THOMAS C. BACON
DIRECT LINE: (310) 880-2698
E-mail: tbacon@baconlawgroup.com
August 13, 2014
VIA EDGAR
Securities and Exchange Commission
100 F Street, N.E.
Washington, DC 20549-0504
Attention: Ms. Stephanie D. Hui, Division of Investment Management
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Re: | Triton Pacific Investment Corporation, Inc. |
| File No. 333-174873 |
| Definitive Proxy Statement |
Dear Ms. Hui:
Concurrently with the delivery of this letter, Triton Pacific Investment Corporation, Inc. (the “Company”), has filed with the SEC its Definitive Proxy Statement for its Special Meeting of Stockholders to be held on September 11, 2014 (the “Definitive Proxy”). Enclosed with this letter is a redlined version of the definitive proxy marked to show the changes that were made to the preliminary version of the proxy that was filed with the SEC on August 1, 2014. The Definitive Proxy was revised to address the comments I received from you via telephone on August 11, 2014. Those comments, and the changes made, are as follows:
Comment 1. The Notice of Special Meeting from the Company’s Chief Financial Officer indicated that the record date for the meeting was July 25, 2014.
Response: The Notice of Special Meeting for the Definitive Proxy was revised to reflect the correct record date of July 28, 2014.
Comment 2. The introductory paragraph to the beneficial ownership table included in the proxy referenced “nominees for director.”
Response. The reference to nominees for director was removed from the Definitive Proxy.
Comment 3. Please confirm that ZAIS Group, LLC, the proposed sub-adviser (“ZAIS”), does not have any directors or general partners other than those listed in the proxy.
Response. In a conversation with general counsel for ZAIS, I confirmed that ZAIS does not have any directors or general partners. As disclosed in the proxy, Christian Zugel serves as the Managing Member of ZAIS.
Comment 4. In Proposal One, in the heading “What are the terms of the Proposed ING IM Sub-Advisory Agreement?” please remove the reference to ING IM.
Response. The requested change was made to the Definitive Proxy.
Comment 5. In Proposal Two, the last sentence of the second paragraph of that proposal states “If the Company delegates sub-advisory duties to a sub-adviser, it remains responsible for monitoring and evaluating the performance of the sub-adviser.” Please revise to reflect the fact that the Adviser, and not the Company, delegates duties to the sub-adviser.
Response. The requested change is included in the Definitive Proxy.
Comment 6. In Proposal Two, in the fourth paragraph under the heading entitled “What factors were considered by the Board?”, please clarify or remove the last sentence of that paragraph that reads “If stockholders approve Proposal Two, the Adviser, pursuant to its Advisory Agreement and other agreements, will continue to provide the same level of management and administrative services to the Company as the Adviser is currently providing.”
Response. As we discussed, that sentence would not be accurate if Proposal Two is approved and the Company implements the manager of managers arrangement. As a result, we deleted that sentence from the Definitive Proxy.
If you should have any additional questions or comments regarding this matter, please feel free to contact me at your convenience.
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| Sincerely, | |
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| /s/ Thomas C. Bacon | |
| Thomas C. Bacon | |
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| BACON LAW GROUP |
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934
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Filed by the Registrantx | Filed by a Party other than the Registranto |
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Check the appropriate box: |
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| Preliminary Proxy Statement |
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| Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) |
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| Definitive Proxy Statement |
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| Definitive Additional Materials |
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| Soliciting Material Pursuant to Rule 14a-12 |
TRITON PACIFIC INVESTMENT CORPORATION, INC.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
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Payment of Filing Fee (Check the appropriate box): | ||
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x | No fee required. | |
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o | Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11. | |
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| 1) | Title of each class of securities to which transaction applies: |
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| 4) | Proposed maximum aggregate value of transaction: |
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| 5) | Total fee paid: |
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o | Fee paid previously with preliminary materials: | |
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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. | |
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| 1) | Amount Previously Paid: |
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10877 Wilshire Blvd., 12th Floor
Los Angeles, California 90024
On behalf of the Board of Director (the “Board”), we are pleased to invite you to a special meeting of stockholders (the “Special Meeting”) of Triton Pacific Investment Corporation, Inc. (the “Company”). The Special Meeting is scheduled for 10:00 A.M., Pacific Time, on September 11, 2014, at the Company’s offices located at 10877 Wilshire Blvd., 12th Floor, Los Angeles, California 90024.
At the Special Meeting, stockholders will be asked to approve a new investment sub-advisory agreement with ZAIS Group, LLC (“ZAIS”). At the Special Meeting, stockholders will also be asked to approve the adoption of a “manager-of-managers” policy for the Company, which would permit the Company, subject to the approval of the Securities and Exchange Commission, to enter into or materially amend sub-advisory agreements with unaffiliated sub-advisers without obtaining stockholder approval.
Formal notice of the Special Meeting appears on the next page, followed by the Proxy Statement. The Proposals are discussed in detail in the enclosed Proxy Statement, which you should read carefully. The Board recommends that you vote “FOR” each of the proposals.
Your vote is important regardless of the number of shares you own. To avoid the added cost of follow-up solicitations and possible adjournments, please read the Proxy Statement carefully and cast your vote. It is important that your vote be received no later than 10:00 a.m., Pacific time, on September 11, 2014.
We appreciate your participation and prompt response in this matter and thank you for your continued support.
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| Sincerely yours, |
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| Craig Faggen |
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| Chairman |
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| and Chief Executive Officer |
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TRITON PACIFIC INVESTMENT CORPORATION INC.
