SECOND AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP OF TRIANGLE MEZZANINE FUND LLLP

EXHIBIT 3.4

 

 

SECOND AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP OF
TRIANGLE MEZZANINE FUND LLLP

Dated as of February 21, 2007

 

 

TRIANGLE MEZZANINE FUND LLLP
Table of Contents

Page

ARTICLE 1.			2
General Provisions			2
Section 1.01 Definitions			2
Section 1.02 LLLP Registration; Name			9
Section 1.03 Principal Office; Registered Office; and Qualification			10
Section 1.04 Commencement and Duration			10
Section 1.05 Admission of Partners			10
Section 1.06 Representations of Partners			11
Section 1.07 Notices With Respect to Representations by Limited Partners			12
Section 1.08 Liability of Partners			13
Section 1.09 Repayment of Capital Contributions of Partners			13
Section 1.10 No Priorities of Limited Partners			13
ARTICLE 2			13
Purpose and Powers			13
Section 2.01 Purpose and Powers			13
Section 2.02 Restrictions on Powers			14
Section 2.03 ERISA Limitation			14
ARTICLE 3			15
Management			15
Section 3.01 Authority of General Partner			15
Section 3.02 Authority of the Limited Partners			17
Section 3.03 The Investment Adviser/Manager			17
Section 3.04 Restrictions on Other Activities of the General Partner and its Affiliates			17
Section 3.05 Management Compensation			18
Section 3.06 Payment of Management Compensation			19
Section 3.07 Partnership Expenses			19
Section 3.08 Valuation of Assets			20
Section 3.09 Standard of Care			21
Section 3.10 Indemnification			21
Section 3.11 [reserved]			23
Section 3.12 Media Company Provisions			23
ARTICLE 4			24
Small Business Investment Company Matters			24
Section 4.01 SBIC Act			24
Section 4.02 Consent or Approval of, and Notice to, SBA			24
Section 4.03 Provisions Required by the SBIC Act for Issuers of Debentures			25
Section 4.04 Effective Date of Incorporated SBIC Act Provisions			25
Section 4.05 SBA as Third Party Beneficiary			25
Section 4.06 Interest of the General Partner After Withdrawal			26

ARTICLE 5			26
Partners’ Capital Contributions			26
Section 5.01 Capital Contributions			26
Section 5.02 [reserved]			26
Section 5.03 [reserved]			26
Section 5.04 Additional Limited Partners and Additional Capital Contributions			26
Section 5.05 [reserved]			27
Section 5.06 [reserved]			27
Section 5.07 [reserved]			27
Section 5.08 [reserved]			27
Section 5.09 [reserved]			27
Section 5.10 [reserved]			27
Section 5.11 [reserved]			27
Section 5.12 [reserved]			27
Section 5.13 [reserved]			27
Section 5.14 Withholding and Application of a Partner’s Distributions			27
Section 5.15 [reserved]			27
Section 5.16 [reserved]			27
ARTICLE 6			27
Adjustment of Capital Accounts			27
Section 6.01 Establishment of Capital Accounts			27
Section 6.02 General Allocations			28
Section 6.03 Special Allocations			28
Section 6.04 Other Allocation Rules			30
Section 6.05 Tax Allocations: Code Section 704(c)			31
Section 6.06 Tax Matters			31
ARTICLE 7			32
Distributions			32
Section 7.01 Distributions to Partners			32
Section 7.02 Distributions of Noncash Assets in Kind			32
Section 7.03 Payments on Behalf of Partners			33
Section 7.04 Distributions Violative of the Act Prohibited			33
Section 7.05 Distributions in Respect of Interests Transferred			33
ARTICLE 8			33
Dissolution, Liquidation, Winding Up and Withdrawal; Merger and Conversion			33
Section 8.01 Dissolution			33
Section 8.02 Winding Up			34
Section 8.03 Removal and Withdrawal of the General Partner			35
Section 8.04 Continuation of the Partnership After the Withdrawal of the General Partner			36
Section 8.05 Withdrawals of Capital			36
Section 8.06 [reserved]			36
Section 8.07 [reserved]			36
Section 8.08 [reserved]			36
Section 8.09 [reserved]			36
Section 8.10 [reserved]			36
Section 8.11 [reserved]			36
Section 8.12 [reserved]			36
Section 8.13 Conversion of General Partner’s Interest			36
Section 8.14 Conversion and Merger			37

ARTICLE 9			37
Accounts, Reports and Auditors			37
Section 9.01 Books of Account			37
Section 9.02 Audit and Reports			38
Section 9.03 Fiscal Year			38
Section 9.04 Banking and Portfolio Securities			39
ARTICLE 10			39
Miscellaneous			39
Section 10.01 Assignability			39
Section 10.02 Binding Agreement			41
Section 10.03 Gender			41
Section 10.04 Notices			41
Section 10.05 Consents and Approvals			42
Section 10.06 Counterparts			42
Section 10.07 Amendments			42
Section 10.08 Limited Partner Consents			43
Section 10.09 Power of Attorney			43
Section 10.10 Applicable Law			44
Section 10.11 Severability			44
Section 10.12 Entire Agreement			45
Section 10.13 Miscellaneous			45

Schedule A — Partners, Capital Contributions and Percentage Interest

Exhibit I — Valuation Guidelines

TRIANGLE MEZZANINE FUND LLLP
AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP

     This AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP is dated and effective as of February 21, 2007, among New Triangle GP, LLC, a North Carolina limited liability company (the “New General Partner” ) in its capacity as the sole general partner of the Partnership, Triangle Capital Corporation, a Maryland corporation, in its capacity as the sole limited partner of the Partnership ( “TCC” ), and the individuals and entities whose names hereafter appear on Schedule A as Limited Partners as amended from time to time (collectively, the “Limited Partners” ), and such other individuals and entities as shall become parties as hereinafter provided.

