DEF 14A: Definitive proxy statements
Published on March 25, 2008
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
SCHEDULE 14A
(RULE 14a-101)
SCHEDULE 14A INFORMATION
PROXY
STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
EXCHANGE ACT OF 1934
Filed by the Registrant þ
Filed by a Party other than the Registrant o
Check the appropriate box:
o
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Preliminary Proxy Statement. | o | Confidential, for Use of the Commission Only | |||
þ
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Definitive Proxy Statement. | (as permitted by Rule 14a-6(e)(2)). | ||||
o
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Definitive Additional Materials. | |||||
o
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Soliciting Material Pursuant to Rule 14a-11(c)
or Rule 14a-12. |
Triangle Capital Corporation
(Name of Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
þ | No fee required. | |||||
o | Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. | |||||
(1 | ) | Title of each class of securities to which transaction applies: | ||||
(2 | ) | Aggregate number of securities to which transaction applies: | ||||
(3 | ) | Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is calculated and state how it was determined): | ||||
(4 | ) | Proposed maximum aggregate value of transaction: | ||||
(5 | ) | Total fee paid: | ||||
o Fee paid previously with preliminary materials.
o Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and
identify the filing for which the offsetting fee was paid previously. Identify the previous filing
by registration statement number, or the form or schedule and the date of its filing.
(1 | ) | Amount previously paid: | ||||
(2 | ) | Form, schedule or registration statement no.: | ||||
(3 | ) | Filing party: | ||||
(4 | ) | Date filed: | ||||
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3600 Glenwood Avenue, Suite 104
Raleigh, North Carolina 27612
(919) 719-4770
Raleigh, North Carolina 27612
(919) 719-4770
March 28, 2008
Dear Stockholder:
You are cordially invited to attend the 2008 Annual Meeting of stockholders to be held on
Wednesday, May 7, 2008 at 9:00 a.m., Eastern Time, at 3600 Glenwood Avenue, Raleigh, North Carolina
27612.
The notice of Annual Meeting and proxy statement accompanying this letter provide an outline
of the business to be conducted at the meeting. I will also report on the progress of the Company
during the past year and answer stockholders questions.
It is important that your shares be represented at the Annual Meeting. If you are unable to
attend the meeting in person, I urge you to vote your shares by completing, dating and signing the
enclosed proxy card and promptly returning it in the envelope provided. Your vote is important.
Sincerely yours, | ||||
Garland S. Tucker, III | ||||
President & Chief Executive Officer |
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TRIANGLE CAPITAL CORPORATION
3600 Glenwood Avenue, Suite 104
Raleigh, North Carolina 27612
(919) 719-4770
3600 Glenwood Avenue, Suite 104
Raleigh, North Carolina 27612
(919) 719-4770
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON WEDNESDAY, MAY 7, 2008
TO BE HELD ON WEDNESDAY, MAY 7, 2008
To the Stockholders of Triangle Capital Corporation:
The 2008 Annual Meeting of Stockholders of Triangle Capital Corporation (the Company) will
be held at 3600 Glenwood Avenue, Raleigh, North Carolina 27612, on Wednesday, May 7, 2008, at 9:00
a.m. (Eastern Time) for the following purposes:
1. | To elect eight directors to serve for one year and until their successors have been duly elected and qualified (Proposal No. 1); | |
2. | To approve the Triangle Capital Corporation Amended and Restated 2007 Equity Incentive Plan (Proposal No. 2); | |
3. | To approve a proposal to authorize the Company, pursuant to approval of its Board of Directors, to sell shares of its common stock during the next year at a price below the Companys then current net asset value per share (Proposal No. 3); | |
4. | To ratify the appointment of Ernst & Young LLP as the Companys independent registered public accounting firm for the fiscal year ending December 31, 2008 (Proposal No. 4); and | |
5. | To transact such other business as may properly come before the meeting. |
You have the right to receive notice of and to vote at the meeting if you were a stockholder
of record at the close of business on March 3, 2008. Whether or not you expect to be present in
person at the meeting, please sign the enclosed proxy and return it promptly in the self-addressed
envelope provided. Instructions are shown on the proxy card. In the event there are not sufficient
votes for a quorum or to approve or ratify any of the foregoing proposals at the time of the Annual
Meeting, the Annual Meeting may be adjourned in order to permit further solicitation of the proxies
by the Company.
By order of the Board of Directors, | ||||
Steven C. Lilly | ||||
Chief Financial Officer, Treasurer and Secretary |
Raleigh, North Carolina
March 28, 2008
March 28, 2008
This is an important meeting. To ensure proper representation at the meeting, please complete,
sign, date and return the proxy card in the enclosed, self-addressed envelope. Even if you vote
your shares prior to the meeting, you still may attend the meeting and vote your shares in person.
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TRIANGLE CAPITAL CORPORATION
3600 Glenwood Avenue, Suite 104
Raleigh, North Carolina 27612
(919) 719-4770
3600 Glenwood Avenue, Suite 104
Raleigh, North Carolina 27612
(919) 719-4770
PROXY STATEMENT
2008 Annual Meeting of Stockholders
2008 Annual Meeting of Stockholders
This proxy statement is furnished in connection with the solicitation of proxies by the Board
of Directors of Triangle Capital Corporation (the Company, Triangle, we, us or our) for
use at our 2008 Annual Meeting of Stockholders to be held on Wednesday, May 7, 2008, at 9:00 a.m.
at 3600 Glenwood Avenue, Raleigh, North Carolina 27612, and at any adjournments thereof (the
Annual Meeting). This proxy statement, the accompanying proxy card and our annual report for the
fiscal year ended December 31, 2007 are first being sent to stockholders on or about March 28,
2008.
We encourage you to vote your shares, either by voting in person at the meeting or by granting
a proxy (i.e., authorizing someone to vote your shares). If you properly sign and date the
accompanying proxy card, and we receive it in time for the meeting, the persons named as proxies
will vote the shares registered directly in your name in the manner that you specified. If you give
no instructions on the proxy card, the shares covered by the proxy card will be voted FOR the
election of the nominees as directors and FOR the other matters listed in the accompanying Notice
of Annual Meeting of Stockholders.
INFORMATION ABOUT THE MEETING
When is the Annual Meeting?
The Annual Meeting will be held on Wednesday, May 7, 2008, at 9:00 a.m. (Eastern Time).
Where will the Annual Meeting be held?
The Annual Meeting will be held at 3600 Glenwood Avenue, Raleigh, North Carolina 27612.
What items will be voted on at the Annual Meeting?
There are four matters scheduled for a vote:
1. | To elect eight directors to serve for one year and until their successors have been duly elected and qualified (Proposal No. 1); | |
2. | To approve the Triangle Capital Corporation Amended and Restated 2007 Equity Incentive Plan (Proposal No. 2); | |
3. | To approve a proposal to authorize the Company, pursuant to approval of its Board of Directors, to sell shares of its common stock during the next year at a price below the Companys then current net asset value per share (Proposal No. 3); and | |
4. | To ratify the appointment of Ernst & Young LLP as the Companys independent registered public accounting firm for the fiscal year ending December 31, 2008 (Proposal No. 4). |
As of the date of this proxy statement, we are not aware of any other matters that will be
presented for consideration at the Annual Meeting.
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What are the Board of Directors recommendations?
Our Board of Directors recommends that you vote:
FOR the election of each of the eight nominees named herein to serve on the Board of Directors;
FOR the approval of the Triangle Capital Corporation Amended and Restated 2007 Equity Incentive
Plan;
FOR the proposal to authorize the Company to sell shares of its common stock during the next year
at a price below the Companys then current net asset value per share; and
FOR the ratification of the appointment of Ernst & Young LLP as the Companys independent
registered public accounting firm for the fiscal year ending December 31, 2008.
Will Triangles directors be in attendance at the Annual Meeting?
Triangle encourages, but does not require, its directors to attend annual meetings of
stockholders. However, Triangle anticipates that all of its directors will attend the Annual
Meeting.
INFORMATION ABOUT VOTING
Who is entitled to vote at the Annual Meeting?
Only stockholders of record at the close of business on the record date, March 3, 2008, are
entitled to receive notice of the Annual Meeting and to vote the shares for which they are
stockholders of record on that date at the Annual Meeting, or any postponement or adjournment of
the Annual Meeting. As of the close of business on March 3, 2008, we had 6,803,863 shares of common
stock outstanding.
Stockholders of Record: Shares Registered in Your Name. If on March 3, 2008, your shares were
registered directly in your name with Triangles transfer agent, Bank of New York Mellon, then you
are a stockholder of record. As a stockholder of record, you may vote in person at the Annual
Meeting or vote by proxy. Whether or not you plan to attend the Annual Meeting, we urge you to fill
out and return the enclosed proxy card to ensure your vote is counted.
Beneficial Owners: Shares Registered in the Name of a Broker or Bank. If on March 3, 2008,
your shares were held in an account at a brokerage firm, bank, dealer or other similar
organization, then you are the beneficial owner of shares held in street name and these proxy
materials are being forwarded to you by that organization. The organization holding your account is
considered the stockholder of record for purposes of voting at the Annual Meeting. As a beneficial
owner, you have the right to direct your broker or other agent on how to vote the shares in your
account. You are also invited to attend the Annual Meeting. However, since you are not the
stockholder of record, you may not vote your shares in person at the Annual Meeting unless you
request and obtain a valid proxy from your broker or other agent.
How do I vote?
You may either vote FOR all the nominees to the Board of Directors or you may withhold your
vote for all nominees or for any nominee you specify. For each of the other matters to be voted on,
you may vote FOR or AGAINST or abstain from voting. The procedures for voting are fairly
simple:
Stockholders of Record: Shares Registered in Your Name. If you are a stockholder of record,
you may vote in person at the Annual Meeting or vote by proxy using the enclosed proxy card.
Whether or not you plan to attend the Annual Meeting, we urge you to vote by proxy to ensure your
vote is counted. You may still attend the Annual Meeting and vote in person if you have already
voted by proxy.
| To vote in person, come to the Annual Meeting, and we will give you a ballot when you arrive. |
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| To vote using the enclosed proxy card, simply complete, sign and date the enclosed proxy card and return it promptly in the postage paid envelope provided. If you return your signed proxy card to us before the Annual Meeting, we will vote your shares as you direct. |
Beneficial Owners: Shares Registered in the Name of a Broker or Bank. If you are a beneficial
owner of shares registered in the name of your broker, bank or other agent, you should have
received a proxy card and voting instructions with these proxy materials from that organization
rather than from Triangle. Simply complete and mail the proxy card to ensure that your vote is
counted. Alternatively, you may be able to vote by telephone or over the Internet as instructed by
your broker or bank. To vote in person at the Annual Meeting, you must obtain a valid proxy from
your broker, bank or other agent. Follow the instructions from your broker or bank included with
these proxy materials, or contact your broker or bank to request a proxy form.
How many votes do I have?
On each matter to be voted upon, you have one vote for each share of common stock for which
you are the stockholder of record as of March 3, 2008.
What if I return a proxy card but do not make specific choices?
If you return a signed and dated proxy card without marking any voting selections, your shares
will be voted: FOR the election of each of the eight nominees named herein to serve on the Board
of Directors; FOR the approval of the Triangle Capital Corporation Amended and Restated 2007
Equity Incentive Plan; FOR the proposal to authorize the Company to sell shares of its common
stock during the next year at a price below the Companys then current net asset value per share;
and FOR the ratification of the appointment of Ernst & Young LLP as Triangles independent
registered public accounting firm for the fiscal year ending December 31, 2008.
If any other matter is properly presented at the meeting, your proxy (one of the individuals
named on your proxy card) will vote your shares as recommended by the Board of Directors or, if no
recommendation is given, will vote your shares using his or her best judgment.
Can I change my vote after submitting my proxy card?
Yes. You can revoke your proxy at any time before the final vote at the Annual Meeting. If you
are the record holder of your shares, you may revoke your proxy in any one of three ways:
| You may submit another properly completed proxy bearing a later date; | ||
| You may send a written notice that you are revoking your proxy to Triangle Capital Corporation, 3600 Glenwood Avenue, Suite 104, Raleigh, NC 27612, Attention: Steven C. Lilly, Corporate Secretary; or | ||
| You may attend the Annual Meeting and notify the election officials at the Annual Meeting that you wish to revoke your proxy and vote in person. Simply attending the Annual Meeting will not, by itself, revoke your proxy. |
If your shares are held by your broker or bank as a nominee or agent, you should follow the
instructions provided by your broker or bank.
How are votes counted?
Votes will be counted by the inspector of election appointed for the Annual Meeting, who will
separately count FOR and withheld votes, and, with respect to proposals other than the election
of directors, AGAINST, ABSTAIN and broker non-votes. A broker non-vote occurs when a nominee,
such as a broker or bank, holding shares for a beneficial owner does not vote on a particular
proposal because the nominee does not have discretionary voting power with respect to that proposal
and has not received instructions with respect to that proposal from the beneficial owner. In the
event that a broker, bank, custodian, nominee or other record holder of our common stock
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indicates on a proxy that it does not have discretionary authority to vote certain shares on a
particular proposal, then those shares will be treated as broker non-votes with respect to that
proposal. Accordingly, if you own shares through a nominee, such as a broker or bank, please be
sure to instruct your nominee how to vote to ensure that your vote is counted on each of the
proposals.
If your shares are held by your broker as your nominee (that is, in street name), you will
need to obtain a proxy form from the institution that holds your shares and follow the instructions
included on that form regarding how to instruct your broker to vote your shares. Please note that
brokers that have not received voting instructions from their clients cannot vote on their clients
behalf on non-routine proposals, such as the proposal to approve the Companys Amended and
Restated 2007 Equity Incentive Plan (Proposal No. 2) and the proposal to allow the Company to issue
shares of common stock below net asset value (Proposal No. 3), but may vote their clients shares
on other proposals.
Abstentions and broker non-votes will be treated as shares present for the purpose of
determining the presence of a quorum for the transaction of business at the Annual Meeting.
How many votes are needed to approve each proposal?
| For Proposal No. 1, the eight nominees receiving the most FOR votes, among votes properly cast in person or by proxy, will be elected. If you vote WITHHOLD AUTHORITY with respect to one or more nominees, your shares will not be included in determining the number of votes cast and, as a result, will have no effect on this proposal. | ||
| To be approved, Proposal No. 2 must receive FOR votes from the majority of all votes cast at the Annual Meeting, whether in person or by proxy. For purposes of the vote on this proposal, abstentions and broker non-votes will not be counted as votes cast and will have no effect on the result of the vote, although they will be considered present for the purpose of determining the presence of a quorum. | ||
| To be approved, Proposal No. 3 must receive FOR votes from (1) a majority of the outstanding shares of common stock entitled to vote at the Annual Meeting and (2) a majority of the outstanding shares of common stock entitled to vote at the Annual Meeting which are not held by affiliated persons of the Company. With respect to Proposal No. 3 only, Section 2(a)(42) of the Investment Company Act of 1940, or the 1940 Act, defines a majority of the outstanding shares as the lesser of: (1) 67% or more of the common stock of Triangle present or represented by proxy at the Annual Meeting, if the holders of more than 50% of Triangles common stock are present or represented by proxy; or (2) more than 50% of the outstanding common stock of Triangle. For purposes of the vote on this proposal, abstentions and broker non-votes will have the effect of votes against the proposal, although they will be considered present for purposes of determining the presence of a quorum. | ||
| To be approved, Proposal No. 4 must receive FOR votes from a majority of all votes cast at the Annual Meeting, whether in person or by proxy. For purposes of the vote on this proposal, abstentions and broker non-votes will not be counted as votes cast and will have no effect on the result of the vote, although they will be considered present for the purpose of determining the presence of a quorum. |
How many shares must be present to constitute a quorum for the Annual Meeting?
A quorum of stockholders is necessary to hold a valid meeting. A quorum will be present if at
least a majority of the outstanding shares entitled to vote are represented by stockholders present
at the Annual Meeting or by proxy. On March 3, 2008, the record date, there were 6,803,863 shares
outstanding and entitled to vote. Thus, 3,401,932 shares must be represented by stockholders
present at the Annual Meeting or by proxy to have a quorum.
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Your shares will be counted towards the quorum only if you submit a valid proxy (or one is
submitted on your behalf by your broker, bank or other nominee) or if you vote in person at the
Annual Meeting. Abstentions and broker non-votes will be counted towards the quorum requirement.
If a quorum is not present at the Annual Meeting, or if a quorum is present but there are not
enough votes to approve any of the proposals, the person named as chairman of the Annual Meeting
may adjourn the meeting to permit further solicitation of proxies. A stockholder vote may be taken
on one or more of the proposals in this proxy statement prior to any such adjournment if there are
sufficient votes for approval on such proposal(s).
How can I find out the results of the voting at the Annual Meeting?
Preliminary voting results will be announced at the Annual Meeting. Final results will be
published in Triangles quarterly report on Form 10-Q for the second quarter of 2008.
ADDITIONAL INFORMATION
How and when may I submit a stockholder proposal for Triangles 2009 Annual Meeting?
Our annual meeting of stockholders generally is held in April or May of each year. We will
consider for inclusion in our proxy materials for the 2009 Annual Meeting of Stockholders,
stockholder proposals that are received at our executive offices no later than November 28, 2008
and that comply with all applicable requirements of Rule 14a-8 promulgated under the Securities
Exchange Act of 1934, as amended, or the Exchange Act. Proposals must be sent to our Corporate
Secretary at Triangle Capital Corporation, 3600 Glenwood Avenue, Suite 104, Raleigh, North Carolina
27612.
Pursuant to Triangles bylaws, stockholders wishing to submit proposals or director
nominations that are not to be included in our proxy materials must have given timely notice
thereof in writing to our Corporate Secretary. To be timely for the 2009 Annual Meeting of
Stockholders, you must notify our Corporate Secretary, in writing, not later than the close of
business on December 28, 2008, nor earlier than the close of business on November 28, 2008. We also
advise you to review Triangles bylaws, which contain additional requirements about advance notice
of stockholder proposals and director nominations, including the different notice submission date
requirements in the event that we mail out the notice for our 2009 Annual Meeting of Stockholders
before February 26, 2009 or after April 27, 2009. The Chairman of the 2009 Annual Meeting of
Stockholders may determine, if the facts warrant, that a matter has not been properly brought
before the meeting and, therefore, may not be considered at the meeting. In addition, the proxy
solicited by the Board of Directors for the 2009 Annual Meeting of Stockholders will confer
discretionary voting authority with respect to (i) any proposal presented by a stockholder at that
meeting for which Triangle has not been provided with timely notice and (ii) any proposal made in
accordance with the Triangles bylaws, if the 2009 proxy statement briefly describes the matter and
how managements proxy holders intend to vote on it, if the stockholder does not comply with the
requirements of Rule 14a-4(c)(2) promulgated under the Exchange Act.
If a stockholder is recommending a candidate to serve on the Board of Directors, the
recommendation must include the information specified in Triangles bylaws, including the
following:
| the stockholders name and address, and the class, series and number of all shares of stock of Triangle which are owned beneficially by such stockholder; | ||
| to the extent known by such stockholder, the name and address of any other stockholder supporting such candidate; | ||
| the name, age, business address and residence address of such candidate proposed; | ||
| the class, series and number of shares of stock of Triangle which are owned beneficially and of record by such candidate and the date such shares were acquired and the investment intent of such acquisition; |
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| whether such stockholder believes any such candidate is, or is not, an interested person of Triangle, as defined in the 1940 Act and information regarding such individual that is sufficient, in the discretion of the Board of Directors or any committee thereof or any authorized officer of Triangle, to make such determinations; | ||
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| a description of all arrangements or understandings between the stockholder and the proposed nominee and any other person or persons regarding the nomination; | ||
| the nominees written consent to being named in Triangles proxy statement as a nominee and to serving as a director if elected; and | ||
| all information regarding the nominee that would be required to be included in Triangles proxy statement by the rules of the SEC, including the nominees age, business experience for the past five years and any other directorships held by the nominee. |
If a stockholder proposes to bring any other business before the 2009 Annual Meeting, the
proposal must include a description of the business desired to be brought before the meeting, the
reasons for proposing such business at the meeting and any material interest or anticipated
interest in such business of such stockholder and any person associated with such stockholder.
How can I obtain Triangles Annual Report on Form 10-K?
A stockholders letter and a copy of our Annual Report on Form 10-K for the fiscal year ended
December 31, 2007, which together constitutes our 2007 Annual Report to Stockholders, is being
mailed along with this proxy statement. Our 2007 Annual Report is not incorporated into this proxy
statement and shall not be considered proxy solicitation material.
We will also mail to you without charge, upon written request, a copy of our Annual Report on
Form 10-K for the fiscal year ended December 31, 2007, as well as a copy of any exhibit
specifically requested. Requests should be sent to: Corporate Secretary, Triangle Capital
Corporation, 3600 Glenwood Avenue, Suite 104, Raleigh, North Carolina 27612. A copy of our Annual
Report on Form 10-K has also been filed with the SEC and may be accessed from the SECs homepage
(www.sec.gov).
