EX-99.(H)(3)
Published on September 22, 2010
Exhibit (h)(3)
EXECUTION COPY
TRIANGLE CAPITAL CORPORATION
2,400,000 Shares of Common Stock
UNDERWRITING AGREEMENT
September 21, 2010
Morgan Keegan & Company, Inc.
BB&T Capital Markets
A Division of Scott & Stringfellow, LLC
Robert W. Baird & Co. Incorporated
Janney Montgomery Scott LLC
c/o Morgan Keegan & Company, Inc.
50 N. Front Street, 12th Floor
Memphis, TN 38103
BB&T Capital Markets
A Division of Scott & Stringfellow, LLC
Robert W. Baird & Co. Incorporated
Janney Montgomery Scott LLC
c/o Morgan Keegan & Company, Inc.
50 N. Front Street, 12th Floor
Memphis, TN 38103
Ladies and Gentlemen:
Each of Triangle Capital Corporation, a corporation established under the laws of Maryland
(the Company) and Triangle Mezzanine Fund LLLP, a limited liability limited partnership
established under the laws of North Carolina (the Fund and, collectively with the Company, the
Triangle Entities), confirm their agreement with Morgan Keegan & Company, Inc. (Morgan Keegan),
BB&T Capital Markets, a division of Scott & Stringfellow, LLC (BB&T), Robert W. Baird & Co.
Incorporated (Baird) and Janney Montgomery Scott LLC (Janney Montgomery) and each of the other
Underwriters named in Schedule A hereto (collectively, the Underwriters, which term shall
also include any underwriter substituted as hereinafter provided in Section 10 hereof), with
respect to the issue and sale by the Company of a total of 2,400,000 shares of common stock, par
value $0.001 per share (the Initial Securities), and the purchase by the Underwriters, acting
severally and not jointly, of the respective numbers of Initial Securities set forth in said
Schedule A hereto, and with respect to the grant by the Company to the Underwriters, acting
severally and not jointly, of the option described in Section 2(b) hereof to purchase all or any
part of 360,000 additional shares to cover over-allotments, if any (the Over-Allotment
Securities). The Initial Securities and Over-Allotment Securities are hereinafter called,
collectively, the Securities. Certain terms used in this Agreement are defined in Section 17
hereof.
The Triangle Entities understand that the Underwriters propose to make a public offering of
the Securities as soon as the Underwriters deem advisable after this Agreement has been executed
and delivered.
The Company has prepared and filed, pursuant to the 1933 Act, with the Commission a registration
statement on Form N-2 (File number 333-151930), which registers the offer and sale of common stock,
par value $0.001 per share, of the Company to be issued from time to time by the Company, including
the Securities. The Company filed a Form N-54A Notification of Election to be Subject to
Sections 55 through 65 of the 1940 Act Filed Pursuant to Section 54(a)
of the 1940 Act (File number 814-00733) with the Commission on November 3, 2006, under the 1940
Act.
The registration statement, as amended by the post-effective amendment thereto filed with the
Commission on June 9, 2010, including the exhibits and schedules thereto, at the time it became
effective on August 12, 2010, and as thereafter amended by any subsequent post-effective amendment,
and including any information contained in a prospectus subsequently filed with the Commission
pursuant to Rule 497 under the 1933 Act with respect to the offer, issuance and/or sale of the
Securities and deemed to be a part of the registration statement at the time of effectiveness
pursuant to Rule 430C under the 1933 Act, and also including any Rule 462(b) Registration Statement
filed pursuant to Rule 462(b) under the 1933 Act, is hereinafter referred to as the Registration
Statement. The prospectus, dated as of August 12, 2010 included in the Registration Statement at
the time it became effective on August 12, 2010 is hereinafter referred to as the Base
Prospectus. The Base Prospectus, together with the preliminary prospectus supplement, dated
September 20, 2010, filed with the Commission pursuant to Rule 497 under the 1933 Act, is
hereinafter referred to as the Preliminary Prospectus. The Base Prospectus, together with the
prospectus supplement to be filed with the Commission pursuant to Rule 497 and used to confirm
sales of the Securities, is hereinafter referred to as the Prospectus.
The Preliminary Prospectus, together with the information set forth on Schedule B
hereto (which information the Underwriters have informed the Company is being conveyed orally by
the Underwriters to prospective purchasers at or prior to the Underwriters confirmation of sales
of the Securities in the public offering) is hereinafter referred to as the Disclosure Package.
Section 1. Representations and Warranties.
(a) Representations and Warranties by the Triangle Entities. Each of the Triangle
Entities represents and warrants, jointly and severally, to each Underwriter as of the date hereof,
as of the Applicable Time, as of the Closing Time referred to in Section 2(c) hereof, and as of
each Option Closing Time (if any) referred to in Section 2(b) hereof, and agrees with each
Underwriter, as follows:
(1) Compliance with Registration Requirements. (i) The Securities have been duly
registered under the 1933 Act pursuant to the Registration Statement. The Company meets the
requirements for use of Form N-2 under the 1933 Act. The Registration Statement has become
effective under the 1933 Act, and no stop order suspending the effectiveness of the Registration
Statement or the use of the Preliminary Prospectus or the Prospectus has been issued, and no
proceedings for any such purpose, have been instituted or are pending or, to a Triangle Entitys
knowledge, are contemplated by the Commission, and any request on the part of the Commission for
additional information with respect thereto has been complied with.
(ii) At the respective times the Registration Statement, and any subsequent post-effective
amendment thereto, became effective, at the Closing Time and as of each Option Closing Time (if
any), the Registration Statement, and all amendments and supplements thereto, complied and will
comply in all material respects with the requirements of the 1933 Act and the 1940 Act, and did not
and will not contain any untrue statement of a material fact or omit to state
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any material fact required to be stated therein or necessary to make the statements therein
not misleading. Neither the Prospectus nor any amendment or supplement thereto, as of its date, at
the time the Prospectus or any such amendment or supplement was issued, at the Closing Time and as
of each Option Closing Time (if any), included or will include any untrue statement of a material
fact or omitted or will omit to state any material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not misleading. The
representations and warranties in this subsection shall not apply to statements in or omissions
from the Registration Statement or Prospectus made in reliance upon and in conformity with
information furnished to the Company by or on behalf of any Underwriter for use in the Registration
Statement or Prospectus, it being understood and agreed that the only such information furnished to
the Company in writing by the Underwriters consists of the information described in Section 6(c)
hereof.
(iii) The Disclosure Package as of the Applicable Time does not include any untrue statement
of a material fact or omit to state any material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not misleading. The
preceding sentence does not apply to statements in or omissions from the Disclosure Package based
upon and in conformity with information relating to any Underwriter furnished to the Company in
writing by any Underwriter or its representative expressly for use therein, it being understood and
agreed that the only such information furnished by the Underwriters to the Company consists of the
information described in Section 6(c) hereof.
(iv) The Preliminary Prospectus when first filed under Rule 497 and as of its date complied in
all material respects with the 1933 Act, and when filed by electronic transmission pursuant to
EDGAR (except as may be permitted by Regulation S-T under the 1933 Act), was substantially
identical to the copy thereof delivered to the Underwriters for use in connection with this
offering. The Prospectus when first filed under Rule 497 and as of its date will comply in all
material respects with the 1933 Act, and when filed by electronic transmission pursuant to EDGAR
(except as may be permitted by Regulation S-T under the 1933 Act), will be substantially identical
to the copy thereof delivered to the Underwriters for use in connection with this offering.
(v) The Companys registration statement on Form 8-A under the 1934 Act is effective.
(2) Independent Registered Public Accounting Firm. Ernst & Young LLP, who audited the
financial statements and supporting schedules, if any, included in the Registration Statement, the
Preliminary Prospectus and the Prospectus is an independent registered public accounting firm as
required by all applicable provisions of the 1933 Act and the 1934 Act and the rules and
regulations of the Public Company Accounting Oversight Board.
(3) Financial Statements. The consolidated financial statements of the Company
included in the Registration Statement, the Preliminary Prospectus and the Prospectus, together
with the related schedules (if any) and notes thereto, present fairly the consolidated financial
position of the Company at the dates indicated and the consolidated results of operations and
consolidated cash flows of the Company for the periods specified; and all such financial statements
have been prepared in conformity with GAAP applied on a consistent basis
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throughout the periods involved and comply with all applicable accounting requirements under
the 1933 Act and the 1940 Act, except as may be expressly stated in the related notes thereto. No
other financial statements or supporting schedules are required to be included in the Registration
Statement, the Preliminary Prospectus or the Prospectus. The other financial and statistical
information and data included in the Registration Statement, the Preliminary Prospectus and the
Prospectus are accurately derived from such consolidated financial statements and the books and
records of the Triangle Entities and have been compiled on a basis consistent with the consolidated
financial statements included in the Registration Statement, the Preliminary Prospectus and the
Prospectus.
(4) Expense Summary. The information set forth in the Registration Statement, the
Preliminary Prospectus and the Prospectus in the Fee and Expenses Table has been prepared in
accordance with the requirements of Form N-2 and to the extent estimated or projected, such
estimates or projections are reasonably believed to be attainable and reasonably based.
(5) No Material Adverse Change. Since the respective dates as of which information is
given in the Disclosure Package and the Prospectus, except as otherwise stated or contemplated
therein, there has not been (A) any Material Adverse Effect or any development that could
reasonably be expected to result in a Material Adverse Effect, (B) any transaction entered into by
either Triangle Entity that is material with respect to such Triangle Entity other than in the
ordinary course of its business as described in the Preliminary Prospectus and the Prospectus,
(C) any liability or obligation, direct, indirect or contingent (including any off-balance sheet
obligations), incurred by a Triangle Entity, that is material to such Triangle Entity and (D) any
dividend or distribution of any kind declared, paid or made by a Triangle Entity on any class of
its capital shares.
(6) Good Standing. (i) The Company has been duly incorporated, is validly existing as
a corporation under the laws of Maryland and is in good standing under the laws of Maryland, with
full power and authority to own, lease and operate its properties and to conduct its business as
described in the Preliminary Prospectus and the Prospectus, and to enter into and perform its
obligations under this Agreement and the Material Agreements (as hereinafter defined); and the
Company is duly qualified to transact business and is in good standing under the laws of each
jurisdiction which requires such qualification, except for such jurisdictions where failure to so
qualify or to be in good standing would not, individually or in the aggregate, result in a Material
Adverse Effect. The Articles of Incorporation of the Company, as amended to date, are in full force
and effect.
(ii) The Fund has been duly organized, is validly existing as a limited liability limited
partnership under the laws of North Carolina and is in good standing under the laws of North
Carolina and the provisions of the North Carolina Revised Uniform Limited Partnership Act, with
full power and authority to own, lease and operate its properties and to conduct its business as
described in the Preliminary Prospectus and the Prospectus, and to enter into and perform its
obligations under this Agreement and the Material Agreements; and the Fund is duly qualified to
transact business and is in good standing under the laws of each jurisdiction which requires such
qualification, except for such jurisdictions where failure to so qualify or to be in good standing
would not, individually or in the aggregate, result in a Material Adverse Effect. The Limited
Partnership Agreement of the Fund, as amended to date, is in full force and effect.
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(iii) The General Partner has been duly organized, is validly existing as a limited liability
limited company and is in good standing under the laws of North Carolina, with full power and
authority to own, lease and operate its properties and to conduct its business as described in the
Preliminary Prospectus and the Prospectus; and the General Partner is duly qualified to transact
business and is in good standing under the laws of each jurisdiction which requires such
qualification, except for such jurisdictions where the failure to qualify or to be in good standing
would not, individually or in the aggregate, result in a Material Adverse Effect.