10877 Wilshire Blvd., 12th Floor
Los Angeles, California 90024
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
To Be Held On September 11, 2014
To the Stockholders of Triton Pacific Investment Corporation:
NOTICE IS HEREBY GIVEN that a special meeting of the stockholders (the “Special Meeting”) of Triton Pacific Investment Corporations, Inc., a Maryland corporation (the “Company”) is scheduled for 10:00 a.m., Pacific time on Thursday, September 11, 2014, 2014 at 10877 Wilshire Boulevard, 12th Floor, Los Angeles, California 90024.
At the Special Meeting, stockholders will be asked:
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| 1. | To approve a new investment sub-advisory agreement between the Company, Triton Pacific Adviser, LLC, the Company’s investment adviser (the “Adviser”) and ZAIS Group, LLC (“ZAIS”); |
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| 2. | To approve a manager-of-managers policy with respect to the Company to enable the Company, subject to the approval of the Securities and Exchange Commission (the “SEC”), to enter into and materially amend agreements with unaffiliated sub-advisers without obtaining approval of the Company’s stockholders; and |
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| 3. | To transact such other business, not currently contemplated, that may properly come before the Special Meeting, or any adjournments or postponements thereof, in the discretion of the proxies or their substitutes. |
Please read the enclosed Proxy Statement carefully for information concerning the Proposals to be placed before the Special Meeting. The Board recommends that you vote“FOR” each of the Proposals.
Stockholders of record as of the close of business on July 25 228, 2014, are entitled to notice of, and to vote at, the Special Meeting, and are also entitled to vote at any adjournments or postponements thereof. Your attention is called to the accompanying Proxy Statement. Regardless of whether you plan to attend the Special Meeting, please complete, sign, and return promptly, but in no event later than 10:00 a.m., Pacific time, on September 11, 2014, the enclosed Proxy Ballot so that a quorum will be present and a maximum number of shares may be voted. Proxies may be revoked at any time before they are exercised by submitting a revised Proxy Ballot, by giving written notice of revocation to the Company or by voting in person at the Special Meeting.
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| By Order of the Board of Directors, |
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| Michael L. Carroll |
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| Chief Financial Officer and Secretary |
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TRITON PACIFIC INVESTMENT CORPORATION INC.
10877 Wilshire Blvd., 12th Floor
Los Angeles, California 90024
SPECIAL MEETING OF STOCKHOLDERS
To Be Held On September 11, 2014
PROXY STATEMENT
GENERAL
This Proxy Statement is furnished in connection with the solicitation of proxies by the board of directors (the “Board”) of Triton Pacific Investment Corporation, a Maryland corporation (the “Company”), for use at the Special Meeting of Stockholders of the Company to be held at 10:00 a.m., Pacific Time, on Thursday, September 11, 2014, at the offices of the Company located at 10877 Wilshire Blvd., 12th Floor, Los Angeles, California 90024, and any adjournments or postponements thereof (the “Special Meeting”). This Proxy Statement and the accompanying materials are being mailed to stockholders of record described below on or about August__,13, 2014.
All properly executed proxies representing shares of common stock, par value $0.001 per share, of the Company (the “Shares”) received prior to the Special Meeting will be voted in accordance with the instructions marked thereon.If no specification is made, the Shares covered by the proxy card will be voted “FOR” the proposal to appoint ZAIS as sub-adviser and implement the proposed sub-advisory agreement with ZAIS and “FOR” the proposed manager-of-managers arrangement for the Company. Any stockholder who has given a proxy has the right to revoke it at any time prior to its exercise. Stockholders who execute proxies may revoke them with respect to a proposal by submitting a letter of revocation or a later-dated proxy to the Company at the above address prior to the date of the Special Meeting or by attending the Special Meeting and voting his or her Shares in person.
Stockholders of record (i.e., stockholders who hold Shares directly in their own names) who attend the Special Meeting may vote in person whether or not he or she has previously voted his or her shares. Stockholders who hold their shares in an account with a broker, bank or other institution or nominee (“Broker Shares”), may vote such shares at the Special Meeting only after obtaining proper written authority from their institution or nominee and present it at the Special Meeting.
Quorum
The presence in person or by proxy of the holders of stock of the Company entitled to cast one third of the votes entitled to be cast at the meeting (without regard to class) shall constitute a quorum at the Special Meeting. Abstentions will be treated as shares present for quorum purposes. Shares for which brokers have not received voting instructions from the beneficial owner of the shares and do not have discretionary authority to vote the shares on certain proposals (which are considered “Broker Non-Votes” with respect to such proposals) will be treated as shares present for quorum purposes. However, abstentions and Broker Non-Votes are not counted as votes cast. If a quorum is not present at the Special Meeting, the stockholders who are represented may adjourn the meeting until a quorum is present. The persons named as proxies will vote those proxies for such adjournment, unless the proxies are marked to be voted against any proposal for which an adjournment is sought, to permit the further solicitation of proxies.
If there are insufficient votes to approve any Proposal or for any other reason deemed appropriate by the persons named as proxies, the persons named as proxies may propose one or more adjournments of the Special Meeting to permit additional time for the solicitation of proxies, in accordance with the organizational documents of the Company and applicable law. Solicitation of votes may continue to be made without any obligation to provide any additional notice of the adjournment. The persons named as proxies will vote in favor of such adjournments in their discretion.
Record Date
The Board has fixed the close of business on July 28, 2014 as the record date (the “Record Date”) for the determination of stockholders entitled to notice of, and to vote at, the Special Meeting and all adjournments or postponements thereof. As of the Record Date, there were 200,606.3 shares of our common stock outstanding held by 64 record holders.
