Triangle Capital Corporation; Notice of Application, 10310-10313 [E8-3555]
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Federal Register / Vol. 73, No. 38 / Tuesday, February 26, 2008 / Notices
necessary for the proper performance of
functions of OPM, and whether it will
have practical utility; whether our
estimate of the public burden of this
collection is accurate, and based on
valid assumptions and methodology;
and ways in which we can minimize the
burden of the collection of information
on those who are to respond, through
use of the appropriate technological
collection techniques or other forms of
information technology.
Approximately 3,000 RI 38–45 forms
are completed annually. Each form
requires approximately 5 minutes to
complete. The annual estimated burden
is 250 hours.
For copies of this proposal, contact
Mary Beth Smith-Toomey on (202) 606–
8358, Fax (202) 418–3251 or via e-mail
to MaryBeth.Smith-Toomey@opm.gov.
Please include a mailing address with
your request.
DATES: Comments on this proposal
should be received within 60 calendar
days from the date of this publication.
ADDRESSES: Send or deliver comments
to Ronald W. Melton, Deputy Assistant
Director, Retirement Services Program,
Center for Retirement and Insurance
Services, U.S. Office of Personnel
Management, 1900 E Street, NW., Room
3305, Washington, DC 20415–3500.
For Information Regarding
Administrative Coordination Contact:
Cyrus S. Benson, Team Leader,
Publications Team, RIS Support
Services/Support Group, (202) 606–
0623.
Howard Weizmann,
Deputy Director, U.S. Office of Personnel
Management.
[FR Doc. E8–3540 Filed 2–25–08; 8:45 am]
BILLING CODE 6325–38–P
OFFICE OF PERSONNEL
MANAGEMENT
Reconsideration Rights outlines the
procedures required to request
reconsideration of an initial OPM
decision about Civil Service or Federal
Employees retirement, Federal or
Retired Federal Employees Health
Benefits requests to enroll or change
enrollment, or Federal Employees’
Group Life Insurance coverage. This
form lists the procedures and time
periods required for requesting
reconsideration.
Comments are particularly invited on:
whether this collection of information is
necessary for the proper performance of
functions of the Office of Personnel
Management, and whether it will have
practical utility; whether our estimate of
the public burden of this collection of
information is accurate, and based on
valid assumptions and methodology;
and ways in which we can minimize the
burden of the collection of information
on those who are to respond, through
the use of appropriate technological
collection techniques or other forms of
information technology.
For copies of this proposal, contact
Mary Beth Smith-Toomey on (202) 606–
8358, Fax (202) 418–3251 or via e-mail
to MaryBeth.Smith-Toomey@opm.gov.
Please include a mailing address with
your request.
DATES: Comments on this proposal
should be received within 60 calendar
days from the date of this publication.
ADDRESSES: Send or deliver comments
to Ronald W. Melton, Deputy Assistant
Director, Retirement Services Program,
Center for Retirement and Insurance
Services, U.S. Office of Personnel
Management, 1900 E Street, NW., Room
3305, Washington, DC 20415–3500.
For Information Regarding
Administrative Coordination Contact:
Cyrus S. Benson, Team Leader,
Publications Team, RIS Support
Services/Support Group, (202) 606–
0623.
Proposed Collection; Comment
Request for Extension, Without
Change, of a Currently Approved
Information Collection: RI 38–47
Howard Weizmann,
Deputy Director, U.S. Office of Personnel
Management.
[FR Doc. E8–3541 Filed 2–25–08; 8:45 am]
Office of Personnel
Management.
ACTION: Notice.
BILLING CODE 6325–38–P
AGENCY:
In accordance with the
Paperwork Reduction Act of 1995 (Pub.
L. 104–13, May 22, 1995), this notice
announces that the Office of Personnel
Management (OPM) intends to submit to
the Office of Management and Budget
(OMB) a request for extension, without
change, of a currently approved
information collection. RI 38–47,
Information and Instructions on Your
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SUMMARY:
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[Investment Company Act Release No.
28165; 812–13447]
Triangle Capital Corporation; Notice of
Application
February 20, 2008.
Securities and Exchange
Commission (‘‘Commission’’).
AGENCY:
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Summary of the Application: Triangle
Capital Corporation (‘‘Triangle’’)
requests an order to permit it to issue
restricted shares of its common stock
under the terms of its employee and
director compensation plan.
Filing Dates: The application was
filed on October 31, 2007, and amended
on February 20, 2008.
Hearing or Notification of Hearing: An
order granting the application will be
issued unless the Commission orders a
hearing. Interested persons may request
a hearing by writing to the
Commission’s Secretary and serving
applicant with a copy of the request,
personally or by mail. Hearing requests
should be received by the Commission
by 5:30 p.m. on March 17, 2008, and
should be accompanied by proof of
service on applicant, in the form of an
affidavit or, for lawyers, a certificate of
service. Hearing requests should state
the nature of the writer’s interest, the
reason for the request, and the issues
contested. Persons who wish to be
notified of a hearing may request
notification by writing to the
Commission’s Secretary.
Secretary, U.S. Securities
and Exchange Commission, 100 F
Street, NE., Washington, DC 20549–
1090. Triangle, c/o Garland S. Tucker
III, Triangle Capital Corporation, 3600
Glenwood Avenue, Suite 104, Raleigh,
NC 27612.