     WHEREAS, Triangle Mezzanine LLC, as the general partner of the Partnership (the “ Old General Partner ”), and the limited partners of the Partnership named therein entered into that certain Agreement of Limited Partnership Agreement of the Partnership dated as of January 3, 2003, as amended (the “Original Agreement” ); and

     WHEREAS, the Partnership, TCC, and TCC Merger Sub, LLC, a North Carolina limited liability company ( “Merger Sub” ), entered into an Agreement and Plan of Merger dated as of November 2, 2006 (the “Fund Merger Agreement” ), pursuant to which Merger Sub is merging with and into the Partnership, with the Partnership being the surviving entity, and the partnership interests held by the limited partners of the Partnership are being converted into shares of common stock of TCC; and

     WHEREAS, the New General Partner, TCC and Old General Partner entered into an Agreement and Plan of Merger dated as of November 2, 2006 (the “GP Merger Agreement” ), pursuant to which the Old General Partner is merging with and into the New General Partner, with the New General Partner being the surviving entity, and the ownership interests held by the members of the Old General Partner are being converted into shares of common stock of TCC; and

     WHEREAS, upon the closing of the transactions contemplated by the Fund Merger Agreement and the GP Merger Agreement, TCC will be the sole limited partner of the Partnership, and the New General Partner will be the sole general partner of the Partnership; and

     WHEREAS, immediately following the closing of the transactions contemplated by the Fund Merger Agreement and GP Merger Agreement, the New General Partner and TCC desire to amend and restate the Original Agreement in its entirety by entering into this Agreement;

     NOW, THEREFORE, the parties, in consideration of their mutual agreements stated in this Agreement, agree to become partners and to form a limited partnership under the Act.

ARTICLE 1.

General Provisions

Section 1.01 Definitions.

     For the purposes of this Agreement, the following terms have the following meanings:

     “Act” means the North Carolina Revised Uniform Limited Partnership Act.

     “Additional Limited Partners” has the meaning stated in Section 5.04.

     “Adjusted Capital Account Deficit” shall mean with respect to any Partner, the deficit balance, if any, in such Partner’s Capital Account as of the end of the relevant Fiscal Year, after giving effect to the following adjustments:

     (i) Credit to such Capital Account any amounts which such Partner is obligated to restore or is deemed to be obligated to restore pursuant to the penultimate sentences of Treasury Regulations Sections 1.704-2(g)(i) and 1.704-2(i)(5); and

     (ii) Debit to such Capital Account the items described in Treasury Regulations Sections 1.704-1(b)(2)(ii)( d )( 4 ), 1.704-1(b)(2)(ii)( d )( 5 ), and 1.704-1(b)(2)(ii)( d )( 6 ).

     The foregoing definition of Adjusted Capital Account Deficit is intended to comply with the provisions of Treasury Regulations Section 1.704-1(b)(2)(ii)( d ) and shall be interpreted consistently therewith.

     “Affiliate” has the meaning stated in the SBIC Act.

     “Affiliated Venture Capital Fund” means any entity commonly referred to as a venture capital or private equity fund managed or controlled by the General Partner to the extent that management or control is not contrary to the SBIC Act, or in which any Principal participates as a general partner or as a general partner, officer, director, manager, or employee of a general partner or investment manager of any such venture capital or private equity fund. TCC is an Affiliated Venture Fund.

     “Agreement” means this agreement of limited partnership, as amended from time to time. References to this Agreement will be deemed to include all provisions incorporated in this Agreement by reference.

     “Assets” means common and preferred stock (including warrants, rights and other options relating to such stock), notes, bonds, debentures, trust receipts and other obligations, instruments or evidences of indebtedness, and other properties or interests commonly regarded as securities, and in addition, interests in real property, whether improved or unimproved, and interests in personal property of all kinds (tangible or intangible), choses in action, and cash, bank deposits and so-called “money market instruments”.

     “Assets Under Management” means, as of any specified date, the value of all Assets owned by the Partnership (the value to be determined as provided in this Agreement) less the amount of any liabilities of the Partnership, determined in accordance with generally accepted accounting principles, consistently applied.

     “Associate” has the meaning stated in the SBIC Act.

     “Assumed Leverage” means an amount equal to the maximum amount of Leverage that an SBIC is eligible to obtain, but not exceeding two (2) times the amount of Unreduced Regulatory Capital.

     “Capital Account” shall mean with respect to any Partner, the Capital Account maintained in accordance with the following provisions:

     (i) To each Partner’s Capital Account there shall be credited such Partner’s Capital Contributions, such Partner’s distributive share of Profits and any items in the nature of income or gain which are specially allocated pursuant to Sections 6.02(b) or 6.03, and the amount of any Partnership liabilities assumed by such Partner or which are secured by any Partnership Assets distributed to such Partner.

     (ii) To each Partner’s Capital Account there shall be debited the amount of cash and the Gross Asset Value of any Partnership Assets distributed to such Partner pursuant to any provision of this Agreement, such Partner’s distributive share of Losses and any items in the nature of expenses or losses which are specially allocated pursuant to Sections 6.02(b) or 6.03, and the amount of any liabilities of such Partner assumed by the Partnership or which are secured by any property contributed by such Partner to the Partnership.

     (iii) In determining the amount of any liability for purposes of clauses (i) and (ii) above, there shall be taken into account Code Section 752(c) and any other applicable provisions of the Code and Treasury Regulations.

     The foregoing provisions and the other provisions of this Agreement relating to the maintenance of Capital Accounts are intended to comply with Treasury Regulations Sections 1.704-1(b) and 1.704-2 and shall be interpreted and applied in a manner consistent with such Treasury Regulations. The General Partner shall (i) make any adjustments that are necessary or appropriate to maintain equality between the Capital Accounts of the Partners and the amount of Partnership capital reflected on the Partnership’s balance sheet, as computed for book purposes in accordance with Treasury Regulations Section 1.704-1(b)(2)(iv)( g ), and (ii) make any appropriate modifications in the event unanticipated events might otherwise cause this Agreement not to comply with Treasury Regulations Sections 1.704-1(b) or 1.704-2.

     “Capital Contribution” in respect of any Partner means the amount of cash and the Gross Asset Value of any other property contributed by such Partner, as such, to the capital of the Partnership.