Required Vote
Approval of both the proposed sub-advisory agreement with ZAIS and the proposed manager of managers arrangement for the Company requires the affirmative vote of a majority of the Company’s outstanding voting securities, All stockholders of the Company will vote together as a single class on each proposal.
Under the rules of the New York Stock Exchange, brokers do not have discretionary authority to vote for either proposal. As a result, absent specific voting instructions from the beneficial owner of the shares, brokers will not be permitted to vote shares for either proposal. If a stockholder abstains from voting as to any matter, or if a broker returns a “non-vote” proxy, indicating a lack of authority to vote on a matter, then the shares represented by such abstention or non-vote will be treated as shares that are present at the Special Meeting for purposes of determining the existence of a quorum. However, abstentions and broker non-votes will be disregarded in determining the “votes cast” on an issue. For this reason, an abstention or broker non-vote will have the effect of a vote against such matters.
Voting
You may vote in person at the Special Meeting or by proxy in accordance with the instructions provided below. Stockholders of the Company are entitled to one vote for each Share held as of the Record Date.
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| • | indicate your instructions on the proxy card; |
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| • | date and sign the proxy card; |
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| • | mail the proxy card promptly in the envelope provided, which requires no postage if mailed in the United States; and |
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| • | allow sufficient time for the proxy card to be received on or before 10:00 a.m., Pacific Time, on September 11, 2014. |
If you plan on attending the Special Meeting and voting your shares in person, you will need to bring photo identification in order to be admitted to the Special Meeting. To obtain directions to the Special Meeting, please call the Company at (310) 943-4990.
Other Information Regarding This Solicitation
The Company will bear the expense of the solicitation of proxies for the Special Meeting, including the cost of preparing, printing and mailing this proxy statement, the accompanying Notice of Special Meeting of Stockholders, and the proxy card. The Company has requested that brokers, nominees, fiduciaries and other persons holding Shares in their names, or in the name of their nominees, which are beneficially owned by others, forward the proxy materials to, and obtain proxies from, such beneficial owners. The Company will reimburse such persons for their reasonable expenses in so doing.
In addition to the solicitation of proxies by the use of the mail, proxies may be solicited in person and/or by telephone or facsimile transmission by directors, officers or employees of the Company and/or officers or employees of Triton Pacific Adviser, LLC (the “Adviser” or “TPA”), the Company’s investment adviser. The Adviser is
located at 10877 Wilshire Blvd., 12th Floor, Los Angeles, California 90024. No additional compensation will be paid to directors, officers or regular employees of the Company or the Adviser for such services.
Security Ownership of Management and Certain Beneficial Owners
The following table sets forth, as of the Record Date, the beneficial ownership of thenominees for directorcompany’s directors, the Company’s executive officers, each person known to the Company to beneficially own 5% or more of the outstanding Shares, and all of the Company’s executive officers and directors as a group.
Beneficial ownership is determined in accordance with the rules of the SEC and includes voting or investment power with respect to the securities. There are no Shares subject to options that are currently exercisable or exercisable within 60 days of July 28, 2014.
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Name and Address of Beneficial Owner |
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5% Stockholders |
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Feinswog Family Trust(3) |
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| 9.97 | % |
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Richard E. Szalach(4) |
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| 8.93 | % |
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Triton Pacific Adviser, LLC(5) |
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| 14,815 |
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| 7.39 | % |
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Andrea Feinswog (6) |
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| 5.54 | % |
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Interested Directors: (5) |
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Craig Faggen |
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| 14,815(7) |
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| 8.93 | % |
Ivan Faggen |
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Independent Directors: (5) |
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Ronald W. Ruther |
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Marshall Goldberg |
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William Pruitt |
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Executive Officers(5) |
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Michael L. Carroll |
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All executive officers and directors as a group (6 persons) |
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| 14,815 |
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| 8.83 | % |
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(1) | Beneficial ownership has been determined in accordance with Rule 13d-3 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Assumes no other purchases or sales of our common stock since the most recently available SEC filings. This assumption has been made under the rules and regulations of the SEC and does not reflect any knowledge that we have with respect to the present intent of the beneficial owners of our common stock listed in this table. |
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(2) | Based on a total of 200,606.3 shares of the Company’s common stock issued and outstanding on the Record Date. |
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(3) | Address is 935 Havenhurst Dr., La Jolla, CA 92037 |
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(4) | Address is 917 W. Jackson Ave., Naperville, IL 60540. |
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(5) | Address is c/o Triton Pacific Capital Partners, LLC, 10877 Wilshire Boulevard, 12th Floor, Los Angeles, CA 90024. |
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(6) | Address is PMB H173, 7660 Fay Avenue, La Jolla, CA 92037. |
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(7) | The Company issued 7,500 shares of its common stock to Triton Pacific Adviser in exchange for gross proceeds of $101,250. On July 26, 2013, the Company issued an additional 7,315 shares of its common stock to Triton Pacific Adviser by converting $98,750 of its liability for funds advanced by the Adviser for Deferred Offering Costs |
Set forth below is the dollar range of equity securities beneficially owned by each of our directors as of the Record Date. We are not part of a “family of investment companies,” as that term is defined in the Investment 1940 Act of 1940, as amended (the “1940 Act”).
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Craig Faggen |
| Over $100,000(3) |
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Ivan Faggen |
| None |
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Ronald W. Ruther |
| None |
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Marshall Goldberg |
| None |
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William Pruitt |
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(1) | The dollar ranges are: None, $1 – $10,000, $10,001 – $50,000, $50,001 – $100,000, or over $100,000. |
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(2) | The dollar range of equity securities beneficially owned in the Company as of the Record Date. Beneficial ownership has been determined in accordance with Rule 16a-1(a)(2) of the Exchange Act. |
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(3) | The value of equity securities beneficially owned in the Company as of December 31, 2013. |
PROPOSAL ONE — APPROVAL OF A PROPOSED SUB-ADVISORY AGREEMENT WITH ZAIS
What is Proposal One?