ADDRESSES:
John
Yoder, Senior Counsel, at (202) 551–
6878, or Janet M. Grossnickle, Branch
Chief, at (202) 551–6821, (Division of
Investment Management, Office of
Investment Company Regulation).
FOR FURTHER INFORMATION CONTACT:
The
following is a summary of the
application. The complete application
may be obtained for a fee at the
Commission’s Public Reference Desk,
100 F Street, NE., Washington, DC
20549–1520 (tel. 202–551–5850).
SUPPLEMENTARY INFORMATION:
SECURITIES AND EXCHANGE
COMMISSION
PO 00000
Notice of an application for an
order under section 6(c) of the
Investment Company Act of 1940 (the
‘‘Act’’) for an exemption from sections
23(a), 23(b) and 63 of the Act, and under
sections 57(a)(4) and 57(i) of the Act and
rule 17d-1 under the Act authorizing
certain joint transactions otherwise
prohibited by section 57(a)(4) of the Act.
ACTION:
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Applicant’s Representations
1. Triangle, a Maryland corporation, is
an internally managed, non-diversified,
closed-end investment company that
has elected to be regulated as a business
development company (‘‘BDC’’) under
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the Act.1 Triangle is a specialty finance
company that provides customized
financing solutions to companies with
annual revenues between $10 million
and $100 million. Shares of Triangle’s
common stock are traded on The
NASDAQ Global Market under the
symbol ‘‘TCAP.’’ Triangle’s initial
public offering was completed on
February 21, 2007. As of December 31,
2007, there were 6,803,863 shares of
Triangle’s common stock outstanding
and Triangle had eleven employees,
including the employees of its whollyowned consolidated subsidiaries.
2. Triangle currently has an eight
member board of directors (‘‘Board’’) of
whom three are ‘‘interested persons’’ of
Triangle within the meaning of section
2(a)(19) of the Act and five are noninterested persons (‘‘Non-interested
Directors’’). Triangle has five directors
who are not officers or employees of
Triangle (the ‘‘Non-employee
Directors’’).
3. Triangle believes that its successful
performance depends on its ability to
offer compensation packages to its
professionals that are competitive with
those offered by its competitors and
other investment management
businesses. Triangle believes its ability
to offer compensation plans providing
for the periodic issuance of shares of
restricted stock (i.e., stock that, at the
time of issuance, is subject to certain
forfeiture restrictions, and thus is
restricted as to its transferability until
such forfeiture restrictions have lapsed)
(the ‘‘Restricted Stock’’) is vital to its
future growth and success. Effective
February 13, 2007, Triangle adopted the
2007 Equity Incentive Plan. Triangle
proposes to amend and restate the 2007
Equity Incentive Plan (‘‘Amended and
Restated Plan’’) to permit the issuance
of shares of Restricted Stock to its Nonemployee Directors, employees and
employees of its wholly-owned
consolidated subsidiaries (collectively,
the ‘‘Participants’’ and each, a
‘‘Participant’’).
4. The Amended and Restated Plan
will authorize the issuance of shares of
Restricted Stock subject to certain
forfeiture restrictions. These restrictions
may relate to continued employment or
service on the Board, as the case may be
(lapsing either on an annual or other
periodic basis or on a ‘‘cliff’’ basis, i.e.,
at the end of a stated period of time), or
other restrictions deemed by the Board
to be appropriate. The Restricted Stock
will not be transferable except for
disposition by gift, will or intestacy.
Except to the extent restricted under the
terms of the Amended and Restated
Plan, a Participant granted Restricted
Stock will have all the rights of any
other shareholder, including the right to
vote the Restricted Stock and the right
to receive dividends. During the
restriction period, the Restricted Stock
generally may not be sold, transferred,
pledged, hypothecated, margined, or
otherwise encumbered by the
Participant. Except as the Board
otherwise determines, upon termination
of a Participant’s employment or service
on the Board during the applicable
restriction period, Restricted Stock for
which forfeiture restrictions have not
lapsed at the time of such termination
shall be forfeited.
5. The maximum amount of Restricted
Stock that may be issued under the
Amended and Restated Plan will be
10% of the outstanding shares of
Triangle’s common stock on the
effective date of the Amended and
Restated Plan plus 10% of the
outstanding number of shares of
Triangle’s common stock issued or
delivered by Triangle (other than
pursuant to compensation plans) during
the term of the Amended and Restated
Plan.2 The Amended and Restated Plan
limits the total number of shares that
may be awarded to any single
Participant in a single year to 100,000
shares. In addition, no Participant may
be granted more than 25% of the shares
of common stock reserved for issuance
under the Amended and Restated Plan.
The Amended and Restated Plan will be
administered by the Board, which will
award shares of Restricted Stock to the
Participants (except for Non-employee
Directors) from time to time as part of
the Participants’ compensation based on
a Participant’s actual or expected
performance and value to Triangle.