(7) Subsidiaries; Portfolio Companies. The Company does not own, directly or
indirectly, any shares of stock or any other equity or long-term debt securities of any corporation
or other entity other than (i) 100% of the equity interests of the Fund and the General Partner,
(ii) those corporations and other entities described in the Preliminary Prospectus and the
Prospectus under the caption Portfolio Companies (each, a Portfolio Company) or (iii) as
disclosed under Item 28 of the Registration Statement. The Company or the Fund has duly authorized
and executed enforceable agreements with respect to the investments described in the Preliminary
Prospectus and the Prospectus under the caption Portfolio Companies.
(8) Business Development Company Status. Each Triangle Entity has duly elected to be
regulated as a business development company (BDC) under the 1940 Act and has filed with the
Commission, pursuant to Section 54(a) of the 1940 Act, a duly completed and executed Form N-54A
(the BDC Election). At the time each such BDC Election was filed with the Commission, it
(i) contained all statements required to be stated therein in accordance with, and complied in all
material respects with the requirements of, the 1940 Act, and (ii) did not include any untrue
statement of material fact or omit to state a material fact necessary to make the statements
therein not misleading. Neither Triangle Entity has filed with the Commission any notice of
withdrawal of such BDC Election pursuant to Section 54(c) of the 1940 Act. Each BDC Election
remains in full force and effect and, to each Triangle Entitys knowledge, no order of suspension
or revocation of such election under the 1940 Act has been issued or proceedings therefore
initiated or threatened by the Commission.
(9) Officers and Directors. Except as disclosed in the Preliminary Prospectus and the
Prospectus, no person is serving or acting as an officer, director or investment advisor of either
Triangle Entity except in accordance with the applicable provisions of the 1940 Act. Except as
disclosed in the Registration Statement, the Preliminary Prospectus and the Prospectus, no director
of a Triangle Entity is (i) an interested person (as defined in the 1940 Act) of such Triangle
Entity or (ii) an affiliated person (as defined in the 1940 Act) of any Underwriter. The Company
has a majority of independent directors as required by the 1934 Act and the rules and regulations
of the Nasdaq. For purposes of this Section 1(a)(9), each Triangle Entity shall be entitled to
reasonably rely on representations from such officers and directors.
(10) Capitalization. The authorized, issued and outstanding capital stock of the
Company is as set forth in the Preliminary Prospectus and in the Prospectus. All issued and
outstanding shares of common stock of the Company have been duly authorized and validly issued and
are fully paid and non-assessable (except as described in the Registration Statement, the
Preliminary Prospectus and the Prospectus) and have been offered and sold or exchanged in
compliance with all applicable laws (including, without limitation, federal and state securities
laws); none of the outstanding shares of common stock of the Company were issued in violation
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of the preemptive or other similar rights of any securityholder of the Company. All issued and
outstanding interests of the Fund are owned directly or through a wholly owned subsidiary by the
Company, free and clear of all liens, security interests, encumbrances, equities or claims. No
shares of preferred stock of the Company have been designated, offered, sold or issued, and no
shares of preferred stock are currently outstanding. The description of the Companys equity
incentive plans or arrangements, if any, and the awards or other rights granted thereunder, set
forth in the Preliminary Prospectus and the Prospectus accurately and fairly presents the
information required to be shown with respect to such plans, arrangements, awards and rights.
(11) Authorization and Description of Securities. The Securities to be sold pursuant
to this Agreement have been duly authorized by the Board of Directors of the Company and such
Securities, when issued and delivered by the Company pursuant to this Agreement against payment of
the consideration set forth herein, will be validly issued and fully paid and non-assessable. The
Securities conform in all material respects to all statements relating thereto contained in the
Registration Statement, the Preliminary Prospectus and the Prospectus and such descriptions conform
to the rights set forth in the instruments defining the same, to the extent such rights are set
forth; and the issuance of the Securities is not subject to the preemptive or other similar rights
of any securityholder of the Company.
(12) Material Agreements. Each agreement required to be described in the Preliminary
Prospectus and the Prospectus has been filed with the Commission (each such agreement, a Material
Agreement and collectively, the Material Agreements) and attached or incorporated by reference
as an exhibit to the Registration Statement and has been accurately and fully described in all
material respects; provided, however, that the Company will file this Agreement in a post-effective
amendment to the Registration Statement pursuant to Rule 462(d). Neither Triangle Entity has sent
or received notice of, or otherwise communicated or received communication with respect to,
termination of any Material Agreement, nor has any such termination been threatened by any person.
Neither Triangle Entity is a party to any employment agreements.
(13) Power and Authority. Each of the Triangle Entities has full power and authority
to execute, deliver and perform this Agreement.
(14) Authorization of Agreements. This Agreement and the Material Agreements have each
been duly authorized by all requisite action on the part of the applicable Triangle Entity,
executed and delivered by such Triangle Entity, as of the dates noted therein, and complies in all
material respects with all applicable provisions of the 1940 Act. Assuming due authorization,
execution and delivery by the other parties thereto, each such agreement constitutes a valid and
binding agreement of such Triangle Entity, enforceable in accordance with its terms, except as
rights to indemnity and contribution hereunder and thereunder may be limited by federal or state
securities laws or principles of public policy and subject to the qualification that the
enforceability of such Triangle Entitys obligations hereunder and thereunder may be limited by
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other laws relating
to or affecting creditors rights generally, general equitable principles (whether considered in a
proceeding in equity or at law) and an implied covenant of good faith and fair dealing.
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(15) Absence of Defaults and Conflicts. Neither Triangle Entity is (i) in violation of
its Organizational Documents, each as amended from time to time, (ii) in breach or default in the
performance or observance of any obligation or the terms of any indenture, contract, lease,
mortgage, note agreement, loan or credit agreement or other agreement, obligation, condition,
covenant or instrument to which it is a party or by which it may be bound or to which its property
or assets is subject (collectively, Agreements and Instruments) or (iii) in violation of any law,
ordinance, administrative or governmental rule or regulation applicable to either of the Triangle
Entities or of any decree of the Commission, any state securities commission, any foreign
securities commission, any national securities exchange, any arbitrator, any court or any other
governmental, regulatory, self-regulatory or administrative agency or any official having
jurisdiction over the Triangle Entity, except, with respect to clauses (ii) or (iii), to the extent
that such breaches, defaults or violations would not, individually or in the aggregate, be
reasonably likely to have a Material Adverse Effect.
(16) Non-Contravention. The execution, delivery and performance of this Agreement, the
consummation of the transactions contemplated herein and in the Registration Statement, the
Preliminary Prospectus and the Prospectus (including the issuance and sale of the Securities and
the use of the proceeds from the sale of the Securities as described in the Preliminary Prospectus
and the Prospectus under the caption Use of Proceeds), and compliance by the Triangle Entities
with their obligations hereunder have been duly authorized by all necessary corporate or
partnership action (as applicable) and do not and will not, whether with or without the giving of
notice or passage of time or both, (i) conflict with or constitute a breach of, or default or
Repayment Event (as defined herein) under, the Agreements and Instruments or result in the creation
or imposition of any lien, charge or encumbrance upon any property or assets of a Triangle Entity
pursuant to the terms of the Agreements and Instruments (except to the extent that such breaches,
defaults or creations or impositions would not, individually or in the aggregate, be reasonably
likely to have a Material Adverse Effect), (ii) result in any violation of the provisions of the
Organizational Documents of either Triangle Entity, each as amended from time to time, or
(iii) result in any violation of any statute, law, rule, regulation, filing, judgment, order,
injunction, writ or decree applicable to the Triangle Entity or any of its assets, properties or
operations (except to the extent that such violations would not, individually or in the aggregate,
be reasonably likely to have a Material Adverse Effect). As used herein, a Repayment Event means
any event or condition which gives the holder of any note, debenture or other evidence of
indebtedness (or any person acting on such holders behalf) the right to require the repurchase,
redemption or repayment of all or a portion of such indebtedness by a Triangle Entity, as
applicable.
(17) Absence of Proceedings. There is no action, suit, proceeding, inquiry or
investigation before or brought by any court or governmental, regulatory or self-regulatory agency
or body, domestic or foreign, now pending, or, to the knowledge of either Triangle Entity,
threatened, against or affecting either of the Triangle Entities that is required to be disclosed
in the Registration Statement, Preliminary Prospectus or the Prospectus (other than as disclosed
therein), or that could reasonably be expected to result in a Material Adverse Effect, or that
could reasonably be expected to materially and adversely affect the consummation of the
transactions contemplated in this Agreement or the performance by either Triangle Entity of its
obligations under this Agreement or the Material Agreements. The aggregate of all pending legal or
governmental proceedings to which the either of the Triangle Entities is a party or of which
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any of their respective property or assets is the subject that are not described in the
Registration Statement, Preliminary Prospectus or the Prospectus, including ordinary routine
litigation incidental to the business of the Triangle Entities, could not reasonably be expected to
result in a Material Adverse Effect.
(18) Accuracy of Descriptions and Exhibits. The statements set forth under the
headings Capitalization, Risk Factors, Business Development Company and Regulated Investment
Company Elections, Description of Capital Stock, Regulation and Material U.S. Federal Income
Tax Considerations in the Preliminary Prospectus and the Prospectus, and in Item 30 of the
Registration Statement, insofar as such statements purport to summarize certain provisions of the
1940 Act, Maryland law, the SBA Regulations (as defined herein), the shares of common stock, the
Companys Organizational Documents, United States federal income tax law and regulations or legal
conclusions with respect thereto, fairly and accurately summarize such provisions in all material
respects; all descriptions in the Registration Statement, the Preliminary Prospectus and the
Prospectus of any Triangle Entity documents are accurate in all material respects.
(19) Absence of Further Requirements. No filing with, or authorization, approval,
consent, license, order, registration, qualification or decree of, any court or governmental
authority or agency, domestic or foreign is necessary or required for the performance by the
Triangle Entities of their obligations under this Agreement in connection with the offering,
issuance, sale or delivery of the Securities hereunder, or the consummation of the transactions
contemplated by this Agreement, except such as have been already obtained under the 1933 Act, the
1940 Act and the 1934 Act, or as may be required under the rules and regulations of the Financial
Industry Regulatory Authority, Inc. (FINRA), Nasdaq or state securities laws.
(20) Possession of Licenses and Permits. Each Triangle Entity has such valid and
current licenses, permits, approvals, consents and authorizations of governmental or regulatory
authorities (permits) as are necessary to own its property and to conduct its business in the
manner described in the Preliminary Prospectus and the Prospectus, and neither Triangle Entity has
received any notice of proceedings relating to the revocation or modification of, or non-compliance
with, any permits, and no event has occurred which allows or, after notice or lapse of time, would
allow, revocation, modification or termination thereof or result in any other material impairment
of the rights of the Triangle Entities under any such permit, subject in each case to such
qualification as may be set forth in the Preliminary Prospectus and the Prospectus.
(21) Small Business Investment Company Status. The Fund is licensed to operate as a
Small Business Investment Company (SBIC) by the U.S. Small Business Administration (SBA). The
Funds SBIC license is in good standing with the SBA and no adverse regulatory findings contained
in any Examinations Reports prepared by the SBA regarding the Fund are outstanding or unresolved.
(22) SBA Debentures. The Fund is eligible to sell securities guaranteed by the SBA in
the amounts and on the terms described in the Preliminary Prospectus and the Prospectus. The Fund
is not in default under the terms of any debenture which it has issued to the SBA for guaranty by
the SBA or any other material monetary obligation.
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(23) Possession of Intellectual Property. The Triangle Entities own or possess, or can
acquire on reasonable terms, adequate patents, patent rights, licenses, inventions, copyrights,
know-how (including trade secrets and other unpatented and/or unpatentable proprietary or
confidential information, systems or procedures), trademarks, service marks, trade names or other
intellectual property (collectively, Intellectual Property) necessary to carry on their business
as described in the Preliminary Prospectus and the Prospectus. The expected expiration of any of
rights to such Intellectual Property would not result in a Material Adverse Effect. The Triangle
Entities have not received any notice or are not otherwise aware of any infringement of or conflict
with asserted rights of others with respect to any Intellectual Property or of any facts or
circumstances which would render any Intellectual Property invalid or inadequate to protect the
interest of the Triangle Entities therein, and which infringement or conflict (if the subject of
any unfavorable decision, ruling or finding) or invalidity or inadequacy, singly or in the
aggregate, would result in a Material Adverse Effect. None of the Intellectual Property employed by
the Triangle Entities has been obtained or is being used by the Triangle Entities in violation of
any contractual obligation binding on either of the Triangle Entities or any of its officers,
directors or employees or otherwise in violation of the rights of any person.