Who is paying for this proxy solicitation?
We will pay for the entire cost of soliciting proxies. We are paying The Altman Group, Inc. a
fee of approximately $7,500 plus out-of-pocket expenses to solicit proxies. In addition to these
mailed proxy materials, our directors and employees may also solicit proxies in person, by
telephone or by other means of communication. Directors and employees will not be paid any
additional compensation for soliciting proxies. We may also reimburse brokerage firms, banks and
other agents for the cost of forwarding proxy materials to beneficial owners.
How many copies should I receive if I share an address with another stockholder?
The SEC has adopted rules that permit companies and intermediaries, such as brokers, to
satisfy the delivery requirements for proxy statements and annual reports with respect to two or
more stockholders sharing the same address by delivering a single proxy statement addressed to
those stockholders. This process, which is commonly referred to as householding, potentially
provides extra convenience for stockholders and cost savings for companies.
Brokers may be householding our proxy materials by delivering a single proxy statement and
Annual Report to multiple stockholders sharing an address unless contrary instructions have been
received from the affected stockholders. Once you have received notice from your broker that they
will be householding materials to your address, householding will continue until you are notified
otherwise or until you revoke your consent. If at any time you no longer wish to participate in
householding and would prefer to receive a separate proxy statement and Annual Report, or if you
are receiving multiple copies of the proxy statement and Annual Report and wish to receive only
one, please notify your broker if your shares are held in a brokerage account or us if you are a
stockholder of
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record. You can notify us by sending a written request to: Steven C. Lilly, Corporate Secretary,
Triangle Capital Corporation, 3600 Glenwood Avenue, Suite 104, Raleigh, North Carolina 27612, or by
calling (919) 719-4770. In addition, Triangle will promptly deliver, upon written or oral request
to the address or telephone number above, a separate copy of the annual report and proxy statement
to a stockholder at a shared address to which a single copy of the documents was delivered.
Whom should I contact if I have any questions?
If you have any questions about the Annual Meeting, these proxy materials or your ownership of
our common stock, please contact Steven C. Lilly c/o Triangle Capital Corporation, 3600 Glenwood
Avenue, Suite 104, Raleigh, North Carolina 27612, Telephone 919-719-4770 or by Fax: 919-719-4777.
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PROPOSAL NO. 1
ELECTION OF DIRECTORS
ELECTION OF DIRECTORS
Our Amended and Restated Bylaws (Bylaws) provide that our Board of Directors will be no less
than one director and no greater than twelve directors. The number of directors is currently set at
eight. Directors are elected for a term of one year each, with each directors term of office
expiring the following year. Directors serve until their successors are elected and qualified.
The current directors, Messrs. Burgess, Dunwoody, Garrott, Goldstein, Lilly, Rich, Smith and
Tucker have been nominated by our Board of Directors (upon the recommendation by our nominating and
corporate governance committee) for election for a one-year term expiring in 2009. Each was
initially elected as a director by the sole stockholder of the Company prior to our initial public
offering in February 2007 to serve until our 2008 Annual Meeting. No person being nominated as a
director is being proposed for election pursuant to any agreement or understanding between us and
any such person. Each director has agreed to serve as a director if elected and has consented to be
named as a nominee.
A stockholder can vote for or withhold his or her vote from any or all of the nominees. In the
absence of instructions to the contrary, it is the intention of the persons named as proxies to
vote such proxy for the election of all the nominees named below. If any of the nominees should
decline or be unable to serve as a director, it is intended that the proxy will be voted for the
election of such person or persons who are nominated as replacements. The Board of Directors has no
reason to believe that any of the persons named will be unable or unwilling to serve.
Information about the Nominees
Certain information, as of March 28, 2008, with respect to each of the eight nominees for
election at the Annual Meeting, all of whom currently serve as our directors, is set forth below,
including their names, ages, a brief description of their recent business experience, including
present occupations and employment, certain directorships that each nominee holds, and the year in
which each nominee became a director of the Company. Each directors current term expires on May
7, 2008, the Annual Meeting date.
Certain of our directors who are also officers of the Company may serve as directors of, or on
the boards of managers of, certain of our portfolio companies. In addition, the Board of Directors
of Triangle Mezzanine Fund LLLP, our wholly-owned consolidated subsidiary that has elected to be
treated as a business development company, or BDC, under the 1940 Act (Triangle Mezzanine Fund),
is composed of all of the Companys directors. The business address of each nominee listed below is
3600 Glenwood Avenue, Suite 104, Raleigh, North Carolina 27612.
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Nominees for Directors
Interested Directors
Messrs. Tucker, Burgess and Lilly are interested persons as defined in the 1940 Act due to their
positions as officers of the Company.
Name and Year | ||||||
First Elected Director | Age | Background Information | ||||
Garland S. Tucker, III (2006)
|
60 | Mr. Tucker currently serves as Chairman of our Board of Directors, Chief Executive Officer, and President and is a member of our investment committee. Mr. Tucker was a co-founder of Triangle Capital Partners LLC, the former external manager of Triangle Mezzanine Fund prior to our IPO. Prior to co-founding Triangle Capital Partners, LLC in 2000, Mr. Tucker and an outside investor group sold First Travelcorp, a corporate travel services company that he and the investors founded in 1991. For the two years preceding the founding of First Travelcorp, Mr. Tucker served as Group Vice President, Chemical Bank, New York, with responsibility for southeastern corporate finance. Prior to Chemical Bank, Mr. Tucker spent a decade with Carolina Securities Corporation, serving as President and Chief Executive Officer until 1988. During his tenure, Carolina Securities Corporation was a member of the New York Stock Exchange, and Mr. Tucker served a term as President of the Mid-Atlantic Securities Industry Association. Mr. Tucker entered the securities business in 1975 with Investment Corporation of Virginia. He is a graduate of Washington & Lee University and Harvard Business School. | ||||
Brent P.W. Burgess (2006)
|
42 | Mr. Burgess currently serves as our Chief Investment Officer and is a member of our Board of Directors and our investment committee. Mr. Burgess was a co-founder of Triangle Capital Partners, LLC. Prior to joining Triangle, he was Vice President for five years at Oberlin Capital, an SBIC mezzanine fund. He began his private equity career in 1996 with Cherokee International Management, a Raleigh based private equity firm, where he worked as an analyst and associate. He previously served on the Board of Governors of the National Association of SBICs and is a past president of the Southern Regional Association of SBICs. He is a graduate of the University of Regina and Regent College, Vancouver. | ||||
Steven C. Lilly (2006)
|
38 | Mr. Lilly currently serves as our Chief Financial Officer, Secretary, Treasurer and Chief Compliance Officer and is a member of our Board of Directors and our investment committee. Prior to joining Triangle Capital Partners in December, 2005, Mr. Lilly spent six and a half years with SpectraSite, Inc., which prior to its sale in August, 2005, was the third largest independent wireless tower company in the United States. At SpectraSite, Mr. Lilly served as Senior Vice President-Finance & Treasurer and Interim Chief Financial Officer. Prior to SpectraSite, Mr. Lilly was Vice President of the Media & Communications Group with First Union Capital Markets (now Wachovia Securities), specializing in arranging financings for high growth, financial sponsor driven companies across the media and telecommunications sector. Mr. Lilly is a graduate of Davidson College and has completed the executive education program at the University of North Carolinas Kenan-Flagler School of Business. |
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Independent Directors
Messrs. Dunwoody, Garrott, Goldstein, Rich and Smith are considered independent for purposes of the
1940 Act.
Name and Year First | ||||||
Elected Director | Age | Background Information | ||||
W. McComb Dunwoody (2007)
|
63 | Mr. Dunwoody currently serves on our Board of Directors and is a member of our compensation committee. He is the founder of The Inverness Group Incorporated and a Managing Member of Inverness Management LLC, a private equity investment firm that specializes in management buyout transactions. Inverness is not a parent, subsidiary or other affiliate of Triangle. Prior to Inverness, Mr. Dunwoody began the Corporate Finance Department of First City National Bank of Houston as a Senior Vice President. From 1968 to 1975, he worked in New York as an investment banker with The First Boston Corporation and Donaldson, Lufkin & Jenrette. Mr. Dunwoody currently serves on various corporate boards of directors and was formerly the Chairman of the Executive Committee of the Board of Directors of National-Oilwell, Inc. Mr. Dunwoodys community involvement includes the co-founding of Imagine College, an education program serving over 5,000 inner-city students. He received an undergraduate degree in Business Administration from the University of Texas Honors Program. | ||||
|
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Thomas M. Garrott, III (2007)
|
70 | Mr. Garrott currently serves on our Board of Directors and is a member of our audit committee and our nominating and corporate governance committee. Mr. Garrott is the retired chairman and chief executive officer of National Commerce Financial, which has since merged into SunTrust Banks. Under Mr. Garrotts leadership, NCF earned a national reputation for inventiveness in retail banking delivery systems, having pioneered successfully large-scale, in-store banking since the early 1980s. NCF was not, and Sun Trust is not, a parent, subsidiary or other affiliate of Triangle. Active in business and civic activities, Mr. Garrott formerly served on the Board of Directors of SunTrust Banks, Inc., as well as the Pension Benefit Guaranty Corporation Advisory Committee. In addition, he has served as chairman of the Memphis Area Chamber of Commerce and a member of the Wharton School executive board. Mr. Garrott has a strong interest in education as well, having served on the boards of various schools, including St. Marys School, The Hutchison School, Presbyterian Day School, The Baylor School and Rhodes College. He holds a bachelors degree in economics from Vanderbilt University and a Masters in Business Administration from the Wharton School of Finance at the University of Pennsylvania. | ||||
|
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Benjamin S. Goldstein (2007)
|
52 | Mr. Goldstein currently serves on our Board of Directors and is a member of our audit committee and our compensation committee. He is currently the President and co-founder of The Advisory Group, LLC, a real estate advisory, development and investment firm based in Cary, North Carolina. The Advisory Group is not a parent, subsidiary or other affiliate of Triangle. Mr. Goldstein is also active in his community, as he currently serves on the boards of the Wake Education Partnership, based in Raleigh, North Carolina, as well as Paragon Commercial Bank. Prior to co-founding The Advisory Group, Mr. Goldstein was President and Partner of Roanoke Properties, the developer of a residential resort real estate community on the Outer Banks of North Carolina, which had a build out value of over $300 million. He spent three years in the securities business, having been |
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Name and Year First | ||||||
Elected Director | Age | Background Information | ||||
|
the Chief Financial Officer of Carolina Securities Corporation for one year, and later named to head the Carolina Securities Division of Thomson McKinnon Corporation, which had acquired Carolina Securities. He began his career at KPMG, where he worked with audit and consulting clients with an emphasis on the real estate industry. A native of North Carolina, Mr. Goldstein graduated from UNC-Chapel Hill with a degree in business. | |||||
Simon B. Rich, Jr. (2007)
|
63 | Mr. Rich currently serves on our Board of Directors and is a member of our audit committee and our nominating and corporate governance committee. He retired in 2001 from his positions as Chief Executive Officer of Louis Dreyfus Holding Co. and Chairman and Chief Executive Officer of Louis Dreyfus Natural Gas, two affiliated Delaware and Oklahoma companies, respectively, neither of which was a parent, subsidiary or other affiliate of Triangle. As CEO, Mr. Richs companies combined operations included roles such as oil refinery processing, petroleum product storage and distribution, natural gas production and distribution and the merchandising and distribution of electricity in North America and Europe, as well as the merchandising and processing of agricultural products in North America, South America and Europe. During Mr. Richs tenure, his companies successfully partnered with Electricite de France, creating EDF Trading, a company that currently dispatches Frances electric generation system. His work experience, which spans more than thirty years, includes all aspects of the energy and agriculture industries. His expertise involves private equity investments with an emphasis on sustainability in energy and agriculture. In addition to Mr. Richs career in the energy and agriculture industries, he currently serves as a trustee of Warren Wilson College and serves on the Board of Directors of Environmental Defense. Mr. Rich is also the former Chairman of the Board of Visitors of The Nicholas School of the Environment and Earth Sciences at Duke University, where he is now Emeritus and an adjunct instructor. Mr. Rich holds an undergraduate degree in Economics from Duke University. | ||||
|
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Sherwood H. Smith, Jr. (2007)
|
73 | Mr. Smith currently serves on our Board of Directors and is a member of our compensation committee and our nominating and corporate governance committee. He currently serves as a director of Franklin Street Partners, a privately held investment management firm in Chapel Hill, North Carolina. Mr. Smith is also active in his community, as he currently serves as a director and Vice Chairman of the Research Triangle Foundation and as a Trustee and Chairman of the Triangle Universities Center for Advanced Studies, Inc. Until 2000 he served as a director of Carolina Power & Light Company (now Progress Energy Corporation), a company for which he has also served as Chairman, President and Chief Executive Officer. In addition, Mr. Smith has served as a director of Wachovia Corporation, Nortel Networks, Springs Industries, and Northwestern Mutual Life Insurance Company (Trustee). Other than his current position as director, Mr. Smith has never been employed by a parent, subsidiary or other affiliate of Triangle. He has been a member of the Business Roundtable and The Business Council and has served as Chairman of the North Carolina Citizens for Business and Industry. Mr. Smith has both an undergraduate and law degree from the University of North Carolina at Chapel Hill. |
The Board of Directors recommends that you vote FOR the election of the nominees named in this
proxy statement.
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DIRECTOR COMPENSATION
Our directors are divided into two groupsinterested directors and independent directors.
Interested directors are interested persons as defined in Section 2(a)(19) of the 1940 Act. The
compensation table below sets forth compensation that we paid during the year ended December 31,
2007, to our independent directors. Our interested directors are not compensated for their service
as Board members.
Fees Earned | ||||||||||||||||
or Paid in | All other | |||||||||||||||
Name | Year | Cash($) | Compensation($) | Total($) | ||||||||||||
W. McComb Dunwoody |
2007 | $ | 28,000 | | $ | 28,000 | ||||||||||
Thomas M. Garrott, III |
2007 | $ | 35,000 | | $ | 35,000 | ||||||||||
Benjamin S. Goldstein |
2007 | $ | 38,000 | 5,000 | (1) | $ | 42,000 | |||||||||
Simon B. Rich, Jr. |
2007 | $ | 38,000 | 5,000 | (2) | $ | 42,000 | |||||||||
Sherwood H. Smith, Jr. |
2007 | $ | 38,000 | 5,000 | (3) | $ | 42,000 |
(1) | Mr. Goldstein received $5,000 in 2007 for his services as our audit committee chairman. | |
(2) | Mr. Rich received $5,000 in 2007 for his services as our nominating and corporate governance committee chairman. | |
(3) | Mr. Smith received $5,000 in 2007 for his services as our compensation committee chairman. |
Director Fees
In 2007, each of our directors who were not one of our employees or an employee of our
subsidiaries earned an annual fee of $20,000 for services as a director, payable quarterly.
Independent directors received a fee of $2,000 for each board meeting attended in person and $1,000
for each board meeting attended by conference telephone or similar communications equipment.
Independent directors receive a fee of $1,000 for each committee meeting attended in person and
$500 for each committee meeting attended by conference telephone or similar communication
equipment. In addition, each committee chairman received an annual fee of $5,000. We reimbursed our
independent directors for all reasonable direct out-of-pocket expenses incurred in connection with
their service on the Board. Directors who are also our employees or employees of our subsidiaries
did not receive compensation for their services as directors.
Non-Employee Director Equity Compensation
Our Board of Directors and sole stockholder approved Triangles 2007 Equity Incentive Plan, or
the Original Plan, effective February 13, 2007, for the purpose of attracting and retaining the
services of executive officers, directors and other key employees. During our fiscal year ended
December 31, 2007, no equity incentive awards were granted under the Original Plan, in part due to
certain 1940 Act restrictions which disallow the issuance of certain types of compensation to a
business development companys non-employee directors without having first obtained exemptive
relief.
In light of the aforementioned restrictions, we filed a request with the Securities and
Exchange Commission, or the SEC, in 2007 for exemptive relief with respect to our ability to issue
restricted stock to our employees and non-employee directors. On February 6, 2008, the Board voted
to approve the Triangle Capital Corporation Amended and Restated 2007 Equity Incentive Plan, or the
Amended and Restated Plan, and to recommend approval of the Amended and Restated Plan by
stockholders at the Annual Meeting, subject to an order from the SEC granting exemptive relief. On
March 18, 2008, we received an order from the SEC authorizing such issuance of restricted stock to
our employees and non-employee directors pursuant to the terms of the Amended and Restated Plan and
as otherwise set forth in the exemptive order.
Subject to approval of the Amended and Restated Plan by our stockholders, the Amended and
Restated Plan provides that our non-employee directors will each receive an automatic grant of
shares of restricted stock at the beginning of each one-year term of service on the Board, for
which forfeiture restrictions will lapse one year from the grant date (i.e. grant after each annual
meeting). The number of shares granted to each non-employee director will be the equivalent of
$30,000 worth of shares taken at the market value at the close of the exchange on
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the date of grant. The grants of restricted stock to non-employee directors under the Amended
and Restated Plan will be automatic and will not be changed without SEC approval.
If approved by our stockholders, our Board will administer the Amended and Restated Plan.
Pursuant to the terms of the Amended and Restated Plan and the conditions of the order, each grant
of restricted stock will be approved by the required majority of our independent directors. In the
event of a consolidation, merger, stock sale, a sale of all or substantially all of the Companys
assets, a dissolution or liquidation or other similar events (a Change in Control), all or a
portion of the award will vest, become immediately exercisable or payable and have all restrictions
lifted upon a Change in Control, unless otherwise specified in the award agreement.
Our Board of Directors may delegate administration of the Amended and Restated Plan to a
committee of three (3) or more members of our Board of Directors, comprised solely of the
independent directors who are independent pursuant to the listing requirements of the Nasdaq Global
Market. Our Board may abolish such committee at any time and revest in our Board the administration
of the Amended and Restated Plan. If approved by our stockholders, our Board will administer the
Amended and Restated Plan in a manner that is consistent with the applicable requirements of the
Nasdaq Global Market and the exemptive order.
EXECUTIVE OFFICERS
As of March 28, 2008, we do not have any executive officers who are not directors of Triangle
Capital Corporation. Our executive officers, Messrs. Tucker, Lilly and Burgess, serve as directors
and executive officers of the Company, as well as directors, managers and/or officers of Triangle
Mezzanine Fund LLLP.
CORPORATE GOVERNANCE
Director Independence
In accordance with rules of the Nasdaq Global Market, our Board of Directors annually
determines each directors independence. We do not consider a director independent unless our Board
of Directors has determined that he or she has no material relationship with us. We monitor the
relationships of our directors and officers through the activities of our nominating and corporate
governance committee and through a questionnaire each director completes no less frequently than
annually and updates periodically as information provided in the most recent questionnaire changes.
In order to evaluate the materiality of any such relationship, the Board of Directors uses the
definition of director independence set forth in the listing standards promulgated by the Nasdaq
Global Market. Rule 4200(a)(15)(G) provides that a director of a BDC shall be considered to be
independent if he or she is not an interested person of the Company, as defined in Section
2(a)(19) of the 1940 Act.
In addition, our chief compliance officer reviews, no less than quarterly, a list of each
directors securities transactions and holdings in order to ensure that our directors have not
entered into any transactions with, or own any interest in, companies that would cause one or more
of them to be considered interested persons as defined in Section 2(a)(19) of the 1940 Act. For
a more detailed description of these policies, please see Certain Relationships and Related Party
Transactions herein.
The Board of Directors has determined that Messrs. Dunwoody, Garrott, Goldstein, Rich and
Smith are independent and have no relationship with us, except as directors and stockholders. All
of the members of our audit committee, compensation committee and nominating and corporate
governance committee are independent as defined in Section 2(a)(19) of the 1940 Act.
Meetings of the Board of Directors and Committees
During 2007, our Board of Directors held five board meetings. Our Board of Directors has
established an audit committee, a compensation committee, a nominating and corporate governance
committee and an investment committee. Each of the audit committee, compensation committee and
nominating and corporate governance committee operates pursuant to a charter, each of which is
available under Corporate Governance on the Investor
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Relations section of our website at the following URL: http://ir.tcap.com, and is also
available in print to any stockholder who requests a copy. All directors attended at least 75% of
the aggregate number of meetings of the Board and of the respective committees on which they
served, with the exception of Mr. Dunwoody, who only attended 56%. Mr. Dunwoody attended four out
of five board meetings, and one out of four compensation committee meetings. We expect each
director to make a diligent effort to attend all Board and committee meetings, as well as each
Annual Meeting of stockholders.
We have designated Simon B. Rich, Jr. as the presiding director to preside at all executive
sessions of non-employee directors. Executive sessions of non-employee directors are held at least
quarterly. Stockholders may communicate with Mr. Rich by writing to: Board of Directors, Triangle
Capital Corporation, 3600 Glenwood Avenue, Suite 104, Raleigh, North Carolina 27612.