     “Certificate of Limited Partnership” means the certificate of limited partnership with respect to the Partnership filed in the office of the Secretary of State of the State of North Carolina.

     “Code” means the Internal Revenue Code of 1986, as amended, as in effect from time to time.

     “Combined Capital” has the meaning stated in the SBIC Act.

     “Commencement Date” means February 14, 2003.

     “Control Person” has the meaning stated in the SBIC Act.

     “Debentures” has the meaning stated in the SBIC Act.

     “Depreciation” shall mean for each Fiscal Year an amount equal to the depreciation, amortization, or other cost recovery deduction allowable with respect to any Noncash Asset for such year or other period, except that if the Gross Asset Value of a Noncash Asset differs from its adjusted basis for Federal income tax purposes at the beginning of such year or other period, Depreciation shall be an amount which bears the same ratio to such beginning Gross Asset Value as the Federal income tax depreciation, amortization, or other cost recovery deduction for such year or other period bears to such beginning adjusted tax basis; provided, however, that if the adjusted basis for Federal income tax purposes of a Noncash Asset at the beginning of such year or other period is zero, Depreciation shall be determined with reference to such beginning Gross Asset Value using any reasonable method selected by the General Partner.

     “Designated Party” means any of the General Partner, any Investment Adviser/Manager, and any partner, manager, stockholder, director, officer, employee, member of the Investment Committee of the New General Partner or Affiliate of any of the foregoing.

     “ERISA” means the Employee Retirement Income Security Act of 1974, as amended, and the regulations thereunder and interpretations thereof promulgated by the Department of Labor, as in effect from time to time.

     “Fiscal Year” shall mean the Partnership’s taxable year for federal income tax purposes or, if the context requires, any portion of such year for which the Partnership is required to allocate Profits, Losses, and other items of Partnership income, gain, loss or deduction pursuant to Article 6.

     “General Partner” means the general partner or general partners of the Partnership, as set forth in this Agreement.

     “Gross Asset Value” shall mean with respect to any Noncash Asset the Noncash Asset’s adjusted basis for federal income tax purposes, except as follows:

     (i) The initial Gross Asset Value of any Noncash Asset contributed by a Partner to the Partnership shall be the gross fair market value of such Noncash Asset, as

specified in this Agreement or (if not so specified) as determined by the General Partner consistent with Section 3.08;

     (ii) The Gross Asset Values of all Noncash Assets shall be adjusted to equal their respective gross fair market values, as of the following times: (A) the issuance of a partnership interest in the Partnership to any new or existing Partner other than pursuant to clause (i) of the first sentence of Section 5.04, (B) the distribution by the Partnership to a Partner of more than a de minimis amount of Assets as consideration for an interest in the Partnership, (C) the liquidation of the Partnership within the meaning of Treasury Regulations Section 1.704-1(b)(2)(ii)( g ), and (D) as provided in Section 8.13; provided, however that adjustments pursuant to clauses (A) and (B) above shall be made only if the General Partner determines that such adjustments are necessary or appropriate to reflect the relative economic interests of the Partners in the Partnership;

     (iii) The Gross Asset Value of any Noncash Asset distributed to any Partner shall be adjusted to equal the gross fair market value of such Noncash Asset on the date of distribution; and

     (iv) The Gross Asset Values of Noncash Assets shall be increased (or decreased) to reflect any adjustments to the adjusted basis of such Noncash Assets pursuant to Code Section 734(b) or Code Section 743(b), but only to the extent that such adjustments are taken into account in determining Capital Accounts pursuant to Treasury Regulations Section 1.704-1(b)(2)(iv)( m ) and clause (vi) of the definition of Profit or Loss and Section 6.03(g); provided, however, that Gross Asset Values shall not be adjusted pursuant to this clause (iv) to the extent the General Partner determines that an adjustment pursuant to clause (ii) above is necessary or appropriate in connection with a transaction that would otherwise result in an adjustment pursuant to this clause (iv).

     For purposes of the foregoing, except as provided in clause (i) the gross fair market value of a Noncash Asset shall be the value established at the then most recent valuation of the Noncash Asset under this Agreement (or such other valuation date as is required under the SBIC Act). If the Gross Asset Value of a Noncash Asset has been determined or adjusted pursuant to clauses (i), (ii), or (iv) above, such Gross Asset Value shall thereafter be adjusted by the Depreciation taken into account with respect to such asset for purposes of computing Profits and Losses.

     “Indemnifiable Costs” means all costs, expenses, damages, claims, liabilities, fines and judgments (including the reasonable cost of the defense, and any sums which may be paid with the consent of the Partnership in settlement), incurred in connection with or arising from a claim, action, suit, proceeding or investigation, by or before any court or administrative or legislative body or authority.

     “Investment Adviser/Manager” has the meaning stated in the SBIC Act, and for the Partnership shall initially be TCC.

     “Investment Advisers Act” means the Investment Advisers Act of 1940, as amended, and the regulations thereunder and interpretations thereof promulgated by the Securities and Exchange Commission, as in effect from time to time.

     “Investment Company Act” means the Investment Company Act of 1940, as amended, and the regulations thereunder and interpretations thereof promulgated by the Securities and Exchange Commission, as in effect from time to time.

     “Leverage” has the meaning stated in the SBIC Act.

     “Limited Partners” mean the limited partners of the Partnership, including but not limited to any Limited Partners who are Affiliates of the General Partner and/or the Investment Adviser/Manager, other than the initial limited partner who has withdrawn as of the date of this Agreement.

     “Majority in Interest of the Limited Partners” means Limited Partners whose Partnership Percentage aggregates in excess of fifty percent (50%) of the Partnership Percentage of all Limited Partners.

     “Management Compensation” means the amounts payable by the Partnership to TCC or the Investment Adviser/Manager, as provided in Section 3.05.

     “Management Compensation Determination Time” has the meaning set forth in Section 3.05(b).

     “Management Expenses” has the meaning set forth in Section 3.07(a).

