40-APP/A: Applications under the Investment Company Act other than those reviewed by Office of Insurance Products
Published on October 1, 2010
File No. 812-13771
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Amendment
No. 2 to Application For An Amended Order Pursuant To Sections 6(c) and 57(c) of
the Investment Company Act of 1940 (1940 Act) granting exemptions from Sections 18(a),
57(a)(1) - (2), and 61(a) of the 1940 Act; under Section 57(i) of the 1940 Act and Rule 17d-1
under the 1940 Act to permit certain joint transactions
otherwise prohibited by Section 57(a)(4) of the 1940 Act
the Investment Company Act of 1940 (1940 Act) granting exemptions from Sections 18(a),
57(a)(1) - (2), and 61(a) of the 1940 Act; under Section 57(i) of the 1940 Act and Rule 17d-1
under the 1940 Act to permit certain joint transactions
otherwise prohibited by Section 57(a)(4) of the 1940 Act
TRIANGLE CAPITAL CORPORATION
TRIANGLE MEZZANINE FUND LLLP
NEW TRIANGLE GP, LLC (NC)
NEW TRIANGLE GP, LLC (DE)
TRIANGLE MEZZANINE FUND II LP
TRIANGLE MEZZANINE FUND LLLP
NEW TRIANGLE GP, LLC (NC)
NEW TRIANGLE GP, LLC (DE)
TRIANGLE MEZZANINE FUND II LP
All Communications, Notices and Orders to: | Copies to: | |
Garland S. Tucker III and Steven C. Lilly | John A. Good, Esq. | |
Triangle Capital Corporation | Helen W. Brown, Esq. | |
3700 Glenwood Avenue, Suite 530 | Bass, Berry & Sims PLC | |
Raleigh, NC 27612 | 100 Peabody Place, Suite 900 | |
Telephone: (919) 719-4770 | Memphis, Tennessee 38103 | |
Telephone: (901) 543-5918 |
As filed with the Securities and Exchange Commission
On October 1, 2010
On October 1, 2010
1
UNITED STATES OF AMERICA
BEFORE THE
SECURITIES AND EXCHANGE COMMISSION
BEFORE THE
SECURITIES AND EXCHANGE COMMISSION
In the Matter of:
|
AMENDMENT NO. 2 TO APPLICATION FOR AN | |||
Triangle Capital Corporation,
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: | AMENDED ORDER PURSUANT TO SECTIONS 6(c), | ||
Triangle Mezzanine Fund LLLP
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: | AND 57(c) OF THE INVESTMENT COMPANY ACT | ||
New Triangle GP, LLC
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: | OF 1940 GRANTING EXEMPTIONS FROM | ||
New Triangle GP, LLC
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: | SECTIONS 18(a), 57(a)(1) (2), AND 61(a) OF THE | ||
Triangle Mezzanine Fund II LP
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: | 1940 ACT; UNDER SECTION 57(i) OF THE 1940 | ||
3700 Glenwood Avenue, Suite 530
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: | ACT AND RULE 17d-1 UNDER THE 1940 ACT TO | ||
Raleigh, NC 27612
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: | PERMIT CERTAIN JOINT TRANSACTIONS | ||
: | OTHERWISE PROHIBITED BY SECTION 57(a)(4) | |||
File No. 812-13771
|
: | OF THE 1940 ACT | ||
Investment Company Act of 1940
|
: |
Triangle Capital Corporation, a Maryland corporation (Triangle), Triangle Mezzanine Fund
LLLP, a North Carolina limited liability limited partnership (TMF), New Triangle GP, LLC, a North
Carolina limited liability company (General Partner), New Triangle GP, LLC, a Delaware limited
liability company (GP II), and Triangle Mezzanine Fund II LP, a Delaware limited partnership
(SBIC II) (collectively, the Applicants), respectfully request an order (the Amended Order) of
the U.S. Securities and Exchange Commission (the Commission) pursuant to Sections 6(c), 57(c),
and 57(i) of the Investment Company Act of 1940 (1940 Act),1 and under Rule 17d-l
thereunder. The Amended Order would amend an exemptive order issued by the Commission on October
14, 2008 (the Prior Order)2 that was granted pursuant to Sections 6(c), 12(d)(1)(J),
57(c), and 57(i) of the 1940 Act, and under Rule 17d-l thereunder, and under Section 12(h) of the
Securities Exchange Act of 1934 (Exchange Act) to Triangle, TMF and the General Partner.
1 | Unless otherwise indicated, all section references herein are to the 1940 Act. | |
2 | In the Matter of Triangle Capital Corporation, Investment Company Act Release Nos. 28383 (September 19, 2008) (notice) and 28437 (October 14, 2008) (order). |
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I. BACKGROUND AND SUMMARY OF APPLICATION
In this application (Application), the Applicants respectfully request the Amended Order to
amend the Prior Order as set forth herein. The Prior Order permits Triangle and TMF to operate
effectively as one company, specifically allowing them to: (1) engage in certain transactions with
each other; (2) invest in securities in which the other is or proposes to be an investor; (3) be
subject to modified consolidated asset coverage requirements for senior securities issued by a
business development company and its small business investment company subsidiary; and (4) file
consolidated reports with the Commission.
The Prior Order granted the above relief to transactions between Triangle and, at the time of
the Prior Order, Triangles only wholly-owned small business investment company subsidiary, TMF.
Subsequent to the Prior Order, Triangle has formed a new wholly-owned small business investment
company subsidiary, SBIC II. In addition to Triangle, TMF and the General Partner, the Amended
Order would grant relief to SBIC II, GP II, and any direct or indirect wholly-owned subsidiaries of
Triangle (collectively, the Subsidiaries, and each a Subsidiary).3
In particular, the relief requested by this Application for an Amended Order would: (1) permit
TMF and another Subsidiary to engage in certain transactions that would otherwise be permitted if
Triangle and its Subsidiaries were one company and (2) permit Triangle to adhere to modified asset
coverage requirements under Section 61 of the 1940 Act. Triangle may in the future create
wholly-owned Subsidiaries that may also be licensed by the Small Business Administration (SBA) to
operate under the Small Business Investment Act of 1958 (SBA Act) as a small business investment
company (SBIC) (collectively, the SBIC Subsidiaries, and each an SBIC Subsidiary) or in some
cases may not be SBICs.
As discussed above, the Prior Order grants relief from Sections 12(d)(1)(A) and (C), 18(a),
21(b), 57(a)(1) (a)(3), and 61(a) of the 1940 Act; under Section 57(i) of the 1940 Act and
3 | For purposes of this Application, references to Subsidiaries include Subsidiaries currently in existence, as well as any future Subsidiaries. |
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Rule 17d-1 under the 1940 Act and under Section 12(h) of the Exchange Act to Triangle and TMF, but
the Prior Order did not specifically request relief for any future Triangle Subsidiaries. The
Applicants are submitting this request to amend the Prior Order to request the same exemptive
relief for SBIC II and any future Subsidiary that was granted under the Prior Order with respect to
TMF, except to the extent that such relief is not necessary due to the fact that SBIC II is not
(and no future Subsidiary will be) a BDC or a registered investment company under the 1940
Act.4
The terms and conditions of the Prior Order will continue to apply to Triangle, TMF and the
General Partner, except as described in this Application. Any existing entities that currently
intend to rely on the Amended Order have been named as Applicants, and any other existing or future
entities that may rely on the Amended Order in the future would comply with its terms and
conditions.