Audit Committee
We have a separately-designated standing audit committee established in accordance with
Section 3(a)(58)(A) of the Exchange Act. The audit committee is responsible for selecting our
independent registered public accounting firm, reviewing the plans, scope and results of the audit
engagement with our independent registered public accounting firm, approving professional services
provided by our independent registered public accounting firm, reviewing the independence of our
independent registered public accounting firm, reviewing the integrity of the audits of the
financial statements and reviewing the adequacy of our internal accounting controls.
Our Board of Directors adopted the Audit Committee Charter on January 31, 2007. The Audit
Committee Charter is publicly available under Corporate Governance on the Investor Relations
section of our website at the following URL: http://ir.tcap.com.
The members of the audit committee are Messrs. Garrott, Goldstein and Rich, each of whom is
independent for purposes of Section 2(a)(19) of the 1940 Act and the Nasdaq Global Market corporate
governance listing standards. Mr. Goldstein serves as the chairman of the audit committee. Our
Board of Directors has determined that Mr. Goldstein is an audit committee financial expert as
defined under Item 407(d)(5) of Regulation S-K of the Exchange Act. Mr. Goldstein meets the current
independence requirements of Rule 10A-3 of the Exchange Act, and, in addition, is not an
interested person of the Company, as defined in Section 2(a)(19) of the 1940 Act. Our audit
committee held four meetings during 2007.
Compensation Committee
The compensation committee is appointed by the Board to discharge its responsibilities
relating to the compensation of our executive officers. The compensation committee has the
responsibility for recommending appropriate compensation levels for our executive officers,
evaluating and approving executive officer compensation plans, policies and programs, reviewing
benefit plans for executive officers and other employees and producing an annual report on
executive compensation for inclusion in our proxy statement. The Compensation Committee Charter is
available under Corporate Governance on the Investor Relations section of our website at the
following URL: http://ir.tcap.com.
Members of our compensation committee review annually and approve goals and objectives
relevant to our executive officers compensation, including annual performance objectives. They
evaluate annually the performance of the chief executive officer and other executive officers, and
recommend to the independent directors of the Board the compensation level for each such person
based on this evaluation. They review on a periodic basis our executive compensation programs to
determine whether they are properly coordinated and achieve their intended purposes. They review
and recommend to the Board for approval any changes in incentive compensation plans and
equity-based compensation plans. The members of the compensation committee review and approve all
equity-based compensation plans of Triangle, whether or not final approval rests with the Companys
stockholders, and grant equity-based awards pursuant to such plans in compliance with the 1940 Act.
They review and approve employment agreements and any special supplemental benefits or perquisites
for our executive officers. They review broadly employee compensation strategies, including salary
levels and ranges and employee fringe benefits, in conjunction with compensation consultants.
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In determining executive compensation levels for our executive officers, the compensation
committee meets at least annually with management, and may meet with compensation consultants, in
order to determine whether current methods of executive compensation are effective in achieving
Triangles short and long term strategies. The compensation committee, in conjunction with a
compensation consultant if necessary, will analyze the compensation of executive officers and
directors of other BDCs in order to establish competitive compensation levels to attract and retain
quality executive officers and investment professionals.
The members of the compensation committee are Messrs. Dunwoody, Goldstein and Smith, each of
whom is independent for purposes of Section 2(a)(19) the 1940 Act and the Nasdaq Global Market
corporate governance listing standards. Mr. Smith serves as the chairman of the compensation
committee. Our compensation committee held four meetings during 2007.
Nominating and Corporate Governance Committee
The nominating and corporate governance committee is responsible for identifying, researching
and nominating directors for election by our stockholders, selecting nominees to fill vacancies on
our Board of Directors or a committee of the Board, developing and recommending to the Board of
Directors a set of corporate governance principles and overseeing the evaluation of the Board of
Directors and our management. The nominating and corporate governance committees policy is to
consider nominees properly recommended by our stockholders in accordance with our charter, bylaws
and applicable law. For more information on how our stockholders may recommend a nominee for a seat
on our Board, see our answer to the question How and when may I submit a stockholder proposal for
Triangles 2009 Annual Meeting? under Additional Information in this proxy statement.
In considering possible candidates for nomination, the nominating and corporate governance
committee will consider certain factors including whether the composition of the Board contains a
majority of independent directors as determined by the Nasdaq Global Market standards and the 1940
Act, the candidates character and integrity, whether the candidate possesses an inquiring mind,
vision and the ability to work well with others, conflicts of interest interfering with the proper
performance of the responsibilities of a director, a candidates experience, whether the candidate
has sufficient time to devote to the affairs of Triangle, including consistent attendance at Board
and committee meetings and advance review of materials and whether each candidate can be trusted to
act in the best interests of us and all of our stockholders.
Our Board of Directors adopted the Nominating and Corporate Governance Committee Charter on
January 31, 2007. The Nominating and Corporate Governance Committee Charter is publicly available
under Corporate Governance on the Investor Relations section of our website at the following URL:
http://ir.tcap.com.
The members of the nominating and corporate governance committee are Messrs. Garrott, Rich and
Smith, each of whom is independent for purposes of Section 2(a)(19) the 1940 Act and the Nasdaq
Global Market corporate governance listing standards. Each nominee for election under Proposal 1 at
the 2008 Annual Meeting was recommended by the members of the nominating and corporate governance
committee to our Board of Directors, which approved such nominees. Mr. Rich serves as the chairman
of the nominating and corporate governance committee. Our nominating and corporate governance
committee held four meetings during 2007.
Investment Committee
Our investment committee is responsible for all aspects of our investment process. The members
of our investment committee are Garland S. Tucker, III, Brent P.W. Burgess, Steven C. Lilly,
Tarlton H. Long and David F. Parker. Our investment committee generally meets once a week but also
meets on an as needed basis depending on transaction volume. Our investment committee is involved
in all significant stages of the investment process, including, origination, due diligence and
underwriting, approval, documentation and closing, and portfolio management and investment
monitoring.
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Communication with the Board of Directors
Stockholders with questions about Triangle Capital Corporation are encouraged to contact
Steven C. Lilly, at 3600 Glenwood Avenue, Suite 104, Raleigh, North Carolina 27612, (919) 719-4770.
However, if stockholders feel their questions have not been addressed, they may communicate with
our Board of Directors by sending their communications to: Triangle Capital Corporation Board of
Directors, c/o Simon B. Rich, Jr., 3600 Glenwood Avenue, Suite 104, Raleigh, North Carolina 27612.
In addition, stockholders may communicate with us by clicking Contact IR on the Investor
Relations section of our website at the following URL: http://ir.tcap.com. All stockholder
communications received by our corporate secretary in this manner will be delivered to one or more
members of the Board of Directors.
Code of Ethics and Corporate Governance Guidelines
We have adopted a code of ethics and corporate governance guidelines covering ethics and
business conduct. These documents apply to our directors, officers and employees. Our code of
ethics and corporate governance guidelines are available on the Investor Relations section of our
website at the following URL: http://ir.tcap.com/governance.cfm. We will report any amendments to
or waivers of a required provision of our code of ethics and corporate governance guidelines on our
website or in a Current Report on Form 8-K.
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COMPENSATION DISCUSSION AND ANALYSIS
General
In 2007, our senior management team consisted of Garland S. Tucker, Brent P.W. Burgess, Steven
C. Lilly, Tarlton H. Long and David F. Parker. Each of these executive officers entered into
employment agreements with us and was compensated according to the terms of such agreements, which
are described herein. We refer to these five officers in 2007 as the named executive officers, or
NEOs.
Our executive compensation program is designed to encourage our executive officers to think
and act like stockholders of the Company. The structure of the NEOs employment agreements and our
incentive compensation programs were designed to encourage and reward the following:
| sourcing and pursuing attractively priced investment opportunities in all types of securities of lower middle market privately-held companies; | ||
| participating in comprehensive due diligence with respect to our investments; | ||
| ensuring we allocate capital in the most effective manner possible; and | ||
| working efficiently and developing relationships with other professionals. |
Our compensation committee reviewed and approved all of our compensation policies for 2007.
We completed our initial public offering, or IPO, in February 2007. As our first year of
operation as a publicly traded BDC, 2007 represented a period of constant development and growth
for us, and we worked to create an executive compensation program that would effectively achieve
our desired objectives stated above. We intend to continue the process of aligning executive
compensation and our goals in 2008.
As a BDC, we must comply with the requirements of the 1940 Act. The 1940 Act imposes certain
limitations on the structure of our compensation programs, including limitations on our ability to
issue certain equity-based compensation to our employees and directors. We have requested an
exemptive order from the SEC which, if granted, will permit us to issue restricted share awards as
part of the compensation packages for our employees and directors. The SEC has responded to our
request for exemptive relief, and we have revised our 2007 Equity Incentive Plan in accordance with
the SECs comments. Our Board has approved the Triangle Capital Corporation Amended and Restated
2007 Equity Incentive Plan, or the Amended and Restated Plan, and if our stockholders approve it at
our 2008 Annual Meeting, the Amended and Restated Plan will be effective as of May 7, 2008.
Executive Compensation Policy
In 2007, we compensated our NEOs through a combination of base salary and cash bonuses. In
the future, if our stockholders approve the Amended and Restated Plan, we will also compensate our
NEOs with stock options and/or restricted shares of common stock, compensation designed to be
competitive with comparable employers and to align managements incentives with the long-term
interests of our stockholders. In allocating among these elements the compensation committee
believes that the compensation of our NEOs should be based predominately on company and individual
performance.
Overview
Our performance-driven compensation policy consists of the following three components:
| Base salary; | ||
| Annual cash bonuses; and |
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| Long-term compensation pursuant to our equity incentive plan. |
We designed, and in the future will design, each NEOs compensation package to appropriately
reward the NEO for his or her contribution to the Company. Our compensation philosophy has not
historically been, and going forward will not be, a mechanical process, and our compensation
committee will use its judgment and experience, working in conjunction with our chief executive
officer, to determine the appropriate mix of compensation for each individual. Cash compensation
consisting of base salary and discretionary cash bonuses tied to achievement of individual
performance goals set by the compensation committee are intended to incentivize NEOs to remain with
us in their roles and work hard to achieve our goals. Stock-based compensation in the form of stock
options and/or restricted shares of common stock may be awarded based on individual performance
expectations set by the compensation committee and, over time, on the NEOs performance against
those expectations. The mix of short-term and long-term compensation may be adjusted to reflect an
individuals need for current cash compensation and desire to retain his or her services.
Establishing Compensation Levels
Role of the Compensation Committee and Management
As set forth in the Compensation Committee Charter, our compensation committees primary
responsibility is to evaluate the compensation of our executive officers and assure that they are
compensated effectively and in a manner consistent with our stated compensation objectives. The
compensation committee also periodically reviews our corporate goals and objectives relevant to
executive compensation, our executive compensation structure to ensure that it is designed to
achieve the objectives of rewarding the companys executive officers appropriately for their
contributions to corporate growth and profitability and our other goals and objectives. At least
annually, the compensation committee will evaluate the compensation of our executive officers and
determine the amounts and individual elements of total compensation for executive officers
consistent with our corporate goals and objectives and will communicate to stockholders the factors
and criteria on which the executive officers compensation is based, including the relationship of
our performance to the executive officers compensation. With respect to the compensation of our
executive officers other than the chief executive officer, the committee works with the chief
executive officer to conduct these reviews. The committee will also periodically evaluate the terms
and administration of our annual and long-term incentive plans, including equity compensation
plans, to ensure that they are structured and administered in a manner consistent with our goals
and objectives as to participation in such plans, target annual incentive awards, corporate
financial goals, actual awards paid to executive officers, and total funds reserved for payment
under the compensation plans.
Assessment of Market Data
To assess the competitiveness of our executive compensation levels, we developed a comparative
group of BDCs and performed comprehensive analyses of competitive performance and compensation
levels. Our analysis centered around key elements of compensation practices within the BDC
industry in general and, more specifically, compensation practices at internally managed BDCs
closer in asset size, typical investment size, typical investment type, market capitalization, and
general business scope to our Company (however, as discussed in greater detail below, we determined
that our Company would be one of the smallest BDCs in terms of asset size and market capitalization
immediately after the consummation of our IPO). Items we reviewed included, but were not
necessarily limited to, base compensation, bonus compensation, option awards, restricted stock
awards, and other compensation as detailed in public filings. In addition to actual levels of
compensation, we also analyzed the approach other BDCs were taking with regard to their
compensation practices. Items we reviewed included, but were not necessarily limited to, the use
of employment agreements for certain employees, the targeted mix of cash and equity compensation,
the use of third party compensation consultants, and certain corporate and executive performance
measures established to achieve long term total return for stockholders.
At the time our analysis was conducted, we were not yet a publicly traded company, but we
compared our Company to others in our market based on our projected market capitalization post-IPO.
Using this benchmark, we ranked below the median of the comparative group in market
capitalization, below the median in net income, and in the lower quartile in assets and number of
employees. Although each of the comparative companies is not exactly
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comparable in size, scope and operations, the compensation committee believes that they were the
most relevant comparable companies available with disclosed executive compensation data, and they
provide a good representation of competitive compensation levels for our executives. In general,
our program was also more team-based than comparable companies programs, with less difference
between our chief executive officers pay and the pay of our other executives.
Assessment of Company Performance
Alignment of a companys business plans, its stockholders expectations and its employee
compensation is an essential component of long term business success. Long term business success
is in the interest of our stockholders and employees. We typically make three to seven year
investments in privately held businesses. Our business plan involves taking on investment risk over
an extended period of time, and a premium is placed on our ability to maintain stability of net
asset values and continuity of earnings to pass through to stockholders in the form of recurring
dividends. Our strategy is to generate income and capital gains from our portfolio of investments
in the debt and equity securities of our customers. This income supports the payment of dividends
to our stockholders. Therefore, a key element of our return to stockholders is in the form of
current income through the payment of dividends. This recurring payout requires a methodical asset
acquisition approach and active monitoring and management of our investment portfolio over time. A
meaningful part of our employee base is dedicated to the maintenance of asset values and expansion
of this recurring revenue to support and grow dividends.
Compensation Determination
We analyzed the competitiveness of the previously described components of compensation
individually, as well as in total. Our comparative analysis indicated that in aggregate, our base
salaries plus target bonuses resulted in total annual cash compensation significantly below the
market median. We believe this is primarily due to the fact that our management team believed it
was in the best interest of stockholders for the Company to minimize cash compensation expense,
including cash compensation expense related to the service of our executive officers, during the
early stages of the Companys growth and development. As the Company grows and matures we would
expect our compensation levels would, over time, more closely approximate the median of our peer
group.
Classes of Executive Compensation
Base salary
Base salary is used to recognize particularly the experience, skills, knowledge and
responsibilities required of the executive officers in their roles. In establishing the 2007 base
salaries of the NEOs, the compensation committee and management considered a number of factors
including the seniority of the individual, the functional role of the position, the level of the
individuals responsibility, the ability to replace the individual, the base salary of the
individual prior to the formation of the Company, the assistance of each NEO in the IPO process and
the number of well-qualified candidates available in our area. In addition, we considered the base
salaries paid to comparably situated executive officers in other BDCs and other competitive market
practices. We did not use compensation consultants in connection with determining 2007 base
salaries or for any other purpose prior to the consummation of the IPO.
The salaries of the NEOs are reviewed on an annual basis, as well as at the time of promotion
or other changes in responsibilities. The leading factors in determining increases in salary level
are relative cost of living and competitive pressures. In connection with the compensation
committees review of base salary for 2008, the committee did not increase base salary or target
bonus for any of our NEOs.
On February 21, 2007, we entered into employment agreements with Messrs. Tucker, Burgess,
Lilly, Long and Parker. We believed these agreements were necessary to secure each executives
services to the Company for one or two years, depending on the circumstances surrounding each NEO.
In general, the agreements provide for the compensation of each NEO, as discussed above, payments
to each executive upon various termination scenarios and contain certain restrictive covenants on
competition and solicitation of our employees and clients.
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Pursuant to these agreements, each executive will receive compensation for termination due to
death or disability, termination by us other than for cause, termination by the executive for good
reason or termination upon a change in control. See Employment Agreements and Potential Payments
upon Termination or Change in Control for additional information regarding the material terms of
these agreements.
Annual Cash Bonuses
We pay annual cash bonuses to reward corporate and individual achievements for the prior
fiscal year. We determined that annual cash bonuses will be based on the compensation committees
discretionary assessment of the Companys and the NEOs performance, with input from the chief
executive officer for NEOs other than himself. For 2007, NEOs were eligible for cash bonuses,
ranging from 0% to 100% of their highest annual rate of base salary. In addition, during 2007, NEOs
were eligible to receive bonus payments for certain tax gross-ups, expense reimbursements and other
similar payments approved by the compensation committee. Performance achievements which were
considered in the determination of cash bonuses for fiscal 2007 include individual performance and
Company performance (based upon a comparison of actual performance to budgeted performance).
Cash bonuses for 2007 were paid in February of 2008 and were typically determined as a
percentage of each employees salary, based on individual performance and each employees level
within the company. Our NEOs annual cash bonuses paid for performance in 2007 are disclosed in the
bonus column of the Summary Compensation Table. All of our NEOs cash bonuses earned during 2007
were determined based on performance goals adopted by the compensation committee. All of our NEOs
cash bonuses for 2007 were determined based on the compensation committees analysis of certain
individual performance-based elements including how efficiently capital was deployed and the
establishment of meaningful operational policies and procedures, including but not limited to,
Sarbanes-Oxley compliance, portfolio valuation, portfolio monitoring processes, asset management
processes and transaction monitoring processes.
Long Term Incentive Compensation
General
Our Board of Directors has adopted the Amended and Restated Plan to provide stock-based awards
as incentive compensation to our employees and non-employee directors. We are presenting the
Amended and Restated Plan to our stockholders at the 2008 Annual Meeting for their approval. No
stock options or restricted shares were granted to NEOs during 2007.
Subject to obtaining stockholder approval of the Amended and Restated Plan at the Annual
Meeting, we expect to use stock-based awards to (i) attract and retain key employees, (ii) motivate
our employees by means of performance-related incentives to achieve long-range performance goals,
(iii) enable our employees to participate in our long-term growth and (iv) link our employees
compensation to the long-term interests of our stockholders. The compensation committee has been
delegated exclusive authority by our Board of Directors to select the persons to receive
stock-based awards. At the time of each award granted to an employee, the compensation committee
will determine the terms of the award in its sole discretion, including any performance period (or
periods) and any performance objectives relating to the award.
Options
Our compensation committee may in its sole discretion (upon delegation by the Board) grant our
employees options to purchase our common stock (including incentive stock options and non-qualified
stock options). We expect that options granted by our compensation committee will represent a fixed
number of shares of our common stock, will have an exercise, or strike, price equal to the fair
market value of our common stock on the date of such grant, and will be exercisable, or vested,
at some later time after grant. Upon any stock option grant, its exercise price will not be changed
absent specific SEC approval that we may do so. The fair market value will be defined as either
(i) the closing sales price of the our common stock on the Nasdaq Global Market, or any other such
exchange on which the shares are traded, on such date, (ii) in the absence of reported sales on
such date, the closing sales price on the immediately preceding date on which sales were reported
or (iii) in the event there is no public market for the shares on such date, the fair market value
as determined, in good faith, by our Board in its sole
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discretion (which will in no event will be less than the net asset value of such shares of
common stock on such date), and for purposes of a sale of a share of common stock as of any date,
the actual sales price on that date. Some stock options granted by our compensation committee may
vest simply by the holder remaining with the Company for a period of time, and some may vest based
on meeting certain performance goals. We anticipate that our options will be valued for financial
reporting purposes using the Black Scholes valuation method, and charges to earnings will be taken
over the relevant service period pursuant to FASB Statement No. 123R. We did not grant any stock
options to our employees in 2007.
Specific performance factors that the compensation committee may consider in determining the
vesting of options may include individual employee performance objectives such as work ethic,
business development, proficiency and overall contribution to the Company.
Restricted Stock
Generally BDCs, such as us, may not grant shares of their stock for services without an
exemptive order from the SEC. In 2007, we filed a request with the SEC for exemptive relief with
respect to our ability to issue restricted stock to our employees and non-employee directors. On
February 6, 2008, the Board voted to approve the Triangle Capital Corporation Amended and Restated
2007 Equity Incentive Plan (the Amended and Restated Plan) and to recommend approval of the
Amended and Restated Plan by stockholders, subject to an order from the SEC granting exemptive
relief. On March 18, 2008, we received an order from the SEC authorizing such issuance of
restricted stock to our employees and non-employee directors, subject to certain restrictions. We
anticipate that, when restricted stock is granted, charges to earnings will be taken over the
relevant service period pursuant to FASB Statement No. 123R. Since we did not receive this relief
until March 18, 2008, however, we were unable to grant any restricted stock to our NEOs during
2007.