     “Management Fee Base” means the sum of Unreduced Regulatory Capital and Assumed SBA Leverage.

     “Management Fee Rate” means:

     (i) 2.5%, if the Management Fee Base is equal to or less than $60 million, or

     (ii) if the Management Fee Base is greater than $60 million but less than $120 million, such percentage that is equal to the difference between (A) 2.5%, and (B) 0.5% multiplied by (the difference between the Management Fee Base and $60 million, divided by $60 million), or

     (iii) 2.0%, if the Management Fee Base is greater or equal to $120 million.

     “Media Company” means an entity that, directly or indirectly, owns controls or operates or has an attributable interest in (a) a U.S. broadcast radio or television station or a U.S. cable televisions system, (b) a “daily newspaper,” (as such term is defined in Section 73.3555 of the rules and regulations of the Federal Communication Commission (“FCC”)), (c) any U.S. communications facility operated pursuant to a license granted by the FCC and subject to the provisions of Section 310(b) of the Communications Act of 1934, as amended, or (d) any other business that is subject to FCC regulations under which the ownership of the Partnership in such

entity may be attributed to a Limited Partner or under which the ownership of a Limited Partner in another business may be subject to limitation or restriction as a result of the ownership of the Partnership in such entity.

     “Noncash Asset” means any Asset of the Partnership other than cash.

     “Nonrecourse Deductions” shall have the meaning provided in, and shall be determined in accordance with, Treasury Regulations Section 1.704-2.

     “Nonrecourse Liability” shall have the meaning provided in, and shall be determined in accordance with, Treasury Regulations Section 1.704-2(b)(3).

     “Organization Expenses” means the fees, costs and expenses of and incidental to the formation of the Partnership and the General Partner and the licensing of the Partnership as an SBIC.

     “Outstanding Leverage” means the total amount of outstanding securities (including, but not limited to, Debentures) issued by the Partnership, which qualify as Leverage and have not been redeemed or repaid as provided in the SBIC Act.

     “Partner Nonrecourse Debt” shall have the meaning provided in Treasury Regulations Section 1.704-2.

     “Partner Nonrecourse Debt Minimum Gain” shall have the meaning provided in, and shall be determined in accordance with, Treasury Regulations Section 1.704-2.

     “Partner Nonrecourse Deductions” shall have the meaning provided in, and shall be determined in accordance with, Treasury Regulations Section 1.704-2.

     “Partners” means the General Partner and the Limited Partners.

     “Partnership” means the limited partnership established by this Agreement.

     “Partnership Minimum Gain” shall have the meaning provided in, and shall be determined in accordance with, Treasury Regulations Section 1.704-2.

     “Partnership Percentage” in respect of any Partner means that the percentage of the total ownership interest in the Partnership held by such Partner based upon its Capital Contributions, as set forth on Exhibit A as revised from time to time.

     “___percent (___%) in Interest of the Limited Partners” means Limited Partners whose Partnership Percentage represents such percentage of the Partnership Percentages of all Limited Partners as of the time of determination.

     “Portfolio Companies” means the issuers of Assets acquired by the Partnership, other than issuers of certificates of deposits, shares or other participations in mutual funds or similar money market type instruments, direct obligations of or obligations guaranteed as to principal and interest by the United States and repurchase agreements with federally insured institutions

with respect to such obligations. Reference to a “Portfolio Company” is to any one of the Portfolio Companies.

     “Portfolio Securities” means the Assets of the Portfolio Companies acquired by the Partnership. Reference to a “Portfolio Security” is to any one of the Portfolio Securities.

     “Principal” means Tarlton H. Long, David F. Parker, Garland S. Tucker, III, Brent P. W. Burgess and Steven C. Lilly so long as in each case that individual is an employee of the Investment Adviser/Manager of the Partnership, and any other individual who the General Partner and a Majority in Interest of the Limited Partners designate as a Principal, so long as that individual is an employee of the Investment Adviser/Manager.

     “Profit” or “Loss” shall mean for each Fiscal Year an amount equal to the Partnership’s taxable income or loss for the Fiscal Year, determined in accordance with Code Section 703(a) (for this purpose, all items of income, gain, loss or deduction required to be stated separately pursuant to Code Section 703(a)(1) shall be included in taxable income or loss), with the following adjustments:

     (i) Any income of the Partnership that is exempt from Federal income tax and not otherwise taken into account in computing Profits and Losses pursuant to this definition shall be added to such taxable income or loss;

     (ii) Any expenditures of the Partnership described in Code Section 705(a)(2)(B) or treated as Code Section 705(a)(2)(B) expenditures pursuant to Treasury Regulations Section 1.704-1(b)(2)(iv)(i), and not otherwise taken into account in computing Profits and Losses pursuant to this definition, shall be subtracted from such taxable income or loss;

     (iii) In the event the Gross Asset Value of any Noncash Asset is adjusted pursuant to clauses (ii) or (iii) of the definition of Gross Asset Value the amount of such adjustment shall be taken into account as gain or loss from the disposition of such Noncash Asset for purposes of computing Profits and Losses;

     (iv) Gain or loss resulting from disposition of any Noncash Asset with respect to which gain or loss is recognized for Federal income tax purposes shall be computed by reference to the Gross Asset Value of the property disposed of, notwithstanding that the adjusted tax basis of such Noncash Asset differs from its Gross Asset Value;

     (v) In lieu of the depreciation, amortization, and other cost recovery deductions taken into account in computing such taxable income or loss, there shall be taken into account Depreciation for such Fiscal Year computed in accordance with the definition thereof;

     (vi) To the extent an adjustment to the adjusted tax basis of any Noncash Asset pursuant to Code Section 734(b) or Code Section 743(b) is required pursuant to Treasury Regulations Section 1.704-1(b)(2)(iv)( m )( 4 ) to be taken into account in determining Capital Accounts as a result of a distribution other than in liquidation of a Partner’s interest in the Partnership, the amount of such adjustment shall be treated as an item of

gain (if the adjustment increases the basis of the Noncash Asset) or loss (if the adjustment decreases the basis of the Noncash Asset) from the disposition of the Noncash Asset and shall be taken into account for purposes of computing Profits and Losses; and

     (vii) Notwithstanding any other provisions of this definition, any items which are allocated pursuant to Sections 6.02(b) or 6.03 shall not be taken into account in computing Profits and Losses.