6. Under the Amended and Restated
Plan, Triangle’s Non-Employee
Directors will each receive a grant of
$30,000 worth of shares of Restricted
Stock at the beginning of each one-year
term of service on the Board, for which
forfeiture restrictions would lapse one
year from the grant date. The Amended
and Restated Plan will be administered
by the Board, and the grants of
Restricted Stock under the Amended
and Restated Plan to Non-employee
1 Section 2(a)(48) defines a BDC to be any closedend investment company that operates for the
purpose of making investments in securities
described in sections 55(a)(1) through 55(a)(3) of the
Act and makes available significant managerial
assistance with respect to the issuers of such
securities.
2 For purposes of calculating compliance with
this limit, Triangle will count as Restricted Stock
all shares of Triangle’s common stock that are
issued pursuant to the Amended and Restated Plan
less any shares that are forfeited back to Triangle
and cancelled as a result of forfeiture restrictions
not lapsing.
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Directors will be automatic and will not
be changed without Commission
approval.
7. The Amended and Restated Plan
will be submitted for approval to
Triangle’s shareholders, and will
become effective upon such approval,
subject to the issuance of the requested
order.
Applicant’s Legal Analysis
Sections 23(a) and (b), Section 63
1. Under section 63 of the Act, the
provisions of section 23(a) of the Act
generally prohibiting a registered
closed-end investment company from
issuing securities for services or for
property other than cash or securities
are made applicable to BDCs. This
provision would prohibit the issuance
of Restricted Stock as a part of the
Amended and Restated Plan.
2. Section 23(b) generally prohibits a
closed-end management investment
company from selling its common stock
at a price below its current net asset
value (‘‘NAV’’). Section 63(2) makes
section 23(b) applicable to BDCs unless
certain conditions are met. Because
Restricted Stock that would be granted
under the Amended and Restated Plan
would not meet the terms of section
63(2), sections 23(b) and 63 would
prevent the issuance of the Restricted
Stock.
3. Section 6(c) provides, in part, that
the Commission may, by order upon
application, conditionally or
unconditionally exempt any person,
security, or transaction, or any class or
classes thereof, from any provision of
the Act, if and to the extent that the
exemption is necessary or appropriate
in the public interest and consistent
with the protection of investors and the
purposes fairly intended by the policy
and provisions of the Act.
4. Triangle requests an order pursuant
to section 6(c) of the Act granting an
exemption from the provisions of
sections 23(a) and (b) and section 63 of
the Act. Triangle states that the
concerns underlying those sections
include: (i) Preferential treatment of
investment company insiders and the
use of options and other rights by
insiders to obtain control of the
investment company; (ii) complication
of the investment company’s structure
that makes it difficult to determine the
value of the company’s shares; and (iii)
dilution of shareholders’ equity in the
investment company. Triangle states
that the Amended and Restated Plan
does not raise the concern about
preferential treatment of Triangle’s
insiders because the Amended and
Restated Plan is a bona fide
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Federal Register / Vol. 73, No. 38 / Tuesday, February 26, 2008 / Notices
compensation plan of the type that is
common among corporations generally.
In addition, section 61(a)(3)(B) of the
Act permits a BDC to issue to its
officers, directors and employees,
pursuant to an executive compensation
plan, warrants, options and rights to
purchase the BDC’s voting securities,
subject to certain requirements. Triangle
states that, for reasons that are unclear,
section 61 and its legislative history do
not address the issuance by a BDC of
restricted stock as incentive
compensation. Triangle states, however,
that the issuance of Restricted Stock is
substantially similar, for purposes of
investor protection under the Act, to the
issuance of warrants, options, and rights
as contemplated by section 61. Triangle
also asserts that the Amended and
Restated Plan would not become a
means for insiders to obtain control of
Triangle because the maximum number
of Triangle’s voting securities that may
be issued pursuant to the Amended and
Restated Plan will be limited as set forth
in the application. Triangle’s current
intention is to issue only shares of
Restricted Stock as incentive
compensation; however, if Triangle
issues stock options in the future, it will
do so pursuant to section 61 and in
compliance with the terms and
conditions of the application. Moreover,
no individual Participant could be
issued more than 25% of the shares
reserved for issuance under the
Amended and Restated Plan.
5. Triangle further states that the
Amended and Restated Plan will not
unduly complicate Triangle’s structure
because equity-based employee
compensation arrangements are widely
used among corporations and
commonly known to investors. Triangle
notes that the Amended and Restated
Plan will be submitted to its
shareholders. Triangle represents that a
concise, ‘‘plain English’’ description of
the Amended and Restated Plan,
including its potential dilutive effect,
will be provided in the proxy materials
that will be submitted to Triangle’s
shareholders. Triangle also states that it
will comply with the proxy disclosure
requirements in Item 10 of Schedule
14A under the Securities Exchange Act
of 1934. Triangle further notes that the
Amended and Restated Plan will be
disclosed to investors in accordance
with the requirements of the Form N–
2 registration statement for closed-end
investment companies, and pursuant to
the standards and guidelines adopted by
the Financial Accounting Standards
Board for operating companies. In
addition, Triangle will comply with the
disclosure requirements for executive
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compensation plans applicable to
operating companies under the
Exchange Act.3 Triangle thus concludes
that the Amended and Restated Plan
will be adequately disclosed to investors
and appropriately reflected in the
market value of Triangle’s shares.