II. GENERAL DESCRIPTION OF APPLICANTS
A. Triangle Capital Corporation
Triangle Capital Corporation was organized under the General Corporation Law of the State of
Maryland on October 10, 2006, for the purpose of operating as an internally-managed,
non-diversified, closed-end management investment company that has elected to be regulated as a
business development company (BDC) within the meaning of Section 2(a)(48) of the 1940
Act.5 In addition, Triangle has elected to be treated for tax purposes as a regulated
investment company (RIC) as defined under Subchapter M of the Internal Revenue Code of 1986, as
amended (Code).
4 | An exemption from Section 12(d)(1)A) pursuant to Section 12(d)(1)(J) of the 1940 Act is not necessary because such Subsidiaries will not own voting stock of Triangle or TMF. Also, an exemption from Sections 21(b) and 57(a)(3) pursuant to Sections 6(c) and 57(c) of the 1940 Act is not necessary because TMF will not make loans to SBIC II or any future Subsidiaries. | |
5 | Section 2(a)(48) defines a BDC to be any closed-end investment company that operates for the purpose of making investments in securities described in Sections 55(a)(1) through 55(a)(3) of the 1940 Act and makes available significant managerial assistance with respect to the issuers of such securities. |
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Triangle first offered its common stock to the public (IPO) pursuant to an effective
Registration Statement on Form N-2 on February 13, 2007. Triangles common stock is listed on the
Nasdaq Global Market and trades under the ticker symbol TCAP.
On February 21, 2007, through a series of transactions that occurred simultaneously with the
closing of the IPO, Triangle acquired all of the equity interests in TMF and the General Partner,
each of which now operates as a subsidiary of Triangle.
Triangle operates as a specialty finance company that provides customized financing solutions
to lower middle market companies that have annual revenues between $10.0 and $100.0 million.
Triangles investment objective is to seek attractive returns by generating current income from
debt investments and capital appreciation from equity related investments. Triangles investment
philosophy is to partner with business owners, management teams and financial sponsors to provide
flexible financing solutions to fund growth, changes of control, or other corporate events.
Triangle invests primarily in senior and subordinated debt securities secured by first and second
lien security interests in portfolio company assets, coupled with equity interests. Triangles
investments generally range from $5.0 to $15.0 million per portfolio company. In certain
situations, Triangle has partnered with other unaffiliated funds to provide larger financing
commitments.
Triangles board of directors (Triangle Board) consists of eight members, five of whom are
not interested persons of Triangle within the meaning of Section 2(a)(19) of the 1940 Act.
Triangle is internally managed by its executive officers under the supervision of the Triangle
Board. As a result, Triangle does not pay external investment advisory fees, but instead incurs
operating costs associated with employing investment and portfolio management professionals.
B. The Subsidiaries
1. TMF
TMF was organized as a limited liability limited partnership under the laws of the State of
North Carolina on August 14, 2002 and received its license from the SBA on September 11, 2003 to
operate as a small business investment company under the SBA Act. Due to TMFs
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status as a licensed SBIC, Triangle has the ability to issue, through TMF, debentures
guaranteed by the SBA at favorable interest rates. Under the regulations applicable to SBIC funds,
an SBIC can have outstanding debentures guaranteed by the SBA generally in an amount up to twice
its regulatory capital, which effectively approximate the amount of its equity capital. Since the
IPO, TMF has had the same investment objectives and strategies as Triangle, as summarized above.
As a result of the IPO and other formation transactions, TMF failed to meet the requirements
for exclusion from the definition of an investment company set forth in Section 3(c)(1) of the 1940
Act by reason of subparagraph (A) of Section 3(c)(1) of the 1940 Act. Accordingly, on February 5,
2007, TMF, as a co-registrant, filed its Registration Statement on Form N-5 with the Commission and
on February 21, 2007, filed an election on Form N-54A to be regulated as a BDC under the 1940 Act.
Triangle directly owns a 99.9% limited partnership interest in TMF. The General Partner, a
wholly owned subsidiary of Triangle, owns a 0.1% general partnership interest in TMF. Therefore,
TMF is functionally a 100% owned subsidiary of Triangle because Triangle and the General Partner
own all of the equity and voting interest in TMF. TMF is consolidated with Triangle for financial
reporting purposes.
Notwithstanding its limited partnership structure, the Second Amended and Restated Agreement
of Limited Partnership of TMF (LP Agreement), permits the appointment of a board of directors,
which appointment is permitted by the North Carolina Revised Uniform Limited Partnership Act, with
the authority to manage the business and affairs of TMF and take all action that the general
partner could otherwise take except any action required by statute to be taken by the general
partner of a North Carolina limited liability limited partnership. Consequently, pursuant to the LP
Agreement, the equity owners of TMF have appointed a board of directors (TMF Board) consisting of
five persons who are not interested persons of TMF within the meaning of Section 2(a)(19) of the
1940 Act and three persons who are interested persons of TMF. The members of the TMF Board are
appointed each year by the equity owners of TMF (i.e., Triangle and the General Partner). Under
the LP Agreement, the General Partner has irrevocably delegated the authority to manage the
business and affairs of TMF to the TMF Board. The SBA has approved the LP Agreement and the
members of the TMF Board pursuant
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to SBA regulations. We believe this structure is identical to that structure proposed in the SECs
No-Action Letter issued to Federated Core Trust II, L.P (the Federated Core letter).6
In the case of TMF, the provision of the North Carolina Revised Uniform Limited Partnership Act
permitting delegation of general partner authority to a board of directors is identical to the
provisions in the Delaware Revised Uniform Limited Partnership Act cited in the Federated Core
letter.
2. SBIC II
SBIC II was organized as a limited partnership under the laws of the state of Delaware on
December 15, 2009, and received its license from the SBA on May 10, 2010 to operate as a small
business investment company under the SBA Act. As an SBIC, SBIC II will be subject to the same
regulatory scheme as TMF. Unlike TMF, SBIC II will not be registered under the 1940 Act based on
the exclusion from the definition of investment company contained in Section 3(c)(7) of the 1940
Act. Pursuant to the limited partnership agreement for SBIC II, the management of SBIC II is vested
exclusively in GP II. Triangle serves as the sole manager of GP II.
Triangle directly owns a 99.9% limited partnership interest in SBIC II. GP II, a wholly owned
subsidiary of Triangle, owns a 0.1% general partnership interest in SBIC II. Therefore, SBIC II is
functionally a 100% owned subsidiary of Triangle because Triangle and GP II own all of the equity
and voting interest in SBIC II. SBIC II is consolidated with Triangle for financial reporting
purposes.
3. Future SBIC Subsidiaries
The American Recovery and Reinvestment Act of 2009 enacted in February 2009 (the Stimulus
Bill) contains several provisions applicable to SBIC funds. One of the key SBIC-related provisions
included in the Stimulus Bill increased the maximum amount of combined SBIC leverage (or SBIC
leverage cap) to $225 million for affiliated SBIC funds. The prior maximum amount of SBIC leverage
available to affiliated SBIC funds was approximately $137
6 | See Federated Core Trust II, L.P., SEC No-Action Letter, pub. avail. February 6, 2002. |
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million, as adjusted annually based upon changes in the Consumer Price Index. Due in part to the
increase in the maximum amount of SBIC leverage available to affiliated SBIC funds, Triangle formed
SBIC II and may form future SBIC Subsidiaries. In our view, the SBIC leverage, including the
increased capacity, remains a strategic advantage due to its long-term, flexible structure and a
low fixed cost. Since the increase in the SBIC leverage cap applies to affiliated SBIC funds,
Triangle will allocate such increased borrowing capacity between TMF, SBIC II and any future SBIC
Subsidiary.