If approved by our stockholders, the Amended and Restated Plan would allow our Board (and
compensation committee, after delegation of administrative duties) to grant shares of restricted
stock to our employees. Each restricted stock award would be for a fixed number of shares as set
forth in an award agreement between the grantee and us. Award agreements would set forth time
and/or performance vesting schedules and other appropriate terms and/or restrictions with respect
to awards, including rights to dividends and voting rights.
Specific performance factors that the compensation committee may consider in determining the
vesting of restricted stock may include individual employee performance objectives such as work
ethic, proficiency and overall contribution to the Company.
Change in Control and Severance
Change in Control
Upon termination of employment after a change of control, the NEOs may receive severance
payments pursuant to their employment agreements entered into in connection with our IPO.
Upon specified covered transactions involving a change of control (as defined in the Amended
and Restated Plan), all outstanding awards under the Amended and Restated Plan may either be
assumed or substituted for by the surviving entity. If the surviving entity does not assume or
substitute similar awards, the awards held by the participants will be accelerated in full and then
terminated to the extent not exercised prior to the covered transaction.
Severance
Under specified covered transactions involving a change in control (as defined in each NEOs
employment agreement), if an NEO terminates his employment with us within two years following such
change in control, or if we terminate or give the NEO notice of non-renewal of the NEOs employment
within the two years commencing with a change in control, he will receive a severance package
beginning on the date of termination. The severance package will include monthly payments equal to
one-twelfth of (i) the NEOs annual salary at that time plus (ii) the NEOs bonus compensation as
described in the employment agreement, and (iii) the Company will continue to
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provide the NEO with all of the benefits provided to him immediately prior to the termination,
as described in the employment agreement. The severance package will continue to be in effect for
either thirty-six months or eighteen months, depending upon the NEOs position held in 2007. In the
event that an NEOs severance pay is triggered under his employment agreement, he will continue to
receive his respective severance package even if he is hired by another employer, including a
competing business development company or other fund; however, the Companys obligation to continue
the NEOs then-existing benefits under the severance package will terminate on the date the NEO
becomes eligible to receive such equal benefit from another employer.
Additionally, a separate severance package exists in the event the NEOs employment is
terminated as a result of death or disability, or in the event that the Company terminates the
NEOs employment outside of the two-year period after a specified covered transaction involving a
change in control. The same severance package referenced in the immediately preceding paragraph
will be provided to the NEO, except that the severance package will only continue to be in effect
for either twenty-four months or twelve months, depending upon the NEOs position.
Each NEOs employment agreement also includes a right to allow the executive officer the
opportunity to evaluate his position with the Company for a one month period beginning at the end
of one year after a change in control has occurred, in order to determine whether at that time it
would be in the best interests of the Company and the executive officer for the executive officer
to continue serving in his then current position. If the NEO is dissatisfied with his
responsibilities one year after the change in control has occurred, he may terminate his employment
with the Company without good reason and still receive a severance package. The severance package
will include monthly payments equal to one-twelfth of (i) the NEOs annual salary at that time plus
(ii) the NEOs bonus compensation as described in the employment agreement, and (iii) the Company
will continue to provide the NEO with all of the benefits provided to him immediately prior to the
termination, as described in the employment agreement. The severance package will continue to be in
effect for either thirty-six months or eighteen months, depending upon the NEOs position held in
2007.
Finally, if we fail to renew any NEOs employment agreement outside of the two-year period
after a specified covered transaction involving a change in control, any severance payment or
benefit will be payable at the absolute discretion of the Board.
The rationale behind providing a severance package in certain events was to attract talented
executives who would be assured that they would not be financially injured if they physically
relocated and/or left another job to join us but were forced out through no fault of their own and
to ensure that our business would be operated and governed for our stockholders by a management
team, and under the direction of a Board of Directors, who were not financially motivated to
frustrate the execution of a change in control transaction. For more discussion regarding executive
compensation in the event of a termination or change of control, please see the table entitled
2007 Potential Payments Upon Termination or Change in Control and accompanying discussion.
Tax and Accounting Considerations
Section 162(m) of the Internal Revenue Code of 1986 limits our deduction for federal income
tax purposes to not more than $1 million of compensation paid to certain executive officers in a
calendar year. Compensation above $1 million may be deducted if it is performance-based
compensation. Our compensation committee has not yet established a policy for determining which
forms of incentive compensation awarded to our executive officers should be designated to qualify
as performance-based compensation. To maintain flexibility in compensating our executive officers
in a manner designed to promote our objectives, the compensation committee has not adopted a policy
that requires all compensation to be deductible. However, the compensation committee intends to
evaluate the effects of the compensation limits of Section 162(m) on any compensation it proposes
to grant, and the compensation committee intends to provide future compensation in a manner
consistent with our best interests and those of our stockholders. In 2007, none of the named
executive officers received compensation that would exceed the $1 million limit on deductibility.
Although we have not yet awarded share-based awards to our employees, we intend, if our
stockholders approve the Amended and Restated Plan, to account for share-based awards
under the provisions of Statement of Financial Accounting Standards No. 123(R), Share-Based
Payment, or FAS 123(R). FAS 123(R) establishes
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accounting for stock-based awards exchanged for goods or services. Accordingly, stock-based
compensation cost is measured at grant date, based on the fair value of the awards, and is
recognized as an expense ratably over the requisite service period. Accounting rules also require
us to record cash compensation as an expense at the time the obligation is incurred.
Conclusion
Our compensation policies are designed to retain and motivate our NEOs and to ultimately
reward them for outstanding performance. The retention and motivation of our NEOs should enable us
to grow strategically and position ourselves competitively in our market.
COMPENSATION COMMITTEE REPORT
The compensation committee determines the compensation for our executive officers and the
amount of salary and bonus to be included in the compensation package for each of our executive
officers. The compensation committee currently consists of Messrs. Dunwoody, Goldstein and Smith,
all of whom are considered independent under the rules promulgated by the Nasdaq Global Market and
are not interested persons of Triangle Capital Corporation, as defined in Section 2(a)(19) of the
1940 Act.
The compensation committee of our Board of Directors has reviewed and discussed with
management the information contained in the Compensation Discussion and Analysis section of this
proxy statement and, based on their review and discussion, has recommended to our Board of
Directors that the Compensation Discussion and Analysis be included in this proxy statement to be
filed with the SEC.
The Compensation Committee: | ||
W. McComb Dunwoody | ||
Benjamin S. Goldstein | ||
Sherwood H. Smith, Jr. |
The information contained in the report above shall not be deemed to be soliciting material or to
be filed with the SEC, nor shall such information be incorporated by reference into any future
filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as
amended, except to the extent specifically incorporated by reference therein.
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EXECUTIVE OFFICER COMPENSATION
Due to the fact that we consummated our initial public offering of common stock in February
2007, we did not compensate our executive officers in 2006, and we only have executive officer
compensation data for a portion of 2007. The respective compensation of our named executive
officers in 2007 was as follows:
Summary Compensation Table
Name and Principal | Base | All Other | ||||||||||||||||||
Position | Year | Salary(1) | Bonus | Compensation(2) | Total | |||||||||||||||
Garland S. Tucker
III Chief
Executive Officer |
2007 | $ | 231,875 | $ | 265,000 | $ | 18,277 | $ | 515,152 | |||||||||||
Brent P.W.
Burgess Chief
Investment Officer |
2007 | $ | 210,000 | $ | 240,000 | $ | 12,318 | $ | 462,318 | |||||||||||
Steven C. Lilly
Chief Financial
Officer |
2007 | $ | 210,000 | $ | 280,416 | (3) | $ | 11,488 | $ | 501,904 | ||||||||||
Tarlton H. Long
Managing Director |
2007 | $ | 175,000 | $ | 0 | $ | 16,886 | $ | 191,886 | |||||||||||
David F. Parker
Managing Director |
2007 | $ | 175,000 | $ | 0 | $ | 17,949 | $ | 192,949 |
(1) | Includes base salary paid from February 21, 2007 (date of consummation of our initial public offering) through December 31, 2007. | |
(2) | Includes benefits in the form of 401(k) contributions, health, life and disability insurance premiums paid by the Company in 2007. | |
(3) | Includes a tax gross-up bonus approved by the compensation committee. |
Employment Agreements
Upon consummation of our IPO, we entered into employment agreements with Messrs. Tucker,
Burgess, and Lilly that provide for a two year term. The initial base salary under the employment
agreements for Messrs. Tucker, Burgess, and Lilly is $265,000, $240,000, and $240,000,
respectively. Upon consummation of our IPO, we entered into employment agreements with Messrs. Long
and Parker that provided for a one year term. The base salary under the employment agreements for
Messrs. Long and Parker was $200,000. Under each employment agreement our Board of Directors has
the right to increase the base salary of each of our executive officers during the term of the
employment agreements and also to decrease it if certain conditions are satisfied. Messrs. Long and
Parkers one year agreements expired on February 21, 2008. Messrs. Long and Parker will continue to
be employed by us as investment professionals on an at-will basis.
In addition, in 2007, each executive officer was entitled to receive an annual bonus of up to
a maximum of 100% of the executive officers 2007 base salary for achieving certain performance
objectives, unless the compensation committee determines that special circumstances exist
warranting a greater amount. The compensation committee of the Board of Directors established such
performance objectives, as well as the bonus awarded to each executive officer.
Potential Payments upon Termination or Change in Control
Under their respective employment agreements, each NEO was entitled to certain payments upon
termination of employment or in the event of a change in control. The following table sets forth
those potential payments with respect to each NEO in 2007. In providing the estimated potential
payments, we have made the following general assumptions in all circumstances where applicable:
| a change in control event has occurred and the date of termination is December 31, 2007; |
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| the annual salary at the time of termination is as follows: Garland S. Tucker, III, $265,000; Brent P.W. Burgess, $240,000; Steven C. Lilly $240,000; Tarlton H. Long, $200,000; and David F. Parker, $200,000; | ||
| there is no unpaid bonus for the prior year; | ||
| there is no accrued and unpaid salary; and | ||
| there is no unpaid reimbursement for expenses incurred prior to the date of termination. |
2007 Potential Payments upon Termination or Change in Control
Within Two | ||||||||||||
Years | Thirteenth | |||||||||||
Outside Of | After | Month | ||||||||||
Two Years | Change In | After | ||||||||||
After Change | Control; | Change in | ||||||||||
In Control; | Termination | Control; | ||||||||||
Termination | w/o Cause | Termination | ||||||||||
w/o | or for Good | w/o Good | ||||||||||
Name | Benefit | Cause(3) | Reason(4) | Death | Disability | Reason(5) | ||||||
Garland S.
Tucker, III
|
Severance
Pay(1) Bonus Compensation(2) |
$530,000 $530,000 |
$795,000 $795,000 |
$530,000 $530,000 |
$530,000 $530,000 |
$795,000 $795,000 |
||||||
Brent P. W.
Burgess
|
Severance Pay(1)
Bonus Compensation(2) |
$480,000 $480,000 |
$720,000 $720,000 |
$480,000 $480,000 |
$480,000 $480,000 |
$720,000 $720,000 |
||||||
Steven C.
Lilly
|
Severance Pay(1)
Bonus Compensation(2) |
$480,000 $480,000 |
$720,000 $720,000 |
$480,000 $480,000 |
$480,000 $480,000 |
$720,000 $720,000 |
||||||
Tarlton H.
P
Long
|
Severance Pay(1)
Bonus Compensation(2) |
$200,000 $200,000 |
$300,000 $300,000 |
$200,000 $200,000 |
$200,000 $200,000 |
$300,000 $300,000 |
||||||
David F. Parker
|
Severance Pay(1)
Bonus Compensation(2) |
$200,000 $200,000 |
$300,000 $300,000 |
$200,000 $200,000 |
$200,000 $200,000 |
$300,000 $300,000 |
||||||
(1) | Severance pay includes an employees annual salary and applicable multiple thereof paid monthly beginning at the time of termination, plus the employees benefits in the form of medical, health or other employee welfare benefit plan adopted by us. | |
(2) | Bonus compensation will at most be equal to 100% of an employees annual salary, multiplied by the number of years in which the employee is eligible to receive severance pay as defined above. | |
|
||
(3) | Change in control is defined in each employees employment agreement. | |
(4) | Good Reason is defined in each employees employment agreement. | |
|
||
(5) | The intent of this particular provision in each of our 2007 executive officers employment agreements was to allow the executive officer the opportunity to evaluate his position with the Company one year after a change in control has occurred, in order to determine whether at that time it would be in the best interests of the Company and the executive officer for the executive officer to continue serving in his then current position. |
Under specified covered transactions involving a change in control, if an NEO terminates his
employment with us within two years following such change in control, or if we terminate or give
the NEO notice of non-renewal of the NEOs employment within the two years commencing with a change
in control, he will receive a severance package beginning on the date of termination. The severance
package will include monthly payments equal to one-
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twelfth of (i) the NEOs annual salary at that time plus (ii) the NEOs bonus compensation as
described in the employment agreement, and (iii) the Company will continue to provide the NEO with
all of the benefits provided to him immediately prior to the termination, as described in the
employment agreement. The severance package will continue to be in effect for either thirty-six
months or eighteen months, depending upon the NEOs position held in 2007.
In addition, a separate severance package exists in the event the NEOs employment is
terminated as a result of death or disability, or in the event that the Company terminates the
NEOs employment outside of the two-year period after a specified covered transaction involving a
change in control. The same severance package referenced in the immediately preceding paragraph
will be provided to the NEO, except that the severance package will only continue to be in effect
for either twenty-four months or twelve months, depending upon the NEOs position.
Each NEOs employment agreement also includes a right to allow the executive officer the
opportunity to evaluate his position with the Company for a one month period beginning at the end
of one year after a change in control has occurred, in order to determine whether at that time it
would be in the best interests of the Company and the executive officer for the executive officer
to continue serving in his then current position. If the NEO is dissatisfied with his
responsibilities under the management after the change in control has occurred, he may terminate
his employment with the Company without good reason and still receive a severance package. The
severance package will include monthly payments equal to one-twelfth of (i) the NEOs annual salary
at that time plus (ii) the NEOs bonus compensation as described in the employment agreement, and
(iii) the Company will continue to provide the NEO with all of the benefits provided to him
immediately prior to the termination, as described in the employment agreement. The severance
package will continue to be in effect for either thirty-six months or eighteen months, depending
upon the NEOs position held in 2007.
Finally, if we fail to renew any NEOs employment agreement outside of the two-year period
after a specified covered transaction involving a change in control, any severance payment or
benefit will be payable at the absolute discretion of the Board.
Equity Incentive Plan
Our Board of Directors and sole stockholder approved Triangles 2007 Equity Incentive Plan
(the Original Plan) effective February 13, 2007, for the purpose of attracting and retaining the
services of executive officers, directors and other key employees. The Original Plan authorized the
issuance of up to 900,000 shares of Triangles common stock (subject to adjustment for certain
capital events such as stock splits, reverse stock splits, reorganizations, stock dividends, and
similar transactions). The Original Plan provided for awards to our officers, employees and
directors in the form of stock options, stock appreciation rights, shares of restricted stock,
restricted stock units, performance awards and other stock-based awards. The Original Plan was set
to terminate on February 13, 2017, unless terminated sooner by our Board of Directors. During our
fiscal year ended December 31, 2007, however, no options, restricted stock or other equity
incentive awards were granted under the Original Plan, in part due to certain 1940 Act restrictions
which disallow the issuance of certain types of compensation to a business development companys
employees and directors without having first obtained exemptive relief.
In light of the aforementioned restrictions, we filed a request with the SEC in 2007 for
exemptive relief with respect to our ability to issue restricted stock to our employees and
non-employee directors. On February 6, 2008, the Board voted to approve the Amended and Restated
Plan and to recommend approval of the Amended and Restated Plan by stockholders, subject to an
order from the SEC granting exemptive relief. On March 18, 2008, we received an order from the SEC
authorizing such issuance of restricted stock to our employees and directors, subject to the
conditions set forth in the order.
Subject to approval of the Amended and Restated Plan by our stockholders at the Annual
Meeting, we may issue restricted stock to employees and non-employee directors consistent with such
terms and conditions as the Board shall deem appropriate. With respect to awards issued to
employees and officers, the Board will determine the time or times at which shares subject to an
award will become exercisable and the terms on which such shares will remain exercisable. Shares
granted pursuant to a restricted stock award will not be transferable until such shares have
vested, unless the transfer is by will or by the laws of descent and distribution.
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The Amended and Restated Plan provides that we may grant options to our employees, which would
entitle the optionee, upon exercise, to purchase shares of our common stock at a specified exercise
price per share. Options must have a per share exercise price of no less than the fair market value
of a share of stock on the date of the grant, subject to forfeiture provisions as determined by the
Board. The exercise price of any option would remain fixed unless and until the SEC granted an
order providing relief for the Board to do so.
If approved by our stockholders, our Board will administer the Amended and Restated Plan and
has the authority, subject to the provisions of the Amended and Restated Plan and the exemptive
order, to determine who will receive awards under the Amended and Restated Plan and the terms of
such awards. Each grant of restricted stock will be approved by the required majority of our
independent directors. In the event of a consolidation, merger, stock sale, a sale of all or
substantially all of the Companys assets, a dissolution or liquidation or other similar events (a
Change in Control), all or a portion of the award will vest, become immediately exercisable or
payable and have all restrictions lifted upon a Change in Control, unless otherwise specified in
the award agreement.
Our Board of Directors may delegate administration of the Amended and Restated Plan to a
committee of three (3) or more members of our Board of Directors, comprised solely of the
independent directors who are independent pursuant to the listing requirements of the Nasdaq Global
Market. Our Board may abolish such committee at any time and revest in our Board the administration
of the Amended and Restated Plan. If approved by our stockholders, our Board will administer the
Amended and Restated Plan in a manner that is consistent with the applicable requirements of the
Nasdaq Global Market and the exemptive order.
401(k) Plan
In 2007, we maintained a 401(k) plan in which all full-time employees who were at least 21
years of age were eligible to participate. Effective in 2008, only full-time employees who are at
least 21 years of age and have 90 days of service are eligible to participate and receive certain
employer contributions. Eligible employees have the opportunity to contribute their compensation on
a pretax salary basis into the 401(k) plan up to $15,500 for the plan year, and to direct the
investment of these contributions. Plan participants who reach the age of 50 prior to or during the
plan year are eligible to defer up to an additional $5,000 for the plan year.
Compensation Committee Interlocks and Insider Participation
All members of our compensation committee (Messrs. Dunwoody, Goldstein and Smith) are
independent directors and none of the members are present or past employees of the Company. No
member of the compensation committee: (i) has had any relationship with the Company requiring
disclosure under Item 404 of Regulation S-K under the Exchange Act; (ii) is an executive officer of
another entity, at which one of our executive officers serves on the compensation committee; or
(iii) is an executive officer of another entity, at which one of our executive officers serves on
the board of directors.
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information with respect to the beneficial ownership of our
common stock as of March 3, 2008, the record date, by each of our executive officers and
independent directors and all of our directors and executive officers as a group. As of March 3,
2008, we are not aware of any 5% beneficial owners of our common stock.
Beneficial ownership is determined in accordance with the rules of the SEC and includes voting
or investment power with respect to the securities. There is no common stock subject to options or
warrants that are currently exercisable or exercisable within 60 days of March 3, 2008. Percentage
of beneficial ownership is based on 6,803,863 shares of common stock outstanding as of March 3,
2008. The business address of each person below is 3600 Glenwood Avenue, Suite 104, Raleigh, North
Carolina 27612.