6. Triangle acknowledges that, while
awards granted under the Amended and
Restated Plan would have a dilutive
effect on the shareholders’ equity in
Triangle, that effect would be
outweighed by the anticipated benefits
of the Amended and Restated Plan to
Triangle and its shareholders. Triangle
asserts that it needs the flexibility to
provide the requested equity-based
employee compensation in order to be
able to compete effectively with other
financial services firms for talented
professionals. These professionals,
Triangle suggests, in turn are likely to
increase Triangle’s performance and
shareholder value. Triangle also asserts
that equity-based compensation would
more closely align the interests of
Triangle’s employees with those of
Triangle’s shareholders. Triangle
believes that the granting of shares of
Restricted Stock to Non-employee
Directors under the Amended and
Restated Plan is fair and reasonable
because of the skills and experience that
such directors provide to Triangle. Such
skills and experience are necessary for
the management and oversight of
Triangle’s investments and operations.
Triangle believes that granting the
shares of Restricted Stock will provide
significant incentives for Non-employee
Directors to remain on the Board and to
devote their best efforts to the success
of Triangle’s business in the future. The
issuance of shares of Restricted Stock
will also provide a means for Triangle’s
Non-employee Directors to increase
their ownership interest in Triangle,
thereby helping to ensure a close
identification of their interests with
those of Triangle and its shareholders.
In addition, Triangle states that
Triangle’s shareholders will be further
protected by the conditions to the
requested order that assure continuing
oversight of the operation of the
Amended and Restated Plan by
Triangle’s Board.
3 In addition, Triangle will comply with the
amendments to the disclosure requirements for
executive and director compensation, related party
transactions, director independence and other
corporate governance matters, and security
ownership of officers and directors to the extent
adopted and applicable to BDCs. See Executive
Compensation and Related Party Disclosure,
Release No. 34–53185 (Jan. 27, 2006).
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Section 57(a)(4), Rule 17d–1
7. Section 57(a) proscribes certain
transactions between a BDC and persons
related to the BDC in the manner
described in section 57(b) (‘‘57(b)
persons’’), absent a Commission order.
Section 57(a)(4) generally prohibits a
57(b) person from effecting a transaction
in which the BDC is a joint participant
absent such an order. Rule 17d–1, made
applicable to BDCs by section 57(i),
proscribes participation in a ‘‘joint
enterprise or other joint arrangement or
profit-sharing plan,’’ which includes a
stock option or purchase plan.
Employees and directors of a BDC are
57(b) persons. Thus, the issuance of
shares of Restricted Stock could be
deemed to involve a joint transaction
involving a BDC and a 57(b) person in
contravention of section 57(a)(4). Rule
17d–1(b) provides that, in considering
relief pursuant to the rule, the
Commission will consider (i) whether
the participation of the company in a
joint enterprise is consistent with the
Act’s policies and purposes and (ii) the
extent to which that participation is on
a basis different from or less
advantageous than that of other
participants.
8. Triangle requests an order pursuant
to section 57(a)(4) and rule 17d–1 to
permit the Amended and Restated Plan.
Triangle states that the Amended and
Restated Plan, although benefiting the
Participants and Triangle in different
ways, are in the interests of Triangle’s
shareholders because the Amended and
Restated Plan will help Triangle attract
and retain talented professionals, help
align the interests of Triangle’s
employees with those of its
shareholders, and in turn help produce
a better return to Triangle’s
shareholders. Thus, Triangle asserts that
the Amended and Restated Plan is
consistent with the policies and
purposes of the Act.
Applicant’s Conditions
Triangle agrees that the order granting
the requested relief will be subject to the
following conditions:
1. The Amended and Restated Plan
will be approved by Triangle’s
shareholders in accordance with section
61(a)(3)(A)(iv) of the 1940 Act.
2. Each issuance of Restricted Stock to
officers and employees will be approved
by the required majority, as defined in
section 57(o) of the Act, of Triangle’s
directors on the basis that such issuance
is in the best interests of Triangle and
its shareholders.
3. The amount of voting securities
that would result from the exercise of all
of Triangle’s outstanding warrants,
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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 the
outstanding voting securities of
Triangle, except that if the amount of
voting securities that would result from
the exercise of all of Triangle’s
outstanding warrants, options, and
rights issued to Triangle’s directors,
officers, and employees, together with
any Restricted Stock issued pursuant to
the Amended and Restated Plan, would
exceed 15% of the outstanding voting
securities of Triangle, 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 the
outstanding voting securities of
Triangle.
4. The maximum amount of Restricted
Stock that may be issued under the
Amended and Restated Plan will be
10% of the outstanding shares of
common stock of Triangle on the
effective date of the Amended and
Restated Plan plus 10% of the number
of shares of Triangle’s common stock
issued or delivered by Triangle (other
than pursuant to compensation plans)
during the term of the Amended and
Restated Plan.
5. The Board will review periodically
the potential impact that the issuance of
Restricted Stock under the Amended
and Restated Plan could have on
Triangle’s earnings and NAV per share,
such review to take place prior to any
decisions to grant Restricted Stock
under the Amended and Restated Plan,
but in no event less frequently than
annually. Adequate procedures and
records will be maintained to permit
such review. The Board will be
authorized to take appropriate steps to
ensure that the grant of Restricted Stock
under the Amended and Restated Plan
would not have an effect contrary to the
interests of Triangle’s shareholders. This
authority will include the authority to
prevent or limit the granting of
additional Restricted Stock under the
Amended and Restated Plan. All records
maintained pursuant to this condition
will be subject to examination by the
Commission and its staff.