(24) Distribution of Written Offering Material. The Triangle Entities have not
distributed and will not distribute any written offering material in connection with the offering
and sale of the Securities other than the Preliminary Prospectus and the Prospectus, and such
materials as may be approved by the Underwriters and comply with the requirements of Rule 482 under
the 1933 Act.
(25) Absence of Registration Rights. Except as disclosed in the Preliminary Prospectus
and the Prospectus, there are no persons with registration rights or other similar rights to have
any securities (debt, equity or otherwise) (A) registered pursuant to the Registration Statement or
included in the offering contemplated by this Agreement or (B) otherwise registered by the Triangle
Entities under the 1933 Act or the 1940 Act. There are no persons with tag-along rights or other
similar rights to have any securities (debt or equity) included in the offering contemplated by
this Agreement or sold in connection with the sale of Securities by the Company pursuant to this
Agreement.
(26) Nasdaq. The common stock of the Company is registered pursuant to Section 12(b)
of the 1934 Act and is listed on the Nasdaq Global Market. The Company has taken no action designed
to, or likely to have the effect of, terminating the registration of the common stock of the
Company under the 1934 Act or delisting the common stock of the Company from the Nasdaq Global
Market, nor has the Company received any notification that the Commission or Nasdaq is
contemplating terminating such registration or listing. The Company has continued to satisfy, in
all material respects, all Nasdaq listing requirements.
(27) FINRA Matters. All of the information provided to the Underwriters or to counsel
for the Underwriters by the Triangle Entities and their respective officers and directors in
connection with letters, filings or other supplemental information provided to FINRA pursuant to
FINRAs conduct rules is true, complete and correct.
(28) Tax Returns. Each of the Triangle Entities has filed all tax returns that are
required to be filed and have paid all taxes required to be paid by it and any other assessment,
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fine or penalty levied against it, to the extent that any of the foregoing is due and payable,
except for any such tax, assessment, fine or penalty that is currently being contested in good
faith by appropriate actions and except for such taxes, assessments, fines or penalties the
nonpayment of which would not, individually or in the aggregate, be reasonably expected to have a
Material Adverse Effect. The Company has made adequate charges, accruals and reserves in the
applicable financial statements referred to in the Preliminary Prospectus and the Prospectus in
respect of all federal, state and foreign income and franchise taxes for all periods as to which
the tax liability of either of the Triangle Entities or the General Partner has not been finally
determined. Neither Triangle Entity is aware of any tax deficiency that has been or might be
asserted or threatened against the Triangle Entities or the General Partner that could result in a
Material Adverse Effect.
(29) Partnership Tax. At all times from the date of its formation until February 21,
2007, the Fund was treated as a partnership for federal income tax purposes, and not as an
association or publicly traded partnership taxable as a corporation. As of and at all times from
February 22, 2007, the Fund has been a disregarded entity for federal income tax purposes.
(30) Subchapter M. The Company qualified to be treated as a regulated investment
company (RIC) under Subchapter M of the Code for its taxable year ended December 31, 2009, and
the Company is in compliance with the requirements of the Code necessary to continue to qualify as
a RIC under the Code. The Company intends to direct the investment of the net proceeds of the
offering of the Securities and continue to conduct its activities in such a manner as to comply
with the requirements of Subchapter M of the Code.
(31) Insurance. The Triangle Entities maintain a joint directors and officers/errors
and omissions insurance policy and fidelity bond that complies with the requirements of Rule 17g-1
under the 1940 Act, and each Triangle Entity and its subsidiaries are insured for reasonable
amounts by such insurance companies and in such amounts as are prudent and customary in the
businesses in which they are engaged.
(32) Accounting Controls and Disclosure Controls. (i) Each Triangle Entity and its
subsidiaries maintains a system of internal control over financial reporting (as such term is
defined in the rules and regulations promulgated under the 1934 Act) sufficient to provide
reasonable assurances that (A) transactions are executed in accordance with managements general or
specific authorizations and with the investment objectives, policies and restrictions of the
Triangle Entity and the applicable requirements of the 1940 Act and the Code; (B) transactions are
recorded as necessary to permit preparation of financial statements in conformity with GAAP and to
maintain asset accountability and to maintain compliance with the applicable books and records
requirements under the 1940 Act; (C) access to assets is permitted only in accordance with
managements general or specific authorization; and (D) the recorded accountability for assets is
compared with existing assets at reasonable intervals and appropriate action is taken with respect
to any differences. The Companys auditors and the Audit Committee of the Board of Directors have
been advised of (1) any known significant deficiencies in the design or operation of internal
controls that could adversely affect the ability to record, process, summarize, and report
financial data and (2) any known fraud, whether or not material, that involves management or other
employees who have a role in the Companys and the Funds
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respective internal control over financial reporting; and such deficiencies or fraud will not
result in a Material Adverse Effect.
(ii) The Triangle Entities internal control over financial reporting is effective and the
Triangle Entities are not aware of any material weakness in their internal control over financial
reporting.
(iii) The Company has established and maintains disclosure controls and procedures (as such
term is defined in the rules and regulations promulgated under the 1934 Act), which are designed to
ensure that material information relating to the Company, including its consolidated subsidiaries,
is made known to the Companys principal executive officer and its principal financial officer by
others within those entities, particularly during the periods in which the periodic reports
required under the 1934 Act are being prepared, and such disclosure controls and procedures are
effective to perform the functions for which they were established.
(33) Compliance with the Sarbanes-Oxley Act. The Triangle Entities are in compliance
with the applicable provisions of the Sarbanes-Oxley Act and the rules and regulations promulgated
in connection therewith, including Sections 302 and 906 related to certifications and Section 404.
(34) Compliance with Laws. Each Triangle Entity (i) has adopted and implemented
written policies and procedures reasonably designed to prevent violation of the Federal Securities
Laws (as that term is defined in Rule 38a-1 under the 1940 Act) by the Triangle Entity, (ii) is
conducting its business in compliance with all laws, rules, regulations, decisions, directives and
orders except for such failure to comply which would not reasonably be expected to result in a
Material Adverse Effect and (iii) is conducting its business in compliance in all material respects
with the requirements of the SBA and the 1940 Act.
(35) Investment Adviser Status. Neither Triangle Entity nor the General Partner is
currently subject to registration as an investment adviser under the Investment Advisers Act of
1940, as amended.
(36) Absence of Stabilization. Neither Triangle Entity has taken nor after the date
hereof will take, directly or indirectly, any action designed to or that would constitute or that
might reasonably be expected to cause or result in the stabilization or manipulation of the price
of any security to facilitate the sale or resale of the Securities, and neither Triangle Entity is
aware of any such action taken or to be taken by any affiliates of such Triangle Entity. The
Triangle Entities acknowledge that the Underwriters may engage in passive market making
transactions in the Securities in accordance with Regulation M under the 1934 Act.
(37) Statistical, Demographic or Market-Related Data. Any statistical, demographic or
market-related data included in the Registration Statement, the Preliminary Prospectus or the
Prospectus is based on or derived from sources that the Triangle Entity believes to be reliable and
accurate and all such data included in the Registration Statement, the Preliminary Prospectus or
the Prospectus accurately reflects the materials upon which it is based or from which it was
derived.
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(38) Advertisements. All advertising, sales literature or other promotional material
(including prospectus wrappers, broker kits, road show slides and road show scripts),
whether in printed or electronic form, authorized in writing by or prepared by or at the direction
of the Company for use in connection with the offering and sale of the Securities (collectively,
sales material) complied and comply in all material respects with the applicable requirements of
the 1933 Act, the 1940 Act and the rules and interpretations of FINRA. No sales material contained
or contains an untrue statement of a material fact or omitted or omits to state a material fact
required to be stated therein or necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading.
(39) Absence of Undisclosed Payments. To each Triangle Entitys knowledge, neither the
Triangle Entities nor any employee or agent of the Triangle Entities has made any payment of funds
of the Triangle Entities or received or retained any funds, which payment, receipt or retention of
funds is of a character required to be disclosed in the Preliminary Prospectus or the Prospectus.
(40) Investments. Except for those limitations of general application provided in the
1940 Act, the SBA Regulations and the Code, there are no material restrictions, limitations or
regulations with respect to the ability of the Triangle Entities to invest their assets as
described in the Preliminary Prospectus or the Prospectus.
(41) No Material Relationships with the Underwriters. Except as disclosed in the
Preliminary Prospectus or the Prospectus, none of the Triangle Entities or the General Partner has
any material lending or other relationship with a bank or lending institution affiliated with any
of the Underwriters.
(42) Lock-Up Agreements. The Company has obtained for the benefit of the Underwriters
the agreement (a Lock-Up Agreement), in the form set forth as Schedule C hereto, from all
directors and executive officers of each of the Triangle Entities.
(43) Payment of Dividends. None of the Triangle Entities or their respective
subsidiaries is currently prohibited, directly or indirectly, from paying any dividends, from
making any other distribution on its capital stock or securities, from repaying any loans or
advances or from transferring any of its property or assets, except as described in Preliminary
Prospectus and the Prospectus and as may be limited by the 1940 Act or SBA Regulations of general
applicability.
(44) Environmental. Each of the Triangle Entities (i) is in compliance with any and
all applicable foreign, federal, state and local laws and regulations relating to the protection of
human health and safety, the environment or hazardous or toxic substances or wastes, pollutants or
contaminants with respect to any property owned, leased, managed or operated by any Triangle Entity
(Environmental Laws), (ii) has received and are in compliance with all permits, licenses or other
approvals required of them under applicable Environmental Laws to conduct their respective
businesses and (iii) has not received notice of any actual or potential liability for the
investigation or remediation of any disposal or release of hazardous or toxic substances or wastes,
pollutants or contaminants, except where such non-compliance with
11
Environmental Laws, failure to receive required permits, licenses or other approvals, or
liability would not, individually or in the aggregate, result in a Material Adverse Effect.
(45) ERISA. Each of the Triangle Entities and its subsidiaries are in compliance in
all material respects with all currently applicable provisions of the Employee Retirement Income
Security Act of 1974, as amended, including the regulations and published interpretations
thereunder (herein called ERISA). No reportable event (as defined in ERISA) has occurred with
respect to any pension plan (as defined in Section 3(2) ERISA) for which such Triangle Entity or
any subsidiary would have any liability. Such Triangle Entity and its subsidiaries have not
incurred and do not expect to incur liability under (i) Title IV of ERISA with respect to
termination of, or withdrawal from, any pension plan or (ii) Sections 412 or 4971 of the Code.
Each pension plan for which any Triangle Entity or any subsidiary would have any liability that
is intended to be qualified under Section 401(a) of the Code is so qualified and nothing has
occurred, whether by action or by failure to act, that would reasonably be expected to cause the
loss of such qualification.