The Company’s stockholders are asked to approve a new investment sub-advisory agreement between the Adviser and ZAIS Group, LLC (the “Proposed ZAIS Sub-Advisory Agreement”). If stockholders approve Proposal One, ZAIS would serve as a sub-adviser to the Company. The Adviser, and not the Company, would be responsible for the payment of any sub-advisory fees due under the Proposed ZAIS Sub-Advisory Agreement.
Who is the Current Sub-Adviser to the Company?
The Company does not currently have a sub-adviser. Sound Point Capital, LP previously served as the Company’s sub-adviser but the agreement between the Adviser and Sound Point terminated effective May 22, 2014.
What will ZAIS’ role be with respect to the Company?
Subject to the overall supervision of our board of directors and our Adviser, ZAIS, as our sub-adviser, will provide investment advisory and management services to us with respect to our syndicated debt portfolio only (consisting primarily of floating rate debt securities, CLO securities, and other credit-oriented securities). ZAIS is not expected to provide any managerial assistance on behalf of our portfolio companies. Under the terms of the Proposed ZAIS Sub-Advisory Agreement, ZAIS will, among other things:
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| • | make recommendations to our Adviser as to the general composition and allocation of our syndicated debt portfolio, the nature and timing of any changes therein and the manner of implementing such changes, including specific recommendations as to the type of securities and other assets to be purchased, retained or sold by the syndicated debt portfolio; |
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| • | assist our Adviser in identifying, evaluating and negotiating the structure of the syndicated debt portfolio investments made or to be made by us; |
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| • | separately or in conjunction with the Adviser, conduct due diligence on prospective portfolio companies within the syndicated debt portfolio; |
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| • | assist the Adviser in executing closing and monitoring our syndicated debt portfolio investments; |
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| • | provide to the Advisor monthly valuation data on the syndicated debt portfolio using external third party valuation sources; |
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| • | upon request from the Adviser, participate in the review of our draft public financial statements and registration statements to ensure that the information presented regarding the Sub-Adviser and the syndicated debt portfolio investments is accurate and not misleading in any material respect; |
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| • | upon request from the Adviser and at such times as are mutually acceptable to the Adviser and the Sub-Adviser, participate in presentations to: (a) broker-dealer road shows; (b) educational forums; (c) due diligence review programs conducted by third-party evaluators and due diligence officers of broker-dealers; and (d) other marketing events and forums to facilitate our fund raising efforts; |
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| • | upon request from the Adviser and as required by our Board, attend meetings of, and participate in presentations to, the Board, in each case with respect to the syndicated debt portfolio; |
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| • | provide the Adviser with such other research and related services relevant to the syndicated debt portfolio as the Adviser may, from time to time, reasonably require for the Adviser to manage our investments; and |
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| • | use commercially reasonable efforts to arrange for debt financing with respect to the syndicated debt portfolio on our behalf as may be determined necessary by the Sub-Adviser, subject to oversight and approval of the Board. |
Who is the Proposed Sub-Adviser?
The proposed Sub-Adviser, ZAIS Group, LLC, is an SEC registered investment adviser and a Delaware limited liability company, located at Two Bridge Avenue, Suite 322, Red Bank, New Jersey 07701. ZAIS invests in a wide range of assets across the credit spectrum including performing bank loans and high yield bonds, structured credit securities, and credit derivatives. ZAIS manages approximately $5.2 billion (as of March 31, 2014) in assets across multiple funds, managed accounts and structured vehicles. ZAIS was established in 1997 and the members of ZAIS’ senior leveraged loan credit team have been actively investing in the leveraged loan market for an average of 20 years.
The name and principal occupation of the managing member and the president of ZAIS are listed in the chart below. The address for each is Two Bridge Avenue, Suite 322, Red Bank, New Jersey 07701.
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NAME: | POSITION WITH SUB-ADVISOR | PRINCIPAL OCCUPATION |
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Christian Zugel | Managing Member, Chief Investment Officer and Chairman of Management Committee | Managing Member, Chief Investment Officer of ZAIS and Chairman of ZAIS’ Management Committee. |
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Michael Szymanski | President | President of ZAIS and Member of ZAIS’ Management Committee. |
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ZAIS will assign a professional team of portfolio managers to assist the Adviser. The team will be led by Vincent Ingato, who currently serves as Portfolio Manager and Managing Director of ZAIS and is responsible for establishing ZAIS’ leveraged finance business. Prior to joining ZAIS in June of 2013, Mr. Ingato was a Managing Director and Portfolio Manager at CVC Credit Partners, CVC Capital’s credit business (formerly known as Apidos Capital). He joined CVC in May 2008 in connection with the sale of ACA to CVC. Mr. Ingato established ACA’s leveraged finance business in 2004 and was responsible for the firm’s Corporate and Leveraged Loan CDOs. Prior to joining ACA Capital, Mr. Ingato was Senior Vice President and Head of the Leveraged Finance Group at Fuji Bank, which he started in 1992. After the bank merged to form Mizuho Financial Group, he served as Deputy General Manager. Prior to joining Fuji Bank, Mr. Ingato was Vice President and Area Manager of the Corporate Banking Group at Wells Fargo Bank where he was responsible for originating LBOs with the bank’s private equity firms. Mr. Ingato holds his B.S., magna cum laude, in Marketing from Fairfield University, and an M.B.A. from the College of William and Mary.
What are the terms of the ProposedING IMSub-Advisory Agreement?