For the Commission, by the Division of
Investment Management, pursuant to
delegated authority.
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E8–3555 Filed 2–25–08; 8:45 am]
BILLING CODE 8011–01–P
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SECURITIES AND EXCHANGE
COMMISSION
[Release Nos. 33–8897; 34–57364; File No.
265–24]
Advisory Committee on Improvements
to Financial Reporting
Securities and Exchange
Commission.
AGENCY:
Notice of Meeting of SEC
Advisory Committee on Improvements
to Financial Reporting.
ACTION:
SUMMARY: The Securities and Exchange
Commission Advisory Committee on
Improvements to Financial Reporting is
providing notice that it will hold a
public meeting on Thursday, March 13,
and Friday, March 14, 2008, at
University of California—San Francisco,
Laurel Heights Conference Center,
Sublevel 1 Auditorium, 3333 California
Street, San Francisco, California 94118.
The meeting will begin at 3 p.m. on
Thursday, March 13, and at 8 a.m. on
Friday, March 14. The meeting will be
open to the public. The meeting will be
webcast on the Commission’s Web site
at https://www.sec.gov. Persons needing
special accommodations to take part
because of a disability should notify a
contact person listed below. The public
is invited to submit written statements
for the meeting.
The agenda for the Thursday, March
13 meeting includes hearing oral
testimony from panel participants
regarding the Advisory Committee’s
developed proposals related to
materiality, restatements, and
professional judgment. The agenda for
the Friday, March 14 meeting includes
(1) hearing oral testimony from panel
participants regarding the Advisory
Committee’s developed proposal related
to the implementation of XBRL, and (2)
consideration of comment letters
received by the Advisory Committee,
consideration of updates from
subcommittees of the Advisory
Committee, and discussion of next steps
and planning for the next meeting.
Written statements should be
received on or before March 6, 2008.
10313
Paper Comments
• Send paper statements in triplicate
to Nancy M. Morris, Federal Advisory
Committee Management Officer,
Securities and Exchange Commission,
100 F Street, NE., Washington, DC
20549–1090.
All submissions should refer to File No.
265–24. This file number should be
included on the subject line if e-mail is
used. To help us process and review
your statements more efficiently, please
use only one method. The Commission
staff will post all statements on the
Advisory Committee’s Web site (https://
www.sec.gov/about/offices/oca/
acifr.shtml). Statements also will be
available for public inspection and
copying in the Commission’s Public
Reference Room, 100 F Street, NE.,
Washington, DC 20549, on official
business days between the hours of 10
a.m. and 3 p.m. All statements received
will be posted without change; we do
not edit personal identifying
information from submissions. You
should submit only information that
you wish to make available publicly.
FOR FURTHER INFORMATION CONTACT:
James L. Kroeker, Deputy Chief
Accountant, or Shelly C. Luisi, Senior
Associate Chief Accountant, at (202)
551–5300, Office of the Chief
Accountant, Securities and Exchange
Commission, 100 F Street, NE.,
Washington, DC 20549–6561.
SUPPLEMENTARY INFORMATION: In
accordance with Section 10(a) of the
Federal Advisory Committee Act, 5
U.S.C. App. 1, § 10(a), James L. Kroeker,
Designated Federal Officer of the
Committee, has approved publication of
this notice.
Dated: February 21, 2008.
Nancy M. Morris,
Committee Management Officer.
[FR Doc. E8–3568 Filed 2–25–08; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[File No. 500–1]
DATES:
Written statements may be
submitted by any of the following
methods:
ADDRESSES:
Electronic Comments
• Use the Commission’s Internet
submission form (https://www.sec.gov/
rules/other.shtml); or
• Send an e-mail message to rulecomments@sec.gov. Please include File
Number 265–24 on the subject line.
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In the Matter of: TelcoBlue, Inc.; Order
of Suspension of Trading
February 22, 2008.
It appears to the Securities and
Exchange Commission that there is a
lack of current and accurate information
concerning the securities of TelcoBlue,
Inc. (‘‘TelcoBlue’’) because TelcoBlue
has failed to file its last six required
periodic reports.
The Commission is of the opinion that
the public interest and the protection of
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]]>Agencies
[Federal Register Volume 73, Number 38 (Tuesday, February 26, 2008)]
[Notices]
[Pages 10310-10313]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E8-3555]
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SECURITIES AND EXCHANGE COMMISSION
[Investment Company Act Release No. 28165; 812-13447]
Triangle Capital Corporation; Notice of Application
February 20, 2008.
AGENCY: Securities and Exchange Commission (``Commission'').
ACTION: Notice of an application for an order under section 6(c) of the
Investment Company Act of 1940 (the ``Act'') for an exemption from
sections 23(a), 23(b) and 63 of the Act, and under sections 57(a)(4)
and 57(i) of the Act and rule 17d-1 under the Act authorizing certain
joint transactions otherwise prohibited by section 57(a)(4) of the Act.
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Summary of the Application: Triangle Capital Corporation
(``Triangle'') requests an order to permit it to issue restricted
shares of its common stock under the terms of its employee and director
compensation plan.
