Exhibit 99.i.5
Executives
FORM OF RESTRICTED STOCK AGREEMENT
----------------------------------
This Agreement is made this ___ day of ____________, 2001, (the "Award
Date") by and between MCG Capital Corporation, a Delaware corporation (the
"Company"), and the undersigned employee of the Company ("Employee").
WHEREAS, the Employee is the holder of certain options (the "Options")
to purchase shares of the Company's Class A common stock, par value $0.01 per
share (the "Class A Common Stock"), granted pursuant to the MCG Credit 1998
Stock Option Plan (the "Plan"),
WHEREAS, the Employee and the Company desire to cancel such Options and
the Company desires to terminate the Plan,
WHEREAS, in consideration therefor, the Company desires to award (the
"Award") Employee shares of common stock, par value $0.01 per share of the
Company (the "Common Stock") in three tiers ("Tier 1," "Tier 2" and "Tier 3";
the awarded shares with respect to the Tier 1 Award, the "Tier 1 Awarded
Shares," the awarded shares with respect to the Tier 2 Award, the "Tier 2
Awarded Shares," the awarded shares with respect to the Tier 3 Award, the "Tier
3 Awarded Shares," and, together, the "Awarded Shares") subject to the
restrictions and other terms and conditions set forth herein;
WHEREAS, the Employee has previously advised the Company of its
intention to make an election under Section 83(b) of the Code with respect to
all or a portion of his/her Tier 1 Shares, Tier 2 Shares, and/or Tier 3 Shares
(as defined herein);
WHEREAS, in connection with the Employee's election under Section 83(b)
of the Code, the Company will make cash payments to the Employee (the "Tier 1
Cash Payment," the "Tier 2 Cash Payment," and "Tier 3 Cash Payment;" and
together, the "Cash Payments");
WHEREAS, in connection with the Employee's election under Section 83(b)
of the Code, the Company desires to sell to Employee, and Employee desires to
purchase (the "Purchase"), from the Company shares of Common Stock (the "Tier 1
Purchased Shares," "Tier 2 Purchased Shares" and the "Tier 3 Purchased Shares,"
and together, the "Purchased Shares;" and together, with the Awarded Shares, the
"Shares;" and the Tier 1 Awarded Shares and Tier 1 Purchased Shares, together,
the "Tier 1 Shares;" and the Tier 2 Awarded Shares and Tier 2 Purchased Shares,
together, the "Tier 2 Shares;" and the Tier 3 Awarded Shares and Tier 3
Purchased Shares, together, the "Tier 3 Shares"); and
1
WHEREAS, it is a condition precedent to the Company's making of such
Award and Cash Payments and making available such Purchase that the Employee
enter into this Agreement with the Company concerning the rights and
restrictions of the shares of Common Stock subject to the Award and the
Purchases and any additional agreements described herein that the Company may
require.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained and for other good and valuable consideration, the
receipt and adequacy of which are hereby acknowledged, the parties hereto,
intending to be legally bound, agree as follows:
I. CANCELLATION OF OPTIONS AND OWNERSHIP OF SHARES
1.1 Options. The Company hereby cancels the Options to purchase the
-------
Class A Common Stock granted pursuant to the Plan. The Employee hereby agrees
that the Options are cancelled and are null and void.
1.2 Shares and Cash Payments.
------------------------
(a) Awarded Shares. The Company hereby awards to the Employee the
--------------
Awarded Shares set forth on Annex 1.
(b) Cash Payments. Within 30 days of the date hereof, the Company
-------------
will make Cash Payments to the Employee in the amounts set forth on Annex 1. The
amount of the Cash Payments is intended to equal the estimated taxes
attributable to the Employee's receipt of the Shares with respect to which
Employee will make an election under Section 83(b) of the Code and the Cash
Payments.
(c) Purchased Shares. The Company hereby sells to the Employee and
----------------
Employee hereby purchases from the Company, the Purchased Shares set forth on
Annex 1 for the price per Share set forth in Annex 1, subject to adjustment as
set forth in paragraph 7 of the Note (as defined below). In consideration for
the Purchased Shares, the Employee agrees concurrently as a condition to such
purchase (i) to execute and deliver a promissory note (the "Note") for the
principal amount set forth on Annex 1, in the form attached hereto as Exhibit B,
the payment of which is being secured by a pledge of the Shares and additional
shares of Common Stock as set forth in the Pledge Agreement (as defined herein),
(ii) to deliver a check payable to the Company in the amount of the par value of
the Purchased Shares, and (iii) to execute and deliver a Stock Pledge Agreement
(the "Pledge Agreement") in the form attached hereto as Exhibit C. The Shares
shall be subject to the 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 subject to the
forfeiture restrictions under Article IV shall be held in escrow by the
Secretary of the Company as provided in, and in accordance with, Article V.
Employee hereby agrees to
2
deliver to the Secretary of the Company ten (10) originals of a duly executed
blank Assignment Separate from Certificate (in the form attached hereto as
Exhibit A).
1.3 Lapse of Restrictions. Subject to Sections 4.1, 4.2 and 4.3
---------------------
hereof, the forfeiture restrictions set forth herein shall lapse with respect to
the Tier 1, Tier 2 and Tier 3 Shares in accordance with the Tier 1 Schedule,
Tier 2 Schedule and Tier 3 Schedule, as appropriate, set forth on Annex 1 (any
portion of the Tier 1, Tier 2 and Tier 3 Shares with respect to which the
restrictions have not lapsed in accordance with the appropriate Schedule, the
"Forfeitable Shares").