     The amounts of the items of Partnership income, gain, loss, or deduction to be allocated pursuant to Sections 6.02(b) or 6.03 shall be determined by applying rules analogous to clauses (i) through (vi) above.

     “Regulatory Capital” has the meaning stated in the SBIC Act.

     “Retained Earnings Available for Distribution” has the meaning stated in the SBIC Act.

     “SBA” means the United States Small Business Administration.

     “SBA Agreements” has the meaning stated in Section 10.12.

     “SBIC” means a small business investment company licensed under the SBIC Act.

     “SBIC Act” means the Small Business Investment Act of 1958, as amended, and the rules and regulations thereunder and interpretations thereof promulgated by SBA, as in effect from time to time.

     “SEC” means the Securities and Exchange Commission.

     “Securities Act” means the Securities Act of 1933, as amended, and the regulations thereunder and interpretations thereof promulgated by the SEC, as in effect from time to time.

     “Treasury Regulations” shall mean the Income Tax Regulations (including Temporary Regulations) promulgated under the Code, as such regulations may be amended from time to time (including corresponding provisions of succeeding regulations).

     “Unreduced Regulatory Capital” means Regulatory Capital plus any Partnership distributions which reduce Regulatory Capital previously made (i) under 13 C.F.R. §107.585, (ii) under 13 C.F.R. §107.1570(b), or (iii) which SBA otherwise approves for inclusion in the Management Compensation calculation.

Section 1.02 LLLP Registration; Name.

     (a) The General Partner has caused the Partnership to register as a limited liability limited partnership under the Act. The Partnership shall continue such registration as a limited liability limited partnership for so long as the General Partner determines, provided that any change of such registration requires SBA prior written approval.

     (b) The name of the Partnership is “Triangle Mezzanine Fund LLLP”.

     (c) Subject to the prior approval of SBA, the General Partner has the power at any time to:

          (i) change the name of the Partnership; and

          (ii) qualify the Partnership to do business under any name when the Partnership’s name is unavailable for use, or may not be used, in a particular jurisdiction.

     (d) The General Partner will give prompt notice of any action taken under Section 1.02(c) to each Partner and SBA.

Section 1.03 Principal Office; Registered Office; and Qualification.

     (a) The principal office of the Partnership will be at 3600 Glenwood Avenue, Suite 104, Raleigh, NC 27612, or such other place as may from time to time be designated by the General Partner, subject to the approval of SBA.

     (b) The registered office of the Partnership in the State of North Carolina will be located at 3600 Glenwood Avenue, Suite 104, Raleigh, North Carolina 27612. The name of the registered agent for the Partnership will be Garland S. Tucker, III. The General Partner may from time to time change the registered agent and registered office of the Partnership.

     (c) The General Partner will qualify the Partnership to do business in each jurisdiction where the activities of the Partnership make such qualification necessary.

     (d) The General Partner will give prompt notice of any action taken under this Section to each Partner and SBA.

Section 1.04 Commencement and Duration.

     (a) The Partnership will commence upon the filing of the Certificate of Limited Partnership in the office of the Secretary of State of the State of North Carolina.

     (b) The Partnership will be dissolved and wound up at the time and in the manner provided for in Article 8.

Section 1.05 Admission of Partners.

     (a) No person may be admitted as a General Partner or a Limited Partner without subscribing and delivering to the Partnership a counterpart of this Agreement, or other written instrument, which sets forth:

          (i) the name and address of the Partner,

          (ii) the Capital Contribution of the Partner, and

          (iii) the agreement of the Partner to be bound by the terms of this Agreement, and such other agreements and instruments as the General Partner requests.

     (b) Without the prior approval of SBA, no person may be admitted as:

          (i) a General Partner, or

          (ii) a Limited Partner with an ownership interest of ten percent (10%) or more of the Partnership’s capital.

     (c) The General Partner will compile, and amend from time to time as necessary, Schedule A attached to this Agreement, which will list:

          (i) the name and address of the General Partner and each Limited Partner,

          (ii) the Capital Contribution of the General Partner and each Limited Partner to the Partnership, and

          (iii) the Partnership Percentage of the General Partner and each Limited Partner in the Partnership.

     (d) The addition to the Partnership at any time of one or more Partners will not be a cause for dissolution of the Partnership, and all the Partners will continue to be subject to the provisions of this Agreement in all respects.

Section 1.06 Representations of Partners.

     (a)  General Partner . This Agreement is made with the General Partner in reliance upon the General Partner’s representation to the Partnership, the Limited Partners and SBA, that:

          (i) it is duly organized, validly existing and in good standing under the laws of the State of North Carolina, and is qualified to do business under the laws of each state where such qualification is required to carry on the business of the Partnership;

          (ii) it has full power and authority to execute and deliver this Agreement and to act as General Partner under this Agreement;

          (iii) this Agreement has been authorized by all necessary actions by it, has been duly executed and delivered by it, and is a legal, valid and binding obligation of it, enforceable according to its terms; and

          (iv) the execution and delivery of this Agreement and the performance of its obligations under this Agreement will not conflict with, or result in any violation of, or default under, any provision of any governing instrument applicable to it, or any agreement or other instrument to which it is a party or by which it or any of its properties are bound, or any provision of law, statute, rule or regulation, or any ruling, writ, order, injunction or decree of any court, administrative agency or governmental body applicable to it.