Filing Dates: The application was filed on October 31, 2007, and
amended on February 20, 2008.
Hearing or Notification of Hearing: An order granting the
application will be issued unless the Commission orders a hearing.
Interested persons may request a hearing by writing to the Commission's
Secretary and serving applicant with a copy of the request, personally
or by mail. Hearing requests should be received by the Commission by
5:30 p.m. on March 17, 2008, and should be accompanied by proof of
service on applicant, in the form of an affidavit or, for lawyers, a
certificate of service. Hearing requests should state the nature of the
writer's interest, the reason for the request, and the issues
contested. Persons who wish to be notified of a hearing may request
notification by writing to the Commission's Secretary.
ADDRESSES: Secretary, U.S. Securities and Exchange Commission, 100 F
Street, NE., Washington, DC 20549-1090. Triangle, c/o Garland S. Tucker
III, Triangle Capital Corporation, 3600 Glenwood Avenue, Suite 104,
Raleigh, NC 27612.
FOR FURTHER INFORMATION CONTACT: John Yoder, Senior Counsel, at (202)
551-6878, or Janet M. Grossnickle, Branch Chief, at (202) 551-6821,
(Division of Investment Management, Office of Investment Company
Regulation).
SUPPLEMENTARY INFORMATION: The following is a summary of the
application. The complete application may be obtained for a fee at the
Commission's Public Reference Desk, 100 F Street, NE., Washington, DC
20549-1520 (tel. 202-551-5850).
Applicant's Representations
1. Triangle, a Maryland corporation, is an internally managed, non-
diversified, closed-end investment company that has elected to be
regulated as a business development company (``BDC'') under
[[Page 10311]]
the Act.\1\ Triangle is a specialty finance company that provides
customized financing solutions to companies with annual revenues
between $10 million and $100 million. Shares of Triangle's common stock
are traded on The NASDAQ Global Market under the symbol ``TCAP.''
Triangle's initial public offering was completed on February 21, 2007.
As of December 31, 2007, there were 6,803,863 shares of Triangle's
common stock outstanding and Triangle had eleven employees, including
the employees of its wholly-owned consolidated subsidiaries.
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\1\ Section 2(a)(48) defines a BDC to be any closed-end
investment company that operates for the purpose of making
investments in securities described in sections 55(a)(1) through
55(a)(3) of the Act and makes available significant managerial
assistance with respect to the issuers of such securities.
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2. Triangle currently has an eight member board of directors
(``Board'') of whom three are ``interested persons'' of Triangle within
the meaning of section 2(a)(19) of the Act and five are non-interested
persons (``Non-interested Directors''). Triangle has five directors who
are not officers or employees of Triangle (the ``Non-employee
Directors'').
3. Triangle believes that its successful performance depends on its
ability to offer compensation packages to its professionals that are
competitive with those offered by its competitors and other investment
management businesses. Triangle believes its ability to offer
compensation plans providing for the periodic issuance of shares of
restricted stock (i.e., stock that, at the time of issuance, is subject
to certain forfeiture restrictions, and thus is restricted as to its
transferability until such forfeiture restrictions have lapsed) (the
``Restricted Stock'') is vital to its future growth and success.
Effective February 13, 2007, Triangle adopted the 2007 Equity Incentive
Plan. Triangle proposes to amend and restate the 2007 Equity Incentive
Plan (``Amended and Restated Plan'') to permit the issuance of shares
of Restricted Stock to its Non-employee Directors, employees and
employees of its wholly-owned consolidated subsidiaries (collectively,
the ``Participants'' and each, a ``Participant'').
4. The Amended and Restated Plan will authorize the issuance of
shares of Restricted Stock subject to certain forfeiture restrictions.
These restrictions may relate to continued employment or service on the
Board, as the case may be (lapsing either on an annual or other
periodic basis or on a ``cliff'' basis, i.e., at the end of a stated
period of time), or other restrictions deemed by the Board to be
appropriate. The Restricted Stock will not be transferable except for
disposition by gift, will or intestacy. Except to the extent restricted
under the terms of the Amended and Restated Plan, a Participant granted
Restricted Stock will have all the rights of any other shareholder,
including the right to vote the Restricted Stock and the right to
receive dividends. During the restriction period, the Restricted Stock
generally may not be sold, transferred, pledged, hypothecated,
margined, or otherwise encumbered by the Participant. Except as the
Board otherwise determines, upon termination of a Participant's
employment or service on the Board during the applicable restriction
period, Restricted Stock for which forfeiture restrictions have not
lapsed at the time of such termination shall be forfeited.
5. The maximum amount of Restricted Stock that may be issued under
the Amended and Restated Plan will be 10% of the outstanding shares of
Triangle's common stock on the effective date of the Amended and
Restated Plan plus 10% of the outstanding number of shares of
Triangle's common stock issued or delivered by Triangle (other than
pursuant to compensation plans) during the term of the Amended and
Restated Plan.\2\ The Amended and Restated Plan limits the total number
of shares that may be awarded to any single Participant in a single
year to 100,000 shares. In addition, no Participant may be granted more
than 25% of the shares of common stock reserved for issuance under the
Amended and Restated Plan. The Amended and Restated Plan will be
administered by the Board, which will award shares of Restricted Stock
to the Participants (except for Non-employee Directors) from time to
time as part of the Participants' compensation based on a Participant's
actual or expected performance and value to Triangle.