The description of the Proposed Sub-Advisory Agreement that follows is qualified in its entirety by reference to the copy of the form of the Proposed Sub-Advisory Agreement included inAppendix A.
Fees. Under the Proposed Sub-Advisory Agreement, our Adviser will pay a portion of the base management and incentive fees it receives from the Company to ZAIS based on the average gross assets (including amounts borrowed) managed by ZAIS and included in the Company’s portfolio. Specifically, the Adviser will pay ZAIS a quarterly fee of.125% (12.5 basis points) of the average gross assets of the Company’s syndicated debt portfolio managed by ZAIS, which will include any borrowings for investment purposes, and will be appropriately adjusted on a pro rata basis during any partial quarter and for any share issuances or repurchases during the relevant quarter. With respect to any incentive fee, the Adviser will pay ZAIS one half of the incentive fee paid to the Adviser multiplied by a quotient equal to the incentive fee generated on the Company’s syndicated debt portfolio divided by the aggregate incentive fee payable to the Adviser each quarter (pro-rated if less than one quarter). However, in no event shall the incentive fee paid to ZAIS be greater than 100% of the incentive fee the Company pays to the Adviser. All fees paid to ZAIS shall be paid out of the fees the Company pays to the Adviser and will not increase the total amount of base management fees or incentive fees the Company is required to pay.
Limitation of Liability. Under the terms of the Proposed Sub-Advisory Agreement, the Adviser and the Company shall indemnify ZAIS, its affiliates and its controlling persons, for any liability and expenses arising from, or in connection with, ZAIS’ performance of its obligations under the sub-advisory agreement or the Adviser’s breach of the terms, representations and warranties contained in the sub-advisory agreement. However, in accordance with the 1940 Act, the Company will not indemnify ZAIS for any liability to which it would be subject by reason of its willful misfeasance, bad faith, gross negligence or reckless disregard of its duties. Further, the Company will not provide indemnification to a person for any loss or liability that would violate any other federal or state securities laws. The Company shall pay or reimburse reasonable legal expenses and other costs incurred by ZAIS or any of their affiliates in advance of final disposition of a proceeding if all of the following are satisfied: (a) the proceeding relates to acts or omissions with respect to the performance of duties or services on the Company’s behalf, (b) the person(s) seeking indemnification provide the Company with written affirmation of their good faith belief that the standard of conduct necessary for indemnification by us has been met, (c) advancement of legal expenses and other costs associated therewith is not prohibited by applicable law, and (d) such person(s) provides us with a written agreement to repay the amount paid or reimbursed by the Company, together with the applicable rate of interest, in cases in which such person(s) is found not to be entitled to indemnification.
Term. The Proposed Sub-Advisory Agreement may be terminated at any time, without the payment of any penalty, upon 60 days’ written notice by the Adviser or ZAIS. It shall also terminate upon (i) its “assignment” (as such term is defined for purposes of Section 15(a)(4) of the 1940 Act), (ii) termination of the advisory agreement with the Adviser, or (iii) if the Adviser determines that the sub-advisory agreement would violate the terms of the investment advisory agreement.
What is the recommendation of the Board?
Based upon its review, and after consideration of such factors and information it considered relevant, the Board, including a majority of the Independent Directors present at its July 8, 2014 meeting, approved the Proposed Sub-Advisory Agreement and voted to recommend to stockholders that they approve the Proposal. The Board is therefore recommending that the Company’s stockholders vote “FOR” Proposal One to appoint ZAIS as Sub-Adviser to the Company and implement the Proposed Sub-Advisory Agreement, as discussed in this Proxy Statement.
What factors were considered by the Board?
At a meeting of the Board held on July 8, 2014, the Board, including a majority of the Independent Directors, determined to: (1) appoint ZAIS as sub-adviser to the Company; and (2) approve the Proposed Sub-Advisory Agreement with ZAIS under which it would serve as sub-adviser to the Company.
In determining whether to approve the Proposed Sub-Advisory Agreement with ZAIS, the Board received and evaluated such information as it deemed necessary for an informed determination of whether the Proposed Sub-Advisory Agreement should be approved for the Company. The materials provided to the Board to inform its consideration of whether to approve the Proposed Sub-Advisory Agreement with ZAIS included: (1) materials provided to the Board in advance of its July 8, 2014 meeting discussing ZAIS and its qualifications to serve as sub-adviser to the Company; (2) supporting documentation, including copies of the forms of the Proposed Sub-Advisory Agreement with ZAIS; and (3) other information relevant to the Board’s evaluation.
In reaching its decision to engage ZAIS as a sub-adviser to the Company, the Board, including a majority of the Independent Directors, considered a number of factors, including, but not limited to, the following: (1) the Adviser’s view with respect to the reputation of ZAIS as a manager to similar funds; (2) ZAIS’ strength and reputation in the industry; (3) the nature, extent, and quality of the services to be provided by ZAIS under the Proposed Sub-Advisory Agreement; (4) the personnel, operations, financial condition, and investment management capabilities, methodologies, and resources of ZAIS; (5) the fairness of the compensation under the Proposed Sub-Advisory Agreement in light of the services to be provided by ZAIS and the projected profitability of ZAIS as sub-adviser to the Company; (6) the costs for the services to be provided by ZAIS, including that the advisory fee rate would not change upon the appointment of ZAIS; (7) the sub-advisory fee rate payable by the Adviser to ZAIS; (8) ZAIS’ operations and compliance program, including its policies and procedures intended to assure compliance with the federal securities laws; and (9) the appropriateness of the selection of ZAIS in light the Company’s investment objective and investor base.