     (b)  Limited Partners . This Agreement is made with each Limited Partner in reliance upon each Limited Partner’s representation to the General Partner, the Partnership and SBA, that:

          (i) it has full power and authority to execute and deliver this Agreement and to act as a Limited Partner under this Agreement; this Agreement has been authorized by all necessary actions by it; this Agreement has been duly executed and delivered by it; and this Agreement is a legal, valid and binding obligation of it, enforceable against it according to its terms;

          (ii) the execution and delivery of this Agreement and the performance of its obligations under this Agreement do not require the consent of any third party not previously obtained, and will not conflict with, or result in any violation of, or default under, any provision of any governing instrument applicable to it, or any agreement or other instrument to which it is a party or by which it or any of its properties are bound, or any provision of law, statute, rule or regulation, or any ruling, writ, order, injunction or decree of any court, administrative agency or governmental body applicable to it;

          (iii) all representations made by it in any subscription agreement, investor qualification questionnaire or other similar document relating to its purchase of Limited Partner interests are true, complete and correct as of the date it became a party hereto; and if the Limited Partner is a bank (as the term is used in the SBIC Act, at 15 U.S.C. § 682(b)), the total amount of such Limited Partner’s investments in SBICs, including such Limited Partner’s interest in the Partnership, does not exceed five percent (5%) of such Limited Partner’s capital and surplus;

          (iv) unless otherwise disclosed to the Partnership in writing, the Partner is a citizen or resident of the United States, an entity organized under the laws of the United States or a state within the United States or an entity engaged in a trade or business within the United States; and

          (v) unless otherwise disclosed to the Partnership in writing, the Partner is not subject to Title I of ERISA.

     (c)  Tax Information . Each Partner who has disclosed to the Partnership in writing that it is not a person described in Section 1.06(b)(iv), agrees to provide the Partnership with any information or documentation necessary to permit the Partnership to fulfill any tax withholding or other obligation relating to the Partner, including but not limited to any documentation necessary to establish the Partner’s eligibility for benefits under any applicable tax treaty.

Section 1.07 Notices With Respect to Representations by Limited Partners.

     (a) If any representation made by a Limited Partner in Section 1.06(b)(i), Section 1.06(b)(ii), or Section 1.06(b)(iii) ceases to be true, then the Limited Partner will promptly provide the Partnership with a correct separate written representation as provided in each such Section.

     (b) The Partnership will give SBA prompt notice of any corrected representation received from any Limited Partner under Section 1.07(a).

Section 1.08 Liability of Partners.

     (a) The General Partner does not have liability for the liabilities of the Partnership except to the extent required by the Act and the SBIC Act. The General Partner will not:

          (i) be obligated to restore by way of Capital Contribution or otherwise any deficits in the respective Capital Accounts of the Partners should such deficits occur, or

          (ii) have any greater obligation with respect to any Outstanding Leverage than is required by the SBIC Act or by SBA.

     (b) Except as otherwise provided under the Act and the SBIC Act, no Limited Partner will be liable for any loss, liability or expense whatsoever of the Partnership.

     (c) If a Limited Partner is required to return to the Partnership, for the benefit of creditors of the Partnership, amounts previously distributed to the Limited Partner, the obligation of the Limited Partner to return any such amount to the Partnership will be the obligation of the Limited Partner and not the obligation of the General Partner. No Limited Partner will be liable under this Agreement for the obligations under this Agreement of any other Partner.

     (d) Nothing in this Agreement limits any liability of any Partner under any agreement between the Partner and SBA.

Section 1.09 Repayment of Capital Contributions of Partners.

     Except as expressly provided in this Agreement, no specific time has been agreed upon for the repayment of the Capital Contributions of the Partners, and no Partner, or any successor-in-interest, shall have a right to withdraw any capital contributed to the Partnership.

Section 1.10 No Priorities of Limited Partners.

     Except as expressly provided in this Agreement or the SBIC Act, no Limited Partner shall have the right to demand or receive property other than cash in return for its Capital Contribution, nor shall any Limited Partner have priority over any other Partner either as to the return of its Capital Contribution or as to profits, losses or distributions.

ARTICLE 2.

Purpose and Powers

Section 2.01 Purpose and Powers.

     (a) The Partnership is being organized solely for the purpose of operating as a mezzanine investment fund. The Partnership has received from the SBA a license to operate as an SBIC under the SBIC Act. The Partnership shall (i) conduct only the activities described under Title III of the SBIC Act, (ii) have the powers and responsibilities, and be subject to the limitations, provided in the SBIC Act, and (iii) conduct all operations and take all actions in compliance with the SBIC Act.

     (b) Subject to Section 2.01(a), the Partnership may make, manage, own and supervise investments of every kind and character in conducting its business as a small business investment company.

     (c) Subject to the provisions of the SBIC Act, the Partnership has all powers necessary, suitable or convenient for the accomplishment of the purposes set forth in Section 2.01(a) and Section 2.01(b), alone or with others, as principal or agent, and can engage in any lawful act or activity for which limited partnerships may be organized under the Act.

Section 2.02 Restrictions on Powers.

     Notwithstanding any provision of Section 2.01(b) or Section 2.01(c), the Partnership will not:

          (i) lend any Assets of the Partnership to or guarantee any obligations of the General Partner, the Investment Adviser/Manager, or any director, officer, member, manager, partner, stockholder, employee or Affiliate of the General Partner or the Investment Adviser/Manager (excluding any Portfolio Company);

          (ii) allow any Assets of the Partnership to become commingled with the assets of the General Partner or the Investment Adviser/Manager, or any director, officer, member, manager, partner, stockholder, employee or Affiliate of the General Partner or the Investment Adviser/Manager;

          (iii) if the Partnership is an SBIC, invest at any time in Portfolio Securities if at the time of such investment the aggregate cost of (A) the investments of the Partnership in a Portfolio Company and its Affiliates plus (B) such additional investment would exceed: the greater of (x) twenty percent (20%) of the Partnership’s Regulatory Capital or (y) such other amount as the SBA shall permit in order to protect the Partnership’s investment;

          (iv) if the Partnership is an SBIC, invest at any time in Portfolio Securities issued by any company in which an SBIC is prohibited from investing by the SBIC Act;

          (v) borrow, guarantee the obligations of others or otherwise incur indebtedness if any such borrowings, guarantees or other indebtedness shall create Limited Partner liability, except as otherwise set forth in the SBIC Act or in an agreement with SBA in connection with issuance of Leverage; or

          (vi) if the Partnership is an SBIC, have outstanding any debt in an amount in excess of the maximum amount of debt permitted under the SBIC Act.