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\2\ For purposes of calculating compliance with this limit,
Triangle will count as Restricted Stock all shares of Triangle's
common stock that are issued pursuant to the Amended and Restated
Plan less any shares that are forfeited back to Triangle and
cancelled as a result of forfeiture restrictions not lapsing.
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6. Under the Amended and Restated Plan, Triangle's Non-Employee
Directors will each receive a grant of $30,000 worth of shares of
Restricted Stock at the beginning of each one-year term of service on
the Board, for which forfeiture restrictions would lapse one year from
the grant date. The Amended and Restated Plan will be administered by
the Board, and the grants of Restricted Stock under the Amended and
Restated Plan to Non-employee Directors will be automatic and will not
be changed without Commission approval.
7. The Amended and Restated Plan will be submitted for approval to
Triangle's shareholders, and will become effective upon such approval,
subject to the issuance of the requested order.
Applicant's Legal Analysis
Sections 23(a) and (b), Section 63
1. Under section 63 of the Act, the provisions of section 23(a) of
the Act generally prohibiting a registered closed-end investment
company from issuing securities for services or for property other than
cash or securities are made applicable to BDCs. This provision would
prohibit the issuance of Restricted Stock as a part of the Amended and
Restated Plan.
2. Section 23(b) generally prohibits a closed-end management
investment company from selling its common stock at a price below its
current net asset value (``NAV''). Section 63(2) makes section 23(b)
applicable to BDCs unless certain conditions are met. Because
Restricted Stock that would be granted under the Amended and Restated
Plan would not meet the terms of section 63(2), sections 23(b) and 63
would prevent the issuance of the Restricted Stock.
3. Section 6(c) provides, in part, that the Commission may, by
order upon application, conditionally or unconditionally exempt any
person, security, or transaction, or any class or classes thereof, from
any provision of the Act, if and to the extent that the exemption is
necessary or appropriate in the public interest and consistent with the
protection of investors and the purposes fairly intended by the policy
and provisions of the Act.
4. Triangle requests an order pursuant to section 6(c) of the Act
granting an exemption from the provisions of sections 23(a) and (b) and
section 63 of the Act. Triangle states that the concerns underlying
those sections include: (i) Preferential treatment of investment
company insiders and the use of options and other rights by insiders to
obtain control of the investment company; (ii) complication of the
investment company's structure that makes it difficult to determine the
value of the company's shares; and (iii) dilution of shareholders'
equity in the investment company. Triangle states that the Amended and
Restated Plan does not raise the concern about preferential treatment
of Triangle's insiders because the Amended and Restated Plan is a bona
fide
[[Page 10312]]
compensation plan of the type that is common among corporations
generally. In addition, section 61(a)(3)(B) of the Act permits a BDC to
issue to its officers, directors and employees, pursuant to an
executive compensation plan, warrants, options and rights to purchase
the BDC's voting securities, subject to certain requirements. Triangle
states that, for reasons that are unclear, section 61 and its
legislative history do not address the issuance by a BDC of restricted
stock as incentive compensation. Triangle states, however, that the
issuance of Restricted Stock is substantially similar, for purposes of
investor protection under the Act, to the issuance of warrants,
options, and rights as contemplated by section 61. Triangle also
asserts that the Amended and Restated Plan would not become a means for
insiders to obtain control of Triangle because the maximum number of
Triangle's voting securities that may be issued pursuant to the Amended
and Restated Plan will be limited as set forth in the application.
Triangle's current intention is to issue only shares of Restricted
Stock as incentive compensation; however, if Triangle issues stock
options in the future, it will do so pursuant to section 61 and in
compliance with the terms and conditions of the application. Moreover,
no individual Participant could be issued more than 25% of the shares
reserved for issuance under the Amended and Restated Plan.
5. Triangle further states that the Amended and Restated Plan will
not unduly complicate Triangle's structure because equity-based
employee compensation arrangements are widely used among corporations
and commonly known to investors. Triangle notes that the Amended and
Restated Plan will be submitted to its shareholders. Triangle
represents that a concise, ``plain English'' description of the Amended
and Restated Plan, including its potential dilutive effect, will be
provided in the proxy materials that will be submitted to Triangle's
shareholders. Triangle also states that it will comply with the proxy
disclosure requirements in Item 10 of Schedule 14A under the Securities
Exchange Act of 1934. Triangle further notes that the Amended and
Restated Plan will be disclosed to investors in accordance with the
requirements of the Form N-2 registration statement for closed-end
investment companies, and pursuant to the standards and guidelines
adopted by the Financial Accounting Standards Board for operating
companies. In addition, Triangle will comply with the disclosure
requirements for executive compensation plans applicable to operating
companies under the Exchange Act.\3\ Triangle thus concludes that the
Amended and Restated Plan will be adequately disclosed to investors and
appropriately reflected in the market value of Triangle's shares.
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\3\ In addition, Triangle will comply with the amendments to the
disclosure requirements for executive and director compensation,
related party transactions, director independence and other
corporate governance matters, and security ownership of officers and
directors to the extent adopted and applicable to BDCs. See
Executive Compensation and Related Party Disclosure, Release No. 34-
53185 (Jan. 27, 2006).