1.4 Restricted Securities. Employee hereby confirms that (i)
---------------------
Employee is acquiring the Shares for its own account, for investment and not
with a view to the distribution thereof within the meaning of the Securities Act
of 1933, as amended (the "1933 Act") and (ii) Employee has been informed that
the Shares are restricted securities under the 1933 Act, and as such have not
been and will not be registered under the 1933 Act or any state securities laws
by reason of their issuance by the Company in a transaction exempt from the
registration requirements thereof and the Shares may not be resold or
transferred unless the Shares are first registered under the federal securities
laws and applicable state securities laws or unless an exemption from such
registration is available. Accordingly, Employee hereby acknowledges that
Employee is prepared to hold the Shares for an indefinite period. Employee
agrees that Employee has been given access to information about the Company, the
Company's financial condition and the Shares. Employee has had an opportunity to
ask questions and receive answers from the Company regarding the terms and
conditions of the Shares, the business of the Company and the merits and risks
of investing in the Shares and to obtain such additional information which the
Company possesses or can acquire without unreasonable effort or expense. Prior
to Employee's acquisition of the Shares, Employee acquired sufficient
information about the Company to reach an informed and knowledgeable decision to
acquire the Shares. Employee has such knowledge and experience in financial and
business matters so as to make him capable of utilizing said information to
evaluate the risks of the prospective investment and to make an informed
investment decision. Employee is able to bear the economic risk of his
investment in the Shares.
1.5 Restrictive Legends. In order to reflect the restrictions on
-------------------
disposition of the Shares and the forfeiture restrictions, the stock
certificates representing the Shares will be endorsed with the following
restrictive legends:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE MAY NOT BE TRANSFERRED,
SOLD, ASSIGNED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF (A "TRANSFER")
EXCEPT IN ACCORDANCE WITH THE PROVISIONS OF A RESTRICTED STOCK AGREEMENT DATED
AS OF _____ __, 2001, AS IT MAY BE AMENDED FROM TIME TO TIME. PURSUANT TO SUCH
AGREEMENT, THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN
TRANSFER RESTRICTIONS AND
3
FORFEITURE RESTRICTIONS, AND ANY TRANSFEREE OF THESE SECURITIES TAKES SUBJECT TO
SUCH TRANSFER RESTRICTIONS AND FORFEITURE RESTRICTIONS. COPIES OF THE RESTRICTED
STOCK AGREEMENT ARE ON FILE WITH THE COMPANY.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 (THE "ACT") OR STATE SECURITIES LAWS AND NO
TRANSFER OF THESE SECURITIES MAY BE MADE EXCEPT (A) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE ACT, OR (B) PURSUANT TO AN EXEMPTION THEREFROM
WITH RESPECT TO WHICH THE COMPANY MAY, UPON REQUEST, REQUIRE A SATISFACTORY
OPINION OF COUNSEL FOR THE HOLDER THAT SUCH TRANSFER IS EXEMPT FROM THE
REQUIREMENTS OF THE ACT."
1.6 Definitions. Whenever the following terms are used in this
-----------
Agreement, they 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.
-----
"Cause"
-----
(a) in the case of an Employee whose employment with the Company or
a Subsidiary is, as of the date of this Agreement, subject to the terms of an
employment or other agreement between such Employee and the Company or
Subsidiary, which employment or other agreement includes a definition of
"Cause," the term "Cause" as used in this Agreement shall have the meaning set
forth in such employment or other agreement in effect as of the date of this
Agreement (without regard to the term of such employment or other agreement);
(b) in all other cases the term "Cause" means (i) failure to perform
reasonably assigned duties, (ii) dishonesty or willful misconduct in the
performance of an Employee's duties, (iii) an Employee's engaging in a
transaction in connection with the performance of such Employee's duties to the
Company or any of its Subsidiaries which transaction is adverse to the interests
of the Company or any of its Subsidiaries and which is engaged in for personal
profit to the Employee, or (iv) willful violation of any law, rule
4
or regulation (other than traffic violations or similar offenses) in connection
with the performance of an Employee's duties.
"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
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 (for purposes of this
definition, a "Subsidiary"), (ii) the Company or its Subsidiaries, or (iii) any
Person in connection with a "Non-Control Transaction" (as hereinafter defined);
(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, the board of
directors of the ultimate Parent Corporation; 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
5
(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 corporation resulting from the Merger (the "Surviving
Corporation") if fifty percent (50%) or more of the combined voting power of the
then outstanding voting securities of the Surviving Corporation is not
Beneficially Owned, directly or indirectly, by another Person or group of
Persons (a "Parent Corporation"), or (y) if there is one or more Parent
Corporations, the ultimate Parent Corporation,
(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 (1) the Company, (2) any Subsidiary,
(3) any employee benefit plan (or any trust forming a part thereof) maintained
by the Company, the Surviving Corporation, or any Subsidiary, or the ultimate
Parent Corporation, or (4) any Person who, together with its Affiliates,
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.
Each transaction described in clauses (A) through (C) above
shall herein be referred to as a "Non-Control Transaction".
(ii) A complete liquidation or dissolution of the Company (other
than where assets of the Company are transferred to or remain with a Subsidiary
or Subsidiaries of the Company).
(iii) 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).
6
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 1986, as amended.
----
"Committee" means the Compensation Committee of the Board, or
---------
another committee of the Board appointed by the Board to administer the
Agreement.
"Dividends" means all cash dividends (including Shares of Common
--------
Stock acquired through any dividend reinvestment program with respect to regular
cash dividends), except for liquidating dividends.
"Fair Market Value" on any date means the closing price per share
-----------------
of Common Stock on such date and, when used with reference to shares of Common
Stock for any period shall mean the average of the daily closing prices per
share of Common Stock for such period. If the shares of Common Stock are listed
or admitted to trading on a national securities exchange, the closing price
shall be the last sale price, regular way, or, in case no such sale takes place
on such day, the average of the closing bid and asked prices, regular way, in
either case as reported in the principal consolidated transaction reporting
system with respect to securities listed or admitted to trading on the New York
Stock Exchange or, if the shares of Common Stock are not listed or admitted to
trading on the New York Stock Exchange, as reported in the principal
consolidated transaction reporting system with respect to securities listed on
the principal national securities exchange on which the shares of Common Stock
are listed or admitted to trading or, if the shares of Common Stock are not so
listed on any national securities exchange, as reported in the transaction
reporting system applicable to securities designated as a "national market
system security" or NASDAQ. If the shares of Common Stock are not so listed,
admitted to trading or designated, Fair Market Value shall be as determined in
good faith by the Board based on an opinion of an independent investment banking
firm with an established national reputation with respect to the valuation of
securities.