(46) Anti-Money Laundering, Foreign Corrupt Practices Act Compliance. The operations
of the Triangle Entities are and have been conducted at all times in compliance in all material
respects with applicable financial recordkeeping and reporting requirements of the Currency and
Foreign Transactions Reporting Act of 1970, as amended, also known as the Bank Secrecy Act, the USA
Patriot Act, the money laundering statues of all applicable jurisdictions, the rules and
regulations thereunder and any related or similar rules, regulations or guidelines, issued,
administered or enforced by any governmental entity having jurisdiction over the Triangle Entities
(collectively, the Money Laundering Laws) and no proceeding by or before any court or
governmental or regulatory agency, authority or body or any arbitrator involving any Triangle
Entity with respect to the Money Laundering Laws is pending or, to the knowledge of either Triangle
Entity, threatened. Neither Triangle Entity, or, to the knowledge of either Triangle Entity, any
director, officer, partner, manager, agent, employee or affiliate of either Triangle Entity has (i)
used any corporate funds for any unlawful contribution, gift, entertainment or other unlawful
expenses relating to political activity; (ii) made any direct or indirect unlawful payment to any
foreign or domestic government official or employee; (iii) violated or is in violation of any
provision of the Foreign Corrupt Practices Act of 1977; (iv) made any bribe, rebate, payoff,
influence payment, kickback or other unlawful payment; or (v) made any payment of funds to either
Triangle Entity or received or retained funds in violation of any such law, rule or regulation.
(47) No Brokers or Finders. There is no broker, finder or other party that is entitled
to receive from the Company or the Fund any brokerage or finders fee or other fee or commission as
a result of any transactions contemplated by this Agreement, other than as contemplated herein.
(48) FINRA Affiliations. To the knowledge of either Triangle Entity, there are no
affiliations or associations (as such terms are defined by FINRAs rules and regulations) between
any member of FINRA and any of the Companys directors and officers, except for Sherwood Smith, as
previously disclosed to the Underwriters. For purposes of this Section 1(a)(48), the Company shall
be entitled to reasonably rely on representations from such officers and directors.
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(49) OFAC. Neither of the Triangle Entities or any of their subsidiaries or, to the
knowledge of either Triangle Entity, any director, officer, agent, employee of either of the
Triangle Entities (in their capacities as such) or affiliate of either Triangle Entity or any of
its subsidiaries is currently subject to any U.S. sanctions administered by the Office of Foreign
Assets Control of the U.S. Department of the Treasury (OFAC); and the Company will not directly
or indirectly use the proceeds of the offering of the Securities hereunder, or lend, contribute or
otherwise make available such proceeds to any subsidiary, joint venture partner or other person or
entity, for the purpose of financing the activities of any person currently subject to any U.S.
sanctions administered by OFAC.
(b) Officers Certificates. Any certificate signed by any officer of a Triangle Entity
and delivered to the Underwriters or to counsel for the Underwriters shall be deemed a
representation and warranty by such Triangle Entity to each Underwriter as to the matters covered
thereby.
Section 2. Sale and Delivery to Underwriters; Closing.
(a) Initial Securities. On the basis of the representations and warranties herein
contained and subject to the terms and conditions herein set forth, the Company agrees to sell to
each Underwriter, severally and not jointly, and each Underwriter, severally and not jointly,
agrees to purchase from the Company, at a purchase price of $15.05 per share (representing a public
offering price of $15.80 per share, less an underwriting discount of $0.75 per share)( the
Purchase Price), the amount of Initial
Securities set forth in Schedule A opposite such Underwriters name, plus any additional number of Initial Securities which such Underwriter may
become obligated to purchase pursuant to the provisions of Section 10 hereof.
(b) Over-Allotment Securities. Subject to the terms and conditions and in reliance
upon the representations and warranties herein set forth, the Company hereby grants an option to
the several Underwriters to purchase, severally and not jointly, up to 360,000 Over-Allotment
Securities at the Purchase Price (less the per share amount or value, as applicable, of any
dividend or other distribution declared by the Company, the record date of which occurs during the
period from the Closing Time through the Option Closing Time (as defined below) with respect
thereto). Said option may be exercised only to cover over-allotments in the sale of the Initial
Securities by the Underwriters. Said option may be exercised in whole or in part at any time and
from time to time on or before the 30th day after the date of the Prospectus upon notice by the
Underwriters to the Company setting forth the number of shares of the Over-Allotment Securities as
to which the several Underwriters are exercising the option and the settlement time and date. The
number of Over-Allotment Securities to be purchased by each Underwriter shall be the same
percentage of the total number of shares of the Over-Allotment Securities to be purchased by the
several Underwriters as such Underwriter is purchasing of the Initial Securities, plus any
additional number of Over-Allotment Securities which such Underwriter may become obligated to
purchase pursuant to the provisions of Section 10 hereof, subject to such adjustments as you in
your absolute discretion shall make to eliminate any fractional shares. Any such time and date of
delivery (an Option Closing Time) shall be determined by you, but shall not be later than seven
full business days after the exercise of said option, nor in any event prior to the Closing Time.
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(c) Payment. Payment of the Purchase Price for, and delivery of certificates, if any,
for the Initial Securities shall be made at the offices of Sutherland Asbill & Brennan LLP, 1275
Pennsylvania Avenue, NW, Washington, DC 20004, or at such other place as shall be agreed upon by
the Underwriters and the Company, at 10:00 A.M. (Eastern time) on September 24, 2010 (unless
postponed in accordance with the provisions of Section 10), or such other time not later than ten
business days after such date as shall be agreed upon by the Underwriters and the Company (such
time and date of payment and delivery being herein called Closing Time).
In addition, in the event that any or all of the Over-Allotment Securities are purchased by
the Underwriters, payment of the Purchase Price for, and delivery of certificates, if any, for,
such Over-Allotment Securities shall be made at the above-mentioned offices, or at such other place
as shall be agreed upon by the Underwriters and the Company, on each Option Closing Time as
specified in the notice from the Underwriters to the Company.
Delivery of the Securities shall be made to the Underwriters for the respective accounts of
the several Underwriters against payment by the several Underwriters of the Purchase Price thereof
to or upon the order of the Company by wire transfer payable in same-day funds to an account
designated by the Company. Delivery of the Initial Securities and the Over-Allotment Securities
shall be made through the facilities of The Depository Trust Company, unless the Underwriters shall
otherwise instruct. Morgan Keegan, BB&T, Baird and Janney Montgomery, each individually and not as
a representative of the Underwriters, may (but shall not be obligated to) make payment of the
Purchase Price for the Initial Securities or the Over-Allotment Securities, if any, to be purchased
by any Underwriter whose funds have not been received by the Closing Time or the relevant Option
Closing Time, as the case may be, but such payment shall not relieve such Underwriter from its
obligations hereunder.
(d) Denominations; Registration. Certificates for the Initial Securities and the
Over-Allotment Securities, if any, shall be in such denominations and registered in such names as
the Underwriters may request in writing at least one full business day before the Closing Time or
the relevant Option Closing Time, as the case may be. The certificates, if any, for the Initial
Securities and the Over-Allotment Securities, if any, will be made available for examination and
packaging by the Underwriters in Memphis, Tennessee not later than noon (Eastern time) on the
business day prior to the Closing Time or the relevant Option Closing Time, as the case may be.
Section 3. Covenants of the Triangle Entities. The Triangle Entities, jointly and
severally, covenant with each Underwriter as follows:
(a) Compliance with Securities Regulations and Commission Requests. The Triangle
Entities, subject to Section 3(a)(ii), will comply with the requirements of the 1933 Act, including
Rule 430C thereunder, and will notify the Underwriters immediately, and confirm the notice in
writing, (i) when any post-effective amendment to the Registration Statement shall become
effective, the Prospectus or any amendment or supplement thereto shall have been filed, or any
amendment or supplement to the Preliminary Prospectus shall have been filed, (ii) of the receipt of
any comments from the Commission, (iii) of any request by the Commission for any amendment to the
Registration Statement or any amendment or supplement to the Preliminary Prospectus or the
Prospectus or for additional information, (iv) of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement or of
14
any order preventing or suspending the use of the Preliminary Prospectus or the Prospectus, or
of the suspension of the qualification of the Securities for offering or sale in any jurisdiction,
or of the initiation or threatening of any proceedings for any of such purposes, and (v) if either
Triangle Entity becomes the subject of a proceeding under Section 8A of the 1933 Act in connection
with the offering of the Securities. The Company will promptly effect the filings required by
Rule 497 and will take such steps as they deem necessary to ascertain promptly whether the form of
prospectus transmitted for filing under Rule 497 was received for filing by the Commission and, in
the event that it was not, it will promptly file such prospectus. The Triangle Entities will make
every reasonable effort to prevent the issuance of any stop order, or order of suspension or
revocation of registration, and, if any such stop order or order of suspension or revocation of
registration is issued, to obtain the lifting or withdrawal thereof at the earliest possible
moment.
(b) Filing of Amendments. The Company will give the Underwriters notice of its
intention to file or prepare any amendment to the Registration Statement (including any Rule 462(b)
Registration Statement) or any amendment, supplement or revision to either the prospectus included
in the Registration Statement at the time it became effective or to the Preliminary Prospectus or
the Prospectus or will furnish the Underwriters with copies of any such documents within a
reasonable amount of time prior to such proposed filing or use, as the case may be, and will not
file or use any such document to which the Underwriters or counsel for the Underwriters shall
reasonably object.
(c) Delivery of Registration Statements. At the request of the Underwriters, the
Company will furnish or deliver to the Underwriters and counsel for the Underwriters, without
charge, signed copies of the Registration Statement as originally filed and of each amendment
thereto (including exhibits filed therewith or incorporated by reference therein) and signed copies
of all consents and certificates of experts, and will also deliver to the Underwriters, without
charge, a conformed copy of the Registration Statement as originally filed and of each amendment
thereto (without exhibits) for each of the Underwriters, during the time period when the
Underwriters are required to deliver the Prospectus. The copies of the Registration Statement and
each amendment thereto furnished to the Underwriters will be identical to the electronically
transmitted copies thereof filed with the Commission pursuant to EDGAR, except to the extent
permitted by Regulation S-T.
(d) Delivery of Prospectuses. The Company has delivered to each Underwriter, without
charge, as many copies of the Preliminary Prospectus as such Underwriter reasonably requested, and
the Company hereby consents to the use of such copies for purposes permitted by the 1933 Act. The
Company will furnish to each Underwriter, without charge, during the period when the Prospectus is
required to be delivered under the 1933 Act or the 1934 Act, such number of copies of any
amendments or supplements to the Preliminary Prospectus prepared on or after the date of this
Agreement and the Prospectus (and any amendments or supplements thereto) as such Underwriter may
reasonably request. The Preliminary Prospectus and the Prospectus and any amendments or supplements
thereto furnished to the Underwriters is or will be, as the case may be, identical to the
electronically transmitted copies thereof filed with the Commission pursuant to EDGAR, except to
the extent permitted by Regulation S-T.
15
(e) Continued Compliance with Securities Laws. Each Triangle Entity will comply with
the 1933 Act and the 1940 Act (including the requirements for qualification as a BDC) so as to
permit the completion of the distribution of the Securities as contemplated in this Agreement and
in the Preliminary Prospectus and the Prospectus. If at any time when the Prospectus is required by
the 1933 Act to be delivered in connection with sales of the Securities (including, without
limitation, pursuant to Rule 172), any event shall occur or condition shall exist as a result of
which it is necessary, in the opinion of counsel for the Underwriters or for the Triangle Entities,
to amend the Registration Statement or amend or supplement the Prospectus in order that the
Prospectus will not include any untrue statement of a material fact or omit to state a material
fact necessary in order to make the statements therein not misleading in the light of the
circumstances existing at the time it is delivered to a purchaser, or if it shall be necessary, in
the opinion of such counsel, at any such time to amend the Registration Statement or amend or
supplement the Prospectus in order to comply with the requirements of the 1933 Act or the 1940 Act,
the Company will promptly prepare and file with the Commission, subject to Section 3(b) hereof,
such amendment or supplement as may be necessary to correct such statement or omission or to make
the Registration Statement or the Prospectus comply with such requirements, and the Company will
furnish to the Underwriters such number of copies of such amendment or supplement as the
Underwriters may reasonably request.
(f) Amendments or Supplements to the Disclosure Package. If there occurs an event or
development as a result of which the Disclosure Package would include an untrue statement of a
material fact or would omit to state a material fact necessary in order to make the statements
therein, in light of the circumstances then prevailing, not misleading, the Company will promptly
notify the Underwriters so that any use of the Disclosure Package may cease until it is amended or
supplemented (at the sole cost and expense of the Company).
