Exhibit 10.3
RESTRICTED STOCK
AGREEMENT
FOR MCG
EMPLOYEE
UNDER 2008 RETENTION
PROGRAM
This Restricted Stock Agreement
(“Agreement”) is effective as of the
[ ] day of
[ ],
2008, (the “Award Date”) by and
between MCG Capital Corporation, a Delaware corporation (the
“Company”), and
[ ]
(“Employee”).
WHEREAS , in accordance with (i) an order of the
Securities and Exchange Commission (the “SEC”) dated
April 4, 2006 (Release No. 27280) granting certain
exemptive relief to the Company regarding the issuance of
restricted stock under and in accordance with the Investment
Company Act of 1940, as amended, (ii) the approvals of the
Board on each of May 12, 2006 and February 14, 2008 and
(iii) the approvals of Company’s Stockholders on each of
June 12, 2006 and April 23, 2008, the Company has adopted
and amended, as the case may be, a Restricted Stock Plan (as
defined below) that governs the issuances of shares of restricted
common stock, $0.01 par value per share, of the Company (the
“Common Stock”), from time to time to employees of the
Company; and
WHEREAS , on September 22, 2006, the Company filed
with the SEC a registration statement on Form S-8 to register the
shares of Common Stock that are authorized for issuance under the
Restricted Stock Plan; and
WHEREAS , on August 6, 2008, the Board approved the
MCG Capital Corporation 2008 Retention Program (the “2008
Retention Program”), which program was designed to provide
specified eligible employees with certain incentives related to
their past service and continuing employment with the Company;
and
WHEREAS , subject to and in accordance with the terms
and conditions of this Agreement, the Restricted Stock Plan and the
2008 Retention Program, the Company desires to award to Employee
shares of Common Stock (such shares, the “Shares”) in
connection with and as consideration for Employee’s various
services to and for the benefit of the Company (such grant, the
“Award”); and
WHEREAS , it is a condition precedent to the
Company’s making of the Award that Employee enter into this
Agreement with the Company concerning the rights and restrictions
of the Shares subject to the Award and any additional agreements
described herein that the Company may require.
NOW, THEREFORE
, in consideration of the mutual
covenants herein contained and for other good and valuable
consideration (the receipt and adequacy of which are hereby
acknowledged), and intending to be legally bound hereby, the
parties hereto hereby agree as follows:
1.1 Awarded Shares . The
Company hereby awards to Employee, effective as of the Award Date,
the number of Shares set forth on Annex 1. The Shares are subject
to certain restrictions and other terms and conditions set forth
herein, including without limitation, the forfeiture restrictions
set forth in Article IV hereof. The certificates representing the
Shares that are subject to forfeiture restrictions under Article IV
may, at the Company’s election, be held in escrow by the
Corporate Secretary of the Company as provided in, and in
accordance with, Article V.
1.2 Lapse of Restrictions .
Subject to Sections 4.1, 4.2, 4.3 and 4.4 hereof, the forfeiture
restrictions set forth herein shall lapse with respect to the
Shares in accordance with the Schedule set forth on Annex
1.
1.3 Restrictive Legends
.
(a) In order to reflect the
restrictions on disposition of the Shares for Affiliates of the
Company, as defined under the Securities Act, any stock
certificates representing the Shares will be endorsed with the
following restrictive legend at any time while Employee is an
Affiliate of the Company:
“THE REGISTERED OWNER OF THE
SECURITIES REPRESENTED BY THIS CERTIFICATE IS AN AFFILIATE, AS
DEFINED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
“ACT”), OF THE COMPANY AND MAY NOT TRANSFER THESE
SECURITIES EXCEPT (A) PURSUANT TO AN EXEMPTION FROM
REGISTRATION UNDER THE ACT, INCLUDING RULE 144 UNDER THE ACT, OR
(B) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
ACT.”
(b) Upon the lapse of the applicable
forfeiture restrictions, at Employee’s request, the Company
shall issue replacement certificates representing such Shares
without the legend set forth in clause (a) of this
Section 1.3 if Employee is not then an Affiliate.
1.4 Definitions . Whenever
used in this Agreement, the following terms shall have the meaning
specified below unless the context clearly indicates to the
contrary.
“ Affiliate ”
means, with respect to any Person, any other Person that, directly
or indirectly through one or more intermediaries, controls, or is
controlled by, or is under common control with, such
Person.
“ Beneficial Ownership
” or “ Beneficially Owned ” means
ownership within the meaning of Rule 13d-3 promulgated under the
Exchange Act.
“ Board ” means
the Board of Directors of the Company.
“ Business Day ”
means is any day that is not a Saturday, Sunday or a day on which
banks in the Commonwealth of Virginia are required or authorized by
law to be closed.
“ Cause ” means
(a) the Employee’s conviction of, or the entering of a
guilty plea or plea of “no contest” with respect to, a
felony or any crime involving dishonesty or moral turpitude or
(b) the Employee (i) has continually failed to
substantially perform his or her duties and obligations with the
Company (other than a failure resulting from the Employee’s
incapacity due to physical or mental illness), (ii) has failed
to comply with a lawful instruction of the Company so long as the
instruction is consistent with the scope and responsibilities of
the Employee’s position or (iii) has willfully engaged
in conduct which is demonstrably and materially injurious to the
Company, monetarily or otherwise, which, in the case of (i) or
(ii) above, if it is the first instance of such conduct or
noncompliance, is not cured within thirty (30) days after a
written notice of demand for substantial
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performance or compliance has been delivered to
the Employee specifying the manner in which the Employee has failed
to substantially perform or comply ( and , if it is any
instance of such conduct or noncompliance after the first instance
thereof and opportunity to cure, then no such opportunity to cure
need be provided with respect to such conduct). No act, nor failure
to act, on the Employee’s part, shall be considered “
willful ” unless he or she has acted or failed
to act, with an absence of good faith and without a reasonable
belief that his or her action or failure to act was in the best
interest of the Company.