"Initial Public Offering" means the consummation of the first
-----------------------
public offering of Shares pursuant to a registration statement (other than on
Form X-0, Xxxx X-0,
7
or Form N-14 or a successor form thereto) filed with, and declared effective by,
the Securities and Exchange Commission.
"Measurement Date" shall mean the date of the completion of the
----------------
Initial Public Offering and such date shall be set forth on Annex 1.
"Non-Forfeitable Shares" means any Shares with respect to which
----------------------
the restrictions have lapsed in accordance with the Schedules set forth in Annex
1.
"Owner" includes the Employee and all subsequent holders of the
-----
Shares who own such Shares pursuant to a Transfer from the Employee in
accordance with Section 3.1, Section 3.2 and Section 3.3 hereof.
"Person" means "person" as such term is used for purposes of
------
Section 13(d) or 14(d) of the Exchange Act, including without limitation, any
individual, corporation, limited liability company, partnership, trust,
unincorporated organization, government or any agency or political subdivision
thereof or any other entity or any group of Persons.
"Plan" means the MCG Credit Corporation 1998 Stock Option Plan.
----
"Schedule" shall refer to the Schedules set forth on Annex 1.
--------
"Subsidiary" means any corporation which is a subsidiary
----------
corporation (within the meaning of Section 424(f) of the Code) with respect to
the Company, except that for the purposes of the definition of a "Change in
Control," Subsidiary is defined in such definition.
"Termination of Employment"
-------------------------
(a) in the case of an Employee whose employment with the Company
or a Subsidiary is, as of the date of this Agreement, subject to the terms of an
employment or other agreement between such Employee and the Company or
Subsidiary, which employment or other agreement includes a definition of
"Termination of Employment," the term "Termination of Employment" as used this
Agreement shall have the meaning set forth in such employment or other agreement
in effect as of the date of this Agreement (without regard to the term of such
employment or other agreement);
(b) in all other cases the term "Termination of Employment" means
the time when the employee-employer relationship between the Employee and the
Company or any Subsidiary is terminated for any reason, with or without Cause,
including, but not by way of limitation, a termination by resignation,
discharge, death, disability or retirement; but excluding (i) terminations where
there is a simultaneous reemployment or continuing employment of an Employee by
the Company or any Subsidiary, (ii) at the discretion of the Committee,
terminations which result in a temporary severance of the
8
employee-employer relationship, and (iii) at the discretion of the Committee,
terminations which are followed by the simultaneous establishment of a
consulting relationship by the Company or a Subsidiary with the former employee.
"Transfer" means a transfer, sale, assignment, pledge,
--------
hypothecation or other disposition of any Shares.
II. SPECIAL PROVISIONS
2.1 Stockholder Rights. Subject to the forfeiture restrictions under
------------------
this Agreement, Employee (or any successor in interest) shall have all the
rights of a stockholder (including voting and dividend rights) with respect to
the Shares, including the Shares held in escrow under Article V, but subject,
however, to the transfer restrictions of Article III.
2.2 Section 83(b) Election and Withholding of Taxes. Employee
-----------------------------------------------
understands that all the Shares are considered subject to a substantial risk of
forfeiture under Section 83 of the Code and that under Section 83(a) of the
Code, upon the lapse of any forfeiture restrictions applicable to the Shares,
Employee is required to include as compensation income the difference, if any,
between the price paid for the Shares and their Fair Market Value on the date on
which any such forfeiture restrictions applicable to such Shares lapse. Employee
understands that he or she may, at the time of the execution and delivery of
this Agreement, elect to include as compensation income an amount equal to the
difference, if any, between the price paid for the Shares, and the Fair Market
Value of the Shares at the time the Shares are acquired hereunder rather than
when and as such Shares cease to be subject to such forfeiture restrictions, by
filing an election under Section 83(b) of the Code, substantially in the form of
Exhibit D (with respect to the Tier 1 Shares), Exhibit E (with respect to the
Tier 2 Shares) and Exhibit F (with respect to the Tier 3 Shares) hereto, with
the Company and with the Internal Revenue Service within thirty (30) days of the
Award Date hereunder. If Employee makes an election under Section 83(b) of the
Code with respect to all or a portion of its Tier 1 Shares, Tier 2 Shares and/or
Tier 3 Shares, Employee shall make a cash payment to the Company equal to the
estimated taxes attributable to the Employee's receipt of the Cash Payments and
such Shares within thirty (30) days after the Award Date. The Employee agrees
that the Company is authorized to use (and will use) all or a portion of the
Cash Payments to satisfy the Employee's obligation to pay the estimated taxes
under this Section 2.2 attributable to the Employee's receipt of the Cash
Payments and the Shares to which Employee will make an election under Section
83(b) of the Code. If the Employee does not make an election under Section 83(b)
of the Code with respect to all or a portion of its Tier 1 Shares, Tier 2 Shares
and/or Tier 3 Shares and is entitled to receive Shares under this Agreement, the
Employee acknowledges that it shall not receive a Cash Payment and shall pay the
estimated taxes attributable to such Shares for which an election under
9
Section 83(b) of the Code is not made to the Company prior to the issuance of
such Shares.