(g) Blue Sky Qualifications. The Company will use its best efforts, in cooperation
with the Underwriters, to qualify the Securities for offering and sale under the applicable
securities laws of such states and other jurisdictions (domestic or foreign) as the Underwriters
may designate and to maintain such qualifications in effect so long as required for the
distribution of the Securities; provided, however, that the foregoing shall not
apply to the extent that the securities are covered securities that are exempt from state
regulation pursuant to Section 18 of the 1933 Act. Notwithstanding the foregoing, the Company shall
not be obligated to file any general consent to service of process or to qualify as a foreign
corporation or as a dealer in securities in any jurisdiction in which it is not so qualified or to
subject itself to taxation in respect of doing business in any jurisdiction in which it is not
otherwise so subject.
(h) Rule 158. The Company will timely file such reports pursuant to the 1934 Act as
are necessary in order to make generally available to their securityholders as soon as practicable
an earnings statement for the purposes of, and to provide to the Underwriters the benefits
contemplated by, the last paragraph of Section 11(a) of the 1933 Act.
(i) Use of Proceeds. The Company will use the net proceeds received by it from the
sale of the Securities in the manner specified in the Preliminary Prospectus and the Prospectus
under Use of Proceeds. The proceeds will not be used by either Triangle Entity to purchase, hold
or carry margin securities as defined in, or in violation of, Board of Governors of the Federal
Reserve System Regulations T, U or X.
16
(j) Listing. The Company will use its reasonable best efforts to cause the Securities
to be duly authorized for listing by Nasdaq prior to the date the Securities are issued.
(k) Restriction on Sale of Securities. During the period beginning from the date
hereof and continuing to and including the date 60 days from the date of the Prospectus (the
Lock-Up Period), the Triangle Entities will not, without the prior written consent of Morgan
Keegan, (A) directly or indirectly, offer, pledge, sell, contract to sell, sell any option, rights
or warrant to purchase, purchase any option or contract to sell, grant any option, right or warrant
to purchase or otherwise transfer or dispose of common stock of the Company or any securities
convertible into or exercisable or exchangeable for common stock of the Company or file any
registration statement under the 1933 Act with respect to any of the foregoing or (B) enter into
any swap or any other agreement or any transaction that transfers, in whole or in part, directly or
indirectly, the economic consequence of ownership of the common stock of the Company, whether any
such swap or transaction described in clause (A) or (B) above is to be settled by delivery of
common stock of the Company or such other securities, in cash or otherwise. Notwithstanding the
foregoing, if (1) during the last 17 days of the Lock-Up Period, the Company issues an earnings
release or material news or a material event relating to the Triangle Entities occurs, or (2) prior
to the expiration of the Lock-Up Period, the Company announces that it will release earnings
results or become aware that material news or a material event will occur during the 16-day period
beginning on the last day of the Lock-Up Period, then the Lock-Up Period shall automatically be
extended and the restrictions imposed by this Section 3(k) shall continue to apply until the
expiration of the 18-day period beginning on the issuance of the earnings release or the occurrence
of the material news or material event, as applicable, unless Morgan Keegan waives, in writing,
such extension. The restrictions in this Section shall not apply to (i) the Securities to be sold
hereunder or (ii) common stock issued or, for avoidance of doubt, purchased in the open market
pursuant to the Companys dividend reinvestment plan or in connection with grants awarded under the
Company Amended and Restated 2007 Equity Incentive Plan, in each case in the ordinary course
consistent with past practice.
(l) Reporting Requirements. The Triangle Entities, during the period when the
Prospectus is required to be delivered under the 1933 Act or the 1934 Act, will file all documents
required to be filed with the Commission pursuant to the 1933 Act, the 1940 Act or the 1934 Act
within the time periods required by the 1933 Act, the 1940 Act, the 1934 Act and the rules and
regulations of the Commission thereunder.
(m) Entity Taxation. The Company will use its best efforts to comply with the
requirements of Subchapter M of the Code to continue to qualify as a regulated investment company
under the Code.
(n) Absence of Stabilization. The Triangle Entities will not take, directly or
indirectly, any action designed to cause or result in, or that would constitute or may reasonably
be expected to constitute, the stabilization or manipulation of the price of any security of the
Company to facilitate the sale or resale of the Securities.
(o) Continued Compliance with SBA Requirements. The Fund will use its best efforts to
continue to comply with the requirements for qualification as an SBIC, which is eligible to borrow
from the SBA as described in the Prospectus.
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Section 4. Payment of Expenses.
(a) Expenses. The Triangle Entities will pay all expenses incident to the performance
of its obligations under this Agreement, including (i) the preparation, printing (or reproduction)
and filing with the Commission of the Registration Statement (including financial statements and
exhibits), each Preliminary Prospectus and the Prospectus, and each amendment or supplement (as
applicable) to any of them, (ii) the printing (or reproduction) and delivery to the Underwriters
(including postage, air freight charges and charges for counting and packaging) of such copies of
the Registration Statement (including financial statements and exhibits), each Preliminary
Prospectus and the Prospectus, and each amendment or supplement (as applicable) to any of them, as
may be reasonably requested for use in connection with the offering, purchase, sale, issuance or
delivery of the Securities, and such other documents as may be required in connection therewith,
(iii) the preparation, issuance and delivery of the certificates for the Securities to the
Underwriters, including any stock or other transfer taxes and any stamp or other duties payable
upon the sale, issuance or delivery of the Securities to the Underwriters, (iv) the fees and
disbursements of Triangle Entities Counsel (as hereinafter defined), the independent registered
public accounting firm and any other advisors to the Triangle Entities, (v) the qualification of
the Securities under securities laws in accordance with the provisions of Section 3(f) hereof,
including filing fees and fees in connection with the preparation of any Blue Sky Survey and any
supplements thereto, (vi) the preparation, printing and delivery to the Underwriters of copies of
any Blue Sky Survey and any supplements thereto, (vii) the fees and expenses of the transfer agent
and registrar for the Securities, (viii) the filing fees of the Commission and any state agency
with respect to the Securities, (ix) the fees and expenses incurred in connection with the listing
of the Securities on Nasdaq, (x) the filing fees incident to, and the reasonable fees and
disbursements of counsel for the Underwriters in connection with, any required review by FINRA, and
(xiii) all other Triangle Entity costs and expenses incident to the performance by the Triangle
Entities of their obligations hereunder.
(b) Termination of Agreement. If this Agreement is terminated by the Underwriters in
accordance with the provisions of Section 5 or Section 9(a) hereof, the Triangle Entities, jointly
and severally, agree that they shall reimburse the Underwriters for all of their out-of-pocket
expenses, including the reasonable fees and disbursements of counsel for the Underwriters.
Section 5. Conditions of Underwriters Obligations. The obligations of the several
Underwriters hereunder shall be subject to the accuracy of the representations and warranties of
the Triangle Entities contained in Section 1 hereof as of the Applicable Time, the Closing Time and
any Option Closing Time pursuant to Section 4 hereof, to the accuracy of the statements of the
Triangle Entities made in any certificates delivered pursuant to the provisions hereof, to the
performance by the Triangle Entities of their respective covenants and other obligations hereunder,
and to the following further conditions:
(a) Effectiveness of Registration Statement. The Registration Statement, including any
Rule 462(b) Registration Statement, shall be effective and at the Closing Time (or the applicable
Option Closing Time, as the case may be) no stop order suspending the effectiveness of the
Registration Statement shall have been issued under the 1933 Act, no notice or order objecting to
its use shall have been issued, no proceedings with respect to either shall have been initiated or,
to the knowledge of counsel to the Underwriters and Triangle Entities Counsel, threatened by
18
the Commission, and any request on the part of the Commission for additional information shall
have been complied or waived with to the reasonable satisfaction of counsel to the Underwriters.
The Prospectus containing the Rule 430C Information shall have been filed with the Commission in
accordance with Rule 497.
(b) Opinions of Triangle Entities Counsel. At the Closing Time, the Underwriters
shall have received the favorable opinions, dated as of the Closing Time, of Bass, Berry & Sims
PLC, Venable LLP, special Maryland counsel, and Pepper Hamilton LLP, special counsel with regard to
SBA-related matters (collectively, Triangle Entities Counsel), in form and substance
satisfactory to counsel for the Underwriters, together with signed or reproduced copies of such
letters for each of the other Underwriters, to such further effect as counsel to the Underwriters
may reasonably request.
(c) Opinion of Counsel for the Underwriters. At the Closing Time, the Underwriters
shall have received the favorable opinion, dated as of the Closing Time, of Sutherland Asbill &
Brennan LLP, counsel for the Underwriters.
(d) Closing Certificates. At the Closing Time, there shall not have been, since the
date hereof or since the respective dates as of which information is given in the Preliminary
Prospectus or the Prospectus (exclusive of any amendments or supplements thereto subsequent to the
date of this Agreement), any event that would have a Material Adverse Effect, and, at the Closing
Time, the Underwriters shall have received certificates of the Chief Financial Officer or Chief
Accounting Officer of the Company and the General Partner, dated as of the Closing Time, to the
effect that (i) there has been no such Material Adverse Effect, (ii) the representations and
warranties of the Triangle Entities in this Agreement are true and correct with the same force and
effect as though expressly made at and as of the Closing Time, (iii) the Triangle Entities have
complied with all agreements and satisfied all conditions on their part to be performed or
satisfied pursuant to this Agreement at or prior to the Closing Time, and (iv) no stop order
suspending the effectiveness of the Registration Statement, or order of suspension or revocation of
registration, has been issued and no proceedings for any such purpose have been instituted or are
pending or, to the Companys knowledge, threatened by the Commission.
(e) Independent Registered Public Accounting Firms Comfort Letter. At the time of the
execution of this Agreement, the Underwriters shall have received from Ernst & Young LLP a letter
dated such date, in form and substance satisfactory to the Underwriters, together with signed or
reproduced copies of such letter for each of the other Underwriters, containing statements and
information of the type ordinarily included in accountants comfort letters to underwriters with
respect to the financial statements and certain financial information contained in the Registration
Statement, the Preliminary Prospectus and the Prospectus.
(f) Bring-down Comfort Letter. At the Closing Time, the Underwriters shall have
received from Ernst & Young LLP a letter dated as of the Closing Time, in form and substance
satisfactory to the Underwriters, to the effect that they reaffirm the statements made in the
letter furnished pursuant to subsection (e) of this Section, except that the specified date
referred to shall be a date not more than three business days prior to the Closing Time.
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(g) Approval of Listing. At the Closing Time, the Securities shall have been approved
for listing on Nasdaq, subject only to official notice of issuance.
(h) No Objection. Prior to the Closing Time, FINRA shall have confirmed in writing
that it has raised no objection with respect to the fairness and reasonableness of the underwriting
terms and arrangements.
(i) Lock-Up Agreements. At the time of the execution of this Agreement, the Company
shall have procured for the benefit of the Underwriters lock-up agreements, in the form of
Schedule C attached hereto, from all directors and executive officers of each of the
Triangle Entities.
(j) Conditions to Purchase of Over-Allotment Securities. In the event that the
Underwriters exercise their option provided in Section 2(b) hereof to purchase all or any portion
of the Over-Allotment Securities, the obligations of the several Underwriters to purchase the
applicable Over-Allotment Securities shall be subject to the conditions specified in the
introductory paragraph of this Section 5 and to the further condition that, at the applicable
Option Closing Time, the Underwriters shall have received:
(1) Closing Certificates. Certificates, dated such Option Closing Time, to the effect
set forth in Section 5(d) hereof, and signed by the Chief Financial Officer or Chief Accounting
Officer of the Company and the General Partner, except that the references in such certificate to
the Closing Time shall be changed to refer to such Option Closing Time.