“ Change in
Capitalization ” means any increase or reduction in the
number of shares of Common Stock, or any change in the shares of
Common Stock or exchange of shares of Common Stock for a different
number or kind of shares or other securities of the Company, by
reason of a reclassification, recapitalization, merger,
consolidation, reorganization, spin-off, split-up, issuance of
warrants or rights or debentures, stock dividend, stock split or
reverse stock split, cash dividend, property dividend, combination
or exchange of shares, change in corporate structure or
substantially similar event.
“ Change in Control
” means the occurrence of any of the following
events:
(a) An acquisition in one or more
transactions (other than directly from the Company) of any voting
securities of the Company by any Person (as defined below)
immediately after which such Person has Beneficial Ownership of
fifty percent (50%) or more of the combined voting power of
the Company’s then outstanding voting securities; provided,
however, in determining whether a Change in Control has occurred,
voting securities which are acquired in a “Non-Control
Acquisition” (as hereinafter defined) shall not
constitute an acquisition which would cause a Change in Control. A
“Non-Control Acquisition” shall mean an
acquisition by (i) an employee benefit plan (or a trust
forming a part thereof) maintained by (A) the Company or
(B) any corporation or other Person of which a majority of its
voting power or its voting equity securities or equity interest is
owned, directly or indirectly, by the Company (a
“Subsidiary” ), (ii) the Company or its
Subsidiaries, or (iii) any Person in connection with a
“Non-Control Transaction” (as hereinafter
defined); or
(b) The individuals who, as of the
date hereof, are members of the Board (the “Incumbent
Board” ), cease for any reason to constitute at least a
majority of the members of the Board or, following a Merger (as
defined below), the board of directors of the ultimate Parent
Corporation (as defined below); provided, however, that if the
election, or nomination for election by the Company’s common
stockholders, of any new director was approved by a vote of at
least a majority of the Incumbent Board (or, with respect to the
directors who are not “ interested persons ” as
defined in the Investment Company Act of 1940, by a majority of the
directors who are not “ interested persons ”
serving on the Incumbent Board), such new director shall, for
purposes of this Agreement, be considered as a member of the
Incumbent Board; provided further, however, that no individual
shall be considered a member of the Incumbent Board if such
individual initially assumed office as a result of an actual or
threatened solicitation of proxies or consents by or on behalf of a
Person other than the Board (a “Proxy Contest” )
including by reason of any agreement intended to avoid or settle
any Proxy Contest; or
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(c) The consummation of:
(i) A merger, consolidation or
reorganization involving the Company (a “ Merger
”) or an indirect or direct subsidiary of the Company, or to
which securities of the Company are issued, unless
:
(A) the stockholders of the Company,
immediately before a Merger, own, directly or indirectly,
immediately following the Merger, more than fifty percent
(50%) of the combined voting power of the outstanding voting
securities of (x) the Surviving Corporation, if there is no
Parent Corporation, or (y) the Parent Corporation, or if there
is one or more Parent Corporations, the ultimate Parent
Corporation; and
(B) the individuals who were members
of the Incumbent Board immediately prior to the execution of the
agreement providing for a Merger constitute at least a majority of
the members of the board of directors of (x) the Surviving
Corporation or (y) the ultimate Parent Corporation, if the
ultimate Parent Corporation, directly or indirectly, owns fifty
percent (50%) or more of the combined voting power of the then
outstanding voting securities of the Surviving Corporation;
and
(C) no Person other than
(a) the Company, (b) any Subsidiary, (c) any
employee benefit plan (or any trust forming a part thereof)
maintained by the Company, the Surviving Corporation, any
Subsidiary, or the ultimate Parent Corporation, or (d) any
Person who, together with its Affiliates (as defined below),
immediately prior to a Merger had Beneficial Ownership of fifty
percent (50%) or more of the then outstanding voting
securities, owns, together with its Affiliates, Beneficial
Ownership of fifty percent (50%) or more of the combined
voting power of the then outstanding voting securities of
(x) the Surviving Corporation or (y) the ultimate Parent
Corporation;
(D) Each transaction described in
clauses (c)(i)(A) through (C) above shall also herein be
referred to as a “Non-Control Transaction” ;
or
(ii) The direct or indirect sale or
other disposition of all or substantially all of the assets of the
Company to any Person (other than (A) a transfer to a
Subsidiary, (B) under conditions that would constitute a
Non-Control Transaction with the disposition of assets being
regarded as a Merger for this purpose, or (C) the distribution
to the Company’s stockholders of the stock of a Subsidiary or
any other assets).
Notwithstanding the foregoing, a
Change in Control shall not be deemed to occur solely because any
Person (the “Subject Person” ) acquired
Beneficial Ownership of more than the permitted amount of the then
outstanding voting securities as a result of the acquisition of
voting securities by the Company which, by reducing the number of
voting securities then outstanding, increases the proportional
number of shares Beneficially Owned by the Subject Persons,
provided that if a Change in Control would occur (but for the
operation of this sentence) as a result of the acquisition of
voting securities by the Company, and after such share acquisition
by the Company, the Subject Person becomes the Beneficial Owner of
any additional voting securities which increases the percentage of
the then outstanding voting securities Beneficially Owned by the
Subject Person, then a Change in Control shall occur.
“ Code ” means
the Internal Revenue Code of 1