2.3 Market Stand-Off.
----------------
(a) The Employee agrees to deliver a lock-up letter in the form
previously distributed to the Employee by the Company in connection with the
Initial Public Offering concurrently with the execution of this Agreement. After
the Initial Public Offering, to the extent requested in writing by the Company
in connection with, or the managing underwriter, if any, of, any registration
statement filed under the 1933 Act (other than an S-8 or X-0, X-00 or successor
or applicable, equivalent forms) or in connection with any subsequent exchange
offer or conversion relating to the securities registered under such
registration statement, each Employee agrees not to sell, transfer or otherwise
dispose of, including any sale pursuant to Rule 144 under the 1933 Act, any
Shares during the time period reasonably requested by the Company or the
managing underwriter, not to exceed 180 days (such period, the "Employee
Lockup"); provided that such agreement shall include the exceptions set forth in
Section 2.7(a) of the Second Amended and Restated Registration Rights Agreement
(the "Registration Rights Agreement") among the Company and certain of its
stockholders to be entered into prior to the Initial Public Offering, as amended
from time to time, which includes a provision allowing the Employee to dispose
of Shares in order to apply the proceeds thereof to repay interest or principal
related to indebtedness due to the Company. This Section 2.3 shall only remain
in effect for the one (1) year period immediately following the effective date
of the Company's Initial Public Offering and shall thereafter terminate and
cease to be in force or effect and, in any event, no Employee Lockup shall
extend beyond such one year period; provided, however, that this shall not
affect the Employee's obligations under Section 2.7(a) of the Registration
Rights Agreement if the Employee is a signatory under that Agreement.
(b) In the event of any stock dividend, stock split,
recapitalization, or other change affecting the Company's outstanding Common
Stock effected without receipt of consideration, then any new, substituted, or
additional securities distributed with respect to the Shares shall be
immediately subject to the provisions of this Section 2.3 to the same extent the
Shares are at such time covered by such provisions.
2.4 Stop Transfer. In order to enforce the provisions of Section 2.3,
-------------
the Company may impose stop-transfer instructions with respect to the Shares
until the end of the applicable stand-off period.
III. TRANSFER RESTRICTIONS
3.1 Restrictions on Transfer of Forfeitable Shares. The Employee shall
----------------------------------------------
not transfer, assign, encumber, or otherwise dispose of all or any part of the
Forfeitable Shares, other than to the Company. Subject to Section 3.3 below,
such restrictions on
10
transfer of the Forfeitable Shares shall not apply with respect to Transfers
of the type described in Section 3.2(a) below (whether or not an Initial Public
Offering by the Company has occurred) provided the Employee receives the
Company's written consent prior to such Transfer; provided that if the
Forfeitable Shares are subject to the Pledge Agreement, such Shares may not be
transferred under any circumstances without the consent of the Company or as
otherwise permitted under the Pledge Agreement.
3.2 Restrictions on Transfer of Non-Forfeitable Shares. The Employee
--------------------------------------------------
shall not transfer, assign, encumber, or otherwise dispose of all or any part of
the Non-Forfeitable Shares, except in compliance with the provisions of Sections
3.2(a) through (c) and Section 3.3 below; provided that if the Non-Forfeitable
Shares are subject to the Pledge Agreement, such Shares may not be transferred
under any circumstances without the consent of the Company or as permitted under
the Pledge Agreement.
(a) The following Transfers of Non-Forfeitable Shares shall be
permitted:
(i) a Transfer made by the Employee to the Company; and
(ii) a Transfer made to any of the following "Permitted
Transferees":
(A) upon the death of the Employee to his executors,
administrators, testamentary trustees, legatees or beneficiaries (the
"Employee's Estate") or a Transfer to the executors, administrators,
testamentary trustees, legatees or beneficiaries of a person who has become a
holder of Shares in accordance with the terms of this Agreement;
(B) a Transfer made to a trust or custodianship the
beneficiaries of which include only the Employee, his spouse, his life partner,
his descendants, including adopted children, his ancestors, his siblings, and
spouses and life partners of his descendants, ancestors and siblings (an
"Employee's Trust"); or
(C) a Transfer made to a partnership, limited liability
company, corporation or other entity all of the owners of which are included in
subparagraph B above (an "Employee's Entity"); or
(D) a Transfer to an organization which is exempt from
federal income taxation under Section 501(c)(3) of the Code;
(b) Immediately prior to any Transfer of Shares to an Employee's
Trust or an Employee's Entity, the Employee shall provide the Company with a
copy of the instruments creating the Employee's Trust or Employee's Entity and
with the identity of the beneficiaries, partners, members or shareholders of the
Employee's Trust or Employee's Entity, as the case may be. The Employee shall
notify the Company prior to
11
any change in the identity of any beneficiary, partner, member or shareholder of
the Employee's Trust or Employee's Entity, as the case may be.
(c) The restrictions on Transfer set forth in this Section 3.2
shall terminate upon an Initial Public Offering by the Company.
3.3 Restrictions on Transfer of Shares; Transferee Obligations.
----------------------------------------------------------
(a) No Transfer of Shares, whether or not permitted by Sections
3.1 or 3.2 hereof, shall be made or recorded on the books of the Company, and
any such Transfer shall be void and of no effect, unless:
(i) Such Transfer of the Shares is made pursuant to an
effective registration statement under the 1933 Act and applicable state
securities laws or pursuant to an exemption therefrom with respect to which the
Company may, upon request, require a satisfactory opinion of counsel retained by
the Employee (which counsel shall be acceptable to the Company) to the effect
that such Transfer is exempt from the provisions of Section 5 of the 1933 Act
and applicable state securities laws; and
(ii) Each person (other than the Company) to whom the Shares
(whether Forfeitable Shares or Non-Forfeitable Shares) are transferred by means
of one of the Transfers specified in Sections 3.1 and 3.2 above shall, as a
condition precedent to the validity of such Transfer, agree in writing to the
Company to be bound by the terms and provisions of this Agreement and
acknowledge that any such transferred Shares shall be subject to the terms and
provisions of this Agreement, including without limitation (1) the restrictions
on transfer contained in Sections 3.1, 3.2, and 3.3 as applicable, (2) the
forfeiture restrictions contained in Section 4, (3) the market stand-off
provisions of Section 2.3 above, and (4) the escrow provisions pursuant to
Article V, to the same extent as if such Shares continued to be owned by the
Employee.
(b) No Transfer of Shares in violation of this Agreement shall be
made or recorded on the books of the Company and any such Transfer shall be void
and of no effect.