After its deliberation, the Board reached the following conclusions: (1) ZAIS should be appointed to serve as a Sub-Adviser to the Company under the Proposed Sub-Advisory Agreement; and (2) the sub-advisory fee rate payable by the Adviser to ZAIS is reasonable in the context of all factors considered by the Board. Based on these conclusions and other factors, the Board voted to approve the Proposed Sub-Advisory Agreement for the Company. During their deliberations, different Board members may have given different weight to different individual factors and related conclusions.
What is the required vote?
Approval of the Proposed Sub-Advisory Agreement by stockholders of the Company requires the affirmative vote of a majority of the Company’s outstanding voting securities. All stockholders of the Company will vote together as a single class on the Proposal.
What happens if stockholders do not approve Proposal One?
If the stockholders of the Company do not approve Proposal One, ZAIS would not be able to serve the Company as a sub-adviser under the Proposed Sub-Advisory Agreement. In this event, the Board will consider other appropriate action, which may include, among other things, appointment of a different sub-adviser, or direct management by the Adviser.
PROPOSAL TWO — APPROVAL OF A “MANAGER-OF-MANAGERS” ARRANGEMENT
What is Proposal Two?
The Company intends to apply for an exemptive order from the SEC to permit the Company and its investment adviser, Triton Pacific Advisor, LLC (the “Adviser”) with the approval of the Board, to enter into or materially amend sub-advisory agreements with unaffiliated sub-advisers, without submitting the agreement to a vote of stockholders (the “Proposed Relief”). An investment company operating in this manner is commonly referred to as a “Manager-of-Managers” investment company. The Company’s stockholders are asked to approve operation of the Company as a manager-of-managers investment company. If this proposal is approved and the Proposed Relief is granted, the Adviser will be permitted to enter into sub-advisory agreements with unaffiliated sub-advisers, or to materially modify certain sub-advisory agreements, with prior approval by the Board (including a majority of our independent directors) but without approval by our stockholders.
Why is a manager-of-managers arrangement proposed?
Subject to the supervision and approval of our Board and approval of our stockholders, TPA is responsible for managing the assets of the Company and is permitted, under the terms of the Investment Advisory Agreement between the Company and the Adviser (the “Advisory Agreement”), to engage sub-advisers to provide portfolio management services to Company. If theCompanyAdviser delegates sub-advisory duties to a sub-adviser,it remainsthe Adviser shall continue to remain responsible for monitoring and evaluating the performance of the sub-adviser.
Under the current Advisory Agreement, the Adviser is required to monitor the investment program of any sub-adviser, review all data and financial reports prepared by the sub-adviser, establish and maintain communications with the sub-adviser, and oversee all matters relating to the purchase and sale of investment securities, corporate governance, third-party contracts and regulatory compliance reports. The Adviser is also required to oversee and monitor the performance of the sub-adviser and is responsible for determining whether to recommend to the Board that a particular sub-advisory agreement be entered into or terminated. A determination of whether to recommend the termination of a sub-advisory agreement depends on a number of factors, including, but not limited to, the sub-adviser’s performance record.
The 1940 Act generally requires that a written sub-advisory agreement be approved by the affirmative vote of a majority of the outstanding shares of an investment company. The appointment of a new sub-adviser or material modification of an existing sub-advisory agreement must also be presented for approval by stockholders under the 1940 Act. The Company intends to seek an exemptive order from the SEC that would permit the Adviser to enter into a new sub-advisory agreement or materially amend an existing sub-advisory agreement with an unaffiliated sub-
adviser, subject to approval by the Board (including a majority of the Independent Directors), but without obtaining stockholder approval. An investment company operating in this manner is commonly referred to as a “Manager-of-Managers” investment company. The Company can operate as a manager-of-managers investment company in reliance upon the Proposed Relief only if, among other things, the SEC grants the Company an exemptive order approving the Proposed Relief and the Company’s stockholders have approved the manager-of-managers arrangement. That approval is sought in this Proposal Two.
The Company and the Adviser anticipate that the Proposed Relief would give the Adviser greater flexibility to select, supervise, and evaluate sub-advisers without incurring the expense and potential delay of seeking specific stockholder approval to utilize their investment management expertise. Under current applicable law, the Company must call and hold a meeting of the Company’s stockholders, create and distribute proxy materials, and arrange for the solicitation of voting instructions from stockholders. This process is time-intensive, slow, and costly. Under the Proposed Relief, the Board would be able to act more quickly and with less expense to appoint a sub-adviser or materially amend an agreement with a sub-adviser.
What is the proposed Manager-of-Managers arrangement?
If this proposal is approved by the Company’s stockholders, the Company will submit an application with the SEC requesting that that the SEC issue the Proposed relief permitting the Adviser, with the approval of the Board, to enter into or materially modify sub-advisory agreements with unaffiliated sub-advisers without requiring stockholder approval. The Company and the Adviser anticipate that this relief would benefit stockholders to the extent that it will give the Company and the Adviser additional flexibility to implement sub-adviser changes or materially modify sub-advisory agreements with unaffiliated sub-advisers when needed, and to avoid numerous and expensive proxy solicitations. The Company will continue to obtain stockholder approval of a sub-advisory agreement with a sub-adviser considered to be an “affiliated person,” as defined in the 1940 Act, of the Company or the Adviser.
The manager-of-managers arrangement will enable the Company to operate with greater efficiency by allowing the Adviser to employ sub-advisers that are best suited to the needs of the Company, without incurring the expense and delays associated with obtaining stockholder approval of sub-advisers or sub-advisory agreements.
What are the conditions of the exemptive relief expected to be granted pursuant to the Proposed Relief?