Number of Shares | Percentage of | |||||||
Name of Beneficial Owner | Beneficially Owned(1) | Class(2) | ||||||
Executive Officers: |
||||||||
Garland S. Tucker, III(3) |
125,161 | 1.8 | % | |||||
Brent P. W. Burgess |
116,986 | 1.7 | % | |||||
Steven C. Lilly |
95,696 | 1.4 | % | |||||
Tarlton H. Long(4)(5) |
77,750 | 1.1 | % | |||||
David F. Parker(4)(6) |
72,209 | 1.1 | % | |||||
Independent Directors: |
||||||||
W. McComb Dunwoody |
151,079 | 2.2 | % | |||||
Thomas M. Garrott, III(7) |
93,728 | 1.4 | % | |||||
Benjamin S. Goldstein |
3,450 | * | ||||||
Simon B. Rich, Jr.(8) |
16,800 | * | ||||||
Sherwood H. Smith, Jr. |
20,643 | * | ||||||
All Directors and Executive
Officers as a Group |
773,502 | 11.4 | % | |||||
* | Less than 1.0% | |
(1) | Beneficial ownership has been determined in accordance with Rule 13d-3 of the Exchange Act. |
|
(2) | Based on a total of 6,803,863 shares issued and outstanding as of March 3, 2008. | |
(3) | Includes 271 shares held by Mr. Tuckers wife and 3,152 shares held by Triangle Capital Partners, LLC, a limited liability company in which Mr. Tucker owns 27.5%. | |
(4) | As of January 1, 2008, Messrs. Long and Parker are no longer executive officers of our Company, although they are still employed by us as investment professionals. | |
(5) | Includes 3,209 shares held by Triangle Capital Partners, LLC, a limited liability company in which Mr. Long owns 28.0%. | |
(6) | Includes 3,209 shares held by Triangle Capital Partners, LLC, a limited liability company in which Mr. Parker owns 28.0%. | |
(7) | Includes 3,926 shares held by Mr. Garrotts wife and 50,000 shares held by the Thomas M. Garrott Foundation Charitable Trust dated December 30, 1995. | |
(8) | Includes 3,500 shares held by Mr. Richs wife. |
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Pursuant to Section 16(a) of the Exchange Act, our directors and executive officers, and any
persons holding 10% or more of our common stock, are required to report their beneficial ownership
and any changes therein to the SEC and to us. Specific due dates for those reports have been
established, and we are required to report herein any failure to file such reports by those due
dates. Based solely on our review of those forms and certain written representations from reporting
persons, we believe that in 2007, our reporting persons were in compliance with applicable filing
requirements, other than (i) Messrs. Tucker, Long and Parker, who each filed a late Form 4 on
November 19, 2007 because each inadvertently failed to file a Form 4 with regard to two
transactions involving a limited liability company in which each is a member, (ii) Mr. Dunwoody,
who filed a late Form 4/A on February 27, 2007 due to his inadvertent omission of certain shares
beneficially owned on his initial Form 4, (iii) Mr. Smith, who filed a Form 4 on September 21, 2007
reporting two late transactions and (iv) C. Robert Knox, Jr., who filed a late Form 3 on February
13, 2008. Mr. Knox reported his only transaction during 2007 on a Form 5 filed on February 13,
2008.
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PROPOSAL NO. 2
APPROVAL OF TRIANGLE CAPITAL CORPORATION
AMENDED AND RESTATED 2007 EQUITY INCENTIVE PLAN
APPROVAL OF TRIANGLE CAPITAL CORPORATION
AMENDED AND RESTATED 2007 EQUITY INCENTIVE PLAN
Our Board and executive management believe that, because the market for investment
professionals is highly competitive, our successful performance depends on our ability to offer
fair compensation packages to our professionals that are competitive with those offered by other
specialty finance companies. The highly specialized nature of our business, the competitiveness of
our market and the skills and importance of our employees make retention even more critical. The
ability to offer equity-based compensation to our professionals, which both aligns employee
behavior with stockholder interests and provides a retention tool, is vital to our future growth
and success.
The Board recommends approval of Proposal 2 for the amendment and restatement of the Triangle
Capital Corporation 2007 Equity Incentive Plan, to provide for the periodic issuance of both
options and shares of restricted stock to our employees and employees of our wholly-owned
consolidated subsidiaries, as well as for our non-employee directors (the Amended and Restated
Plan). With the addition of the ability to issue restricted stock, we believe that the Amended and
Restated Plan would enable us to offer our employees and directors compensation packages that are
more competitive with those offered by our competitors and other investment management businesses,
while also requiring less cash compensation. This will enhance our ability to hire and retain key
senior management and other key personnel while at the same time preserving our cash for making new
investments. Ultimately, our ability to (1) identify investment opportunities in the marketplace,
(2) make successful investments in and loans to our portfolio companies, and (3) provide managerial
assistance to our portfolio companies, is highly dependent upon the abilities, performance records
and reputations of our personnel.
Use of Restricted Stock
We believe that the particular characteristics of our business, our dependence on key
personnel to conduct our business effectively and the highly competitive environment in which we
operate require the use of equity-based compensation for our personnel. Retention and recruitment
of highly qualified investment professionals and managers is vital to the future success and growth
of our business and is in the best interests of our stockholders. Appropriate compensation plans
that support our objectives and align the interests of stockholders and employees are essential to
long term success in the finance business in general and critical to our business in particular.
Most leading asset management, private equity and commercial finance firms in the United States
provide equity-based compensation in one form or another.
We believe that the most appropriate form of equity-based compensation that we can offer is
restricted stock. Relative to other forms of equity-based compensation, restricted stock will allow
us to align our business plan, stockholder interests and employee interests and to match the
expectations for the business more closely with our equity-based compensation plan. We believe that
restricted stock has a clear and meaningful benefit to our stockholders and our business prospects.
Aligning our Business Plan, Stockholder Interests, and Employee Interests
Alignment of a companys business plan, stockholders interests and employee interests is an
essential component of long term business success. Long-term business success is in the interest of
our stockholders and employees. Our investment objective is to maximize our portfolios total
return by generating current income from our debt investments and capital appreciation from our
equity-related investments. As a taxpayer that intends to elect to be regulated as a regulated
investment company, or RIC, under Subchapter M of the Internal Revenue Code, we must meet specified
source-of-income and asset diversification requirements and distribute annually an amount equal to
at least 90% of the sum of our net ordinary income and realized net short-term capital gains in
excess of realized net long-term capital losses, if any, out of assets legally available for
distribution. Therefore, a key element of our return to stockholders is in the form of current
income through the payment of dividends. This recurring payout requires a methodical asset
acquisition approach and active monitoring and management of the investment portfolio over time. It
also limits the appreciation in stock price that would otherwise be expected if any earnings were
not paid out as dividends, and therefore makes options not as attractive as other incentive
mechanisms, as options do not benefit from dividends and rely solely on stock appreciation for
further value.
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We believe that restricted stock motivates behavior that is more consistent with the type of
return expectations that we have established for our stockholders. Our strategy is to originate
debt and equity assets. Further, our business plan is to execute an accumulation of debt or equity
securities that have a risk-based pricing premium relative to similar securities. To this end,
restricted stock places more value on the quality of originated assets over the quantity of
originated assets, and thus, restricted stock is a better compensation tool for us to align
employee interests with stockholder interests. Shares of restricted stock that are subject to
forfeiture provisions will allow us to set objectives and provide meaningful rewards over time to
employees who effectuate the targeted outcome of income and principal stability. We believe that
the issuance of restricted stock permits us to provide long-term incentives to attract experienced
business professionals who might otherwise elect to become employed with private equity, mezzanine
lenders, venture capital firms or hedge funds.
On March 18, 2008, we received an order from the SEC authorizing the issuance of restricted
stock to our employees and non-employee directors. Awards of restricted stock will comply with all
aspects of the order, including the following:
| Each issuance of restricted stock will be approved by a required majority of the Companys non-employee directors on the basis that such issuance is in the best interests of the Company and its stockholders; | ||
| The maximum amount of shares of restricted stock that may be issued under the Amended and Restated Plan will be 10% of the Companys outstanding stock on the effective date of the Amended and Restated Plan plus 10% of the number of shares of the Companys common stock issued or delivered during the term of the Amended and Restated Plan; | ||
| The restricted stock will be subject to the additional limitations on equity compensation discussed below; and | ||
| The Board of Directors will review the Amended and Restated Plan at least annually. |
The Board of Directors recommends a vote FOR the approval of the Triangle Capital Corporation
Amended and Restated 2007 Equity Incentive Plan.
Summary of the Amended and Restated Plan
On February 6, 2008, the Board voted to approve the Amended and Restated Plan and to recommend
approval of the Amended and Restated Plan by stockholders. The following is a summary of the
material features of the Amended and Restated Plan as it will be in effect following approval by
the stockholders. It may not contain all of the information important to you. You are encouraged to
read the entire Amended and Restated Plan as proposed to be amended, a copy of which appears as
Annex A to this proxy statement.
Effective Date. If adopted by stockholders, the Amended and Restated Plan will be effective
immediately upon such approval by the stockholders.
Purpose and Effect of Amendment and Restatement of the Triangle Capital Corporation 2007
Equity Incentive Plan. Stockholders are being requested to consider and approve the amendment and
restatement of the Triangle Capital Corporation 2007 Equity Incentive Plan. The Amended and
Restated Plan includes provisions allowing the issuance of restricted stock to all key employees
and directors. As of March 3, 2008, the record date, approximately seventeen individuals would be
eligible to participate in the Amended and Restated Plan. Restricted stock refers to an award of
stock that is subject to forfeiture restrictions and may not be transferred until such restrictions
have lapsed. The Amended and Restated Plan will also continue to allow us to issue options to our
employees, although we did not issue any such options during 2007. We may not issue any options to
our non-employee directors under the Amended and Restated Plan unless and until we receive an
exemptive order from the SEC or written confirmation from the staff of the SEC that we may do so.
Participation. Under the Amended and Restated Plan, up to 900,000 shares of our common stock
are authorized for issuance. Participants in the Amended and Restated Plan (Participants) who are
employees and
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employee directors may receive awards of options to purchase shares of common stock or grants of
restricted stock, as determined by the Board. Participants who are non-employee directors may
receive awards of restricted stock in accordance with certain parameters as discussed below under
Restricted Stock Awards to Non-Employee Directors. The basis of such participation is to provide
incentives to our employees and directors in order to attract and retain the services of qualified
professionals.
Options. Options granted under the Amended and Restated Plan (the Options) entitle the
optionee, upon exercise, to purchase shares of common stock at a specified exercise price per
share. Options must have a per share exercise price of no less than the fair market value of a
share of stock on the date of the grant, subject to forfeiture provisions as determined by the
Board. The exercise period of each stock option awarded will expire on a date determined by the
Board, such date to be specified in the stock option award agreement; however, the Plan also states
that no stock option award will be exercisable after the expiration of ten years from the date such
stock option was granted.
Restricted Stock Awards to Employees. The Amended and Restated Plan permits the issuance of
restricted stock to employees consistent with such terms and conditions as the Board shall deem
appropriate, subject to the limitations set forth in the plan. With respect to awards issued to
our employees and officers, the Board will determine the time or times at which such shares of
restricted stock will become exercisable and the terms on which such shares will remain
exercisable. Shares granted pursuant to a restricted stock award will not be transferable until
such shares have vested in accordance with the terms of the award agreement, unless the transfer is
by will or by the laws of descent and distribution.
Restricted Stock Awards to Non-Employee Directors. The Amended and Restated Plan provides that
our non-employee directors will each receive an automatic grant of shares of restricted stock at
the beginning of each one-year term of service on the Board, for which forfeiture restrictions will
lapse one year from the grant date. The number of shares granted to each non-employee director will
be the equivalent of $30,000 worth of shares taken at the market value at the close of the Nasdaq
Global Market on the date of grant. The grants of restricted stock to non-employee directors under
the Amended and Restated Plan will be automatic and will not be changed without SEC approval.
Shares granted pursuant to a restricted stock award will not be transferable until such shares have
vested in accordance with the terms of the award agreement, unless the transfer is by will or by
the laws of descent and distribution.
Limitations on Awards. On March 18, 2008, the SEC granted an order for exemptive relief that
authorizes the Company to issue restricted shares of our common stock to our employees and
non-employee directors (the Order), subject to stockholder approval. Awards under the Amended and
Restated Plan will comply with all aspects of the Order, including the following:
| The total number of shares that may be outstanding as restricted shares under the Amended and Restated Plan may not exceed 10% of the total number of the Companys shares of common stock authorized and outstanding at any time. | ||
| No one person shall be granted awards of restricted stock relating to more than 25% of the shares available for issuance under the Amended and Restated Plan. | ||
| The amount of voting securities that would result from the exercise of all our outstanding warrants, options and rights, together with any restricted stock issued pursuant to the Amended and Restated Plan, at the time of issuance shall not exceed 25% of our outstanding voting securities. | ||
| Notwithstanding the immediately preceding limitation, if the amount of voting securities that would result from such exercise of all of our outstanding warrants, options and rights issued to our directors, officers and employees, together with any restricted stock issued pursuant to the Amended and Restated Plan, would exceed 15% of our outstanding voting securities, then the total amount of voting securities that would result from the exercise of all outstanding warrants, options and rights, together with any restricted stock issued pursuant to the Amended and Restated Plan, at the time of issuance shall not exceed 20% of our outstanding voting securities. |
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| An employee participating in the Amended and Restated Plan may not receive options to purchase in excess of 100,000 shares of the Companys common stock in any single calendar year. |
Transfer/Termination Date. Unless sooner terminated by the Board, the Amended and Restated
Plan will terminate on the tenth anniversary of its adoption, and no additional awards may be made
under the Amended and Restated Plan after that date. The Amended and Restated Plan provides that
all awards granted under such plan are subject to modification as required to ensure that such
awards do not conflict with the requirements of the 1940 Act applicable to the Company.
Material Differences between Original Plan and Amended and Restated Plan. A few material
differences exist between the Original Plan and the Amended and Restated Plan that have not
previously been discussed. Under the Original Plan, any employee, director, consultant, or any
other person to whom the Company wanted to give an award was eligible to receive equity incentives.
Under the Amended and Restated Plan, only employees or directors of the Company and its
wholly-owned consolidated subsidiaries may receive equity incentive awards. Under the Original
Plan, participants could receive options, stock appreciation rights, restricted share awards,
restricted share units, performance awards and other stock based awards. Under the Amended and
Restated Plan, participants may only receive stock options and restricted share awards. Under the
Original Plan, an options strike price could have been changed by our Board of Directors. The
Amended and Restated Plan requires that the strike price of an option may not be changed once
granted unless the Company has obtained specific relief from the SEC to do so.
Administration. Our Board of Directors administers the Amended and Restated Plan and has the
authority, subject to the provisions of the Amended and Restated Plan, to determine who will
receive awards under the Amended and Restated Plan and the terms of such awards. Our Board has the
authority to adjust the number of shares available for awards, the number of shares subject to
outstanding awards and the exercise price for awards; provided, however, that the exercise price of
options granted under the Amended and Restated Plan will not be adjusted unless we first receive an
exemptive order from the SEC or written confirmation from the staff of the SEC that we may do so.
The Board may delegate administration of the Amended and Restated Plan to a committee or
committees of three or more members of the Board. If administration is delegated to such a
committee, the committee shall have, in connection with the administration of the Amended and
Restated Plan, the powers theretofore possessed by the Board, including the power to delegate to a
subcommittee any of the administrative powers the committee is authorized to exercise. The Board
may abolish the committee at any time and revest in the Board the administration of the Amended and
Restated Plan.
In the event of a consolidation, merger, stock sale, a sale of all or substantially all of the
Companys assets, a dissolution or liquidation or other similar events (a Change in Control), all
or a portion of the award will vest, become immediately exercisable or payable and have all
restrictions lifted upon a Change in Control, unless otherwise specified in the award agreement.
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Awards under the Amended and Restated Plan will be granted to our executive officers and other
employees as determined by our Board at the time of each issuance. If the Amended and Restated Plan
is approved by stockholders at the Annual Meeting, we expect to grant the following awards:
Triangle Capital Corporation Amended and Restated 2007 Equity Incentive Plan(1)
Dollar Value of | Dollar Value of Restricted | |||||
Name | Options(2) | Stock(3) | ||||
Garland S. Tucker, III(4)
|
| | ||||
Brent P.W. Burgess(4)
|
| | ||||
Steven C. Lilly(4)
|
| | ||||
W. McComb Dunwoody
|
| $ | 30,000 | |||
Thomas M. Garrott, III
|
| $ | 30,000 | |||
Benjamin S. Goldstein
|
| $ | 30,000 | |||
Simon B. Rich, Jr.
|
| $ | 30,000 | |||
Sherwood M. Smith, Jr.
|
| $ | 30,000 | |||
Executive Group (4)
|
| | ||||
Non-Executive Director Group
|
| $ | 150,000 | |||
Non-Executive Officer Employee Group (4)
|
| |
(1) | The number of options and/or restricted stock that would have been awarded to officers, including employee directors, during 2007 had the Amended and Restated Plan been in effect at that time is not determinable because our Board has absolute discretion in making such grants under the Amended and Restated Plan. The number of shares of restricted stock that would have been awarded to non-employee directors during 2007 is also not determinable because the SEC must grant specific relief for our Board to issue restricted stock to our non-employee directors, and we do not know the amount of restricted stock the SEC would have permitted our Board to grant at that time. | |
(2) | The number of options that will be granted to our employees, including executive officers, is not determinable as our Board has absolute discretion in making such grants. Options will not be granted to non-employee directors under the Amended and Restated Plan unless prior exemptive relief has been received from the SEC | |
(3) | The number of shares granted to each non-employee director will be the equivalent of $30,000 worth of shares taken at the market value at the close of the exchange on the grant date. | |
(4) | The number of options and/or restricted stock that will be granted to our employees, including executive officers, is not determinable as our Board has absolute discretion in making such grants. |
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Securities Authorized for Issuance Under Equity Compensation Plans
The following table provides information regarding our equity compensation plans as of December 31,
2007:
Number of securities | ||||||||||||
remaining available for | ||||||||||||
Number of securities to be | Weighted-average exercise | future issuance | ||||||||||
issued upon exercise of | price of outstanding | under equity compensation | ||||||||||
outstanding options, | options, warrants and | plans (excluding securities | ||||||||||
warrants and rights | rights | reflected in column (a)) | ||||||||||
Plan Category | (a) | (b) | (c) | |||||||||
Equity compensation
plans approved by
security
holders(1)(2) |
| | 900,000 | |||||||||
Equity compensation
plans not approved
by security holders |
| | | |||||||||
Total |
| | 900,000 |
(1) | The Triangle Capital Corporation 2007 Equity Incentive Plan, or the Original Plan, was initially approved by our sole stockholder. Our Board of Directors approved the Amended and Restated Plan on February 6, 2008; however, the Amended and Restated Plan has not yet been approved by our stockholders. The 900,000 shares available under the Original Plan will, if approved, be available under the Amended and Restated Plan. | |
(2) | On April 3, 2007, the Company filed with the SEC a registration statement on Form S-8 registering the 900,000 shares of its common stock under the Original Plan. As these registered shares will be available if the Amended and Restated Plan is approved, our stockholders will not incur, either directly or indirectly, any fees associated with the registration of any restricted stock granted under the Amended and Restated Plan. |
U.S. Federal Income Tax Consequences
No taxable income is recognized by a recipient of a restricted stock award upon the grant of
such award. However, a recipient of a restricted stock award under the Amended and Restated Plan
will incur taxable income based on the fair market value of the Companys common stock (minus
amounts paid by the recipient for the stock, if any) when the forfeiture provisions on his or her
award, or any portion thereof, lapse. Such taxable income will generally be recognized as ordinary
income. Upon sale or disposition of the previously restricted common stock, the recipient may incur
additional taxes on the capital gain equal to the difference between the sales price and the
recipients tax basis.
The recipient may elect under Section 83(b) of the Internal Revenue Code to include as
ordinary income in the year he or she receives the restricted stock award the fair market value of
such award on the date of issuance. If the Section 83(b) election is made, the recipient will not
recognize any additional income as and when the forfeiture provisions lapse.
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PROPOSAL NO. 3
APPROVAL TO SELL SHARES OF COMMON STOCK BELOW NET ASSET VALUE
APPROVAL TO SELL SHARES OF COMMON STOCK BELOW NET ASSET VALUE
The Company is a closed-end investment company that has elected to be treated as a business
development company, or BDC, under the 1940 Act. The 1940 Act prohibits the Company from selling
shares of its common stock at a price below the current net asset value per share of such stock,
with certain exceptions. One such exception would permit the Company to sell shares of its common
stock during the next year at a price below the Companys then current net asset value per share if
its stockholders approve such a sale and the Companys directors make certain determinations.
Pursuant to this provision, the Company is seeking the approval of its common stockholders so that
it may, in one or more public or private offerings of its common stock, sell shares of its common
stock at a price below its then current net asset value per share, subject to certain conditions
discussed below. If approved, the authorization would be effective for a period expiring on the
earlier of the anniversary of the date of this Annual Meeting and the date of the Companys 2009
Annual Meeting of Stockholders, which is expected to be held in May 2009.
Generally, equity securities sold in public securities offerings are priced based on market
prices, rather than net asset value per share. The Company is seeking the approval of a majority of
its common stockholders of record to offer and sell shares of its common stock at prices that, net
of underwriting discount or commissions, may be less than net asset value so as to permit the
flexibility in pricing that market conditions generally require.
Reasons to Offer Common Stock Below Net Asset Value
The Company believes that market conditions will continue to provide attractive opportunities
to deploy capital. Over the past several months, U.S. credit markets, including middle market
lending, have experienced significant turbulence spurred in large part by the sub-prime residential
mortgage crisis and concerns generally about the state of the U.S. economy. This has led to
significant stock price volatility for capital providers such as the Company and has made access to
capital more challenging for many firms, particularly those who have relied heavily on secured
lending facilities. However, the change in market conditions also has had beneficial effects for
capital providers, including more reasonable pricing of risk and more appropriate contractual
terms. Accordingly, for firms that continue to have access to capital, the current environment
should provide investment opportunities on more favorable terms than have been available in recent
periods. The Companys ability to take advantage of these opportunities is dependent upon its
access to equity capital.