(2) Opinions of Triangle Entities Counsel. The favorable opinions of Triangle
Entities Counsel, in form and substance satisfactory to counsel for the Underwriters, dated such
Option Closing Time, relating to the Over-Allotment Securities to be purchased on such Option
Closing Time and otherwise to the same effect as the opinion required by Section 5(b) hereof.
(3) Opinion of Counsel for the Underwriters. The favorable opinion of Sutherland
Asbill & Brennan LLP, counsel for the Underwriters, dated such Option Closing Time, relating to the
Over-Allotment Securities to be purchased on such Option Closing Time and otherwise to the same
effect as the opinion required by Section 5(c) hereof.
(4) Bring-down Comfort Letter. A letter from Ernst & Young LLP, in form and substance
satisfactory to the Underwriters and dated such Option Closing Time, substantially in the same form
and substance as the letter furnished to the Underwriters pursuant to Section 5(f) hereof, except
that the specified date in the letter furnished pursuant to this paragraph shall be a date not
more than five days prior to such Option Closing Time.
(k) Additional Documents. At the Closing Time and at each Option Closing Time, counsel
for the Underwriters shall have been furnished with such documents and opinions as they may require
for the purpose of enabling them to pass upon the issuance and sale of the Securities as herein
contemplated, or in order to evidence the accuracy of any of the representations or warranties, or
the fulfillment of any of the conditions, contained in this Agreement; and all proceedings taken by
the Triangle Entities in connection with the issuance and sale of the Securities as herein
contemplated, and in connection with the other transactions
20
contemplated by this Agreement, shall be satisfactory in form and substance to the
Underwriters and counsel for the Underwriters.
(l) Delivery of Documents. The documents required to be delivered by this Section 5
shall be delivered at the office of Sutherland Asbill & Brennan LLP, 1275 Pennsylvania Avenue, NW,
Washington, DC 20004, on the Closing Time and at each Option Closing Time.
(m) Termination of Agreement. If any condition specified in this Section 5 shall not
have been fulfilled when and as required to be fulfilled, this Agreement, or, in the case of any
condition to the purchase of Over-Allotment Securities, on an Option Closing Time which is after
the Closing Time, the obligations of the several Underwriters to purchase the relevant
Over-Allotment Securities, may be terminated by the Underwriters by notice to the Company at any
time at or prior to the Closing Time or such Option Closing Time, as the case may be, and such
termination shall be without liability of any party to any other party except as provided in
Section 4 and except that Sections 1, 6, 7, 8 and 12 shall survive any such termination and remain
in full force and effect.
Section 6. Indemnification.
(a) Indemnification by the Triangle Entities. The Triangle Entities, jointly and
severally, shall indemnify and hold harmless each Underwriter, its partners, directors, officers
and employees, and each person, if any, who controls any Underwriter within the meaning of Section
15 of the 1933 Act or Section 20 of the 1934 Act, and the successors and assigns of all of the
foregoing persons, as follows:
(1) against any and all loss, liability, claim, damage and expense whatsoever, as incurred,
arising out of any untrue statement or alleged untrue statement of a material fact contained in the
Registration Statement (or any amendment thereto), including the Rule 430C Information, or the
omission or alleged omission therefrom of a material fact required to be stated therein or
necessary to make the statements therein not misleading, or arising out of any untrue statement or
alleged untrue statement of a material fact included in the Preliminary Prospectus, any sales
material, the Disclosure Package or the Prospectus (or, in each case, any amendment or supplement
thereto), or the omission or alleged omission therefrom of a material fact necessary in order to
make the statements therein, in the light of the circumstances under which they were made, not
misleading;
(2) against any and all loss, liability, claim, damage and expense whatsoever, as incurred, to
the extent of the aggregate amount paid in settlement of any litigation, or any investigation or
proceeding by any governmental, regulatory or self-regulatory agency or body, commenced or
threatened, or of any claim whatsoever based upon any such untrue statement or omission, or any
such alleged untrue statement or omission; and
(3) against any and all expense whatsoever, as incurred (including the fees and charges of
counsel chosen by the Underwriters), reasonably incurred in investigating, preparing or defending
against any litigation, or any investigation or proceeding by any governmental agency or body, or
regulatory or self-regulatory authority, commenced or threatened, or any claim whatsoever based
upon any such untrue statement or omission, or any such alleged untrue
21
statement or omission, to the extent that any such expense is not paid under (i) or
(ii) above; provided, however, that this indemnity agreement shall not apply to
any loss, liability, claim, damage or expense to the extent arising out of any untrue statement or
omission or alleged untrue statement or omission made in reliance upon and in conformity with
written information furnished to the Company by any Underwriter expressly for use in the
Registration Statement (or any amendment thereto), including the Rule 430C Information, or in the
Preliminary Prospectus, any sales material, the Disclosure Package or the Prospectus (or any
amendment or supplement thereto), it being understood and agreed that the only such information
furnished to the Company in writing by the Underwriters consists of the information described in
Section 6(c) hereof.
(b) Indemnification for Marketing Materials. In addition to the foregoing
indemnification, the Triangle Entities also, jointly and severally, shall indemnify and hold
harmless each Underwriter and each person, if any, who controls any Underwriter within the meaning
of Section 15 of the 1933 Act or Section 20 of the 1934 Act, against any and all loss, liability,
claim, damage and expense described in the indemnity contained in Section 6(a), as limited by the
proviso set forth therein, with respect to any sales material, if any are employed.
(c) Indemnification by the Underwriters. Each Underwriter severally agrees to
indemnify and hold harmless each of the Triangle Entities, their respective directors, members and
shareholders, each of the Triangle Entities officers who signed the Registration Statement, and
each person, if any, who controls a Triangle Entity within the meaning of Section 15 of the 1933
Act or Section 20 of the 1934 Act against any and all loss, liability, claim, damage and expense
described in the indemnity contained in subsection (a) of this Section 6, as incurred, but only
with respect to untrue statements or omissions, or alleged untrue statements or omissions, made in
the Registration Statement (or any amendment thereto), including the Rule 430C Information, or any
Preliminary Prospectus, any sales material, the Disclosure Package or the Prospectus (or any
amendment or supplement thereto) in reliance upon and in conformity with written information
furnished to the Triangle Entities by such Underwriter expressly for use in the Registration
Statement (or any amendment thereto), including the Rule 430C Information, or such Preliminary
Prospectus, sales material, Disclosure Package or Prospectus (or any amendment or supplement
thereto). The Triangle Entities acknowledge that the statements set forth in the Preliminary
Prospectus and the Prospectus in (i) the last paragraph of the cover page regarding delivery of the
Securities and (ii) under the heading Underwriting, (A) the list of Underwriters and their
respective participation in the sale of the Securities, (B) the sentences related to concessions
and reallowances and (C) the paragraph related to stabilization, syndicate covering transactions
and penalty bids constitute the only information furnished in writing by or on behalf of the
several Underwriters for inclusion in the Disclosure Package or the Prospectus.
(d) Actions against Parties; Notification. Each indemnified party shall give notice as
promptly as reasonably practicable to each indemnifying party of any action commenced against it in
respect of which indemnity may be sought hereunder, but failure to so notify an indemnifying party
shall not relieve such indemnifying party from any liability hereunder to the extent it is not
materially prejudiced as a result thereof and in any event shall not relieve it from any liability
which it may have otherwise than on account of this indemnity agreement. In the case of parties
indemnified pursuant to Section 6(a) above, counsel to the indemnified parties shall be selected by
the Underwriters, and, in the case of parties indemnified pursuant to Section 6(c) above, counsel
to the indemnified parties shall be selected by the Triangle Entities. An
22
indemnifying party may participate at its own expense in the defense of any such action;
provided, however, that counsel to the indemnifying party shall not (except with
the consent of the indemnified party) also be counsel to the indemnified party. In no event shall
the indemnifying party be liable for the fees and expenses of more than one counsel (in addition to
any local counsel) separate from its own counsel for all indemnified parties in connection with any
one action or separate but similar or related actions in the same jurisdiction arising out of the
same general allegations or circumstances. No indemnifying party shall, without the prior written
consent of the indemnified parties, settle or compromise or consent to the entry of any judgment
with respect to any litigation, or any investigation or proceeding by any governmental agency or
body, commenced or threatened, or any claim whatsoever in respect of which indemnification or
contribution could be sought under this Section 6 or Section 7 hereof (whether or not the
indemnified parties are actual or potential parties thereto), unless such settlement, compromise or
consent (i) includes an unconditional release of each indemnified party from all liability arising
out of such litigation, investigation, proceeding or claim and (ii) does not include a statement as
to or an admission of fault, culpability or a failure to act by or on behalf of any indemnified
party.
(e) Settlement Without Consent. No indemnifying party shall, without the written
consent of the indemnified party, effect the settlement or compromise of, or consent to the entry
of any judgment with respect to, any pending or threatened action or claim in respect of which
indemnification or contribution may be sought hereunder (whether or not the indemnified party is an
actual or potential party to such action or claim) unless such settlement, compromise or judgment
(i) includes an unconditional release of the indemnified party from all liability arising out of
such action or claim and (ii) does not include a statement as to or an admission of fault,
culpability or a failure to act, by or on behalf of any indemnified party.
Section 7. Contribution. (a) If the indemnification provided for in Section 6 hereof
is for any reason unavailable to or insufficient to hold harmless an indemnified party in respect
of any losses, liabilities, claims, damages or expenses (or actions in respect thereof) referred to
therein, then each indemnifying party shall contribute to the aggregate amount of such losses,
liabilities, claims, damages and expenses (or actions in respect thereof) incurred by such
indemnified party, as incurred, (i) in such proportion as is appropriate to reflect the relative
benefits received by the Triangle Entities on the one hand and the Underwriters on the other hand
from the offering of the Securities pursuant to this Agreement or (ii) if the allocation provided
by clause (i) is not permitted by applicable law, in such proportion as is appropriate to reflect
not only the relative benefits referred to in clause (i) above but also the relative fault of the
Triangle Entities on the one hand and of the Underwriters on the other hand in connection with the
statements or omissions which resulted in such losses, liabilities, claims, damages or expenses (or
actions in respect thereof), as well as any other relevant equitable considerations. The relative
benefits received by the Triangle Entities on the one hand and the Underwriters on the other hand
in connection with the offering of the Securities pursuant to this Agreement shall be deemed to be
in the same respective proportions as the total net proceeds from the offering of the Securities
pursuant to this Agreement (before deducting expenses) received by the Company and the total
underwriting discounts and commissions received by the Underwriters, in each case as set forth on
the cover of the Prospectus, bear to the aggregate initial public offering price of the Securities
as set forth on such cover.
23
(b) The relative fault of the Triangle Entities on the one hand and the Underwriters on the
other hand shall be determined by reference to, among other things, whether any such untrue or
alleged untrue statement of a material fact or omission or alleged omission to state a material
fact relates to information supplied by the Triangle Entities or by the Underwriters and the
parties relative intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission.
(c) The Triangle Entities and the Underwriters agree that it would not be just and equitable
if contribution pursuant to this Section 7 were determined by pro rata allocation (even if the
Underwriters were treated as one entity for such purpose) or by any other method of allocation
which does not take account of the equitable considerations referred to above in this Section 7.
The aggregate amount of losses, liabilities, claims, damages and expenses (or actions in respect
thereof) incurred by an indemnified party and referred to above in this Section 7 shall be deemed
to include any legal or other expenses reasonably incurred by such indemnified party in
investigating, preparing or defending against any litigation, or any investigation or proceeding by
any governmental agency or body, commenced or threatened, or any claim whatsoever based upon any
such untrue or alleged untrue statement or omission or alleged omission.
(d) Notwithstanding the provisions of this Section 7, no Underwriter shall be required to
contribute any amount in excess of the amount by which the total price at which the Securities
underwritten by it and distributed to the public were offered to the public exceeds the amount of
any damages which such Underwriter has otherwise been required to pay by reason of any such untrue
or alleged untrue statement or omission or alleged omission.