The Company believes that under the terms of the Proposed Relief, the Company and the Adviser would be subject to several conditions imposed by the SEC. The Company would be required to continue to obtain stockholder approval to approve or materially modify a sub-advisory agreement with an affiliated sub-adviser. Further, under the conditions of the Proposed Relief, within 90 days of the adoption of a new sub-advisory agreement or a change to an existing sub-advisory arrangement, the Company’s stockholders must be provided with an information statement that contains information about the sub-adviser and sub-advisory agreement.
In addition, in order to rely on the manager-of-managers relief, a majority of the Board must consist of Independent Directors and the nomination of new or additional Independent Directors must be at the discretion of the then existing Independent Directors. The Company’s prospectus must prominently discuss the manager-of-managers arrangement, including the fact that the Adviser has ultimate responsibility (subject to oversight by the Board) to oversee the sub-advisers and recommend their hiring, termination and replacement. If an unaffiliated sub-adviser is hired or terminated, the Adviser must provide the Board with information showing the expected impact on its profitability.
What is the recommendation of the Board?
Based upon its review and after consideration of such factors and information it considered relevant, the Board, including a majority of the Independent Directors present at its July 8, 2014 meeting, approved Proposal Two and voted to recommend to stockholders that they approve the Proposal. The Board is therefore recommending that the Company’s stockholders vote “FOR” the proposed manager-of-managers arrangement for the Company, as discussed in this Proxy Statement.
What factors were considered by the Board?
In determining whether or not it was appropriate to approve the proposed Manager-of-Managers arrangement and to recommend approval of such arrangements to the Company’s stockholders, the Board, including the Independent Directors, considered certain information and representations provided by the Adviser.
After carefully considering the Company’s contractual arrangement under which the Adviser is engaged as an investment adviser, and the Adviser’s experience in recommending and monitoring sub-advisers, the Board believes that it is appropriate to allow the recommendation, supervision, and evaluation of sub-advisers to be conducted by the Adviser. The Board also believes that this approach would be consistent with stockholders’ expectations that the Adviser will use its expertise to recommend to the Board qualified candidates to serve as sub-advisers.
The Board will continue to provide oversight of the sub-adviser selection and engagement process. The Board, including a majority of the Independent Directors, will continue to evaluate and consider for approval all new or amended sub-advisory agreements. In addition, under the 1940 Act and the terms of the sub-advisory agreements, the Board, including a majority of the Independent Directors, is required to review annually and consider for renewal, the agreement after the initial term. Upon entering into, renewing or amending a sub-advisory agreement, the Adviser and the sub-advisers have a legal duty to provide to the Board, information on pertinent factors.
The Board also considered that stockholder approval of Proposal Two will not result in an increase or decrease in the total amount of investment advisory fees paid by the Company to the Adviser. When engaging sub-advisers and entering into sub-advisory agreements, the Adviser has negotiated and will continue to negotiate fees with sub-advisers. These fees are paid directly by the Adviser and not by the Company. Therefore, any fee reduction or increase negotiated by the Adviser may be either beneficial or detrimental to the Adviser. The fees paid by the Company to the Adviser and the fees paid by the Adviser to the sub-advisers are considered by the Board in approving and renewing the investment management and sub-advisory agreements. Any increase in the investment management fee paid to the Adviser by the Company would continue to require stockholder approval.If stockholders approve Proposal Two, the Adviser, pursuant to its Advisory Agreement and other agreements, will continue to provide the same level of management and administrative services to the Company as the Adviser is currently providing.
The Board concluded that it is appropriate and in the best interests of the Company’s stockholders to provide the Adviser and the Board with maximum flexibility to recommend, supervise and evaluate sub-advisers without incurring the unnecessary delay or expense of obtaining stockholder approval. This process will allow the Company to operate more efficiently. Currently, to appoint an unaffiliated sub-adviser to the Company or to materially amend a sub-advisory agreement with an unaffiliated sub-adviser, the Company must call and hold a stockholder meeting, create and distribute proxy materials, and solicit proxy votes from stockholders. In addition, if a sub-adviser to the Company is acquired or there is a change of control of the sub-adviser that results in the “assignment” of the sub-advisory agreement with the Adviser, the Company currently must seek approval of a new sub-advisory agreement from its stockholders, even when there will be no change in the persons managing the sub-adviser or no change to the services provided to the Company. This process is time-consuming and costly, and some of the costs may be borne by the Company. Without the delay inherent in holding a stockholder meeting, the Adviser and the Company would be able to act more quickly to appoint an unaffiliated sub-adviser with less expense when the Board and the Adviser believe that the appointment would benefit the Company.
What is the required vote?
The Company’s stockholders must approve Proposal Two for it to be effective for the Company. Proposal Two must be approved by the affirmative vote of a majority of the Company’s outstanding voting securities. All stockholders of the Company will vote together as a single class on the Proposal.
What happens if stockholders do not approve Proposal Two?
If stockholders do not approve the manager-of-managers arrangement, or if the SEC does not grant the Proposed Relief, it will not be implemented and the Company will continue to be required to obtain stockholder approval of any changes in the sub-adviser of the Company or any material changes to sub-advisory agreements. Because the Company has not yet obtained the approval of the SEC of the Proposed Relief, the stockholders’
approval, or failure to approve, this proposal will have no effect on Proposal One and the approval of ZAIS to act as the Company’s sub-adviser.
OTHER MATTERS TO COME BEFORE THE MEETING
The Board is not aware of any matters that will be presented for action at the Special Meeting other than the matters set forth herein. Should any other matters requiring a vote of stockholders arise, it is intended that the proxies that do not contain specific instructions to the contrary will be voted in accordance with the judgment of the persons named in the enclosed form of proxy.