Investments for the SBIC Subsidiaries are approved by the investment committee for each SBIC
Subsidiary (Investment Committee). The members of the Investment Committees for each SBIC
Subsidiary are subject to approval and fingerprinting by the SBA. The current members of the
Investment Committees for TMF and SBIC II are Messrs. Garland S. Tucker III (Triangles Chairman of
the Board, Chief Executive Officer and President), Brent P.W. Burgess (Triangles Chief Investment
Officer), Steven C. Lilly (Triangles Chief Financial Officer, Secretary, Treasurer and Chief
Compliance Officer), Jeffrey A. Dombcik (an employee of Triangle), Douglas A. Vaughn (an employee
of Triangle), and David F. Parker (an employee of Triangle). In addition, Messrs. Tucker, Burgess
and Lilly serve as directors on the Triangle Board and the TMF Board.
Each of TMF and SBIC II has entered into a Management Services Agreement with Triangle
(Management Services Agreement), whereby Triangle provides management services to TMF and SBIC
II, including prospective investment identification, due diligence and analytical services,
preparation of reports, research and economic/statistical data relating to potential and existing
investments for use by the TMF Board and GP II in overseeing such entitys investment portfolio,
monitoring of existing investments, including enforcement of rights under operative agreements,
bookkeeping, accounting and other administrative services, preparation of financial reports and tax
returns, preparation of reports filed with the SBA, provision of office space and clerical staff,
and maintenance of relationships with professionals retained by the SBIC Subsidiary. The
Management Services Agreement allows for the payment of management fees by the SBIC Subsidiary to
Triangle. To date, no management fees have been paid or accrued.
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4. The General Partners
(a) General Partner of TMF
The General Partner was organized as a limited liability company under the laws of the state
of North Carolina on November 1, 2007 and is a wholly owned subsidiary of Triangle. The General
Partner is the sole general partner of TMF. Pursuant to the provisions of the LP Agreement, the
General Partner has irrevocably delegated its authority to manage the business and affairs of TMF
to the TMF Board.7 As a consequence, the General Partners only role is to perform
certain ministerial functions that result from decisions made by the TMF Board; the General Partner
is not able to prevent the TMF Board from acting independently. In addition, under the LP
Agreement, the General Partner may not seek to amend the LP Agreement or take any substantive,
non-ministerial action in the name of TMF without the prior approval of a majority of the TMF
Board.
(b) General Partner of SBIC II
GP II was organized as a limited liability company under the laws of the state of Delaware on
December 15, 2009 and is a wholly owned subsidiary of Triangle. GP II is the sole general partner
of SBIC II and owns a 0.1% general partnership interest in SBIC II.
III. PROPOSED OPERATIONS AS ONE COMPANY
A. Exemptive Relief Requested from Sections 57(a)(1) and (2).
1. General. Sections 57(a)(1) and (2) make it unlawful for any person related to a BDC
in the manner described in Section 57(b), or any affiliated person of that person (1) to sell any
security or other property to the BDC or to any company controlled by the BDC (except securities of
which the buyer is the issuer or securities of which the seller is the issuer and which are part of
a general offering to the holders of a class of its securities), and (2) to purchase from any BDC
or from any company controlled by such BDC any security (except securities of which the seller is
the issuer).
7 | See Federated Core Trust II, L.P. (February 6, 2002). |
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Section 57(b) specifies the persons to whom the prohibitions of Sections 57(a)(1) and (2)
apply. These persons include the following: (1) any director, officer, employee, or other member of
an advisory board of the BDC or any person who controls, is controlled by, or is under common
control with such director, officer, employee, or advisory board member; or (2) (A) any investment
adviser or promoter of, general partner in, principal underwriter for, or person directly or
indirectly either controlling, controlled by, or under common control with, the BDC (except the BDC
itself and any person who, if it were not directly or indirectly controlled by the BDC, would not
be directly or indirectly under the control of a person who controls the BDC), or (B) any person
(i) who controls, is controlled by, or is in common control with such adviser, promoter, general
partner, principal underwriter, or person controlling, controlled by, or under common control with
the BDC or (ii) who is an officer, director, partner, copartner, or employee of such adviser,
promoter, general partner, principal underwriter, or person controlling, controlled by, or under
common control with the BDC.
Rule 57b-1 under the 1940 Act exempts certain persons otherwise related to a BDC in a manner
described in Section 57(b)(2) of the 1940 Act from being subject to the prohibitions of Section
57(a). Specifically, this rule states that the provisions of Section 57(a) shall not apply to such
person: (a) solely because that person is directly or indirectly controlled by a BDC, or (b) solely
because that person is directly or indirectly controlling, controlled by, or under common control
with a person described in (a) of the rule or is an officer, director, partner, copartner, or
employee of a person described in (a) of the rule.
2. Application of Section 57(a)(l) and (2) to Applicants. Triangle is a person related
to each of TMF and SBIC II in a manner described in Section 57(b) because of its direct ownership
of all the limited partnership interests in each of TMF and SBIC II and its indirect ownership of
all of the general partnership interests in the General Partner and GP II through its 100%
ownership of the General Partner and GP II. Triangle would be a person related to any future
Subsidiaries in a manner described in Section 57(b) because it will, either directly or indirectly,
own more than 99.9% of the voting securities of each Subsidiary. SBIC II and TMF would also each
be a person related to each other in a manner described in Section 57(b) because each is deemed to
be under the control of Triangle and thus under common control. Each future Subsidiary would also
each be a person related to each other Subsidiary in a manner described in
Section 57(b) as long as they remain under the common control of Triangle.
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With respect to the prohibitions of Sections 57(a)(1) and (2), every purchase or sale
transaction between Triangle and any Subsidiary and every purchase or sale transaction between two
or more Subsidiaries must be analyzed from the point of view of each participant including, if
applicable, TMF as a Subsidiary that is a BDC. As currently contemplated by the Applicants, there
may be circumstances when it is in the interest of Triangle and/or TMF that one or more of
Triangle, TMF, SBIC II or any future Subsidiary would purchase all or a portion of the portfolio
investments held by one of the others in order to enhance the liquidity of the selling company or
for other reasons, subject in each case to the requirements of the SBA and the regulations
thereunder, as applicable. In addition, there may be circumstances when it is in the interest of
Triangle and/or TMF for a Subsidiary to invest in securities of an issuer that may be deemed to be
a person related to either Triangle or TMF in a manner described in Section 57(b), or for Triangle
to invest in securities of an issuer that may be deemed to be a person related to a Subsidiary in a
manner described in Section 57(b), as in the case of a portfolio company deemed to be related to
Triangle or a Subsidiary as a result of either Triangles or such Subsidiaries ownership of more
than 25% of the portfolio companys voting securities. Similarly, it may be desirable for a
Subsidiary to invest in securities of an issuer that may be deemed to be a person related to
another Subsidiary in a manner described in Section 57(b).