IV. FORFEITURE OF FORFEITABLE SHARES
4.1 Forfeiture of Forfeitable Shares. Subject to Section 4.2, and
--------------------------------
unless the Committee provides otherwise in its sole discretion, the following
provisions shall apply in the event of the Employee's Termination of Employment:
(a) With respect to the Tier 1 Shares, Tier 2 Shares and Tier 3
Shares, if the Employee's employment with the Company or a Subsidiary is subject
to the terms of an employment or other agreement between such Employee and the
Company or Subsidiary, such agreement shall govern the forfeiture of Forfeitable
Shares if such
12
agreement contains such provisions and this Section 4.1 shall have no effect in
respect of such Employee.
(b) In all other cases, with respect to the Tier 1 and Tier 2
Shares, upon a Termination of Employment by the Company for any reason
(including, without limitation, for Cause) or by the Employee for any reason
(including death or disability), then, for purposes of determining the Tier 1
and Tier 2 Non-Forfeitable Shares, the Employee will be considered to remain an
Employee through the end of the applicable calendar year quarter in which the
Termination of Employment occurs. The Employee will forfeit any Tier 1 and Tier
2 Shares that are Forfeitable Shares at the end of the applicable calendar year
quarter in which the Termination of Employment occurs.
(c) In all other cases, with respect to the Tier 3 Shares, if the
Employee's Termination of Employment is
(i) by the Company for any reason other than Cause or by the
Employee because of his death or disability, then the Tier 3 Shares allocable to
the Performance Periods (as defined in the Tier 3 Schedule on Annex 1) ending
before the beginning of the Performance Period in which the Termination of
Employment occurs plus the pro rata portion (determined on a quarterly basis),
of the Tier 3 Shares allocable to the Performance Period in which the
Termination of Employment occurs as if the Termination of Employment occurred on
the last day of the calendar year quarter in which the Termination of Employment
occurs shall become non-forfeitable to the same extent as if the Employee
remained employed by the Company through September 30, 2005; provided, however,
that the True-Up Total Return (as defined in the Tier 3 Schedule on Annex 1) is
inapplicable to the period in which the Termination of Employment occurs and all
subsequent periods; and
(ii) by the Company for Cause or by the Employee other than
for death or disability, the Tier 3 Shares shall be forfeited.
4.2 Change in Control. Upon a Change in Control, the forfeiture
-----------------
restrictions shall immediately lapse with respect to (A) the Tier 1 and Tier 2
Forfeitable Shares, (B) the Tier 3 Shares as to which a Performance Based
Criteria Test (as defined on the Tier 3 Schedule on Annex 1) has been met prior
to the date of the Change in Control transaction (such Shares in this clause B
hereinafter called the "CIC Shares" and any Tier 3 Shares which are not CIC
Shares are hereinafter referred to as the "Non-CIC Shares"), and (C) (x) if the
Change in Control is described in clause (a) or (c) of the definition of Change
in Control, the greater of (i) one-third of the Non-CIC Shares so long as the
consideration (in whatever form) paid (in whatever manner) to the Company's
shareholders in the Change of Control transaction is at least $22 per share of
Common Stock or (ii) the Non-CIC Shares for which a Performance Based Criteria
Test would be deemed to be satisfied after taking into account the consideration
paid to the Company's shareholders in the Change in Control transaction; or (y)
if the Change in Control is described in clause (b) of the definition of Change
in Control, (i) one-third of the Non-CIC Shares if none of the individuals who
are members of the Incumbent Board and are affiliated with Institutional
Investors vote for the Change in Control described in clause (b) of the
definition of Change in Control or (ii) all the Non-CIC Shares if any of the
individuals who are members of the Incumbent Board and are affiliated with
Institutional Investors vote for the Change in Control described in clause (b)
of the definition of Change in Control. "Institutional Investors" means GS
Capital Partners II, L.P., Vestar Capital Partners IV, L.P., or Xxxxx Private
Equity Partners LLC. The Company shall assign this Agreement and its rights,
together with its obligations, hereunder in connection with a Change in Control.
13
4.3 Additional Shares or Substituted Securities. In the event of a
-------------------------------------------
Change in Capitalization, any new, substituted or additional securities or other
property (excluding Dividends) which is by reason of any such Change in
Capitalization distributed with respect to the Shares shall be immediately
subject to the restrictions set forth herein, but only to the extent the Shares
are at the time covered by such restrictions. Appropriate adjustments to reflect
the distribution of such securities or property shall be made to the number of
Shares hereunder in order to reflect the effect of any such transaction upon the
Company's capital structure.
V. ESCROW
5.1 Deposit. Upon issuance, the certificates for the Shares shall be
-------
deposited in escrow with the Secretary of the Company to be held in accordance
with the provisions of this Article V. Each deposited certificate shall be
accompanied by ten original duly executed Assignment Separate from Certificates
in the form of Exhibit A. The deposited certificates, together with any other
assets or securities from time to time deposited with the Company pursuant to
the requirements of this Agreement, shall remain in escrow until such time or
times as the certificates (or other assets and securities) are to be released or
otherwise surrendered for cancellation in accordance with Section 5.3 below.
Upon delivery of the certificates (or other assets and securities) to the
Company, the Owner shall be issued an instrument of deposit acknowledging the
number of Shares (or other assets and securities) delivered in escrow to the
Secretary of the Company.
5.2 Recapitalization. All Dividends shall be paid directly to the Owner
----------------
and shall not be held in escrow. However, in the event of a Change in
Capitalization, any new, substituted or additional securities or other property
(excluding Dividends) which is by reason of such transaction distributed with
respect to the Shares shall be immediately delivered to the Secretary of the
Company to be held in escrow under this Article V, but only to the extent the
Shares are at the time subject to the escrow requirements of Section 5.1 above.
5.3 Release/Surrender. The Shares, together with any other assets or
-----------------
securities held in escrow hereunder, shall be subject to the following terms and
conditions relating to their release from escrow or their surrender to the
Company for cancellation:
(a) The certificates for Shares (excluding Dividends) shall be
released from escrow and delivered to the Owner as the restrictions on the
Forfeitable Shares lapse in accordance with the Schedule or as otherwise set
forth herein, upon the request of the Owner.
(b) In the event Forfeitable Shares are forfeited hereunder, the
certificates representing such forfeited Shares shall be surrendered to the
Company.