AVAILABLE INFORMATION
We are required to file with or submit to the SEC annual, quarterly and current periodic reports, proxy statements and other information meeting the informational requirements of the Exchange Act. You may inspect and copy these reports, proxy statements and other information at the Public Reference Room of the SEC at 100 F Street, NE, Washington, D.C. 20549. You may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC maintains an Internet site that contains reports, proxy and information statements and other information filed electronically by us with the SEC which are available on the SEC’s website at http://www.sec.gov. Copies of these reports, proxy and information statements and other information may be obtained, after paying a duplicating fee, by electronic request at the following e-mail address: publicinfo@sec.gov, or by writing to the SEC’s Public Reference Room. This information will also be available free of charge by contacting us at Triton Pacific Investment Corporation, 10877 Wilshire Blvd., 12th Floor, Los Angeles, CA 90024 or by telephone at (844) TRITON1 (844-874-8661).
Householding of Proxy Materials
In a further effort to reduce printing costs, postage fees and the impact on the environment, we have adopted a practice approved by the SEC called “householding.” Under this practice, stockholders who have the same address and last name will receive only one copy of our proxy materials, unless any of these stockholders notifies us that he or she wishes to continue receiving individual copies. Stockholders who participate in householding will continue to receive separate proxy cards.
If you share an address with another stockholder and received only one set of proxy materials, but would like to request a separate copy of these materials, please contact the Company by calling (844) TRITON1 or by writing to the Company, Attn: Secretary,10877 Wilshire Blvd., Los Angeles, CA 90024. Similarly, you may also contact the Company if you received multiple copies of the proxy materials and would prefer to receive a single copy in the future.
INVESTMENT ADVISER AND ADMINISTRATOR, INVESTMENT SUB-ADVISER, DEALER
MANAGER AND SUB-ADMINISTRATOR
Set forth below are the names and addresses of the Company’s investment adviser and administrator, investment sub-adviser, dealer manager and sub-administrator:
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INVESTMENT |
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Triton Pacific Adviser, LLC |
| TFA Associates, LLC |
| Triton Pacific Securities, LLC |
| The Bank of New York |
10877 Wilshire Blvd. |
| 13807 Village Mill |
| 10877 Wilshire Blvd. |
| Mellon Trust Company, NA |
12th Floor |
| Dr. Suite 312 |
| 12th Floor |
| 525 William Penn Place, |
Los Angeles, CA 90024 |
| Midlothian, VA 23114 |
| Los Angeles, CA 90024 |
| 8th Floor Pittsburgh, PA 15259 |
PLEASE VOTE PROMPTLY BY SIGNING AND DATING THE ENCLOSED PROXY CARD AND
RETURNING IT IN THE ACCOMPANYING POSTAGE PAID RETURN ENVELOPE.
TRITON PACIFIC INVESTMENT CORPORATION
10877 Wilshire Blvd., 12th Floor
Los Angeles, California 90024
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
To Be Held On September 11, 2014
The undersigned hereby appoints Craig J. Faggen and Michael L. Carroll, and each of them, as proxies of the undersigned with full power of substitution in each of them, to attend the Special Meeting of Stockholders of Triton Pacific Investment Corporation, Inc., a Maryland corporation (the “Company”), to be held at10:00 a.m., Pacific Time, on Thursday, September 11, 2014, at the offices of the Company located at 10877 Wilshire Blvd., 12th Floor, Los Angeles, California 90024, and any adjournments or postponements thereof (the “Special Meeting”), and vote as designated on the reverse side of this proxy card all of the shares of common stock, par value $0.001 per share, of the Company (“Shares”) held of record by the undersigned. The proxy statement and the accompanying materials are being mailed to stockholders of record described below on or about August__,13, 2014. All properly executed proxies representing Shares received prior to the Special Meeting will be voted in accordance with the instructions marked thereon.
If no specification is made, the Shares will be voted FOR the proposal to approve the sub-advisory agreement between Triton Pacific Adviser, LLC and ZAIS Group, LLC and FOR the proposal to approve a manager-of-managers policy to permit Triton Pacific Adviser, LLC, subject to the approval by the Boards, to enter into and materially amend agreements with unaffiliated sub-advisers without first obtaining the approval of the Company’s stockholders. If any other business is presented at the Special Meeting, this proxy will be voted by the proxies in their best judgment, including a motion to adjourn or postpone the Special Meeting to another time and/or place for the purpose of soliciting additional proxies. At the present time, the board of directors of the Company knows of no other business to be presented at the Special Meeting. Any stockholder who has given a proxy has the right to revoke it at any time prior to its exercise. Stockholders who execute proxies may revoke them with respect to a proposal by attending the Special Meeting and voting his or her Shares in person or by submitting a letter of revocation or a later-dated proxy to the Company at the above address prior to the date of the Special Meeting.
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| Note: Please sign exactly as your name appears on this Proxy. When signing in a fiduciary capacity, such as executor, administrator, trustee, attorney, guardian, etc., please so indicate. Corporate or partnership proxies should be signed by an authorized person indicating the person’s title. |
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Please refer to the Proxy Statement for a discussion of each matter. | |||
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1. | To approve a new investment sub-advisory agreement between Triton Pacific Adviser, LLC and ZAIS Group, LLC with respect to the Company. |
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2. | To approve a manager-of-managers policy with respect to the Company to permit Triton Pacific Adviser, LLC, subject to prior approval by the Board, to enter into and materially amend agreements with unaffiliated sub-advisers without obtaining approval of the Company’s shareholders. |
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PLEASE SIGN ON THE REVERSE SIDE