If Triangle were to engage in these activities other than through a subsidiary, transactions
with affiliated portfolio companies whether controlled or not controlled, would be permissible
without Commission approval by virtue of Rule 57b-1. The Commission made this clear in Investment
Company Act Release 11493 (December 16, 1980) where, in adopting Rule 57b-l, it stated in relevant
part:
However, non-controlled portfolio affiliates of a business development company are
not among those persons whose participation in transactions with the business
development company requires Commission approval (under Section 57(c) [15 U.S.C.
80a-56(c)] or specific statutory findings regarding the transaction by the companys
Board of Directors (under Section 57(f) [15 U.S.C. 80a-56(f)]. The legislative
history of the 1980 Amendments indicates that Congress also did not intend to
require Commission approval or such specific statutory findings by the Board of
Directors of a business development company for transactions between
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the company and a controlled portfolio affiliate. As the House Committee Report on
the bill which became the 1980 Amendments states:
Conspicuously absent from the prohibitions in Section 57 against
transactions with the business development company are
persons which it controls or of which it holds at
least 5 percent of the outstanding securities. Also omitted from the
prohibitions are persons affiliated with such so-called downstream
affiliates of the business development company. In this regard, it
should be noted that the Commission has undertaken through
rulemaking to exempt all investment companies from prohibitions
relating to transactions solely between investment companies and
such downstream affiliates. The Committee again wishes to note that
if experience demonstrates that under such exclusion from statutory
prohibitions investors are not being adequately protected, the
Committee would expect to revisit this area.
H.R. Rep. No. 1341, at 48 (1980) (Comm. Rep.) (emphasis added).
However, due to an apparently inadvertent drafting error, business development
company transactions involving controlled portfolio affiliates and certain
affiliated persons of such affiliates must be approved by the Commission. The
Commission proposes to correct this error by the rulemaking.
As pointed out in the House Committee report, even if Triangle were a registered investment
company rather than a BDC, it would be exempt from prohibitions relating to transactions between
itself and its downstream affiliates. See Rules 17a-6 and 17d-1(d)(5) and (6). Thus, Rule 57b-1
exempts purchase or sale transactions between Triangle (the BDC parent) and its downstream
controlled affiliates from the prohibitions of Sections 57(a) and 17(a) and (d).
However, without the relief requested by this Application, purchase or sale transactions
between TMF (a BDC subsidiary) and any other Subsidiaries or downstream controlled affiliates of
Triangle or other Subsidiaries may violate Section 57(a)(1) or (2) of the 1940 Act. Such purchase
and sale transactions may violate Sections 57(a)(1)-(2) since the participant involved, SBIC II (or
any future Subsidiary) would be related to the BDC (TMF), in a manner described in Section 57(b).
The exemption in Rule 57b-1 may not be available in this case since the transaction is between TMF
(a BDC) and entities affiliated with a controlling affiliate of TMF. Therefore the participant is
not related to the BDC (TMF) solely on the circumstances set forth in either paragraph (a) or (b)
of Rule 57b-1 (i.e., not (a) solely because that person is directly or
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indirectly controlled by TMF, or (b) solely because that person is directly or indirectly
controlling, controlled by, or under common control with a person described in (a) of the rule or
is an officer, director, partner, copartner, or employee of a person described in (a) of the rule).
Triangle and its Subsidiaries should not be precluded from investing in portfolio affiliates
of each other if such investments would be permitted if Triangle and such Subsidiary were treated
as one combined company.
3. Requested Exemptions. As discussed above, the Prior Order only extends relief from
Sections 57(a)(1) and (2) to transactions between Triangle and TMF. Accordingly, the Applicants
respectfully request an Amended Order of the Commission pursuant to Section 57(c) exempting any
current or future Subsidiary from the provisions of Sections 57(a)(l) and (2) for any transaction
between TMF and any other Subsidiary with respect to the purchase or sale of securities or other
property. The Applicants also request an Amended Order of the Commission exempting from the
provisions of Section 57(a)(1) and (2) any transaction between TMF and a controlled portfolio
affiliate of another Subsidiary, but only to the extent that any such transaction would not be
prohibited if such Subsidiary were deemed to be part of Triangle and not a separate company. It is
the intent of this request only to permit Triangle and it Subsidiaries to do that which they
otherwise would be permitted to do within the provisions of the 1940 Act if they were one company,
as opposed to TMF, SBIC II (or any future Subsidiary) being a wholly owned subsidiary of Triangle.
B. Exemptive Relief Requested from Section 57(a)(4) and Rule 17d-1.
1. General. Section 57(a)(4) of the 1940 Act makes it unlawful for certain persons
related to a BDC in the manner set forth in Section 57(b), acting as principal, knowingly to effect
any transaction in which the BDC or a company controlled by the BDC is a joint or joint and several
participant with that person in contravention of such rules and regulations as the Commission may
prescribe for the purpose of limiting or preventing participation by the BDC or controlled company
on a basis less advantageous than that of the other participant. Section 57(i) of the 1940 Act
states that the rules and regulations of the Commission under Section 17(d) of the 1940 Act
applicable to registered closed-end investment companies (e.g., Rule 17d-1) shall be deemed to
apply to transactions subject to Section 57(a) of the 1940 Act until the adoption by
the Commission of rules and regulations under Section 57(a).
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Rule 17d-1 under the 1940 Act prohibits an affiliate or, when applying Rule 17d-1 to
implement Section 57(a)(4), a person related to a BDC in a manner described in Section 57(b) -
acting as principal, from participating in, or effecting any transaction in connection with, any
joint enterprise or other joint arrangement or profit-sharing plan in which any such BDC, or a
company controlled by such BDC, is a participant, except pursuant to an order of the Commission.
2. Application of Section 57(a)(4) and Rule 17d-1(a) to Applicants. As described
above, Triangle and the Subsidiaries are (and future Subsidiaries will be) related to one another
in a manner described in Section 57(b). There may be circumstances when it is in the interest of
Triangle and/or TMF, as applicable, that two or more of Triangle, TMF, SBIC II (or any future
Subsidiary) purchase or sell the same or different securities of the same issuer, either
simultaneously or sequentially, and that they deal with their investments separately or jointly.
The joint transactions prohibition of Section 57(a)(4) and Rule 17d-1, taken together, would not
apply to transactions involving two or more of Triangle and the Subsidiaries because the Section
57(b) relationship would arise solely from Triangle controlling each of the Subsidiaries.
Therefore, Rule 57b-1 would exempt Triangle and its controlled affiliates from the prohibitions of
Section 57(a)(4). However, a joint transaction in which TMF and another Subsidiary participates
could be deemed to be prohibited under Section 57(a)(4) because such Subsidiary would not be a
controlled affiliate of TMF.
3. Requested Exemptions. As discussed above, the Prior Order only extends relief from
Section 57(a)(4) and Rule 17d-1 for such transactions between Triangle and TMF. Accordingly,
Applicants are seeking an Amended Order of the Commission pursuant to Section 57(i) of the 1940 Act
and Rule 17d-1 thereunder, permitting any joint transaction that would otherwise be prohibited by
Section 57(a)(4), in which TMF and another Subsidiary participate, but only to the extent that the
transaction would not be prohibited if the Subsidiaries participating were deemed to be part of
Triangle, and not separate companies. As stated above, the intent of this request is only to permit
Triangle and its Subsidiaries to conduct their businesses as otherwise permitted by the 1940 Act,
as if Triangle and its Subsidiaries were a single company.