Section 2.03 ERISA Limitation.

     At any time that a Limited Partner is subject to Title I of ERISA and 25% or more in interest of all Limited Partners (as measured by their aggregate Capital Accounts) are “benefit plan investors” (within the meaning of Department of Labor Regulation § 2510.3-101(f)(2), 51 Fed. Reg. 41,282 (November 13, 1986) or any amendment or successor regulation), the Partnership will use its reasonable efforts to ensure that the Partnership qualifies as a “venture

capital operating company” (within the meaning of Department of Labor Regulation § 2510.3-101(d), 51 Fed. Reg. 41,281 (November 13, 1986) or any amendment or successor regulation). Subject to SBA approval if and to the extent required, the General Partner shall have the authority to take any action it deems necessary in order to implement this Section 2.03. Such authority shall include, but shall not be limited to, the authority to prevent any Limited Partner from acquiring or disposing of interests in the Partnership so as to prevent the Assets of the Partnership from being deemed to be assets of a “benefit plan investor,” whether by limiting equity interests of “benefit plan investors” so that their participation is not “significant” within the meaning of the regulations, or otherwise.

ARTICLE 3.

Management

Section 3.01 Authority of General Partner.

     (a) The management and operation of the Partnership and the formulation of investment policy is vested exclusively in the General Partner, whose sole purpose shall be to serve as the general partner of the Partnership and who shall have the rights and powers which may be possessed by a general partner under the Act, and such rights and powers as are otherwise conferred by law and are necessary, advisable or convenient to the discharge of its duties under this Agreement and to the management of the operations and affairs of the Partnership.

          (A) Pursuant to the powers vested in the General Partner pursuant to Section 3.01(a) of the Agreement and Section 59-403(c) of the Act, notwithstanding any other provision in this Agreement to the contrary, the General Partner hereby delegates the authority to manage the business and affairs of the Partnership to the Board of Directors of the Partnership. The Board of Directors will be selected annually by the affirmative vote of Partners of the Partnership, voting as a single class, holding Partnership Percentages aggregating in excess of fifty percent (50%) of the Partnership Percentages of all Partners. All members of the Board of Directors of the Partnership will also be directors of Triangle Capital Corporation. The initial directors of the Partnership are Garland S. Tucker (Chairman), Brent P.W. Burgess, Steven C. Lilly, Thomas M. Garrott, Ben Goldstein, Simon Rich, Sherwood H. Smith, Jr. and Mac Dunwoody, who comprise all the directors of Triangle Capital Corporation and of the General Partner and who have heretofore been represented to the SBA as holding those positions. At all times that the Partnership is a registrant under the Investment Company Act of 1940 (the “1940 Act”) and has in effect an election to be treated as a business development company under the 1940 Act, a majority of the Board of Directors (or such higher percentage as may be required by the 1940 Act) will be persons who are not “interested persons” of the Partnership or its Affiliates within the definition of that term provided by Section 2(a)(19) of the 1940 Act (or any successor provision). The Board of Directors will operate in accordance with the attached governance procedures, which are identical to Article III (Directors) and Article IV (Committees) of the Bylaws of Triangle Capital Corporation. Notwithstanding anything contained herein to the contrary, the following duties will remain vested in the General Partner: (i) the authority to bind the Partnership as provided in Section 3.01(b) of the Partnership Agreement, and (2) the authority to perform any action that the Act requires be performed by a general partner of a

limited partnership (and which may not be performed by a delegate of a general partner). Notwithstanding the foregoing, should the General Partner seek to amend this Agreement or take any additional substantive, non-ministerial action in the name of the Partnership, the General Partner shall obtain the prior approval of a majority of the Board of Directors. In addition, if the Board of Directors shall elect to amend this Agreement and any such amendment shall be approved by the SBA (to the extent so required), the General Partner shall execute such amendment. Members of the Board of Directors will be a “Designated Party” for purposes of the Agreement; provided, however, that the liability of any member of the Board of Directors to the Partnership will not be limited to the extent prohibited by the Investment Company Act of 1940.”

          (B) So long as the Board of Directors remains the Board of Directors of the Partnership and so long as the Partnership is licensed as an SBIC, the Board of Directors will comply with the requirements of the SBIC Act, including, without limitation, 13 C.F.R. § 107.160(a) and (b), as in effect from time to time.

     (b) The act of the General Partner in carrying on the business of the Partnership will bind the Partnership.

     (c) In the case of any General Partner other than a natural person, at any time that the Partnership is licensed as an SBIC, the General Partner will not allow any person to serve as a general partner, director, officer or manager of the General Partner, unless such person has been approved by SBA.

     (d) So long as the General Partner remains the general partner of the Partnership and so long as the Partnership either (i) has an SBIC license application pending or (ii) is licensed as an SBIC:

          (i) the General Partner will comply with the requirements of the SBIC Act, including, without limitation, 13 C.F.R. § 107.160(a) and (b), as in effect from time to time; and

          (ii) in the case of any General Partner other than a natural person, except as set forth in Section 3.01(d)(iii), it will devote all of its activities to the conduct of the business of the Partnership and will not engage actively in any other business, unless its engagement is related to and in furtherance of the affairs of the Partnership.

          (iii) The General Partner may, however:

               (A) subject to Section 3.04, act as the general partner or Investment Adviser/Manager for one or more other SBICs, and

               (B) receive, hold, manage and sell Assets received by it from the Partnership (or other SBIC for which it acts as general partner or Investment Adviser/Manager), or through the exercise or exchange of Assets received by it from the Partnership (or other SBIC for which it acts as general partner or Investment Adviser/Manager).

Section 3.02 Authority of the Limited Partners.

