- |
Practice solidarity by respecting and supporting team decisions.
|
||
- |
Encourage initiative and participation.
|
||
- |
Be accountable to the team.
|
||
- |
Lead by example.
|
||
- |
Recognize that taking and accepting reasonable risks is
necessary business conduct.
|
E. |
Responsibility
|
a. |
Responsibility means we are morally and legally accountable for
our actions.
|
||
b. |
We are determined to do the right thing, and to be good
stewards of the things that have been entrusted into our care.
|
Amplifying and implementing guidance
:
|
- |
Accept responsibility for your own mistakes, and give credit to
others for their accomplishments.
|
||
- |
Keep commitments.
|
F. |
Loyalty and Hard Work
|
a. |
We will be loyal to our Company and protect its assets and
confidential information. We will be faithful in carrying out our duties.
|
||
b. |
We will always work hard and do our best.
|
Amplifying and implementing guidance
:
|
- |
Demand excellence from yourself, and seek and encourage it from others.
|
||
- |
Demonstrate a sense of urgency in all that you do.
|
||
- |
Our success is directly related to our loyalty to each other and to our Company.
|
IV. |
Our Valued Relationships
|
|
Customers and clients are the reason we are in business. We seek to help our
customers and clients to achieve their goals. We know that if we help them reach their
goals, they will help us reach our goals too.
|
||
|
Employees are the heart of our Company. We are no greater than our employees. Each
employee is an integral part of our team. We seek to have the best employees and the
best organization to support the growth of each employee.
|
||
|
Shareholders have entrusted us with their assets. We seek to increase the value of
those assets. As trustees we will do our best to protect and grow the assets that have
been entrusted to us.
|
||
|
Suppliers provide us with the things we need to achieve our goals. They have the
goods and services we need to grow our business. We will treat each supplier as a
valued partner in the growth of our business.
|
||
|
Corporate governance is part of our operations. We seek to fulfill the regulatory
aspects of our business operations in a timely and accurate manner.
|
V. |
Standards of Ethics and Business Conduct
|
1. |
Honest and Ethical Conduct
|
2. |
Legal Compliance
|
3. |
Insider Trading
|
4. |
International Business Laws
|
5. |
Environmental Compliance
|
6. |
Conflicts of Interest
|
|
whether it may interfere with the employees job performance, responsibilities
or morale;
|
||
|
whether the employee has access to confidential information;
|
||
|
whether it may interfere with the job performance, responsibilities or morale of
others within the organization;
|
||
|
any potential adverse or beneficial impact on our business;
|
||
|
any potential adverse or beneficial impact on our relationships with our
customers or suppliers or other service providers;
|
||
|
whether it would enhance or support a competitors position;
|
|
the extent to which it would result in financial or other benefit (direct or
indirect) to the employee;
|
||
|
the extent to which it would result in financial or other benefit (direct or
indirect) to one of our customers, suppliers or other service providers; and
|
||
|
the extent to which it would appear improper to an outside observer.
|
|
Employment by (including consulting for) or service on the board of a competitor,
customer or supplier or other service provider (other than as part of your duties as an
employee of the Company).
Activity that enhances or supports the position of a
competitor to the detriment of one or more of our companies is prohibited, including
individual employment by or service on the board of a competitor. Employment by or
service on the board of a customer or supplier or other service provider is generally
discouraged and you must seek authorization in advance if you plan to take such a
position.
|
||
|
Owning, directly or indirectly, a significant financial interest in any entity that
does business, seeks to do business or competes with us.
In addition to the factors
described above, persons evaluating ownership in other entities for conflicts of
interest will consider the size and nature of the investment; the nature of the
relationship between the other entity and any one of our companies; the employees
access to confidential information and the employees ability to influence one of our
companies decisions. If you would like to acquire a financial interest of any kind,
you must seek written approval in advance from the CCO.
|
||
|
Soliciting or accepting gifts, favors, loans or preferential treatment from any
person or entity that does business or seeks to do business with us.
See Section 10
for further discussion of the issues involved in this type of conflict.
|
||
|
Soliciting contributions to any charity or for any political candidate from any
person or entity that does business or seeks to do business with us.
|
||
|
Taking personal advantage of corporate opportunities.
See Section 7 for further
discussion of the issues involved in this type of conflict.
|
||
|
Working at a second job without permission.
|
||
|
Conducting business transactions between any one of our companies and your family
member or a business in which you or a family member has a significant financial
interest.