14
C. Exemptive Relief Requested from Sections 18(a) and 61(a).
1. General. Section 18(a) makes it unlawful for any closed-end management company to
issue any class of senior security or to sell any senior security of which it is the issuer, unless
such company complies with the asset coverage and other requirements set forth in Section 18(a).
Asset coverage is defined in Section 18(h) to mean a ratio which the value of the total assets of
an issuer, less all liabilities not represented by senior securities, bears to the amount of senior
securities. Section 61 applies Section 18, with certain modifications, to a BDC. Section 18(k)
makes the asset coverage and other requirements of subparagraphs (A) and (B) of paragraph (1) of
Section 18(a) inapplicable to investment companies operating under the SBA Act. However, companies
operating under the SBA Act, such as SBIC II (and future SBIC Subsidiaries), are subject to the
SBAs substantial regulation of permissible leverage in their capital structure. An SBIC with
outstanding SBA financial assistance may not incur any secured third-party debt or refinance any
debt with secured third-party debt without prior written approval of the SBA. SBIC II is (and any
future SBIC Subsidiaries would be) regulated by the SBA and operates under the SBA Act. There is no
difference in the SBAs regulation of the SBIC II due to the fact that it and any other SBIC
Subsidiaries will not be registered under the 1940 Act or be a BDC.
2. Application of Sections 18(a) and 61(a) to Applicants. As a BDC, Triangle is
subject to the requirements of Section 18(a) by way of Section 61(a). Although a BDC, TMF, as an
investment company licensed as an SBIC under the SBA Act is exempt, on a stand-alone basis, from
Section 18(a)(1)(A) and (B) and Section 61(a) by reason of the exemption provided by Section 18(k).
However, since each SBIC Subsidiary is a wholly owned subsidiary of Triangle, a question exists as
to whether Triangle must comply with the asset coverage requirements of Section 18(a) (as modified
by Section 61(a) for BDCs) solely on an individual basis or whether Triangle must also comply with
these asset coverage requirements on a consolidated basis, because Triangle may be deemed to be an
indirect issuer of any class of senior security issued by any SBIC Subsidiary. Applying Section
18(a) (as modified by Section 61(a)) on a consolidated basis would mean that Triangle would treat
as its own all assets held directly by Triangle and any SBIC Subsidiary and would also treat as its
own any liabilities of any SBIC Subsidiary (with intercompany receivables and liabilities
eliminated), including any
15
liabilities of such SBIC Subsidiary with respect to senior securities as to which such SBIC
Subsidiary may be exempt from the provisions of Section 18(a)(1)(A) and (B) by virtue of Section
18(k).
3. Requested Exemptions. As discussed above, the Prior Order granted relief under
Section 6(c) from Sections 18(a) and 61(a) to permit Triangle to exclude from its consolidated
asset coverage ratio any senior security representing indebtedness issued by TMF (not any future
SBIC Subsidiary). Accordingly, the Applicants respectfully request relief under Section 6(c) from
Sections 18(a) and 61(a) to permit Triangle to exclude from its consolidated asset coverage ratio
any senior security representing indebtedness issued by any SBIC Subsidiary. For the purposes of
the requested relief, and only for such purposes, Triangle wishes to treat SBIC II (and any future
SBIC Subsidiary) as if it were a BDC subject to Sections 18 and 61. Since TMF is entitled to rely
on Section 18(k) and since SBIC II (or any future SBIC Subsidiary) would be entitled to rely on
Section 18(k) if it were a BDC itself, there is no policy reason to deny the benefit of such
exemptions to Triangle.
D. Precedents.
In addition to the Prior Order granting such relief to Triangle and TMF, the Applicants have
reviewed previous exemptive orders issued by the Commission granting exemptive relief similar to
that requested herein. See MCG Capital Corporation, et al., Investment Company Act Release Nos.
28427 (Sept. 30, 2008) (notice) and 28474 (Oct. 28, 2008) (order) (MCG Capital); Main Street
Capital Corporation, et. al., Investment Company Act Release No. IC-28120; File No. 812-13411 (Jan.
16, 2008) (Main Street); Hercules Technology Growth Capital, Inc., et al., Investment Company Act
Release Nos. 27748 (Mar. 7, 2007) (notice) and 27776 (Apr. 5, 2007) (order) (Hercules); Elk
Associates Funding Corporation, et. al, Investment Company Act Release No. 24121, File No.
812-11420 (November 2, 1999)(Elk Associates); Berthel Growth & Income Trust I, et. al.,
Investment Company Act Release No. 23864, 69 SEC Docket 2233 (June 8, 1999) (Berthel); Allied
Capital Corporation, et. al., Investment Company Act Release No. 22941, 66 SEC Docket 297 (Dec. 16,
1997) (Allied Capital); Capital Southwest Corporation, et. al., Investment Company Act Release
No. 22586, 64 SEC Docket 457 (Mar. 26, 1997) (Capital Southwest); MACC Private Equities Inc., et.
al.,
16
Investment Company Act Release No. 20887; 58 SEC Docket 2067 (Feb. 7, 1995) (Private
Equities); Allied Capital Corporation II, et. al., Investment Company Act Release No.17492, 46 SEC
Docket 343 (May 16, 1990) (Allied II); and Greater Washington Investors, et. al., Investment
Company Act Release No.16055, 39 SEC Docket 549 (Oct. 15, 1987) (Greater Washington).
In Main Street, a parent BDC with an SBIC subsidiary obtained similar relief as requested
herein, and on similar representations and conditions as contained herein. The Main Street order
permits a Parent BDC and its wholly-owned subsidiaries (one of which is an SBIC) to engage in
certain transactions that otherwise would be permitted if the BDC and its subsidiaries were one
company and permits the Parent BDC to adhere to a modified asset coverage requirements. The Main
Street order applies to future SBIC subsidiaries.
In Berthel, a parent BDC with a BDC/SBIC subsidiary obtained similar relief as requested
herein, and on similar representations and conditions as contained herein, except as modified to
reflect that the parent was a trust rather than a corporation and that the subsidiary was a limited
liability company rather than a limited liability limited partnership. In Capital Southwest, a
parent BDC with a closed-end management investment company/SBIC subsidiary, obtained exemptive
relief similar to the relief requested in this Application, and on similar representations and
conditions as contained in this Application. The Private Equities case involved a reorganization
pursuant to a bankruptcy plan which provided for the transfer of all of the capital stock of an
SBIC subsidiary of the debtors to a newly created BDC, and the election of the SBIC also to be
regulated as a BDC. The Greater Washington, and Allied II, cases involved existing SBICs that
reorganized by establishing wholly owned subsidiaries to which the parent would transfer its SBIC
license. The parent company in each case remained a BDC with public ownership.
In addition, Applicants have reviewed previous exemptive orders issued by the Commission
granting exemptive relief with respect to future wholly-owned subsidiaries of the parent. See Main
Street, MCG Capital, Hercules, Elk Associates, and Allied. In Main Street, MCG Capital, Hercules,
Elk Associates and Allied, a parent BDC with an SBIC subsidiary
17
obtained substantially the same relief as requested in this Application, including relief as
to possible future wholly-owned subsidiaries of the parent.
The Applicants are requesting the ability to engage in similar transactions as requested by
Triangle, TMF and the General Partner in the Prior Order.