14
(c) Notwithstanding anything to the contrary contained in this
Section 5.3, all Shares (or other assets or securities) released from escrow in
accordance with the provisions of Section 5.3(a) hereof shall nevertheless
remain subject to the market stand-off provisions of Section 2.3 above, and the
transfer restrictions set forth in Sections 3.2 and 3.3 until such provisions
terminate in accordance with their terms.
VI. GENERAL PROVISIONS
6.1 No Employment or Service Contract. Nothing in this Agreement shall
---------------------------------
confer upon the Employee any right to continue in the service of the Company (or
any subsidiary corporation of the Company employing or retaining Employee) for
any period of time or interfere with or restrict in any way the rights of the
Company (or any subsidiary corporation of the Company employing or retaining
Employee) or the Employee, which rights are hereby expressly reserved by each,
to terminate the employee status of Employee at any time for any reason
whatsoever, with or without Cause, subject to the provisions of any employment
agreement between the Company and the Employee.
6.2 Notices. Any notice required in connection with this Agreement
-------
shall be given in writing and shall be deemed to have been given when delivered
personally to the recipient, sent to the recipient by reputable overnight
courier service (charges prepaid) or telecopied to the recipient at the address
indicated on Annex 1 or at such other address as such party may designate by ten
(10) days' advance written notice under this Section 6.2 to all other parties to
this Agreement.
6.3 No Waiver. No waiver of any breach or condition of this Agreement
---------
shall be deemed to be a waiver of any other or subsequent breach or condition,
whether of like or different nature.
6.4 Amendment. This Agreement may be modified, amended, suspended or
---------
terminated, and terms or conditions may be waived, but only by a written
instrument executed by the parties hereto.
6.5 Employee Undertaking. Employee hereby agrees to take whatever
--------------------
additional action and execute whatever additional documents the Company may, in
its judgment, deem necessary or advisable in order to carry out or effect one or
more of the obligations or restrictions imposed on either the Employee or the
Shares pursuant to the express provisions of this Agreement.
6.6 Agreement Is Entire Contract. This Agreement constitutes the entire
----------------------------
agreement between the parties hereto with regard to the subject matter hereof.
6.7 Governing Law. This Agreement shall be governed by, and construed
-------------
in accordance with, the laws of the State of Delaware, as such laws are applied
to contracts
15
entered into and performed in such State, without regard to conflict of laws
principles thereof.
6.8 Counterparts. This Agreement may be executed in counterparts, each
------------
of which shall be deemed to be an original, but all of which, when taken
together, shall constitute one and the same instrument.
6.9 Successors and Assigns. The provisions of this Agreement shall
---------------------
inure to the benefit of, and be binding upon, the Company and its successors and
assigns and the Employee and the Employee's legal representatives, heirs,
legatees, distributees, assigns and transferees by operation of law, whether or
not any such person shall have become a party to this Agreement and have agreed
in writing to join herein and be bound by the terms and conditions hereof.
6.10 Rescission. This Agreement, the Note and the Pledge Agreement
----------
shall be rescinded and shall be null and void if the Company's Initial Public
Offering does not occur within twenty (20) days of the Award Date. Upon the
rescission of this Agreement, the Shares shall be automatically cancelled and
surrendered to the Company.
6.11 Consistent Tax Reporting. Employee agrees that by making the
------------------------
election under Section 83(b) of the Code with respect to some or all of the
Shares, Employee will be treated as the owner of such Shares as of the Award
Date. Employee further agrees that it will report the Cash Payments as taxable
compensation income in the year of the Award and that it will treat the
Purchased Shares as if those Shares were purchased for the Note.
6.12 Severability. The provisions of this Agreement shall be deemed
------------
severable and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability of the other provisions hereof.
* * *
16
IN WITNESS WHEREOF, the Parties have executed this Agreement on the day
and year first indicated above.
THE COMPANY:
MCG CAPITAL CORPORATION
By:
--------------------------------
Name:
Title:
THE EMPLOYEE:
--------------------------------
Name:
17
Annex 1
MCG CAPITAL CORPORATION
RESTRICTED STOCK AGREEMENT
Name: _____________________________________
Address: _____________________________________
Principal Amount of Note: ---------
Par Value of Purchased Shares: ---------
Tier 1 Shares:
-------------
(a) Number of Tier 1 Awarded Shares:
---------
(b) Number of Tier 1 Purchased Shares:
---------
Tier 1 Shares:
---------
(c) Tier 1 Cash Payment:*
---------
Tier 2 Shares:
-------------
(a) Number of Tier 2 Awarded Shares:
---------
(b) Number of Tier 2 Purchased Shares:
---------
Tier 2 Shares:
---------
(c) Tier 2 Cash Payment:*
---------
Tier 3 Shares:
-------------
(a) Number of Tier 3 Awarded Shares:
---------
(b) Number of Tier 3 Purchased Shares:
---------
--------
* The exact amount of the Cash Payments is calculated at a price of $____ per
share of Common Stock. The exact amount of the Cash Payments may differ
to the extent that the closing price per share of Closing Stock on the date
the Initial Public Offering occurs is not $____ per share of Common Stock.
1
Tier 3 Shares:
---------
(c) Tier 3 Cash Payment:*
---------
Measurement Date:
---------
Purchase Price per Purchased Share: ---------
Tier 1 Schedule:
---------------
All Tier 1 Shares covered hereby shall remain subject to the
restrictions and other terms and conditions set forth in this Agreement during
the period measured from the Award Date and ending on the Measurement Date. From
and after the Measurement Date, subject to the restrictions and other terms and
conditions set forth in this Agreement, the restrictions set forth in Sections
3.1, 3.3 and 4.1 shall lapse with respect to one-twelfth (1/12) of the Tier 1
Shares (i) on the Measurement Date (if on such date the Employee is then
employed by the Company), and (ii) on the last day of each of the eleven (11)
calendar year quarters beginning Xxxxx 00, 0000, (xx on each such date the
Employee is then employed by the Company). Thus, such restrictions with respect
to all Tier 1 Shares will lapse on September 30, 2004.