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6. Triangle acknowledges that, while awards granted under the
Amended and Restated Plan would have a dilutive effect on the
shareholders' equity in Triangle, that effect would be outweighed by
the anticipated benefits of the Amended and Restated Plan to Triangle
and its shareholders. Triangle asserts that it needs the flexibility to
provide the requested equity-based employee compensation in order to be
able to compete effectively with other financial services firms for
talented professionals. These professionals, Triangle suggests, in turn
are likely to increase Triangle's performance and shareholder value.
Triangle also asserts that equity-based compensation would more closely
align the interests of Triangle's employees with those of Triangle's
shareholders. Triangle believes that the granting of shares of
Restricted Stock to Non-employee Directors under the Amended and
Restated Plan is fair and reasonable because of the skills and
experience that such directors provide to Triangle. Such skills and
experience are necessary for the management and oversight of Triangle's
investments and operations. Triangle believes that granting the shares
of Restricted Stock will provide significant incentives for Non-
employee Directors to remain on the Board and to devote their best
efforts to the success of Triangle's business in the future. The
issuance of shares of Restricted Stock will also provide a means for
Triangle's Non-employee Directors to increase their ownership interest
in Triangle, thereby helping to ensure a close identification of their
interests with those of Triangle and its shareholders. In addition,
Triangle states that Triangle's shareholders will be further protected
by the conditions to the requested order that assure continuing
oversight of the operation of the Amended and Restated Plan by
Triangle's Board.
Section 57(a)(4), Rule 17d-1
7. Section 57(a) proscribes certain transactions between a BDC and
persons related to the BDC in the manner described in section 57(b)
(``57(b) persons''), absent a Commission order. Section 57(a)(4)
generally prohibits a 57(b) person from effecting a transaction in
which the BDC is a joint participant absent such an order. Rule 17d-1,
made applicable to BDCs by section 57(i), proscribes participation in a
``joint enterprise or other joint arrangement or profit-sharing plan,''
which includes a stock option or purchase plan. Employees and directors
of a BDC are 57(b) persons. Thus, the issuance of shares of Restricted
Stock could be deemed to involve a joint transaction involving a BDC
and a 57(b) person in contravention of section 57(a)(4). Rule 17d-1(b)
provides that, in considering relief pursuant to the rule, the
Commission will consider (i) whether the participation of the company
in a joint enterprise is consistent with the Act's policies and
purposes and (ii) the extent to which that participation is on a basis
different from or less advantageous than that of other participants.
8. Triangle requests an order pursuant to section 57(a)(4) and rule
17d-1 to permit the Amended and Restated Plan. Triangle states that the
Amended and Restated Plan, although benefiting the Participants and
Triangle in different ways, are in the interests of Triangle's
shareholders because the Amended and Restated Plan will help Triangle
attract and retain talented professionals, help align the interests of
Triangle's employees with those of its shareholders, and in turn help
produce a better return to Triangle's shareholders. Thus, Triangle
asserts that the Amended and Restated Plan is consistent with the
policies and purposes of the Act.
Applicant's Conditions
Triangle agrees that the order granting the requested relief will
be subject to the following conditions:
1. The Amended and Restated Plan will be approved by Triangle's
shareholders in accordance with section 61(a)(3)(A)(iv) of the 1940
Act.
2. Each issuance of Restricted Stock to officers and employees will
be approved by the required majority, as defined in section 57(o) of
the Act, of Triangle's directors on the basis that such issuance is in
the best interests of Triangle and its shareholders.
3. The amount of voting securities that would result from the
exercise of all of Triangle's outstanding warrants,
[[Page 10313]]
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 the outstanding voting securities of Triangle, except
that if the amount of voting securities that would result from the
exercise of all of Triangle's outstanding warrants, options, and rights
issued to Triangle's directors, officers, and employees, together with
any Restricted Stock issued pursuant to the Amended and Restated Plan,
would exceed 15% of the outstanding voting securities of Triangle, 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 the outstanding
voting securities of Triangle.
4. The maximum amount of Restricted Stock that may be issued under
the Amended and Restated Plan will be 10% of the outstanding shares of
common stock of Triangle on the effective date of the Amended and
Restated Plan plus 10% of the number of shares of Triangle's common
stock issued or delivered by Triangle (other than pursuant to
compensation plans) during the term of the Amended and Restated Plan.
5. The Board will review periodically the potential impact that the
issuance of Restricted Stock under the Amended and Restated Plan could
have on Triangle's earnings and NAV per share, such review to take
place prior to any decisions to grant Restricted Stock under the
Amended and Restated Plan, but in no event less frequently than
annually. Adequate procedures and records will be maintained to permit
such review. The Board will be authorized to take appropriate steps to
ensure that the grant of Restricted Stock under the Amended and
Restated Plan would not have an effect contrary to the interests of
Triangle's shareholders. This authority will include the authority to
prevent or limit the granting of additional Restricted Stock under the
Amended and Restated Plan. All records maintained pursuant to this
condition will be subject to examination by the Commission and its
staff.
For the Commission, by the Division of Investment Management,
pursuant to delegated authority.
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E8-3555 Filed 2-25-08; 8:45 am]
BILLING CODE 8011-01-P