E. Applicants Legal Analysis.
1. Section 6(c).
Section 6(c) of the 1940 Act permits the Commission to conditionally or unconditionally exempt
any person or transaction from any provision or provisions of the 1940 Act, if and to the extent
that such exemption is necessary or appropriate in the public interest and consistent with the
protection of investors and the purposes fairly intended by the policies and provisions of the 1940
Act.
(a) The Exemption Requested is Appropriate in the Public Interest.
The operation of Triangle as a BDC with wholly owned SBIC Subsidiaries is intended to permit
Triangle to engage in an expanded scope of operations beyond that which would be available to it if
it conducted the SBIC operations itself. Triangle and any SBIC Subsidiary will be engaged in
operations permitted (and in fact contemplated) by the 1940 Act and subject to the provisions
thereof, as they are applied to BDCs. Moreover, since such SBIC Subsidiary will be a wholly owned
subsidiary of Triangle, any activity carried on by it will in all material respects have the same
economic effect and substance with respect to Triangles stockholders as it would if done directly
by Triangle.
With respect to the Sections 18(a) and 61(a) exemption, the net effect of application of the
asset coverage requirements on a consolidated basis as to Triangle and any SBIC Subsidiary, if
relief were not obtained, could be to restrict the ability of such SBIC Subsidiary to obtain the
kind of financing that would be available to Triangle if it were to conduct the SBIC operations
itself. Section 18(k) exempts any class of senior securities representing an indebtedness issued
by certain closed-end companies from the asset coverage and other requirements of subparagraphs (A)
and (B) of paragraph (1) of Section 18(a), whether or not
18
such class of senior securities representing an indebtedness is held or guaranteed by the SBA.
The application of Section 18(k) to Triangle would not expose investors to the risks of
unconstrained leverage because the SBA regulates the capital structure of such SBIC Subsidiary.
Accordingly, no harm to the public interest will occur if the exemption is granted.
Based on the foregoing, it is clear that the public interest will not be harmed by the
granting of the requested exemption, while the interests of Triangle and its stockholders will be
enhanced.
(b) The Exemption Requested is Consistent with the Protection of Investors and the Purposes
Fairly Intended by the Policies and Provisions of the 1940 Act.
The Sections 18(a) and 61(a) exemption will have no material adverse financial or economic
impact on Triangles stockholders because such Subsidiary is (or will be) wholly owned by Triangle,
and Triangles stockholders effectively own all economic interests in such Subsidiary. Also, the
representations and agreements of Triangle made in this Application effectively eliminate any
substantive differences between applying the regulatory framework to Triangle conducting its SBIC
activities as one entity and the framework applicable to Triangle and any such Subsidiary as
separate entities.
Congress meant to encourage the development of venture capital companies by the enactment of
the 1980 Amendments. A principal purpose of the 1980 Amendments was to remove regulatory burdens on
venture capital companies while assuring adequate protection of the interests of investors in such
companies. S. Rep. No. 958, at 5 (1980); H.R. Rep. No. 1341, at
21-22 (1980), as reprinted in 1980 U.S.C.C.A.N. 4803, 4904. The 1980 Amendments sought to eliminate
provisions of the 1940 Act that created unnecessary disincentives to venture capital activities.
Id. One goal underlying elimination of these disincentives was to increase investment by
the public, particularly institutional investors, in professionally managed venture capital
companies in order to provide a new source of risk capital for small developing companies. See
Reginald L. Thomas & Paul F. Roye, Regulation of Business Development Companies Under the
Investment Company Act, 55 S. Cal. L. Rev. 895, 912 (1982).
19
In adopting interim rules 60a-l and 57b-l, the Commission recognized this goal, stating [t]he
1980 Amendments, which became effective immediately upon their signing by the President, represent
the considerable efforts of Congress and numerous other participants, including representatives of
the Commission and the venture capital industry, to enhance the flow of capital to small,
developing businesses and financially troubled businesses. Investment Company Act Release No.
11493, [1980 Transfer Binder] Fed. Sec. L. Rep. (CCH) ¶83,704 (Dec. 16, 1980). The Commission also
stated in this Release that it is clear that Congress did not intend to prohibit business
development companies from acquiring the securities of and operating wholly owned SBICs. Indeed,
the 1980 Amendments specifically recognized the possibility of such ownership. Subsidiary SBICs
are also contemplated by Item 8 of the instructions to Form N-2.
The Applicants submit that the proposed exemption is entirely consistent with the general
purposes of the 1980 Amendments. By this Application, Triangle seeks relief that will allow it,
together with its current and future SBIC Subsidiaries, to expand and broaden its activities
consistent with the Congressional policies described above and without creating conflicting
regulatory problems. The goal can be accomplished only by obtaining the exemption requested. The
proposed exemption is therefore consistent with the general purposes of the 1940 Act, as amended by
the 1980 Amendments.
It is submitted that granting the requested exemption on the terms set forth in this
Application is consistent with the policies and provisions of the 1940 Act and will enhance the
interests of Triangles stockholders while retaining for them the important protections afforded by
the provisions of the 1940 Act.
2. Section 57(c).
In addition to relief under Sections 6(c), the Applicants request relief under Section 57(c)
with respect to the proposed operations as one company and certain transactions between the
Applicants and portfolio companies, as specified above. Section 57(c) of the 1940 Act directs the
Commission to exempt a transaction from one or more provisions of Sections 57(a)(1) and (2) if all
three of the following standards are met: (i) the terms of the proposed transaction, including the
consideration to be paid or received, are reasonable and fair and do not involve overreaching
20
of the business development company or its stockholders or partners on the part of any person
concerned; (ii) the proposed transaction is consistent with the policy of the business development
company as recited in the filings made by such company with the Commission under the Securities
Act, its registration statement and reports filed under the Exchange Act, and its reports to
stockholders or partners; and (iii) the proposed transaction is consistent with the general
purposes of the 1940 Act.
(a) Under Section 57(c)(l), the terms of the proposed transaction must be reasonable
and fair and must not involve overreaching of the business development company or its
stockholders on the part of any person. As discussed above, the proposed operations as one
company will enhance efficient operations of Triangle and its wholly owned subsidiaries,
including TMF, and allow them to deal with portfolio companies as if Triangle and such
Subsidiaries were one company. Operation as essentially one company in these circumstances
has been repeatedly recognized by the Commission in exemptive orders, including with respect
to Triangle under the Prior Order, Main Street, Elk Associates/Ameritrans, Berthel, Capital
Southwest, Private Equities, Greater Washington, and Allied Capital II and other companies
cited in the applications of these companies. As discussed above with respect to the
Applicants legal arguments under Section 6(c), the contemplated transactions among the
Applicants and affiliates as specified above will be reasonable and fair and will not
involve overreaching on the part of any person.
(b) As indicated above, the terms of the proposed transactions are reasonable and fair
and do not involve overreaching of Triangle or TMF by any person. The Applicants believe
that the requested order would permit Triangle and the Subsidiaries to carry out more
effectively (1) the purposes and objectives of the Applicants of investing primarily in
small business concerns, and (2) the intent and policy of Congress as stated in and
implemented by the 1940 Act, the SBA Act and the 1980 Amendments.