(e) No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the 1933 Act) shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. No person shall be entitled to indemnification hereunder in
contravention of Section 17(i) of the 1940 Act.
(f) For purposes of this Section 7, each person, if any, who controls an Underwriter within
the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act and each trustee, director,
officer, employee and agent of an Underwriter shall have the same rights to contributions as such
Underwriter, and each person who controls the Triangle Entities within the meaning of Section 15 of
the 1933 Act or Section 20 of the 1934 Act, each officer of a Triangle Entity, each trustee,
director or member of a Triangle Entity shall have the same rights to contribution as such Triangle
Entity. The Underwriters respective obligations to contribute pursuant to this Section 7 are
several in proportion to the number of Initial Securities set forth opposite their respective names
in Schedule A hereto and not joint.
Section 8. Representations, Warranties and Agreements to Survive Delivery. All
representations, warranties and covenants contained in this Agreement or in certificates of
officers of the Triangle Entities submitted pursuant hereto, shall remain operative and in full
force and effect, regardless of any investigation made by or on behalf of any Underwriter or
controlling person, or by or on behalf of the Triangle Entities, and shall survive delivery of the
Securities to the Underwriters.
24
Section 9. Termination of Agreement. (a) The Underwriters may terminate this
Agreement, by notice to the Company, at any time on or prior to the Closing Time (and, if any
Over-Allotment Securities are to be purchased on an Option Closing Time which occurs after the
Closing Time, the Underwriters may terminate their obligations to purchase such Over-Allotment
Securities, by notice to the Company, at any time on or prior to such Option Closing Time) (i) if
there has been, since the respective dates as of which information is given in the Preliminary
Prospectus or the Prospectus, any Material Adverse Effect, or (ii) if there has occurred any
material adverse change in the financial markets in the United States or the international
financial markets, any outbreak of hostilities or escalation thereof, any calamity or crisis, any
acts of terrorism, or any change or development involving a prospective change in national or
international political, financial or economic conditions, in each case the effect of which is so
material and adverse as to make it, in the judgment of the Underwriters, impracticable or
inadvisable to market the Securities or to enforce contracts for the sale of the Securities, or
(iii) if trading in any securities of the Company has been suspended or materially limited by the
Commission or Nasdaq, or if trading generally on the American Stock Exchange, the New York Stock
Exchange or in the Nasdaq Global Market has been suspended or materially limited, or minimum or
maximum prices for trading have been fixed, or maximum ranges for prices have been required, by any
of said exchanges or by such system or by order of the Commission, FINRA or any other governmental
authority, or a material disruption has occurred in commercial banking or securities settlement or
clearance services in the United States, or (iv) if a banking moratorium has been declared by
either Federal or New York authorities.
(b) If this Agreement is terminated pursuant to this Section 9, such termination shall be
without liability of any party to any other party except as provided in Section 4 hereof, and
provided further that Sections 1, 4, 6, 7, 8, and 12 hereof shall survive such termination and
remain in full force and effect.
Section 10. Default by One or More of the Underwriters. If one or more of the
Underwriters shall fail at the Closing Time or an Option Closing Time to purchase the Securities
which it or they are obligated to purchase under this Agreement (the Defaulted Securities), the
remaining Underwriters shall have the right, within 24 hours thereafter, to make arrangements for
one or more of the non-defaulting Underwriters, or any other underwriters, to purchase all of the
Defaulted Securities in such amounts as may be agreed upon and upon the terms herein set forth; if,
however, the Underwriters shall not have completed such arrangements within such 24-hour period,
then:
(a) if the number of Defaulted Securities does not exceed 10% of the number of Securities to
be purchased on such date, each of the non-defaulting Underwriters shall be obligated, severally
and not jointly, to purchase the full amount thereof in the proportions that their respective
underwriting obligations hereunder bear to the underwriting obligations of all non-defaulting
Underwriters; or
(b) if the number of Defaulted Securities exceeds 10% of the number of Securities to be
purchased on such date, this Agreement or, with respect to any Option Closing Time which occurs
after the Closing Time, the obligation of the Underwriters to purchase and of the Company to sell
the Over-Allotment Securities to be purchased and sold on such Option Closing Time, shall terminate
without liability on the part of any non-defaulting Underwriter.
25
No action taken pursuant to this Section 10 shall relieve any defaulting Underwriter from
liability in respect of its default.
In the event of any such default which does not result in a termination of this Agreement or,
in the case of an Option Closing Time which is after the Closing Time, which does not result in a
termination of the obligation of the Underwriters to purchase and the Company to sell the relevant
Over-Allotment Securities, as the case may be, the Underwriters shall have the right to postpone
the Closing Time or the relevant Option Closing Time, as the case may be, for a period not
exceeding seven days in order to effect any required changes in the Registration Statement or
Prospectus or in any other documents or arrangements. As used herein, the term Underwriter
includes any person substituted for an Underwriter under this Section 10.
Section 11. Notices. All notices and other communications hereunder shall be in
writing and shall be deemed to have been duly given if mailed or transmitted by any standard form
of telecommunication. Notices to the Underwriters shall be directed to Morgan Keegan & Company,
Inc., 50 N. Front Street, 12th Floor, Memphis, TN 38103, Attention: Larry Herman, Senior Vice
President, with a copy to Sutherland Asbill & Brennan LLP, 1275 Pennsylvania Avenue, NW,
Washington, DC 20004, Attention: Steven B. Boehm, Esq.; notices to the Triangle Entities shall be
directed to them at 3700 Glenwood Avenue Suite 530, Raleigh, NC 27612, Attention: Steven C. Lilly,
with a copy to Bass, Berry & Sims PLC, 100 Peabody Place, Suite 900, Memphis, TN 38103, Attention:
John A. Good, Esq.
Section 12. Parties. This Agreement shall inure to the benefit of and be binding upon
the Underwriters, the Triangle Entities and their respective successors. Nothing expressed or
mentioned in this Agreement is intended or shall be construed to give any person, firm or
corporation, other than the Underwriters, the Triangle Entities and their respective successors and
the controlling persons and directors, officers, members, shareholders and trustees referred to in
Sections 6 and 7 and their heirs and legal representatives, any legal or equitable right, remedy or
claim under or in respect of this Agreement or any provision herein contained, whether as
third-party beneficiaries or otherwise. This Agreement and all conditions and provisions hereof are
intended to be for the sole and exclusive benefit of the Underwriters, the Triangle Entities and
their respective successors, and, solely for purposes of Sections 6 and 7, their respective
controlling persons and officers, directors, shareholders and trustees, and their heirs and legal
representatives, and for the benefit of no other person, firm or corporation. No purchaser of
Securities from any Underwriter shall be deemed to be a successor by reason merely of such
purchase.
Section 13. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS FORMED AND TO BE
PERFORMED ENTIRELY WITHIN THE STATE OF NEW YORK, WITHOUT REGARD TO THE CONFLICTS OF LAW PRINCIPLES
OR RULES THEREOF, TO THE EXTENT SUCH PRINCIPLES WOULD REQUIRE OR PERMIT THE APPLICATION OF THE LAWS
OF ANOTHER JURISDICTION.
Section 14. Submission to Jurisdiction. Each of the parties hereto irrevocably agrees
that any suit, action or proceeding arising out of or relating to this Agreement or the
transactions
26
contemplated hereby may be instituted in any United States federal and New York State courts
located in the City of New York, irrevocably waives, to the fullest extent it may effectively do
so, any objection which it may now or hereafter have to the laying of venue of any such proceeding;
and irrevocably submits to the non-exclusive jurisdiction of such courts in any such suit, action
or proceeding brought in such a court and waives any other requirements of or objections to
personal jurisdiction with respect thereto.
Section 15. Waiver of Jury Trial. The Triangle Entities and the Underwriters hereby
irrevocably waive, to the fullest extent permitted by applicable law, any and all right to trial by
jury in any legal proceeding arising out of or relating to this Agreement or the transactions
contemplated hereby.
Section 16. Effect of Headings. The Section and Schedule headings herein are for
convenience only and shall not affect the construction hereof.
Section 17. Definitions. As used in this Agreement, the following terms have the
respective meanings set forth below:
1933 Act means the Securities Act of 1933, as amended, and the rules and regulations
promulgated thereunder.
1934 Act means the Securities Exchange Act of 1934, as amended, and the rules and
regulations promulgated thereunder.
1940 Act means the Investment Company Act of 1940, as amended, and the rules and
regulations promulgated thereunder.
Applicable Time means 9:00 a.m. (New York City time) on September 21, 2010 or such
other time as agreed by the Company and the Underwriters; provided that if, subsequent to the date
of this Agreement, the Company and the Underwriters have determined that the Disclosure Package
included an untrue statement of material fact or omitted a statement of material fact necessary to
make the information therein not misleading, and have agreed, in connection with the public
offering of the Securities, to provide an opportunity to purchasers to terminate their old
contracts and enter into new contracts, then Applicable Time will refer to the information
available to purchasers at the time of entry into the first such new contract.
Articles of Incorporation means the Articles of Incorporation of Triangle Capital
Corporation dated as of October 10, 2006, as amended on November 29, 2006.
Code means the Internal Revenue Code of 1986, as amended.
Commission means the Securities and Exchange Commission.
EDGAR means the Commissions Electronic Data Gathering, Analysis and Retrieval System
or Interactive Data Electronic Applications system, as the case may be.
GAAP means United States generally accepted accounting principles.
27
General Partner means New Triangle GP, LLC, a North Carolina limited liability company
and the sole general partner of the Fund.
Limited Partnership Agreement means the Second Amended and Restated Limited
Partnership Agreement of Triangle Mezzanine Fund LLLP, dated February 21, 2007, as amended to date.
Material Adverse Effect means a material adverse change in the condition, financial or
otherwise, or in the earnings, net asset value, business affairs or business prospects of the
Triangle Entities, considered as a whole, whether or not arising in the ordinary course of
business.
Nasdaq means The NASDAQ Stock Market, Inc.
Organizational Documents means (a) in the case of a corporation, its charter and
bylaws; (b) in the case of a limited or general partnership, its partnership certificate,
certificate of formation or similar organizational document and its partnership agreement; (c) in
the case of a limited liability company, its articles of organization, certificate of formation or
similar organizational documents and its operating agreement, corporation agreement, membership
agreement or other similar agreement; (d) in the case of a trust, its certificate of trust,
certificate of formation or similar organizational document and its trust agreement or other
similar agreement; and (e) in the case of any other entity, the organizational and governing
documents of such entity.
Rule 172, Rule 497, Rule 430C, Rule 462(b), and Rule 462(d) refer to such rules
under the 1933 Act.
Rule 430C Information means the information included in the Preliminary Prospectus and
the Prospectus that was omitted from the Registration Statement at the time it became effective but
that is deemed to be a part of and included in the Registration Statement pursuant to Rule 430C.
Rule 462(b) Registration Statement means a registration statement filed by the Company
pursuant to Rule 462(b) for the purpose of registering any of the Securities under the 1933 Act,
including the Rule 430C Information.
Sarbanes-Oxley Act means the Sarbanes-Oxley Act of 2002 and the rules and regulations
promulgated thereunder or implementing the provisions thereof.
SBA means the U.S. Small Business Administration.
SBA Regulations means the Small Business Investment Act of 1958 and the regulations
promulgated thereunder.
All references in this Agreement to the Registration Statement, any Rule 462(b)
Registration Statement, the Preliminary Prospectus, the Prospectus or any amendment or supplement
to any of the foregoing shall be deemed to include the copy filed with the Commission pursuant to
EDGAR.
28
Whenever the words include, includes or including are used in this Agreement, they
are deemed to be followed by the words without limitation.