As a BDC and RIC, the Company is dependent on its ability to raise capital through the
issuance of common stock. RICs generally must distribute substantially all of their earnings to
stockholders as dividends in order to achieve pass-through tax treatment, which prevents the
Company from using those earnings to support new investments. Further, BDCs must maintain a debt to
equity ratio of less than 1:1, which requires the Company to finance its investments with at least
as much equity as debt in the aggregate. To continue to build the Companys investment portfolio,
and thereby support maintenance and growth of the Companys dividends, the Company endeavors to
maintain consistent access to capital through the public and private equity markets enabling it to
take advantage of investment opportunities as they arise.
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Although the Companys common stock has had a limited trading history, it has traded both at a
premium and at a discount in relation to its net asset value. The possibilities that shares of our
common stock will trade at a discount from net asset value or at premiums that are unsustainable
over the long term are separate and distinct from the risk that our net asset value will decrease.
It is not possible to predict whether any shares of our common stock issued in the future will
trade at, above, or below net asset value. The following table lists the high and low sales prices
for our common stock, and the sales price as a percentage of net asset value. On March 3, 2008, the
record date, the last reported closing sale price of our common stock on the Nasdaq Global Market
was $11.52 per share.
Net | Premium of High | Discount of Low | ||||||||||||||||||
Asset | Sales Price | Sales Price to Net | Sales Price to Net | |||||||||||||||||
Value(1) | High | Low | Asset Value(2) | Asset Value(2) | ||||||||||||||||
Year ended
December 31, 2007 |
||||||||||||||||||||
February 15, 2007
to March 31,
2007(3) |
$ | 13.57 | $ | 16.00 | $ | 13.45 | 118 | % | 99 | % | ||||||||||
Second Quarter |
$ | 13.75 | $ | 15.79 | $ | 13.58 | 115 | % | 99 | % | ||||||||||
Third Quarter |
$ | 13.99 | $ | 14.99 | $ | 11.95 | 107 | % | 85 | % | ||||||||||
Fourth Quarter |
$ | 13.74 | $ | 14.50 | $ | 10.75 | 106 | % | 78 | % |
(1) | Net asset value per share is determined as of the last day in the relevant quarter and therefore may not reflect the net asset value per share on the date of the high and low sales prices. The net asset values shown are based on outstanding shares at the end of each period. | |
(2) | Calculated as the respective high or low closing sales price divided by net asset value. |
|
(3) | Our stock began trading on the Nasdaq Global Market on February 15, 2007. |
The unprecedented nature of the current credit market dislocation and uncertainty surrounding
the U.S. economy has led to significant stock market volatility, particularly with respect to the
stock of financial services companies. During times of increased price volatility, the Companys
common stock may periodically trade below its net asset value, which is not uncommon for BDCs like
the Company. As noted above, however, the current market dislocation has created, and we believe
will continue to create, favorable opportunities to invest, including opportunities that, all else
being equal, may increase net asset value over the longer-term, even if financed with the issuance
of common stock below net asset value. The Company expects that it will be periodically presented
with attractive opportunities that require the Company to make an investment commitment quickly.
The Company may be unable to capitalize on investment opportunities presented to it unless it is
able to quickly raise capital. Stockholder approval of the proposal to sell shares below net asset
value subject to the conditions detailed below will provide the Company with the flexibility to
invest in such opportunities.
The Board of Directors believes that having the flexibility to issue its common stock below
net asset value in certain instances is in the best interests of stockholders. If the Company were
unable to access the capital markets as attractive investment opportunities arise, the Companys
ability to grow over time and continue to pay steady or increasing dividends to stockholders could
be adversely affected. It could also have the effect of forcing the Company to sell assets that the
Company would not otherwise sell, and such sales could occur at times that are disadvantageous to
sell.
Conditions to Sales Below Net Asset Value
If this proposal is approved, the Company will only sell shares of its common stock at a price
below net asset value per share if the following conditions are met:
| a majority of the Companys directors who have no financial interest in the sale and a majority of such directors who are not interested persons of the Company have determined that any such sale would be in the best interests of the Company and its stockholders; and |
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| a majority of the Companys directors who have no financial interest in the sale and a majority of such directors who are not interested persons of the Company, in consultation with the underwriter or underwriters of the offering if it is to be underwritten, have determined in good faith, and as of a time immediately prior to the first solicitation by or on behalf of the Company of firm commitments to purchase such securities or immediately prior to the issuance of such securities, that the price at which such securities are to be sold is not less than a price which closely approximates the market value of those securities, less any distributing commission or discount. |
In determining whether or not to sell additional shares of the Companys common stock at a
price below the net asset value per share, the Board of Directors will have duties to act in the
best interests of the Company and its stockholders.
Key Stockholder Considerations
Before voting on this proposal or giving proxies with regard to this matter, common
stockholders should consider the potentially dilutive effect of the issuance of shares of the
Companys common stock at less than net asset value per share on the net asset value per
outstanding share of common stock. Any sale of common stock at a price below net asset value would
result in an immediate dilution to existing common stockholders. Since under this proposal shares
of the Companys common stock could be issued at a price that is substantially below the net asset
value per share, the dilution could be substantial. This dilution would include reduction in the
net asset value per shares as a result of the issuance of shares at a price below the net asset
value per share and a proportionately greater decrease in a stockholders interest in the earnings
and assets of the Company and voting interest in the Company than the increase in the assets of the
Company resulting from such issuance. The Board of Directors of the Company will consider the
potential dilutive affect of the issuance of shares at a price below the net asset value per share
when considering whether to authorize any such issuance.
The 1940 Act establishes a connection between common share sale price and net asset value
because, when stock is sold at a sale price below net asset value per share, the resulting increase
in the number of outstanding shares is not accompanied by a proportionate increase in the net
assets of the issuer. Further, if current stockholders of the Company do not purchase any shares to
maintain their percentage interest, regardless of whether such offering is above or below the then
current net asset value, their voting power will be diluted. For an illustration on the potential
dilutive effect of an offering of our common stock at a price below net asset value, please see the
chart below under the heading Example of Dilutive Effect of the Issuance of Shares Below Net Asset
Value.
Any sale of substantial amounts of our common stock or other securities in the open market may
adversely affect the market price of our common stock and may adversely affect our ability to
obtain future financing in the capital markets. In addition, future sales of our common stock to
the public may create a potential market overhang, which is the existence of a large block of
shares readily available for sale that could lead the market to discount the value of shares held
by other investors.
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Example of Dilutive Effect of the Issuance of Shares Below Net Asset Value
Assume that Company XYZ has 1,000,000 total shares outstanding, $15,000,000 in total assets
and $5,000,000 in total liabilities. The net asset value per share of the common stock of Company
XYZ is $10.00. The following table illustrates the reduction to net asset value, or NAV, and the
dilution experienced by Stockholder A following the sale of 40,000 shares of the common stock of
Company XYZ at $9.50 per share, a price below its NAV per share.
Prior to Sale | Following Sale | Percentage | ||||||||||
Below NAV | Below NAV | Change | ||||||||||
Reduction to NAV |
||||||||||||
Total Shares Outstanding |
1,000,000 | 1,040,000 | 4.0 | % | ||||||||
NAV per share |
$ | 10.00 | $ | 9.98 | (0.2 | )% | ||||||
Dilution to Existing Stockholder |
||||||||||||
Shares Held by Stockholder A |
10,000 | 10,000 | (1) | 0.0 | % | |||||||
Percentage Held by Stockholder A |
1.00 | % | 0.96 | % | (3.8 | )% | ||||||
Total Interest of Stockholder A |
$ | 100,000 | $ | 99,808 | (0.2 | )% |
(1) | Assumes that Stockholder A does not purchase additional shares in equity offering of shares below NAV. |
Required Vote
Approval of this proposal requires the affirmative vote of (1) a majority of the outstanding
shares of common stock entitled to vote at the Annual Meeting; and (2) a majority of the
outstanding shares of common stock entitled to vote at the Annual Meeting which are not held by
affiliated persons of the Company.
For purposes of this proposal, the 1940 Act defines a majority of the outstanding shares as:
(1) 67% or more of the voting securities present at the Annual Meeting if the holders of more than
50% of the outstanding voting securities of such company are present or represented by proxy; or
(2) 50% of the outstanding voting securities of such company, whichever is the less. Abstentions
and broker non-votes will have the effect of a vote against this proposal.
The Board of Directors recommends a vote FOR the proposal to authorize the Company to sell shares
of its common stock during the next year at a price below the Companys then current net asset
value per share.
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PROPOSAL NO. 4
RATIFICATION OF APPOINTMENT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
RATIFICATION OF APPOINTMENT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The audit committee of the Board of Directors has selected Ernst & Young LLP as our
independent registered public accounting firm for the fiscal year ending December 31, 2008, and the
Board of Directors has further directed that management should submit the appointment of the
independent registered public accounting firm for ratification by the stockholders at the Annual
Meeting. If the stockholders ratify the selection of Ernst & Young LLP as our independent
registered public accounting firm, Ernst & Young LLP also will serve as the independent registered
public accounting firm for all of our wholly-owned subsidiaries.
Ernst & Young LLP has advised us that neither the firm nor any present member or associate of
it has any material financial interest, direct or indirect, in us or our wholly-owned subsidiaries.
It is expected that a representative of Ernst & Young LLP will be present at the Annual Meeting and
will have an opportunity to make a statement if he or she chooses and will be available to answer
questions.
Stockholder ratification of the appointment of Ernst & Young LLP as our independent registered
public accounting firm is not required by our bylaws or other governing documents. However, the
Board is submitting the appointment of Ernst & Young LLP to the stockholders for ratification as a
matter of good corporate governance. However, the audit committee is not bound by a vote either for
or against the proposal. The audit committee will consider a vote against the firm by the
stockholders in selecting our independent registered public accounting firm in the future. Even if
the stockholders do ratify the appointment, the audit committee in its discretion may direct the
appointment of a different independent registered public accounting firm at any time during the
year if it believes that such a change would be in the best interest of Triangle and our
stockholders.
On behalf of the audit committee, the Board recommends a vote FOR the ratification of the
appointment of Ernst & Young LLP as the Companys independent registered public accounting firm for
the fiscal year ending December 31, 2008.
Independent Registered Public Accounting Firms Fees
We have paid or expect to pay the following fees to Ernst & Young LLP for work performed in
2007 and 2006 or attributable to the audit of our 2007 and 2006 financial statements:
Fiscal Year Ended | Fiscal Year Ended | |||||||
December 31, 2007 | December 31, 2006 | |||||||
Audit Services |
$ | 248,000 | $ | 619,000 | ||||
Audit Related Services |
| | ||||||
Tax Services |
| | ||||||
Other Services |
| | ||||||
TOTAL FEES: |
$ | 248,000 | $ | 619,000 |
Audit Services. Audit fees include fees for services that normally would be provided by the
accountant in connection with statutory and regulatory filings or engagements and that generally
only the independent accountant can provide. In addition to fees for the audit of our annual
financial statements, the audit of the effectiveness of our internal control over financial
reporting and the review of our quarterly financial statements in accordance with generally
accepted auditing standards, this category contains fees for comfort letters, statutory audits,
consents, and assistance with and review of documents filed with the SEC.
Audit Related Services. Audit related fees are assurance related services that traditionally
are performed by the independent accountant, such as attest services that are not required by
statute or regulation.
Tax Services. Tax fees include corporate and subsidiary compliance and consulting.
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Other Services. Fees for other services would include fees for products and services other
than the services reported above.
Pre-Approval Policies and Procedures
The audit committee has established, and our Board of Directors has approved, a pre-approval
policy that describes the permitted audit, audit-related, tax, and other services to be provided by
Ernst & Young LLP, the Companys independent registered accounting firm. The policy requires that
the audit committee pre-approve the audit and non-audit services performed by the independent
registered accounting firm in order to assure that the provision of such service does not impair
the firms independence. However, our audit committee did not formally adopt this pre-approval
policy until March 12, 2008. Prior to March 12, 2008, our audit committee specifically reviewed
and approved Ernst & Young LLPs services between February 21, 2007 and December 31, 2007. Prior
to the Companys initial public offering, the Company did not have an audit committee, and our sole
stockholder approved all services of Ernst & Young LLP.
Since adoption of the Companys pre-approval policy, any requests for audit, audit-related,
tax, and other services that have not received general pre-approval must be submitted to the audit
committee for specific pre-approval, irrespective of the amount, and cannot commence until such
approval has been granted. Normally, pre-approval is provided at regularly scheduled meetings of
the audit committee. However, the audit committee may delegate pre-approval authority to one or
more of its members. The member or members to whom such authority is delegated shall report any
pre-approval decisions to the audit committee at its next scheduled meeting. The audit committee
does not delegate its responsibilities to pre-approve services performed by the independent
registered accounting firm to management.
AUDIT COMMITTEE REPORT
The audit committee of the Board of Directors of Triangle Capital Corporation operates under a
written charter adopted by the Board of Directors, which is available on our website at the
following URL: http://ir.tcap.com/governance.cfm. The audit committee is currently comprised of
Messrs. Garrott, Goldstein and Rich.
Management is responsible for the Companys internal controls and the financial reporting
process. The Companys independent registered public accounting firm is responsible for performing
an independent audit of the Companys consolidated financial statements in accordance with auditing
standards generally accepted in the United States and expressing an opinion on the conformity of
those audited financial statements in accordance with accounting principles generally accepted in
the United States. The audit committees responsibility is to monitor and oversee these processes.
The audit committee is also directly responsible for the appointment, compensation and oversight of
the Companys independent registered public accounting firm.
Review with Management
The audit committee has reviewed the audited financial statements and met and held discussions
with management regarding the audited financial statements. Management has represented to the audit
committee that the Companys consolidated financial statements were prepared in accordance with
accounting principles generally accepted in the United States.
Review and Discussion with Independent Registered Public Accounting Firm
The audit committee has discussed with Ernst & Young LLP matters required to be discussed by
Statement of Auditing Standards No. 61 (Communication with Audit Committees). The audit committee
received and reviewed the written disclosures and the letter from Ernst & Young LLP required by
Independence Standard No. 1, Independence Discussions with Audit Committees, as amended by the
Independence Standards Board, and has discussed with Ernst & Young LLP its independence and the
compatibility of non-audit services with the firms independence. The audit committee also reviewed
the requirements and the Companys implementation of Section 404 of the Sarbanes-Oxley Act of 2002
including the Public Company Accounting Oversight Boards Auditing Standard No. 2 regarding the
audit of internal controls over financial reporting.
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Conclusion
Based on the audit committees discussion with management and the Companys independent
registered public accounting firm, the audit committees review of the audited financial
statements, the representations of management and the report of the independent registered public
accounting firm to the audit committee, the audit committee recommends that the Board of Directors
include the audited consolidated financial statements in the Companys Annual Report on Form 10-K
for the year ended December 31, 2007 for filing with the Securities and Exchange Commission. The
audit committee also appoints Ernst & Young LLP to serve as the Companys independent registered
public accounting firm for the year ended December 31, 2008, subject to ratification of such
appointment by the stockholders of the Company.
The Audit Committee
Benjamin S. Goldstein, Chair
Thomas M. Garrott, III
Simon B. Rich, Jr.
Thomas M. Garrott, III
Simon B. Rich, Jr.
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
Related Party Transactions Policy and Procedure
The Company has procedures in place for the review, approval and monitoring of transactions
involving the Company and certain related persons of the Company. As a BDC, the Company is
prohibited by the 1940 Act from participating in transactions with any persons affiliated with the
BDC, including, officers, directors, and employees of the BDC and any person controlling or under
common control with the BDC, or the affiliates, absent an exemptive order from the SEC.
In the ordinary course of business, the Company enters into transactions with portfolio
companies that may be considered related party transactions. In order to ensure that the Company
does not engage in any prohibited transactions with any persons affiliated with Company, the
Company has implemented the following procedures:
| The Companys chief executive officer and chief financial officer prepare a list of persons who would be considered related persons under the 1940 Act. This list is prepared no less frequently than quarterly. The Companys chief compliance officer reviews the list of affiliated persons. This list is then presented to the Board of Directors at each board meeting. | ||
| Each director and executive officer completes a questionnaire each year indicating whether the director or executive officer has any relationship with the Company from which he or she may directly or indirectly derive any monetary gain. | ||
|
|||
| The Board of Directors reviews any proposed transaction between the Company and any of its affiliated persons. Such affiliated transactions may not be executed unless approved by a majority of the Companys directors who are neither interested persons of the Company nor have a financial interest in the transaction, on the basis that (i) the transactions terms are reasonable and fair to the Companys stockholders, (ii) the transaction is consistent with the interests of the Companys stockholders and the Companys policies and (iii) the background of the transaction and the findings and basis for the Board of Directors approval is recorded and preserved in the minutes of the Company. | ||
|
|||
| The Companys chief compliance officer reviews all affiliated transactions before they occur and makes a recommendation to the Board of Directors regarding whether the transactions comply with all applicable rules and regulations. The chief compliance officer also reviews the Boards minutes to ensure that any approval by the Board of an affiliated transaction is made in accordance with the Companys related party transaction policies and procedures. |
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| The Companys chief compliance officer reviews all affiliated transactions after they occur to verify that they comply with the proposed terms and all applicable regulations. The chief compliance officer will notify the Board should any affiliated transaction occur without proper approval or with terms different than those approved. The Board has the discretion to reverse the transaction or require the affiliated party to reimburse any detriment suffered by the Company as a result of the related party transaction. |
In addition, the Companys Code of Ethics and Business Conduct, which is approved by the Board
of Directors and acknowledged in writing by all employees, requires that all employees and
directors avoid any conflict, or the appearance of a conflict, between an individuals personal
interests and the interests of the Company. Pursuant to the Code of Ethics and Business Conduct,
each employee and director must disclose any conflicts of interest, or actions or relationships
that might give rise to a conflict, to our chief compliance officer. The nominating and corporate
governance committee is charged with monitoring and making recommendations to the Board of
Directors regarding policies and practices relating to corporate governance. Certain actions or
relationships that might give rise to a conflict of interest are reviewed and approved by the Board
of Directors.
Certain Transactions With or Involving Related Persons
Effective concurrently with the closing of our IPO, Triangle Mezzanine LLC, the general
partner of Triangle Mezzanine Fund LLLP, merged into a wholly owned subsidiary of Triangle Capital
Corporation. A substantial majority of the ownership interests of Triangle Mezzanine LLC were owned
by certain of our executive officers (Garland S. Tucker, III, Brent P.W. Burgess, Steven C. Lilly,
Tarlton H. Long and David F. Parker). As a result of such merger, Messrs. Tucker, Burgess, Lilly,
Long and Parker collectively received shares of our common stock valued at approximately $6.7
million.
Prior to the closing of our initial public offering, certain employees (Messrs. Tucker, Long
and Parker) collectively owned approximately 67% of Triangle Capital Partners, LLC, an entity which
provided management and advisory services to Triangle Mezzanine Fund LLLP pursuant to a management
services agreement dated as of February 3, 2003. Under the terms of that management services
agreement, Triangle Capital Partners, LLC received $0.2 million in management fees from Triangle
Mezzanine Fund LLLP during the fiscal year ended December 31, 2007. This agreement was terminated
upon the closing of our initial public offering.
For additional information regarding the amount of common stock owned by members of
management, see Security Ownership of Certain Beneficial Owners and Management.
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OTHER BUSINESS
The Board of Directors knows of no other business to be presented for action at the Annual
Meeting. If any matters do come before the meeting on which action can properly be taken, it is
intended that the proxies shall vote in accordance with the judgment of the person or persons
exercising the authority conferred by the proxy at the meeting. The submission of a proposal does
not guarantee its inclusion in our proxy statement or presentation at the meeting unless certain
securities law requirements are met.
You are cordially invited to attend the Annual Meeting of stockholders in person. Whether or
not you plan to attend the meeting, you are requested to complete, date, sign and promptly return
the accompanying proxy card in the enclosed postage-paid envelope.
By order of the Board of Directors
Steven C. Lilly
Chief Financial Officer, Treasurer and Secretary
Steven C. Lilly
Chief Financial Officer, Treasurer and Secretary
Raleigh, North Carolina
March 28, 2008
March 28, 2008
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Annex A
TRIANGLE CAPITAL CORPORATION
AMENDED AND RESTATED
2007 EQUITY INCENTIVE PLAN
AMENDED AND RESTATED
2007 EQUITY INCENTIVE PLAN
Section 1. Purposes.