(c) Under Section 57(c)(2), relief may be granted if the proposed transactions are
consistent with the policy of the business development company as specified in filings with
the Commission and reports to stockholders. The proposed operations of the
21
Applicants as one company and the requested relief are consistent with the disclosure
in Triangles public filings with the Commission and its reports to stockholders.
Accordingly, this condition is also met.
(d) In addition, the representations and agreements made in this Application
effectively eliminate any substantive differences between applying the regulatory framework
to Triangle conducting its SBIC activities as one entity and the framework applicable to
Triangle and its current and future Subsidiaries as separate entities and granting the
requested exemptions on the terms set forth in this Application is consistent with the
policies and provisions of the 1940 Act and will enhance the interests of Triangle and TMF
while retaining the important protections afforded by the provisions of the 1940 Act.
In summary, the Applicants meet the standards for relief under Section 57(c) with respect to
the exemptions from Sections 57(a)(l) and (2) as described above.
3. Section 57(i), Rule 17d-l and Section 57(a)(4).
Relief is also requested under Rule 17d-l with respect to certain joint transactions that
would otherwise be prohibited by Section 57(a)(4) of the 1940 Act, including transfers of assets
between the Applicants and investments in the same portfolio companies by Triangle and the
Subsidiaries, all as described above. Section 57(i) of the 1940 Act provides that rules and
regulations under Section 17(d) of the 1940 Act will apply to transactions subject to Section
57(a)(4) in the absence of rules under that Section. The Commission has not adopted rules under
Section 57(a)(4) with respect to joint transactions and, accordingly, the standards set forth in
Rule 17d-1 govern Applicants request for relief. In determining whether to grant an order under
Section 57(i) and Rule 17d-1, the Commission considers whether the participation of the BDC in the
joint transaction is consistent with the provisions, policies and purposes of the 1940 Act and the
extent to which such participation is on a basis different from or less advantageous than that of
other participants in the transaction.
(a) First, as discussed above with respect to the Applicants legal arguments under
Section 6(c), the proposed transactions are consistent with the policy and
22
provisions of the 1940 Act and will enhance the interests of Triangle and TMF while
retaining the important protections afforded by the provisions of the 1940 Act.
(b) Second, since the joint participants will conduct their operations as though they
comprise one company, the participation of one will not be on a basis different from or
less advantageous than the others.
In summary, the Applicants meet the standards for relief under Rule 17d-1.
IV. CONDITIONS OF PRIOR ORDER
The
Applicants note that the conditions in the Prior Order will be replaced by the
conditions set forth in Section V. The conditions in
Section V are the same conditions as the Prior Order, except
that (a) the defined terms have been revised to include all
current and future Subsidiaries, (b) condition 6 has been
added in the event a person or entity serves or acts as an investment
adviser to SBIC II or a future Subsidiary and (c) the two (2) conditions
relating to consolidated reporting, which Applicants no longer
believe to be necessary, will be deleted from the Prior Order.
V. CONDITIONS OF EXEMPTIVE ORDER
Applicants agree that the Amended Order will be subject to the following conditions:
1. Triangle will at all times own and hold, beneficially and of record, all of the outstanding
equity interests in any Subsidiary, including all of the outstanding membership interests in any
general partner of any Subsidiary, or otherwise own and hold beneficially, all of the outstanding
voting securities and other equity interests in such Subsidiary.
2. The SBIC Subsidiaries will have investment policies not inconsistent with those of
Triangle, as set forth in Triangles Registration Statement.
3. No person shall serve as a member of any board of directors of any Subsidiary unless such
person shall also be a member of the Triangle Board. The board of directors or the managers, as
applicable, of any Subsidiary will be appointed by the equity owners of such Subsidiary.
4. Triangle will not itself issue or sell any senior security, and Triangle will not
23
cause or permit any SBIC Subsidiary to issue or sell any senior security of which Triangle or
such SBIC Subsidiary is the issuer except to the extent permitted by Section 18 (as modified for
BDCs by Section 61) of the 1940 Act; provided that immediately after the issuance or sale of any
such senior security by either Triangle or any SBIC Subsidiary, Triangle individually and on a
consolidated basis shall have the asset coverage required by Section 18(a) (as modified by Section
61(a)), except that, in determining whether Triangle and any SBIC Subsidiary on a consolidated
basis have the asset coverage required by Section 61(a), any borrowings by any SBIC Subsidiary
shall not be considered senior securities and, for purposes of the definition of asset coverage
in Section 18(h), shall be treated as indebtedness not represented by senior securities.
5. Triangle will acquire securities of any SBIC Subsidiary representing indebtedness only if,
in each case, the prior approval of the SBA has been obtained. In addition, Triangle and any SBIC
Subsidiary will purchase and sell portfolio securities between themselves only if, in each case,
the prior approval of the SBA has been obtained.
6. No
person shall serve or act as investment adviser to SBIC II or
any future Subsidiary
unless the Triangle Board and the stockholders of Triangle shall have taken
such action with respect thereto that is required to be taken
pursuant to the 1940 Act by the functional equivalent of the board of
directors of SBIC II or any future Subsidiary and the
stockholders of SBIC II or any future Subsidiary
as if SBIC II or such future Subsidiary were a BDC.
VI. CONCLUSION AND REQUEST FOR ORDER
Based on the foregoing, Applicants respectfully request that the Commission issue an Amended
Order pursuant to Sections 6(c) and 57(c) of the 1940 Act granting exemptions from Sections 18(a),
57(a)(1) (2), and 61(a) of the 1940 Act; under Section 57(i) of the 1940 Act and Rule 17d-1 under
the 1940 Act to permit certain joint transactions otherwise prohibited by Section 57(a)(4) of the
1940 Act, all on the terms and conditions set forth herein.
VII. PROCEDURAL MATTERS
A. Exhibit List.
The following documents are annexed to this Application as Exhibits and are incorporated by
reference.
Exhibit A Verifications Required by Rule 0-2(d)
Exhibit B Resolutions Authorizing Application
B. Authorizations Required By Rule 0-2
24
The verification required by Rule 0-2(d) under the 1940 Act is attached to this Application as
Exhibit A. The filing of this Application has been specifically authorized by a resolution of the
Triangle Board dated November 4, 2009. A copy of this resolution, which remains in full force and
effect, is attached to this Application as Exhibit B. The filing of this Application by the other
Applicants was authorized by their respective members, general partners or officers, as applicable,
pursuant to authority granted to such persons by their respective operating agreements, articles of
incorporation or bylaws, as applicable. Each of the foregoing authorizations remain in effect.
25
SIGNATURES
Pursuant to the requirements of the Investment Company Act of 1940, the Applicants have caused
this Application to be duly signed on their behalf on the 1st day of
October, 2010.