     The Limited Partners shall take no part in the control or management of the business or affairs of the Partnership, and the Limited Partners shall not have any authority to act for or on behalf of the Partnership or to vote on any matter relative to the Partnership and its affairs except as is specifically permitted by this Agreement. No Limited Partner that is subject to the Bank Holding Company Act of 1956, as amended, will have the right to vote on any matter for so long as such right to vote, in the opinion of counsel to such Limited Partner, would be inconsistent with the requirements of such act, or any rules or regulations promulgated thereunder. A Limited Partner or an employee, agent, member, manager, partner, director or officer of a Limited Partner also may be an employee, agent, member, manager, partner, director or officer of the Partnership, the General Partner or the Investment Adviser/Manager. For purposes of the Act, the existence of these relationships and acting in such capacities will not result in a Limited Partner’s being deemed to be participating in the control of the business of the Partnership or otherwise affect the liability under the Act of the Limited Partner or the person so acting.

Section 3.03 The Investment Adviser/Manager.

     (a) Subject to the SBIC Act, the General Partner may delegate any part of its authority to an Investment Adviser/Manager, including but not limited to entering into an agreement on behalf of the Partnership with an Investment Adviser/Manager for the provision of management services.

     (b) Any agreement delegating any part of the authority of the General Partner to an Investment Adviser/Manager will:

          (i) be in writing, executed by the General Partner on behalf of the Partnership and by the Investment Adviser/Manager,

          (ii) specify the authority so delegated, and

          (iii) expressly require that such delegated authority will be exercised by the Investment Adviser/Manager in conformity with the terms and conditions of such agreement, this Agreement and the SBIC Act.

     (c) Each agreement with an Investment Adviser/Manager, and any material amendment to any such agreement, is subject to the prior approval of SBA.

     (d) TCC is the initial Investment Adviser/Manager.

Section 3.04 Restrictions on Other Activities of the General Partner and its Affiliates.

     (a) Except as provided in the SBIC Act and as otherwise specifically provided in this Agreement, no provision of this Agreement will be construed to preclude any (i) Limited Partner, (ii) Investment Adviser/Manager, or (iii) Affiliate, general partner, member, manager or stockholder of any Partner or Investment Adviser/Manager, from engaging in any activity whatsoever or from receiving compensation therefor or profit from any such activity. Such activities may include, without limitation, (A) receiving compensation from issuers of securities

for investment banking services, (B) managing investments, (C) participating in investments, brokerage or consulting arrangements or (D) acting as an adviser to or participant in any corporation, partnership, limited liability company, trust or other business person.

     (b) Except as provided in the SBIC Act, the General Partner’s Affiliates, each for its own account or for others (other than any Affiliated Venture Capital Fund), may not purchase participations of any amount in Portfolio Companies so long as the General Partner is the general partner of the Partnership; provided, however, that, subject to the SBIC Act, the General Partner’s Affiliates each may make purchases and sales for its own account of publicly-held securities in the open market and may invest in or finance a Portfolio Company if the Partnership is securing or has previously secured its desired investment position in that company and the General Partner determines that such investment or financing would not materially and adversely affect the Partnership’s investment. Except as set forth in this Section 3.04, the General Partner’s Affiliates each may, subject to the SBIC Act, make other investments of every type and nature for itself or for the account of others without offering the Partnership a participation in such investments and without the Partnership or any Partner becoming entitled by virtue of this Agreement to any interest therein or to the profits or income derived therefrom. Subject to the limitations contained herein, all the foregoing shall be in the sole and absolute discretion of the General Partner and without liability to the Partnership or the Limited Partners.

Section 3.05 Management Compensation.

     (a) (i) As compensation (“ Management Compensation ”) for services rendered in the management of the Partnership, during the term of the Partnership, beginning on the Commencement Date, the Partnership will pay an annual management fee computed on a daily basis equal to the Management Fee Rate multiplied by the Management Fee Base, except as provided in paragraph (ii).

     (ii) If the Partnership does not meet the criteria for “activity” set forth in the SBIC Act (13 CFR 107.590) for two consecutive fiscal quarters, beginning on the first day of the next fiscal quarter, the Partnership shall pay an annual management fee equal to the Management Fee Rate multiplied by the cost of loans and investments for all portfolio companies in which the Partnership has not written off its investment and which are going concerns. Following any fiscal quarter in which the Partnership meets the criteria for “activity”, the Partnership shall resume paying Management Compensation in accordance with paragraph (a)(i).

     (b) Notwithstanding anything contained herein to the contrary, if the Management Compensation is payable to an Investment Adviser/Manager, the Partnership will not pay any Management Compensation to the Investor Adviser/Manager until such time that the SEC has granted exemptive relief with respect to the payment of such compensation or the Investment Advisor/Manager otherwise determines that such compensation is permissible under the Investment Company Act (the “ Management Compensation Determination Time ”). Prior to the Management Compensation Determination Time, Management Compensation shall accrue, and such accrued Management Compensation shall be payable in full by the Partnership to the Investment Advisor/Manager at the Management Compensation Determination Time.

     (c) The Management Compensation will be paid by the Partnership to TCC or, at TCC’s direction, in whole or in part to an Investment Adviser/Manager.

     (d) As long as the Partnership remains an SBIC, it will not pay any Management Compensation with respect to any fiscal year in excess of the amount of Management Compensation approved by SBA.

Section 3.06 Payment of Management Compensation.

     (a) Management Compensation will be paid in advance on the first day of each fiscal quarter or a portion thereof in cash. If the Management Compensation payable for a fiscal quarter or other period calculated as provided in Section 3.05 is greater than the amount paid at the beginning of that fiscal quarter or period, then the additional Management Compensation owed shall be paid at the beginning of the next fiscal quarter. If the Management Compensation payable for a fiscal quarter or other period calculated as provided in Section 3.05 is less than the amount paid at the beginning of that fiscal quarter or period, then Management Compensation payable for the following fiscal quarter or period shall be reduced by the amount of the overpayment or, if the Partnership will be wound up and liquidated by the end of such fiscal quarter or other period, the overpayment shall be repaid by the recipient to the Partnership.

     (b) Within sixty (60) days after (i) the end of each fiscal year of the Partnership, (ii) the date of its dissolution and (iii) the date a person ceases to