Section 18. Absence of Fiduciary Relationship. Each Triangle Entity acknowledges
and agrees that:
(a) each of the Underwriters is acting solely as an underwriter in connection with the
public offering of the Securities and no Underwriter has assumed or will assume a fiduciary,
advisory or agency relationship in favor of the Triangle Entities, no fiduciary, advisory or agency
relationship has been or will be created between the Underwriters and the Triangle Entities in
respect of the offering and any of the transactions contemplated by this Agreement (irrespective of
whether or not any of the Underwriters has advised or is currently advising the Triangle Entities
on other matters) and none of the Underwriters has any obligation to the Triangle Entities with
respect to the offering and the transactions contemplated by this Agreement except the obligations
expressly set forth in this Agreement;
(b) the purchase and sale of the Securities pursuant to this Agreement, including the
determination of the public offering price of the Securities and any related discounts and
commissions, and the price to be paid by the Underwriters for the Securities, is an arms-length
commercial transaction between the Triangle Entities, on the one hand, and the several
Underwriters, on the other hand;
(c) it is capable of evaluating and understanding, and understands and accepts, the
terms, risks and conditions of the transactions contemplated by this Agreement;
(d) in connection with the offering and each transaction contemplated by this Agreement
and the process leading to such transactions, each Underwriter is and has been acting solely as
principal and not as fiduciary, advisor or agent of the Triangle Entities or any of their
respective affiliates, stockholders, creditors, employees or any other party;
(e) none of the Underwriters has provided any legal, accounting, regulatory or tax
advice with respect to the offering and the transactions contemplated by this Agreement and the
Triangle Entities have consulted their own legal, accounting, regulatory and tax advisors to the
extent it has deemed appropriate;
(f) the Underwriters and their respective affiliates may be engaged in a broad range of
transactions that involve interests that differ from those of the Triangle Entities, and that none
of the Underwriters has any obligation to disclose such interests and transactions to the Triangle
Entities by virtue of any fiduciary, advisory or agency relationship; and
(g) it waives, to the fullest extent permitted by law, any claims it may have against
any of the Underwriters for breach of fiduciary duty or alleged breach of fiduciary duty and agrees
that none of the Underwriters shall have any liability (whether direct or indirect, in contract,
tort or otherwise) to it in respect of such a fiduciary duty claim or to any person asserting a
fiduciary duty claim on its behalf.
29
Section 19. Counterparts. This Agreement may be signed in any number of
counterparts, each of which shall be deemed an original, and when taken together shall constitute
one and the same instrument.
Section 20. Complete Agreement. This Agreement (including the Schedules hereto
and the Lock-Up Agreements) represents the complete understanding and agreement of the parties and
supersedes all prior agreements and understandings (whether written or oral) between the Triangle
Entities and the Underwriters with respect to the subject matter hereof.
[Remainder of Page Intentionally Left Blank]
30
If the foregoing is in accordance with your understanding of our agreement, please sign and
return to us a counterpart hereof, whereupon this instrument, along with all counterparts, will
become a binding agreement among the Underwriters, the Company and the Fund in accordance with its
terms.
Very truly yours, | |||||
TRIANGLE CAPITAL CORPORATION | |||||
By: | /s/ Garland S. Tucker III | ||||
Name: Title: |
Garland S. Tucker III President, Chief Executive Officer and Chairman of the Board of Directors |
||||
TRIANGLE MEZZANINE FUND LLLP | |||||
By: | New Triangle GP, LLC, its General Partner | ||||
By: | Triangle Capital Corporation, its Manager | ||||
By: | /s/ Garland S. Tucker III | ||||
Name: Title: |
Garland S. Tucker III President, Chief Executive Officer and Chairman of the Board of Directors |
CONFIRMED AND ACCEPTED, as of the date first above written: | ||||
MORGAN KEEGAN & COMPANY, INC. | ||||
By: |
/s/ Larry M. Herman | |||
|
||||
Title: Senior Vice President | ||||
BB&T CAPITAL MARKETS, A DIVISION OF SCOTT & STRINGFELLOW, LLC |
||||
By: |
/s/ James A. Tyler, Jr. | |||
|
||||
Title: Senior Vice President | ||||
ROBERT W. BAIRD & CO. INCORPORATED | ||||
/s/ Mark C. Micklem | ||||
Name: |
Mark C. Micklem | |||
Title: |
Managing Director | |||
JANNEY MONTGOMERY SCOTT LLC | ||||
/s/ Cliff Booth | ||||
Name: |
Cliff Booth | |||
Title: |
MD |
SCHEDULE A
Name of Underwriter | No. of Initial Securities | |||
Morgan Keegan & Company, Inc. |
1,080,000 | |||
BB&T Capital Markets, a division of Scott & Stringfellow, LLC |
600,000 | |||
Robert W. Baird & Co. Incorporated |
480,000 | |||
Janney Montgomery Scott LLC |
240,000 | |||
Total |
2,400,000 | |||
SCHEDULE B
PRICE-RELATED INFORMATION
TRIANGLE CAPITAL CORPORATION
Public offering price: $15.80 per share
Underwriting discounts and commissions: $0.75 per share
Proceeds (before expenses) to the Company: $15.05 per share
Shares offered: 2,400,000
Over-allotment option: 360,000
Underwriting discounts and commissions: $0.75 per share
Proceeds (before expenses) to the Company: $15.05 per share
Shares offered: 2,400,000
Over-allotment option: 360,000
SCHEDULE C
FORM OF LOCK-UP AGREEMENT
TRIANGLE CAPITAL CORPORATION
September 20, 2010
Morgan Keegan & Company, Inc.
BB&T Capital Markets
A Division of Scott & Stringfellow, LLC
Robert W. Baird & Co. Incorporated
Janney Montgomery Scott LLC
c/o Morgan Keegan & Company, Inc.
50 N. Front Street, 12th Floor
Memphis, TN 38103
BB&T Capital Markets
A Division of Scott & Stringfellow, LLC
Robert W. Baird & Co. Incorporated
Janney Montgomery Scott LLC
c/o Morgan Keegan & Company, Inc.
50 N. Front Street, 12th Floor
Memphis, TN 38103
Re: | Lock-Up Agreement for shares of Triangle Capital Corporation |
Ladies & Gentlemen:
The undersigned is an owner of record or beneficially of certain shares of common stock
(Common Stock) of Triangle Capital Corporation, a Maryland corporation (the Company) or
securities convertible into or exchangeable or exercisable for shares of Common Stock
(collectively, the Securities). The Company proposes to carry out a public offering of Common
Stock (the Offering) for which you will act as the representative to the several underwriters
(the Underwriters). The undersigned recognizes that the Offering will be of benefit to the
undersigned and will benefit the Company by, among other things, raising additional capital for its
operations. The undersigned acknowledges that you are relying on the representations and agreements
of the undersigned contained in this letter agreement (this Agreement) in carrying out the
Offering and in entering into an Underwriting Agreement (the Underwriting Agreement) with the
Company with respect to the Offering.
In consideration of the foregoing, the undersigned hereby agrees that the undersigned will not
(and will cause any spouse or immediate family member of the spouse or the undersigned living in
the undersigneds household and any trustee of any trust that holds Securities for the benefit of
the undersigned or such spouse or family member not to), without the prior written consent of
Morgan Keegan & Company, Inc. on behalf of the Underwriters (which consent may be withheld in its
sole discretion), directly or indirectly, (1) offer, pledge, sell, contract to sell, sell any
option or contract to purchase, purchase any option or contract to sell, grant any option, right or
warrant to purchase or otherwise transfer or dispose of (or enter into any transaction or device
that is designed to, or could be expected to, result in the disposition by any person at any time
in the future of) any Securities (including, without limitation, shares of Common Stock that may be
deemed to be beneficially owned by the undersigned in accordance with the rules and regulations of
the Securities and Exchange Commission), (2) enter into any swap or other derivatives transaction
that transfers to another, in whole or in part, any economic benefits or risks of ownership of
shares of the Securities, whether any such transaction described in clause (1) or (2) above is to
be settled by delivery of the Common Stock or such other Securities, in cash or otherwise, or (3)
publicly announce an intention to do any of the foregoing, for a period commencing on the date
hereof and continuing through the close of trading on the date 60 days after the public offering
date set forth on the final prospectus used to sell the Securities in the Offering (the Lock-up
Period) pursuant to the Underwriting Agreement.
The foregoing restrictions have been expressly agreed to by the undersigned so as to preclude
the undersigned (or such spouse, family member or trustee) from engaging in any hedging or other
transaction that is designed to or reasonably expected to lead to or result in a disposition of
Securities during the Lock-up Period, even if such Securities would be disposed of by someone other
than such holder. Such prohibited hedging or other transactions would include, without limitation,
any short sale (whether or not against the box) or any purchase, sale or grant of any right
(including,
without limitation, any put or call option) with respect to any security (other than a
broad-based market basket or index) that includes, relates to or derives any significant part of
its value from the Securities. In addition, the undersigned agrees that, without the prior written
consent of Morgan Keegan & Company, Inc. on behalf of the Underwriters, it will not, during the
Lock-Up Period, make any demand for or exercise any right with respect to, the registration of any
Securities or any security convertible into or exercisable or exchangeable for the Securities.
The foregoing shall not apply to the following: (1) the registration of or sale to the
Underwriters of Securities pursuant to the Offering and the Underwriting Agreement, (2) the
issuance of shares of Common Stock issuable under the Companys dividend reinvestment plan, (3)
Securities withheld by, or transferred to the Company under any Restricted Stock Award Agreement
for purposes of covering any tax withholding obligations on behalf of the undersigned, as permitted
under the Companys Amended and Restated 2007 Equity Incentive Plan, (4) bona fide gifts,
succession and inheritance by will or intestacy, (5) transfers to trusts for the benefit of the
undersigned, any spouse, immediate family member or a charitable, educational or religious
institution by the undersigned, or (6) transfers made with the prior written consent of Morgan
Keegan & Company, Inc. on behalf of the Underwriters; provided, however, that in
the case of a transfer under clause (4) or (5), the transferee(s)/donee(s) shall agree in writing
prior to such disposition to be bound by the restrictions set forth herein and to the extent any
interest in the Securities is retained by the undersigned (or such spouse or family member), the
Securities shall remain subject to the restrictions contained in this Agreement.
Notwithstanding the foregoing, if (1) during the last 17 days of the Lock-up Period, the
Company issues an earnings release or material news or a material event relating to the Company
occurs, or (2) prior to the expiration of the Lock-up Period, the Company announces that it will
release earnings results or become aware that material news or a material event will occur during
the 16-day period beginning on the last day of the Lock-up Period, then the Lock-up Period shall
automatically be extended and the restrictions imposed by this Agreement shall continue to apply
until the expiration of the 18-day period beginning on the issuance of the earnings release or the
occurrence of the material news or material event, as applicable, unless Morgan Keegan & Company,
Inc., on behalf of the Underwriters, waives, in writing, such extension.
The undersigned also agrees and consents (1) with respect to Securities held of record by the
undersigned, to the entry of stop transfer instructions with the Companys transfer agent and
registrar against the transfer of such Securities as described herein except in compliance with
this Agreement, and (2) with respect to Securities beneficially owned, but not held of record by,
the undersigned, to cause the record holder of such Securities to agree and consent to the entry of
stop transfer instructions with the Companys transfer agent and registrar against the transfer of
such Securities as described herein except in compliance with this Agreement.
It is understood that, if (1) the Company notifies the undersigned that it does not intend to
proceed with the Offering, (2) the registration statement filed with the Securities and Exchange
Commission with respect to the Offering is withdrawn, or (3) for any reason the Underwriting
Agreement shall terminate or be terminated prior to payment for and delivery of the Securities to
be sold thereunder, the undersigned will be released from its obligations under this Agreement.
This Agreement shall be governed by and construed in accordance with the laws of the State of
New York applicable to contracts formed and to be performed entirely within the State of New York,
without regard to conflicts of law principles or rules thereof, to the extent such principles would
require or permit the application of the laws of another jurisdiction.
This Agreement is irrevocable and will be binding on the undersigned and the respective
successors, heirs, personal representatives and assigns of the undersigned.
[Remainder of Page Intentionally Left Blank]
* * *
Very truly yours, | ||||
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