Notwithstanding anything herein to the contrary, the lapsing of
forfeiture restrictions with respect to the Tier 1 Shares shall occur first with
respect to the Tier 1 Awarded Shares and thereafter with respect to the Tier 1
Purchased Shares.
Tier 2 Schedule:
---------------
All Tier 2 Shares covered hereby shall remain subject to the
restrictions and other terms and conditions set forth in this Agreement during
the period measured from the Award Date and ending on the Measurement Date. From
and after the Measurement Date, subject to the restrictions and other terms and
conditions set forth in this Agreement, the restrictions set forth in Sections
3.1, 3.3. and 4.1 shall lapse with respect to one-sixteenth (1/16) of the Tier 2
Shares (i) on the Measurement Date (if on such date the Employee is then
employed by the Company), and (ii) on the last day of each of the fifteen (15)
calendar year quarters beginning Xxxxx 00, 0000, (xx on each such date the
Employee is then employed by the Company). Thus, such restrictions with respect
to all Tier 2 Shares will lapse on September 30, 2005.
Notwithstanding anything herein to the contrary, the lapsing of
forfeiture restrictions with respect to the Tier 2 Shares shall occur first with
respect to the Tier 2 Awarded Shares and thereafter with respect to the Tier 2
Purchased Shares.
2
Tier 3 Schedule:
---------------
Subject to the terms and conditions of this Agreement, the restrictions set
forth in Sections 3.1, 3.3 and 4.1 of this Agreement will lapse with respect to
the Tier 3 Shares on September 30, 2005 with respect to the number of Tier 3
Shares set forth below, provided that the Employee continues to be employed by
the Company on September 30, 2005 and provided, further, that such restrictions
will lapse with respect to one-quarter (1/4) of the Tier 3 Shares for each of
four (4) performance periods starting with the period from the date of the
completion of the Initial Public Offering to December 31, 2002, and continuing
thereafter with each of the three (3) consecutive twelve (12) month periods
beginning October 1, 2002, (each a "Performance Period") if (i) the specified
"Total Return" set forth below for each such Performance Period has been
achieved and (ii) the average Total Return for the then-current Performance
Period and all historical Performance Periods is equal to or greater than 10%
(the "Minimum Average Total Return"). If the Total Return and Minimum Average
Total Return are not met in a particular Performance Period, the restrictions
set forth in Sections 3.1, 3.3 and 4.1 shall lapse with respect to the Tier 3
Shares allocated to that Performance Period if the average Total Return for the
then-current Performance Period and all historical Performance Periods is
greater than 20% (the "True-Up Average Total Return"; for purposes of this
Agreement, a "Performance Based Criteria Test" shall be defined as (A) the Total
Return and the Minimum Average Total Return or (B) the True-Up Average Total
Return). Moreover, if at the end of any of the four Performance Periods the
Minimum Average Total Return is at least 10% and also results in the Minimum
Average Total Return for each of the prior Performance Periods to be 10%, the
restrictions set forth in Sections 3.1, 3.3 and 4.1 shall lapse with respect to
the total Tier 3 Shares allocated to all prior Performance Periods for which the
Total Return is satisfied but for which the Minimum Average Total Return is not
satisfied. Notwithstanding the foregoing, the restrictions set forth in Sections
3.1, 3.3 and 4.1 in all restricted stock agreements entered into by the Company
shall lapse with respect to all Tier 3 Shares outstanding under all such
restricted stock agreements on September 30, 2005, unless the Committee
determines in its sole discretion based on factors it deems relevant that all
Company employees are required to forfeit a specified number or all of the Tier
3 Shares outstanding under all such restricted stock agreements allocated to a
Performance Period in which the Total Return, the Minimum Average Total Return
and the True-Up Average Total Return, as applicable, were not met.
Performance Tier 3 Shares Total Return Minimum Average True-Up Average Total
----------- ------------- ------------ ---------------- ---------------------
Period Total Return Return
------ ------------ ------
1 (IPO closing date - 25% of Tier 3
12/31/02) Shares 20% -- --
2 (10/1/02 - 9/30/03) 25% of Tier 3 15% 10% 20%
Shares
3 (10/1/03 - 9/30/04) 25% of Tier 3 15% 10% 20%
Shares
4 (10/1/04 - 9/30/05) 25% of Tier 3 15% 10% 20%
Shares
3
The Total Return in respect of one share of Common Stock is calculated
assuming that an investor owns one share of Common Stock on the first day of
each Performance Period, receives dividends in cash through the Performance
Period in respect of one share of Common Stock (assuming no re-investment for
purposes of this calculation), and sells that share of Common Stock on the last
day of the Performance Period at a price that is the average of the Fair Market
Value on the last ten (10) trading days of the applicable Performance Period,
including the last trading day of the applicable Performance Period. The Total
Return in respect of one share of Common Stock will be calculated with an
assumed starting point on the first day of each Performance Period equal to the
higher of $22 or the average of the Fair Market Value on the last ten (10)
trading days of the prior Performance Period.
4
EXHIBIT A
Assignment Separate from Certificate
FOR VALUE RECEIVED and subject to the terms and conditions set forth in
Section 1.2 of that certain Restricted Stock Agreement by and between the
undersigned ("Employee") and MCG Capital Corporation, a Delaware corporation
(the "Company"), Employee does hereby assign and transfer to the Company
____________ (_____) shares of the Common Stock, par value of $0.01 per share,
of the Company standing in Employee's name on the books of said Company and
represented by Certificate No. ___, which is delivered herewith, and Employee
does hereby irrevocably constitute and appoint the principals of the Company as
Employee's Attorney to transfer the said stock on the books of the Company with
full power of substitution in the premises.
Dated as of ___________________, 2001
Signature ____________________
[Name]
Signature ____________________
Print Name
1
EXHIBIT D
ELECTION TO INCLUDE TIER 1 SHARES IN GROSS
INCOME PURSUANT TO SECTION 83(b) OF THE
INTERNAL REVENUE CODE
The undersigned has been allocated shares of Common Stock, par value
$.01 per share (the "property"), of MCG Capital Corporation, a Delaware
corporation (the "Company"), on September ___, 2001 pursuant to a Restricted
Stock Agreement dated as of that date between the Company and the undersigned.