Material related-party transactions must be approved by the Audit Committee
and, if that activity involves any executive officer or director, that activity will be
required to be publicly disclosed as required by applicable laws and regulations.
|
7. |
Corporate Opportunities
.
|
8. |
Maintenance of Corporate Books, Records, Documents and Accounts; Financial
Integrity; Public Reporting
|
|
no entry be made in our books and records that intentionally hides or disguises the
nature of any transaction or of any of our liabilities or misclassifies any
transactions as to accounts or accounting periods;
|
||
|
transactions be supported by appropriate documentation;
|
||
|
the terms of sales and other commercial transactions be reflected accurately in the
documentation for those transactions and all such documentation be reflected accurately
in our books and records;
|
||
|
employees comply with our system of internal controls; and
|
||
|
no cash or other assets be maintained for any purpose in any unrecorded or
off-the-books fund.
|
|
no employee may take or authorize any action that would intentionally cause our
financial records or financial disclosure to fail to comply with generally accepted
accounting principles, the rules and regulations of the SEC or other applicable laws,
rules and regulations;
|
||
|
all employees must cooperate fully with our Accounting Department and, when one is
established, Internal Auditing Departments, as well as our independent public
accountants and counsel, respond to their questions with candor and provide them with
complete and accurate information to help ensure that our books and records, as well as
our reports filed with the SEC, are accurate and complete; and
|
||
|
no employee should knowingly make (or cause or encourage any other person to make)
any false or misleading statement in any of our reports filed with the SEC or knowingly
omit (or cause or encourage any other person to omit) any information necessary to make
the disclosure in any of our reports accurate in all material respects.
|
9. |
Fair Dealing
|
10. |
Gifts and Entertainment
|
11. |
Protection and Proper Use of Company Assets
|
|
access the internal computer system (also known as hacking) or other resource of
another entity without express written authorization from the entity responsible for
operating that resource; or
|
||
|
commit any unlawful or illegal act, including harassment, libel, fraud, sending of
unsolicited bulk email (also known as spam) in violation of applicable law,
trafficking in contraband of any kind or espionage.
|
||
|
If you receive authorization to access another entitys internal computer system or
other resource, you must make a permanent record of that authorization so that it may
be retrieved for future reference, and you may not exceed the scope of that
authorization.
|
12. |
Confidentiality
|
13. |
Media and Public Discussions
|
14. |
Waivers
|
15. |
Compliance Standards and Procedures
|
|
investigating possible violations of this Code;
|
||
|
training new employees in Code policies;
|
||
|
conducting annual training sessions to refresh employees familiarity with this
Code;
|
||
|
distributing certifications regarding this Code annually by hard copy or by email to
each employee as a reminder that each employee is responsible for reading,
understanding and complying with this Code;
|
||
|
updating this Code as needed and alerting employees to any updates, with appropriate
approval of the Audit Committee, to reflect changes in the law, our companies
operations and in recognized best practices, and to reflect our companies experience;
and
|
||
|
otherwise promoting an atmosphere of responsible and ethical conduct.
|
16. |
Amendments and Modifications
|
(a) |
General Prohibitions
|
(b) |
General Principles.
|
(c) |
Definitions.
|
(d) |
Pre-Clearance of Certain Personal Transactions.
|
(e) |
Reporting Requirements.
|
i. |
Securities held in accounts over
which an Access Person has no direct or indirect influence or
control;
|
||
ii. |
Direct obligations of the
Government of the United States;
|
||
iii. |
Bankers acceptances, bank
certificates of deposit, commercial paper and high quality
short-term debt instruments, including repurchase agreements;
and
|
||
iv. |
Shares issued by open-end funds.
|
i. |
Transactions in Securities over
which an Access Person has no direct or indirect influence or
control;
|
||
ii . |
Transactions in Direct
obligations of the Government of the United States;
|
||
iii. |
Transactions in Bankers
acceptances, bank certificates of deposit, commercial paper and
high quality short-term debt instruments, including repurchase
agreements;
|
||
iv . |
Transactions in shares issued by
unaffiliated open-end funds; and
|
||
v. |
Transactions which are part of an
automatic dividend reinvestment plan.
|
(f) |
Confidentiality of Transactions
|
(g) |
Sanctions
|
(h) |
Administration and Construction
|
(i) |
Required Records.
|
(j) |
Amendments and Modifications
|
No. of | ||||||||||||||||||||||||
Shares or | ||||||||||||||||||||||||
IPO or Limited | Principal | |||||||||||||||||||||||
Date | Offering | Amount | Name of Security | Unit Price | Total Price | Broker | ||||||||||||||||||
|
||||||||||||||||||||||||
|
||||||||||||||||||||||||
Permission Granted
¨
|
||||
|
||||
Permission Denied
¨
|
Signature: _______________ | Date: _______________ | ||
|
(Clearing Officer) | |||
|
||||
|
Signature: _______________ | Date: _______________ | ||
|
(Clearing Officer) |
No. of Shares | ||||||||||||||||||||
or Principal | Name of | Unit | Total | |||||||||||||||||
Date | Amount | Security | Price | Price | Broker | |||||||||||||||
|
||||||||||||||||||||
|
||||||||||||||||||||
|
||||||||||||||||||||
|
||||||||||||||||||||
For the year ending _______________
|
Name: ___________________________ | |
|
||
Date: ___________________________
|
Signature: ________________________ |