TRIANGLE CAPITAL CORPORATION | ||||||||
By: | /s/ Steven C. Lilly | |||||||
Name: | Steven C. Lilly | |||||||
Title: | Chief Financial Officer, Treasurer, and Secretary | |||||||
TRIANGLE MEZZANINE FUND LLLP | ||||||||
By: New Triangle GP, LLC, Its General Partner | ||||||||
By: | Triangle Capital Corporation, Its Manager | |||||||
By: | /s/ Steven C. Lilly | |||||||
Name: |
|
|||||||
Title: | Chief Financial Officer, Treasurer, and Secretary | |||||||
TRIANGLE MEZZANINE FUND II LP | ||||||||
By: New Triangle GP, LLC, Its General Partner | ||||||||
By: | Triangle Capital Corporation, Its Manager | |||||||
By: | /s/ Steven C. Lilly | |||||||
Name: |
|
|||||||
Title: | Chief Financial Officer, Treasurer, and Secretary | |||||||
NEW TRIANGLE GP, LLC (a North Carolina entity) | ||||||||
By: | Triangle Capital Corporation, Its Manager | |||||||
By: | /s/ Steven C. Lilly | |||||||
Name: |
|
|||||||
Title: | Chief Financial Officer, Treasurer, and Secretary | |||||||
NEW TRIANGLE GP, LLC (a Delaware entity) | ||||||||
By: | Triangle Capital Corporation, Its Manager | |||||||
By: | /s/ Steven C. Lilly | |||||||
Name: |
|
|||||||
Title: | Chief Financial Officer, Treasurer, and Secretary |
EXHIBIT A
Verifications Required by Rule 0-2(d)
Verifications Required by Rule 0-2(d)
STATE OF NORTH CAROLINA |
} | |
COUNTY OF WAKE |
} |
The undersigned states that he has duly executed the attached Application for an Amended Order
Pursuant to Sections 6(c) and 57(c) granting exemptions from Sections 18(a), 57(a)(1) (a)(2), and
61(a) of the 1940 for and on behalf of Triangle Capital Corporation, a Maryland corporation
(Triangle), Triangle Mezzanine Fund LLLP, a North Carolina limited liability limited partnership
(TMF), New Triangle GP, LLC, a North Carolina limited liability company (General Partner), New
Triangle GP, LLC, a Delaware limited liability company (GP II), and Triangle Mezzanine Fund II
LP, a Delaware limited partnership (SBIC II); that he is the Chief Financial Officer, Treasurer,
and Secretary of Triangle; that he has been authorized by Triangle, TMF, SBIC II, the General
Partner, and GP II to execute the attached Application in the name of and/or on behalf of Triangle,
TMF, SBIC II, the General Partner, and GP II; and that all action by stockholders, directors, and
other bodies necessary to authorize the undersigned to execute and file such instrument has been
taken. The undersigned further states that he is familiar with such instrument, and the contents
thereof, and that the facts therein set forth are true to the best of his knowledge, information
and belief.
By: | /s/ Steven C. Lilly | |||||
Name: |
|
|||||
Title: | Chief Financial Officer, Treasurer, and Secretary of Triangle Capital Corporation |
|||||
Date: | October 1, 2010 |
EXHIBIT B
JOINT RESOLUTIONS
OF THE BOARDS OF DIRECTORS OF
JOINT RESOLUTIONS
OF THE BOARDS OF DIRECTORS OF
TRIANGLE CAPITAL CORPORATION AND TRIANGLE MEZZANINE FUND LLLP
WHEREAS, the Company, the Fund, and the Funds general partner, New Triangle GP, LLC (the
General Partner), previously filed a joint exemptive application with the SEC requesting an order
under Sections 6(c), 12(d)(1)(J), and 57(c) of the Investment Company Act of 1940, as amended (the
1940 Act), granting exemptions from Sections 12(d)(1)(A) and (C), 18(a), 21(b), 57(a)(1)-(a)(3),
and 61(a) of the 1940 Act, under Section 57(i) of the 1940 Act and Rule 17d-1 thereunder to permit
certain joint transactions otherwise prohibited by Section 57(a)(4) of the 1940 Act, and under
Section 12(h) of the 1934 Act granting an exemption from Section 13(a) of the Exchange Act (the
Prior Application);
WHEREAS, on October 14, 2008, the SEC issued an exemptive order (the Prior Order) granting
the relief requested by the Prior Application;
WHEREAS, the Company, as the sole manager of the New GP to be formed, intends to form the New
Fund, and may form other direct or indirect wholly-owned subsidiaries in the future; and
WHEREAS, the Board believes that it is in the best interests of the Company and its
stockholders that the Company, on behalf of the New Fund, as well as any future direct or indirect
wholly-owned subsidiaries of the Company (the Subsidiaries, and each a Subsidiary) seek the
same exemptive relief for the New Fund and any future Subsidiary that was granted under the Prior
Order by filing a new application with the SEC requesting an amendment to the Prior Order (the
Amended Application) to add the New Fund as an applicant as well as any future Subsidiaries.
NOW, THEREFORE, BE IT RESOLVED, that the officers of the Company shall be, and each of them
hereby is, authorized, empowered, and directed, by and on behalf of the Company, the Fund, the New
Fund and any other direct or indirect wholly-owned subsidiary of the Company, to execute and file
the Amended Application with the SEC requesting exemption from various sections of the 1940 Act and
the Exchange Act, and to execute and file any other applications for exemptive relief, and any
amendments deemed necessary or appropriate thereto, and any other related documents, including but
not limited to requests for no action relief or interpretative positions under the Securities Act
of 1933, as amended (the Securities Act), the 1940 Act or the Exchange Act, or any other
applicable federal or state securities laws, as such officers, in their sole discretion, deem
necessary, appropriate or advisable in order to effectuate the transactions contemplated therein
and the relief sought thereby, on behalf of the Company, the Fund, and the New Fund, or any other
current or future Subsidiary, as the case may be.
FURTHER RESOLVED, that the officers of the Company shall be, and each of them hereby is,
authorized, empowered, and directed, by and on behalf of the Company, as the sole member and
manager of the General Partner of the Fund and as the sole member and manager of the new general
partner of the New Fund, and in such new general partners name, to execute and file the Amended
Application with the SEC requesting exemption from various sections of the 1940 Act and the
Exchange Act, and to execute and file any other applications for exemptive relief, and any
amendments deemed necessary or appropriate thereto, and any other related documents, including but
not limited to requests for no action relief or interpretative positions under the Securities Act,
the 1940 Act or the Exchange Act, or any other applicable federal or state securities laws, as such
officers, in their sole discretion, deem necessary, appropriate or advisable in order to effectuate
the transactions contemplated therein and the relief sought thereby, on behalf of such general
partners and on behalf of the Fund, the New Fund or any other current or future Subsidiary, as the
case may be.
FURTHER RESOLVED, that the officers of the Company be, and each of them hereby is, authorized,
empowered and directed to certify and deliver copies of these resolutions to such government
bodies, agencies, persons, firms or corporations as the officers may deem necessary and to identify
by his or her signature or certificate, or in such form as may be required, the documents and
instruments presented to and approved herein and to furnish evidence of the approval, by an officer
authorized to give such approval, of any document, instrument or provision or any addition,
deletion or change in any document or instrument.
FURTHER RESOLVED, that the officers of the Company are hereby authorized, empowered, and
directed to take any and all such actions and to execute and deliver any and all other such
documents as each may reasonably deem necessary, appropriate or advisable to give effect to the
intent of these resolutions.
FURTHER RESOLVED, that in every instance in the foregoing resolutions where an officer is
authorized to take such actions or make such changes to a document as he or she determines to be
necessary, desirable or appropriate, then the taking of the action or the execution of such
document with such changes shall evidence conclusively his or her determination that such actions
or changes to such documents are necessary, desirable or appropriate (as applicable).
FURTHER RESOLVED, that any and all actions previously taken by any of the officers of the
Company in connection with the foregoing resolutions are hereby ratified, approved and confirmed in
all respects as and for the acts and deeds of the parties thereto.