1.1. Generally. This plan shall be known as the Triangle Capital Corporation Amended and
Restated 2007 Equity Incentive Plan (the Plan). The purpose of the Plan is to promote the
interests of Triangle Capital Corporation, a Maryland corporation (the Company), its Affiliates
(as defined herein) and its stockholders by (i) attracting and retaining key officers, employees,
and directors of, the Company and its Affiliates; (ii) motivating such individuals by means of
individual performance-related incentives to achieve long-range performance goals; (iii)
encouraging ownership of stock in the Company by such individuals; and (iv) linking their
compensation to the long-term interests of the Company and its stockholders. With respect to any
awards granted under the Plan that are intended to comply with the requirements of
performance-based compensation under Section 162(m) of the Code, the Plan shall be interpreted in
a manner consistent with such requirements.
1.2. Amendment and Restatement. This Plan amends and restates the Triangle Capital Corporation
2007 Equity Incentive Plan adopted February 13, 2007 (the Prior Plan) in its entirety. All Awards
(as defined below) granted subsequent to the date of this Plans adoption by the Companys
stockholders shall be subject to the terms of this Plan.
Section 2. Definitions.
As used in the Plan, the following terms shall have the meanings set forth below:
(a) 1940 Act means the Investment Company Act of 1940, as amended.
(b) Affiliate shall mean any wholly-owned consolidated subsidiary of the Company.
(c) Award shall mean any Option or Restricted Share Award granted under the Plan, whether
singly, in combination or in tandem, to a Participant by the Board pursuant to such terms,
conditions, restrictions and/or limitations, if any, as the Board may establish or which are
required by applicable legal requirements.
(d) Award Agreement shall mean any written agreement, contract or other instrument or
document evidencing any Award, which may, but need not, be executed or acknowledged by a
Participant.
(e) Board shall mean the Board of Directors of the Company.
(f) Cause shall mean, unless otherwise defined in the applicable Award Agreement, (i) the
engaging by the Participant in willful misconduct that is injurious to the Company or its
Affiliates, or (ii) the embezzlement or misappropriation of funds or property of the Company or its
Affiliates by the Participant. For purposes of this paragraph, no act, or failure to act, on the
Participants part shall be considered willful unless done, or omitted to be done, by the
Participant not in good faith and without reasonable belief that the Participants action or
omission was in the best interest of the Company. Any determination of Cause for purposes of the
Plan or any Award shall be made by the Board in its sole discretion. Any such determination shall
be final and binding on a Participant.
(g) Change in Control shall mean, unless otherwise defined in the applicable Award
Agreement, any of the following events:
(i) any person or entity, including a group as defined in Section 13(d)(3) of the
Exchange Act, other than the Company or an Affiliate thereof or any employee benefit plan of
the Company or any of its Affiliates, becomes the beneficial owner of the Companys
securities having 35% or more of the combined
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voting power of the then outstanding securities of the Company that may be cast for the
election of directors of the Company (other than as a result of an issuance of securities
initiated by the Company in the ordinary course of business);
(ii) as the result of, or in connection with, any cash tender or exchange offer, merger
or other business combination or contested election, or any combination of the foregoing
transactions, less than a majority of the combined voting power of the then outstanding
securities of the Company or any successor company or entity entitled to vote generally in
the election of the directors of the Company or such other corporation or entity after such
transaction are held in the aggregate by the holders of the Companys securities entitled to
vote generally in the election of directors of the Company immediately prior to such
transaction;
(iii) during any period of two (2) consecutive years, individuals who at the beginning
of any such period constitute the Board cease for any reason to constitute at least a
majority thereof, unless the election, or the nomination for election by the Companys
stockholders, of each Director of the Company first elected during such period was approved
by a vote of at least two-thirds (2/3rds) of the Directors of the Company then still in
office who were (i) Directors of the Company at the beginning of any such period, and (ii)
not initially (a) appointed or elected to office as result of either an actual or threatened
election and/or proxy contest by or on behalf of a Person other than the Board, or (b)
designated by a Person who has entered into an agreement with the Company to effect a
transaction described in (i) or (ii) above or (iv) or (v) below;
(iv) a complete liquidation or dissolution of the Company; or
(v) the sale or other disposition of all or substantially all of the assets of the
Company to any Person (other than a transfer to an Affiliate).
(h) Code shall mean the Internal Revenue Code of 1986, as amended from time to time.
(i) Committee shall mean a committee of two or more members of the Board appointed by the
Board in accordance with Section 3.3.
(j) Covered Officer shall mean at any date (i) any individual who, with respect to the
previous taxable year of the Company, was a covered employee of the Company within the meaning of
Section 162(m); provided, however, that the term Covered Officer shall not include any such
individual who is designated by the Board, in its discretion, at the time of any Award or at any
subsequent time, as reasonably expected not to be such a covered employee with respect to the
current taxable year of the Company and (ii) any individual who is designated by the Board, in its
discretion, at the time of any Award or at any subsequent time, as reasonably expected to be such a
covered employee with respect to the current taxable year of the Company or with respect to the
taxable year of the Company in which any applicable Award will be paid or vested.
(k) Director shall mean a member of the Board.
(l) Disability shall mean, unless otherwise defined in the applicable Award Agreement, a
disability that would qualify as a total and permanent disability under the Companys then current
long-term disability plan.
(m) Employee shall mean an officer or employee of the Company or of any Affiliate.
(n) Exchange Act shall mean the Securities Exchange Act of 1934, as amended from time to
time.
(o) Fair Market Value with respect to the Shares, shall mean, for purposes of a grant of an
Award as of any date, (i) the closing sales price of the Shares on the Nasdaq stock market, or any
other such exchange on which the shares are traded, on such date, or in the absence of reported
sales on such date, the closing sales price on the immediately preceding date on which sales were
reported or (ii) in the event there is no public market for the Shares on such date, the fair
market value as determined, in good faith, by the Board in its sole discretion (which, for purposes
of Section 6.2, will in no event will be less than the net asset value of such Shares on
such date, as
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determined in accordance with the 1940 Act and the rules thereunder), and for purposes of a
sale of a Share as of any date, the actual sales price on that date.
(p) Incentive Stock Option shall mean an option to purchase Shares from the Company that is
granted under Section 6 of the Plan and that is intended to meet the requirements of
Section 422 of the Code or any successor provision thereto.
(q) Non-Qualified Stock Option shall mean an option to purchase Shares from the Company that
is granted under Sections 6 or 9 of the Plan and is not intended to be an Incentive
Stock Option.
(r) Non-Employee Director shall mean a Director who is not an officer or employee of the
Company.
(s) Option shall mean an Incentive Stock Option or a Non-Qualified Stock Option.
(t) Option Price shall mean the purchase price payable to purchase one Share upon the
exercise of an Option.
(u) Participant shall mean any Employee or Director.
(v) Performance Award shall mean any Award granted under Section 8 of the Plan.
(w) Person shall mean any individual, corporation, partnership, limited liability company,
association, joint-stock company, trust, unincorporated organization, government or political
subdivision thereof or other entity.
(x) Restricted Share or Restricted Share Award shall mean any Share granted under
Sections 7 or 9 of the Plan.
(y) Retirement shall mean, unless otherwise defined in the applicable Award Agreement,
retirement of a Participant from the employ or service of the Company or any of its Affiliates in
accordance with the terms of the applicable Company retirement plan or, if a Participant is not
covered by any such plan, retirement on or after such Participants 65th birthday.
(z) SEC shall mean the Securities and Exchange Commission or any successor thereto.
(aa) Section 16 shall mean Section 16 of the Exchange Act and the rules promulgated
thereunder and any successor provision thereto as in effect from time to time.
(bb) Section 162(m) shall mean Section 162(m) of the Code and the regulations promulgated
thereunder and any successor provision thereto as in effect from time to time.
(cc) Shares shall mean shares of the common stock, $0.001 par value, of the Company.
(dd) Substitute Awards shall mean Awards granted solely in assumption of, or in substitution
for, outstanding awards previously granted by a company acquired by the Company or with which the
Company combines.
Section 3. Administration.
3.1. Administration by the Board. The Board shall administer the Plan unless and until it
delegates administration to a Committee, as provided in Section 3.3 hereof.
3.2. Powers of the Board. The Board shall have the power, subject to the express provisions
of the Plan and applicable law:
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(a) To determine from time to time which of the persons eligible under the Plan shall be
granted Awards; when and how each Award shall be granted and documented; what type or combination
of types of Awards shall be granted; the provision of each Award granted, including the time or
times when a Participant shall be permitted to exercise an Award; and the number of Shares with
respect to which an Award shall be granted to each such Participant. Notwithstanding the foregoing
powers of the Board, any grants of Awards to Non-Employee Directors under the Plan shall be
automatic and shall not be changed without SEC approval, and the issuance of any Award to an
Employee will be approved by the required majority, as defined in Section 57(o) of the 1940 Act, of
the Companys directors on the basis that such issuance is in the best interests of the Company and
its stockholders.
(b) To construe and interpret the Plan and Awards granted under it, and to establish, amend
and revoke rules and regulations for its administration. The Board, in the exercise of this power,
may correct any defect, omission or inconsistency in the Plan or in any Award documentation, in
such manner and to such extent as it shall deem necessary or expedient to make the Plan fully
effective.
(c) To amend the Plan or an Award as provided in Section 13.
(d) To terminate or suspend the Plan as provided in Section 13.
(e) Generally, to exercise such powers and to perform such acts as the Board deems necessary
or expedient to promote the best interests of the Company and that are not in conflict with the
provisions of the Plan.
3.3. Delegation to Committee. The Board may delegate administration of the Plan to a
Committee or Committees of three (3) or more members of the Board, and the term Committee shall
apply to any persons to whom such authority has been delegated. If administration is delegated to
a Committee, the Committee shall have, in connection with the administration of the Plan, the
powers theretofore possessed by the Board, including the power to delegate to a subcommittee any of
the administrative powers the Committee is authorized to exercise (and references in this Plan to
the Board, other than the Board reference at the end of this sentence and Board references in the
last sentence of this Section 3.3 shall thereafter be to the Committee or subcommittee),
subject, however, to such resolutions, not inconsistent with the provisions of the Plan, as may be
adopted from time to time by the Board. The Board may abolish the Committee at any time and revest
in the Board the administration of the Plan.
3.4. Effects of Boards Decision. Determinations, interpretations and constructions made by
the Board in good faith shall not be subject to review by any person and shall be final, binding
and conclusive on all persons.
Section 4. Shares Available For Awards.
4.1. Shares Available. Subject to the provisions of Section 4.5 hereof, the stock to
be subject to Awards under the Plan shall be the Shares of the Company and the maximum number of
Shares with respect to which Awards may be granted under the Plan shall be 900,000. If, after the
effective date of the Plan, any Shares covered by an Award granted under this Plan, or to which
such an Award relates, are forfeited, or if such an Award is settled for cash or otherwise
terminates, expires unexercised or is canceled or settled without the delivery of Shares or with
the delivery of a reduced number of Shares, then the Shares covered by such Award, or to which such
Award relates, or the number of Shares otherwise counted against the aggregate number of Shares
with respect to which Awards may be granted, to the extent of any such settlement, reduction,
forfeiture, termination, expiration or cancellation, shall again become Shares with respect to
which Awards may be granted. In the event that any Award granted hereunder is exercised through
the delivery of Shares or in the event that withholding tax liabilities arising from such Award are
satisfied by the withholding of Shares by the Company, the number of Shares available for Awards
under the Plan shall be increased by the number of Shares so surrendered or withheld.
4.2. Limits on Grants of Individual Awards.
(a) No individual Participant shall be granted Options under the Plan in any calendar year
that relate to more than 100,000 Shares.
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(b) No individual Participant shall be granted Awards under the Plan relating to more than 25%
of the Shares reserved for issuance.
4.3. Limits on Grants of Restricted Shares. The combined maximum amount of Restricted Shares
that may be issued under the Plan will be 10% of the outstanding Shares on the Effective Date (as
defined in Section 15.1 below) plus 10% of the number of Shares issued or delivered by the
Company (other than pursuant to compensation plans) during the term of the Plan.
4.4. Limits on Number of Awards. The amount of voting securities that would result from the
exercise of all of the Companys outstanding warrants, options and rights, together with any
Restricted Shares issued pursuant to the Plan, at the time of issuance shall not exceed 25% of the
outstanding voting securities of the Company, except that if the amount of voting securities that
would result from the exercise of all of the Companys outstanding warrants, options, and rights
issued to the Companys directors, officers, and employees, together with any Restricted Shares
issued pursuant to the Plan, would exceed 15% of the outstanding voting securities of the Company,
then the total amount of voting securities that would result from the exercise of all outstanding
warrants, options, and rights, together with any Restricted Shares issued pursuant to the Plan, at
the time of issuance shall not exceed 20% of the outstanding voting securities of the Company.
4.5. Adjustments. In the event that any dividend or other distribution (whether in the form
of cash, Shares, other securities or other property), recapitalization, stock split, reverse stock
split, reorganization, merger, consolidation, split-up, spin-off, combination, repurchase or
exchange of Shares or other securities of the Company, issuance of warrants or other rights to
purchase Shares or other securities of the Company, or other similar corporate transaction or event
affects the Shares, then the Board shall in an equitable and proportionate manner (and, as
applicable, in such manner as is consistent with Sections 422 and 409A of the Code and the
regulations thereunder and with Section 162(m)) either: (i) adjust any or all of (1) the aggregate
number of Shares or other securities of the Company (or number and kind of other securities or
property) with respect to which Awards may be granted under the Plan; (2) the number of Shares or
other securities of the Company (or number and kind of other securities or property) subject to
outstanding Awards under the Plan, provided that the number of shares subject to any Award shall
always be a whole number; (3) the grant or exercise price with respect to any Award under the Plan
(but only provided that the SEC has issued an exemptive order or the SECs staff has provided
written confirmation allowing the Company to do so); and (4) the limits on the number of Shares
that may be granted to Participants under the Plan in any calendar year; (ii) provide for an
equivalent award in respect of securities of the surviving entity of any merger, consolidation or
other transaction or event having a similar effect; or (iii) make provision for a cash payment to
the holder of an outstanding Award.
4.6. Substitute Awards. Any Shares issued by the Company as Substitute Awards in connection
with the assumption or substitution of outstanding grants from any acquired corporation shall not
reduce the Shares available for Awards under the Plan.
4.7. Sources of Shares Deliverable Under Awards. Any Shares delivered pursuant to an Award
may consist, in whole or in part, of authorized and unissued Shares or of issued Shares which have
been reacquired by the Company.
4.8. No Grants in Contravention of 1940 Act. No Award may be granted under the Plan if the
grant of such Award would cause the Company to violate Section 61(a)(3) of the Act, and, if
otherwise approved for grant, shall be void and of no effect. The grants of Awards under the Plan
to Non-Employee Directors shall be automatic and shall not be changed without SEC approval.
Section 5. Eligibility.
Any Employee or Director shall be eligible to be designated a Participant; provided, however,
that Non-Employee Directors shall only be eligible to receive Awards granted consistent with
Section 9.
Section 6. Stock Options.
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6.1. Grant. The Board shall have sole and complete authority to determine the Participants to
whom Options shall be granted, the number of Shares subject to each Award, the exercise price
(subject to Section 6.2 below) and the conditions and limitations applicable to the
exercise of each Option. The Board shall have the authority to grant Incentive Stock Options, and
to grant Non-Qualified Stock Options. In the case of Incentive Stock Options, the terms and
conditions of such grants shall be subject to and comply with Section 422 of the Code, as from time
to time amended, and any regulations implementing such statute. A person who has been granted an
Option under this Plan may be granted additional Options under the Plan if the Board shall so
determine; provided, however, that to the extent the aggregate Fair Market Value (determined at the
time the Incentive Stock Option is granted) of the Shares with respect to which all Incentive Stock
Options are exercisable for the first time by an Employee during any calendar year (under all plans
described in of Section 422(d) of the Code of the Employees employer corporation and its parent
and Affiliates) exceeds $100,000, such Options shall be treated as Non-Qualified Stock Options.
6.2. Price. The Board in its sole discretion shall establish the Option Price at the time
each Option is granted. Except in the case of Substitute Awards, the Option Price of an Option may
not be less than one hundred percent (100%) of the Fair Market Value of the Shares with respect to
which the Option is granted on the date of grant of such Option. Once established, the Option
Price of any Option may not be changed absent an exemptive order from the SEC or written
confirmation from its staff allowing the Company to do so.
6.3. Term. Subject to the Boards authority under Section 3.2 and the provisions of
Section 6.5, each Option and all rights and obligations thereunder shall expire on the date
determined by the Board and specified in the Award Agreement. The Board shall be under no duty to
provide terms of like duration for Options granted under the Plan. Notwithstanding the foregoing,
no Option shall be exercisable after the expiration of ten (10) years from the date such Option was
granted.
6.4. Exercise.
(a) Each Option shall be exercisable at such times and subject to such terms and conditions as
the Board may, in its sole discretion, specify in the applicable Award Agreement or thereafter.
The Board shall have full and complete authority to determine, subject to Section 6.5
herein, whether an Option will be exercisable in full at any time or from time to time during the
term of the Option, or to provide for the exercise thereof in such installments, upon the
occurrence of such events and at such times during the term of the Option as the Board may
determine.
(b) The Board may impose such conditions with respect to the exercise of Options, including
without limitation, any relating to the application of federal, state or foreign securities laws or
the Code, as it may deem necessary or advisable. The exercise of any Option granted hereunder
shall be effective only at such time as the sale of Shares pursuant to such exercise will not
violate any state or federal securities or other laws.
(c) An Option may be exercised in whole or in part at any time, with respect to whole Shares
only, within the period permitted thereunder for the exercise thereof, and shall be exercised by
written notice of intent to exercise the Option, delivered to the Company at its principal office,
and payment in full to the Company at the direction of the Board of the amount of the Option Price
for the number of Shares with respect to which the Option is then being exercised.
(d) Payment of the Option Price shall be made in cash or cash equivalents, or, at the
discretion of the Board, (i) by transfer, either actually or by attestation, to the Company of
Shares that have been held by the Participant for at least six (6) months (or such lesser period as
may be permitted by the Board), valued at the Fair Market Value of such Shares on the date of
exercise (or next succeeding trading date, if the date of exercise is not a trading date), together
with any applicable withholding taxes, such transfer to be upon such terms and conditions as
determined by the Board, or (ii) by a combination of such cash (or cash equivalents) and such
Shares; provided, however, that the optionee shall not be entitled to tender Shares pursuant to
successive, substantially simultaneous exercises of an Option or any other stock option of the
Company. Subject to applicable securities laws, an Option may also be exercised by delivering a
notice of exercise of the Option and simultaneously selling the Shares thereby acquired, pursuant
to a brokerage or similar agreement approved in advance by proper officers of the Company, using
the proceeds of such sale as payment of the Option Price, together with any applicable withholding
taxes. Until the
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optionee has been issued the Shares subject to such exercise, he or she shall possess no
rights as a stockholder with respect to such Shares.
6.5. Ten Percent Stock Rule. Notwithstanding any other provisions in the Plan, if at the time
an Option is otherwise to be granted pursuant to the Plan, the optionee or rights holder owns
directly or indirectly (within the meaning of Section 424(d) of the Code) Shares of the Company
possessing more than ten percent (10%) of the total combined voting power of all classes of Stock
of the Company or its parent or Affiliate corporations (within the meaning of Section 422(b)(6) of
the Code), then any Incentive Stock Option to be granted to such optionee or rights holder pursuant
to the Plan shall satisfy the requirement of Section 422(c)(5) of the Code, and the Option Price
shall be not less than one hundred ten percent (110%) of the Fair Market Value of the Shares of the
Company, and such Option by its terms shall not be exercisable after the expiration of five (5)
years from the date such Option is granted.
Section 7. Restricted Shares.
7.1. Grant.
(a) Subject to the provisions of the Plan and other applicable legal requirements, the Board
shall have sole and complete authority to determine the Participants to whom Restricted Shares
shall be granted, the number of Restricted Shares to be granted to each Participant, the duration
of the period during which, and the conditions under which, the Restricted Shares may be forfeited
to the Company, and the other terms and conditions of such Awards. The Restricted Share Awards
shall be evidenced by Award Agreements in such form as the Board shall from time to time approve,
which agreements shall comply with and be subject to the terms and conditions provided hereunder
and any additional terms and conditions established by the Board that are consistent with the terms
of the Plan.
(b) Each Restricted Share Award made under the Plan shall be for such number of Shares as
shall be determined by the Board and set forth in the Award Agreement containing the terms of such
Restricted Share Award. Such agreement shall set forth a period of time during which the grantee
must remain in the continuous employment of the Company in order for the forfeiture and transfer
restrictions to lapse. If the Board so determines, the restrictions may lapse during such
restricted period in installments with respect to specified portions of the Shares covered by the
Restricted Share Award. The Award Agreement may also, in the discretion of the Board, set forth
performance or other conditions that will subject the Shares to forfeiture and transfer
restrictions. The Board may, at its discretion, waive all or any part of the restrictions
applicable to any or all outstanding Restricted Share Awards.
(c) Notwithstanding Sections 7.1(a) and 7.1(b) hereof, any grants of
Restricted Shares to Non-Employee Directors under the Plan shall be automatic and shall not be
changed without SEC approval.
7.2. Delivery of Shares and Transfer Restrictions. At the time of a Restricted Share Award, a
certificate representing the number of Shares awarded thereunder shall be registered in the name of
the grantee. Such certificate shall be held by the Company or any custodian appointed by the
Company for the account of the grantee subject to the terms and conditions of the Plan, and shall
bear such a legend setting forth the restrictions imposed thereon as the Board, in its discretion,
may determine. The applicable Award Agreement will specify whether a grantee has the right to
receive dividends with respect to the Restricted Shares prior to the lapsing of transfer
restrictions. Unless otherwise provided in the applicable Award Agreement, the grantee shall have
all other rights of a stockholder with respect to the Restricted Shares, including the right to
vote such Shares, subject to the following restrictions: (i) the grantee shall not be entitled to
delivery of the stock certificate until the expiration of the restricted period and the fulfillment
of any other restrictive conditions set forth in the Award Agreement with respect to such Shares;
(ii) none of the Shares may be transferred except for disposition by gift, will or the laws of
descent and distribution during such restricted period or until after the fulfillment of any such
other restrictive conditions; and (iii) except as otherwise determined by the Board at or after
grant, all of the Shares shall be forfeited and all rights of the grantee to such Shares shall
terminate, without further obligation on the part of the Company, unless the grantee remains in the
continuous employment of the Company for the entire restricted period in relation to which such
Shares were granted and unless any other restrictive conditions relating to the Restricted Share
Award are met. Unless otherwise provided in the applicable Award Agreement, any Shares, any other
securities of the Company and any other property (except for cash dividends) distributed with
respect to the Shares subject to Restricted Share Awards shall be subject to the same restrictions,
terms and conditions as such restricted Shares.
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7.3. Termination of Restrictions. At the end of the restricted period and provided that any
other restrictive conditions of the Restricted Share Award are met, or at such earlier time as
otherwise determined by the Board, all restrictions set forth in the Award Agreement relating to
the Restricted Share Award or in the Plan shall lapse as to the restricted Shares subject thereto,
and a stock certificate for the appropriate number of Shares, free of the restrictions and
restricted stock legend, shall be delivered to the Participant or the Participants beneficiary or
estate, as the case may be.
Section 8. Performance Awards.
8.1. Grant. The Board shall have sole and complete authority to determine the Employees who
shall receive a Performance Award, which shall consist of a right that is (i) denominated in cash
or Shares (including but not limited to Restricted Shares), (ii) valued, as determined by the
Board, in accordance with the achievement of such Employees individual performance goals during
such performance periods as the Board shall establish, and (iii) payable at such time and in such
form as the Board shall determine.
8.2. Terms and Conditions. Subject to the terms of the Plan and any applicable Award
Agreement, the Board shall determine the performance goals to be achieved during any performance
period, the length of any performance period, the amount of any Performance Award and the amount
and kind of any payment or transfer to be made pursuant to any Performance Award, and may amend
specific provisions of the Performance Award; provided, however, that such amendment may not
adversely affect existing Performance Awards made within a performance period commencing prior to
implementation of the amendment.
8.3. Payment of Performance Awards. Performance Awards may be paid in a lump sum or in
installments following the close of the performance period or, in accordance with the procedures
established by the Board, on a deferred basis. Termination of employment prior to the end of any
performance period, other than for reasons of death or Disability, will result in the forfeiture of
the Performance Award, and no payments will be made. An employees rights to any Performance Award
may not be sold, assigned, transferred, pledged, hypothecated or otherwise encumbered or disposed
of in any manner, except by will or the laws of descent and distribution, and/or except as the
Board may determine at or after grant.
Section 9. Non-Employee Director Awards.
9.1. Each Non-Employee Director shall receive a grant of Restricted Shares at the beginning of
each one-year term of service on the Board, for which forfeiture restrictions will lapse at the end
of that year. The number of Restricted Shares granted to each Non-Employee Director shall be the
equivalent of $30,000 worth of Shares based on the market value at the close of the Nasdaq stock
market on the date of grant. Notwithstanding the foregoing, and subject to Sections 9.2 and
9.3 below, the Board may provide that all or a portion of a Non-Employee Directors annual
retainer, meeting fees and/or other awards or compensation as determined by the Board, be payable
(either automatically or at the election of a Non-Employee Director) in the form of Non-Qualified
Stock Options, Restricted Shares or unrestricted Shares; provided, however, that the Company has
received an order from the SEC that permits such Award. The Board shall determine the terms and
conditions of any such Awards, including the terms and conditions which shall apply upon a
termination of the Non-Employee Directors service as a member of the Board, and shall have full
power and authority in its discretion to administer such Awards, subject to the terms of the Plan
and applicable law.
9.2. Subject to applicable legal requirements and Section 9.3 below, the Board may
also grant Awards to Non-Employee Directors pursuant to the terms of the Plan, including any Award
described in Sections 6 or 7 above.
9.3. Any grants of Awards to Non-Employee Directors under the Plan shall be automatic and
shall not be changed without SEC approval.
Section 10. Provisions Applicable To Covered Officers And Performance Awards.
10.1. Notwithstanding anything in the Plan to the contrary, unless the Board determines that a
Performance Award to be granted to a Covered Officer should not qualify as performance-based
compensation for
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purposes of Section 162(m), Performance Awards granted to Covered Officers shall be subject to
the terms and provisions of this Section 10. Accordingly, unless otherwise determined by
the Board, if any provision of the Plan or any Award Agreement relating to such an Award does not
comply or is inconsistent with Section 162(m), such provision shall be construed or deemed amended
to the extent necessary to conform to such requirements, and no provision shall be deemed to confer
upon the Board discretion to increase the amount of compensation otherwise payable to a Covered
Officer in connection with any such Award upon the attainment of the performance criteria
established by the Board.
10.2. With respect to any Covered Officer, the maximum annual number of Shares in respect of
which all Performance Awards may be granted under Section 8 of the Plan is 100,000 and the
maximum amount of all Performance Awards that are settled in cash and that may be granted under
Section 8 of the Plan in any year is $1,000,000.
10.3. To the extent necessary to comply with Section 162(m), with respect to grants of
Performance Awards, no later than 90 days following the commencement of each performance period (or
such other time as may be required or permitted by Section 162(m) of the Code), the Board shall, in
writing, (1) select the individual performance goal or goals applicable to the performance period,
(2) establish the various targets and bonus amounts which may be earned for such performance
period, and (3) specify the relationship between performance goals and targets and the amounts to
be earned by each Covered Officer for such performance period. Following the completion of each
performance period, the Board shall certify in writing whether the applicable performance targets
have been achieved and the amounts, if any, payable to Covered Officers for such performance
period. In determining the amount earned by a Covered Officer for a given performance period,
subject to any applicable Award Agreement, the Board shall have the right to reduce (but not
increase) the amount payable at a given level of performance to take into account additional
factors that the Board may deem relevant in its sole discretion to the assessment of individual
performance for the performance period.
Section 11. Termination Of Employment.
The Board shall have the full power and authority to determine the terms and conditions that
shall apply to any Award upon a termination of employment with the Company and Affiliates,
including a termination by the Company with or without Cause, by a Participant voluntarily, or by
reason of death, Disability or Retirement, and may provide such terms and conditions in the Award
Agreement or in such rules and regulations as it may prescribe.
Section 12. Change In Control.
The Board may specify in the applicable Award Agreement at or after grant, or otherwise by
resolution prior to a Change in Control, that all or a portion of the outstanding Awards shall
vest, become immediately exercisable or payable and have all restrictions lifted upon a Change in
Control.
Section 13. Amendment And Termination.
13.1. Amendments to the Plan. The Board may amend, alter, suspend, discontinue or terminate
the Plan or any portion thereof at any time; provided that no such amendment, alteration,
suspension, discontinuation or termination shall be made without stockholder approval if such
approval is necessary to comply with any tax or regulatory requirement.
13.2. Amendments to Awards. Subject to the restrictions of Section 6.2 above and
Section 13.5 below, the Board may waive any conditions or rights under, amend any terms of
or alter, suspend, discontinue, cancel or terminate, any Award theretofore granted, prospectively
or retroactively; provided that any such waiver, amendment, alteration, suspension, discontinuance,
cancellation or termination that would materially and adversely affect the rights of any
Participant or any holder or beneficiary of any Award theretofore granted shall not to that extent
be effective without the consent of the affected Participant, holder or beneficiary.
13.3. Adjustments of Awards Upon the Occurrence of Certain Unusual or Nonrecurring Events.
The Board is hereby authorized to make equitable and proportionate adjustments in the terms and
conditions of, and the criteria included in, Awards in recognition of unusual or nonrecurring
events (and shall make such adjustments for
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events described in Section 4.5 hereof) affecting the Company or any Affiliate, or the
financial statements of the Company or any Affiliate, or of changes in applicable laws, regulations
or accounting principles.
13.4. Section 409A Compliance. No Award (or modification thereof) shall provide for deferral
of compensation that does not comply with Section 409A of the Code unless the Board, at the time of
grant, specifically provides that the Award is not intended to comply with Section 409A of the
Code. Notwithstanding any provision of this Plan to the contrary, if one or more of the payments
or benefits received or to be received by a Participant pursuant to an Award would cause the
Participant to incur any additional tax or interest under Section 409A of the Code, the Board may
reform such provision to maintain to the maximum extent practicable the original intent of the
applicable provision without violating the provisions of Section 409A of the Code.
13.5. Exercise Price of Awards. Once established, the exercise price of an Award shall not be
changed absent an exemptive order from the SEC or written confirmation from its staff that the
Company may do so.
Section 14. General Provisions.
14.1. Limited Transferability of Awards. Except as otherwise provided in the Plan, no Award
shall be assigned, alienated, pledged, attached, sold or otherwise transferred or encumbered by a
Participant, except by gift, will or the laws of descent and distribution. In addition, no transfer
or disposition of an Award shall be effective to bind the Company unless the Company shall have
been furnished with written notice thereof and an authenticated copy of the gift affidavit, will
and/or such other evidence as the Board may deem necessary or appropriate to establish the validity
of the transfer.
14.2. Dividends. In the sole and complete discretion of the Board, an Award may provide the
Participant with dividends, payable in cash, Shares, other securities or other property on a
current or deferred basis. All dividends which are not paid currently may, at the Boards
discretion, accrue interest, be reinvested into additional Shares, or, in the case of dividends
credited in connection with Performance Awards, be credited as additional Performance Awards and
paid to the Participant if and when, and to the extent that, payment is made pursuant to such
Award. The total number of Shares available for grant under Section 4 shall not be reduced
to reflect any dividends that are reinvested into additional Shares or credited as Performance
Awards.
14.3. No Rights to Awards. No Person shall have any claim to be granted any Award, and there
is no obligation for uniformity of treatment of Participants or holders or beneficiaries of Awards.
The terms and conditions of Awards need not be the same with respect to each Participant.
14.4. Share Certificates. All certificates for Shares or other securities of the Company or
any Affiliate delivered under the Plan pursuant to any Award or the exercise thereof shall be
subject to such stop transfer orders and other restrictions as the Board may deem advisable under
the Plan or the rules, regulations and other requirements of the SEC or any state securities
commission or regulatory authority, any stock exchange or other market upon which such Shares or
other securities are then listed, and any applicable Federal or state laws, and the Board may cause
a legend or legends to be put on any such certificates to make appropriate reference to such
restrictions.
14.5. Withholding. A Participant may be required to pay to the Company or any Affiliate and
the Company or any Affiliate shall have the right and is hereby authorized to withhold from any
Award, from any payment due or transfer made under any Award or under the Plan, or from any
compensation or other amount owing to a Participant the amount (in cash, Shares, other securities,
other Awards or other property) of any applicable withholding or other tax-related obligations in
respect of an Award, its exercise or any other transaction involving an Award, or any payment or
transfer under an Award or under the Plan and to take such other action as may be necessary in the
opinion of the Company to satisfy all obligations for the payment of such taxes. The Board may
provide for additional cash payments to holders of Options to defray or offset any tax arising from
the grant, vesting, exercise or payment of any Award.
14.6. Award Agreements. Each Award hereunder shall be evidenced by an Award Agreement that
shall be delivered to the Participant and may specify the terms and conditions of the Award and any
rules applicable thereto. In the event of a conflict between the terms of the Plan and any Award
Agreement, the terms of the Plan shall prevail.
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The Board shall, subject to applicable law, determine the date an Award is deemed to be
granted. The Board or, except to the extent prohibited under applicable law, its delegate(s) may
establish the terms of agreements or other documents evidencing Awards under this Plan and may, but
need not, require as a condition to any such agreements or documents effectiveness that such
agreement or document be executed by the Participant, including by electronic signature or other
electronic indication of acceptance, and that such Participant agree to such further terms and
conditions as specified in such agreement or document. The grant of an Award under this Plan shall
not confer any rights upon the Participant holding such Award other than such terms, and subject to
such conditions, as are specified in this Plan as being applicable to such type of Award (or to all
Awards) or as are expressly set forth in the agreement or other document evidencing such Award.
14.7. No Limit on Other Compensation Arrangements. Nothing contained in the Plan shall
prevent the Company or any Affiliate from adopting or continuing in effect other compensation
arrangements, which may, but need not, provide for the grant of Options or Restricted Shares.
14.8. No Right to Employment. The grant of an Award shall not be construed as giving an
Employee the right to be retained in the employ of the Company or any Affiliate. Further, the
Company or an Affiliate may at any time dismiss an Employee from employment, free from any
liability or any claim under the Plan, unless otherwise expressly provided in an Award Agreement.
14.9. No Rights as Stockholder. Subject to the provisions of the Plan and the applicable
Award Agreement, no Participant or holder or beneficiary of any Award shall have any rights as a
stockholder with respect to any Shares to be distributed under the Plan until such person has
become a holder of such Shares. Notwithstanding the foregoing, in connection with each grant of
Restricted Shares hereunder, the applicable Award Agreement shall specify if and to what extent the
Participant shall not be entitled to the rights of a stockholder in respect of such Restricted
Shares.
14.10. Governing Law. The validity, construction and effect of the Plan and any rules and
regulations relating to the Plan and any Award Agreement shall be determined in accordance with the
laws of the State of Maryland without giving effect to conflicts of laws principles.
14.11. Severability. If any provision of the Plan or any Award is, or becomes, or is deemed
to be invalid, illegal or unenforceable in any jurisdiction or as to any Person or Award, or would
disqualify the Plan or any Award under any law deemed applicable by the Board, such provision shall
be construed or deemed amended to conform to the applicable laws, or if it cannot be construed or
deemed amended without, in the determination of the Board, materially altering the intent of the
Plan or the Award, such provision shall be stricken as to such jurisdiction, Person or Award and
the remainder of the Plan and any such Award shall remain in full force and effect.
14.12. Other Laws. The Board may refuse to issue or transfer any Shares or other
consideration under an Award if, acting in its sole discretion, it determines that the issuance or
transfer of such Shares or such other consideration might violate any applicable law or regulation
(including applicable non-U.S. laws or regulations) or entitle the Company to recover the same
under Exchange Act Section 16(b), and any payment tendered to the Company by a Participant, other
holder or beneficiary in connection with the exercise of such Award shall be promptly refunded to
the relevant Participant, holder or beneficiary.
14.13. No Trust or Fund Created. Neither the Plan nor any Award shall create or be construed
to create a trust or separate fund of any kind or a fiduciary relationship between the Company or
any Affiliate and a Participant or any other Person. To the extent that any Person acquires a
right to receive payments from the Company or any Affiliate pursuant to an Award, such right shall
be no greater than the right of any unsecured general creditor of the Company or any Affiliate.
14.14. No Fractional Shares. No fractional Shares shall be issued or delivered pursuant to
the Plan or any Award, and the Board shall determine whether cash, other securities or other
property shall be paid or transferred in lieu of any fractional Shares or whether such fractional
Shares or any rights thereto shall be canceled, terminated or otherwise eliminated.
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14.15. Headings. Headings are given to the sections and subsections of the Plan solely as a
convenience to facilitate reference. Such headings shall not be deemed in any way material or
relevant to the construction or interpretation of the Plan or any provision thereof.
14.16. 1940 Act. No provision of this Plan shall contravene any portion of the 1940 Act, and
in the event of any conflict between the provisions of the Plan or any Award and the 1940 Act, the
applicable section of the 1940 Act shall control and all Awards under the Plan shall be so
modified. All Participants holding such modified Awards shall be notified of the changes to their
Awards and such change shall be binding on such Participant.
Section 15. Term Of The Plan.
15.1. Effective Date. The Plan shall become effective upon approval by the stockholders of
the Company and the Board; provided, however, that the Plan shall not be effective with respect to
any Award to a Non-Employee Director or any award of Restricted Shares unless the Company has
received an order from the SEC that permits such Award.
15.2. Expiration Date. No new Awards shall be granted under the Plan after the tenth
anniversary of the Effective Date. Unless otherwise expressly provided in the Plan or in an
applicable Award Agreement, any Award granted hereunder may, and the authority of the Board to
amend, alter, adjust, suspend, discontinue or terminate any such Award or to waive any conditions
or rights under any such Award shall, continue after the tenth anniversary of the Effective Date.
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THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
TRIANGLE CAPITAL CORPORATION FOR ANNUAL MEETING OF STOCKHOLDERS
TRIANGLE CAPITAL CORPORATION FOR ANNUAL MEETING OF STOCKHOLDERS
May 7, 2008
The undersigned stockholder of Triangle Capital Corporation (the Company) acknowledges
receipt of the Notice of Annual Meeting of Stockholders of the Company and hereby appoints Garland
S. Tucker, III and Steven C. Lilly, or any one of them, and each with full power of substitution,
to act as attorneys and proxies for the undersigned to vote all the shares of common stock of the
Company that the undersigned is entitled to vote at the Annual Meeting of Stockholders of the
Company to be held on May 7, 2008, at 9:00 a.m. Eastern Time at 3600 Glenwood Avenue, Raleigh,
North Carolina 27612, and at any adjournment thereof, as indicated on this proxy.
THIS PROXY IS REVOCABLE AND WILL BE VOTED AS DIRECTED BY THE UNDERSIGNED BELOW; where no choice is
specified, it will be voted FOR Proposals 1, 2, 3 and 4.
Please sign and date this proxy on the reverse side and return it in the enclosed envelope.
(CONTINUED ON REVERSE SIDE)
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ANNUAL MEETING OF STOCKHOLDERS
TRIANGLE CAPITAL CORPORATION
May 7, 2008
TRIANGLE CAPITAL CORPORATION
May 7, 2008
Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Triangle Capital Corporation, c/o The Altman Group, Inc., Attn: Charlotte Brown, 1200 Wall Street West, 3rd Floor, Lyndhurst, New Jersey 07071. |
PLEASE DATE, SIGN AND MAIL YOUR
PROXY CARD IN THE ENVELOPE PROVIDED AS SOON AS POSSIBLE!
PROXY CARD IN THE ENVELOPE PROVIDED AS SOON AS POSSIBLE!
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSALS 1, 2, 3 AND 4
1. The election of the following eight persons
(except as marked to the contrary) as Directors
who will serve as directors of Triangle Capital
Corporation until the 2009 Annual Meeting, or
until their successors are elected and
qualified.
|
Nominees: Garland S. Tucker, III Brent P.W. Burgess Thomas M. Garrott, III Simon B. Rich, Jr. |
Steven C. Lilly W. McComb Dunwoody Benjamin S. Goldstein Sherwood M. Smith, Jr. |
FOR o |
WITHHOLD AUTHORITY o |
FOR ALL EXCEPT o |
|||||||||||
INSTRUCTIONS: To withhold authority to vote for any individual, mark, For All Except and write the nominees name(s) on the line below. | ||||||||||||||||
FOR | AGAINST | ABSTAIN | ||||||||||||||
2. To approve the Triangle Capital Corporation Amended and Restated 2007 Equity Incentive Plan. | o | o | o | |||||||||||||
3. To approve a proposal to authorize the Company, pursuant to approval of its Board of Directors, to sell shares of its common stock during the next year at a price below the Companys then current net asset value per share | o | o | o | |||||||||||||
4. The ratification of the selection of Ernst & Young LLP as the Companys independent registered public accounting firm for the fiscal year ending December 31, 2008. | o | o | o | |||||||||||||
THIS PROXY IS REVOCABLE AND WILL BE VOTED AS DIRECTED BY THE UNDERSIGNED BELOW; where no choice is
specified, it will be voted FOR Proposals 1, 2, 3 and 4.
IMPORTANT: Please sign exactly as your name appears on this proxy. For joint accounts, each joint
owner should sign. When signing as attorney, executor, administrator, trustee or guardian, please
give your full title as such. If the signer is a corporation or partnership, please sign in full
corporate or partnership name by a duly authorized officer or partner.
SIGNATURE
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DATE | SIGNATURE | DATE | |||||
IF HELD JOINTLY |