The property is subject to a substantial risk of forfeiture and is
non-transferable as described below. The undersigned desires to make an election
to have the property taxed under the provision of the Internal Revenue Code of
1986, as amended (the "Code") ss. 83(b) at the time he is allocated the
property.
Therefore, pursuant to Code ss.83(b) and Treasury Regulation ss.1.83-2
promulgated thereunder, the undersigned hereby makes an election, with respect
to the property (described below), to report as taxable income for calendar year
2001 the excess (if any) of the property's fair market value on the date the
property is allocated over the purchase price thereof.
The following information is supplied in accordance with Treasury
Regulation ss. 1.83-2(e).
(1) The person who performed the services is:
Name:
Address: c/o MCG Capital Corporation
0000 Xxxxxx Xxxxxxxxx
Xxxxx 000
Xxxxxxxxx, XX 00000
Taxpayer Ident. No.:
Taxable Year: Calendar Year 2001
(2) The property with respect to which the election is being made is
_____ shares of the common stock of the Company.
(3) The property was transferred on ________, 2001. The taxable year
to which this election relates is calendar year 2001.
(4) The property is subject to forfeiture until restrictions lapse.
Subject to restrictions under federal and state securities laws,
the property as to which the
1
forfeiture restrictions have lapsed is freely transferable but
property as to which the forfeiture restrictions have not lapsed
may not be transferred (except for certain limited, specified
instances). Restrictions with respect to one-twelfth (1/12) of
the shares of common stock subject to forfeiture lapse on the
date of the completion of the Company's initial public offering.
Restrictions with respect to one-eleventh (1/11) of the remaining
shares of common stock subject to forfeiture lapse on the last
day of each of the eleven (11) consecutive calendar year quarters
beginning March 31, 2002.
(5) The fair market value at the time of transfer (determined without
regard to any restriction other than a restriction which by its
terms will never lapse) of the property with respect to which
this election is being made is $______ per share.
(6) The amount paid for __________ shares is $0 per share. The amount
paid for ________ shares is $_____ per share.
(7) A copy of this statement was furnished to the Company, for whom
Employee rendered the service underlying the transfer of
property.
(8) This statement is executed as of: ________, 2001.
---------------------------
Name:
2
EXHIBIT E
ELECTION TO INCLUDE TIER 2 SHARES IN GROSS
INCOME PURSUANT TO SECTION 83(b) OF THE
INTERNAL REVENUE CODE
The undersigned has been allocated shares of Common Stock, par value
$.01 per share (the "property"), of MCG Capital Corporation, a Delaware
corporation (the "Company"), on September ___, 2001 pursuant to a Restricted
Stock Agreement dated as of that date between the Company and the undersigned.
The property is subject to a substantial risk of forfeiture and is
non-transferable as described below. The undersigned desires to make an election
to have the property taxed under the provision of the Internal Revenue Code of
1986, as amended (the "Code") ss. 83(b) at the time he is allocated the
property.
Therefore, pursuant to Code ss.83(b) and Treasury Regulation ss.1.83-2
promulgated thereunder, the undersigned hereby makes an election, with respect
to the property (described below), to report as taxable income for calendar year
2001 the excess (if any) of the property's fair market value on the date the
property is allocated over the purchase price thereof.
The following information is supplied in accordance with Treasury
Regulation ss. 1.83-2(e).
(1) The person who performed the services is:
Name:
Address: c/o MCG Capital Corporation
0000 Xxxxxx Xxxxxxxxx
Xxxxx 000
Xxxxxxxxx, XX 00000
Taxpayer Ident. No.:
Taxable Year: Calendar Year 2001
(2) The property with respect to which the election is being
made is _____ shares of the common stock of the Company.
(3) The property was transferred on ________, 2001. The taxable
year to which this election relates is calendar year 2001.
(4) The property is subject to forfeiture until restrictions
lapse. Subject to restrictions under federal and state
securities laws, the property as to which the
1
forfeiture restrictions have lapsed is freely transferable
but property as to which the forfeiture restrictions have
not lapsed may not be transferred (except for certain
limited, specified instances). Restrictions with respect to
one-sixteenth (1/16) of the shares of common stock subject
to forfeiture lapse on the date of the completion of the
Company's initial public offering. Restrictions with respect
to one-fifteenth (1/15) of the remaining shares of common
stock subject to forfeiture lapse on the last day of each of
the fifteen (15) consecutive calendar year quarters
beginning March 31, 2002.
(5) The fair market value at the time of transfer (determined
without regard to any restriction other than a restriction
which by its terms will never lapse) of the property with
respect to which this election is being made is $______ per
share.
(6) The amount paid for ____ shares is $_____ per share. The
amount paid for ____ Shares is $0 per share.
(7) A copy of this statement was furnished to the Company, for
whom Employee rendered the service underlying the transfer
of property.
(8) This statement is executed as of: ________, 2001.
---------------------------
Name:
2
EXHIBIT F
ELECTION TO INCLUDE TIER 3 SHARES IN GROSS
INCOME PURSUANT TO SECTION 83(b) OF THE
INTERNAL REVENUE CODE
The undersigned has been allocated shares of Common Stock, par value
$.01 per share (the "property"), of MCG Capital Corporation, a Delaware
corporation (the "Company"), on September ___, 2001 pursuant to a Restricted
Stock Agreement dated as of that date between the Company and the undersigned.
The property is subject to a substantial risk of forfeiture and is
non-transferable as described below. The undersigned desires to make an election
to have the property taxed under the provision of the Internal Revenue Code of
1986, as amended (the "Code") ss. 83(b) at the time he is allocated the
property.
Therefore, pursuant to Code ss.83(b) and Treasury Regulation ss.1.83-2
promulgated thereunder, the undersigned hereby makes an election, with respect
to the property (described below), to report as taxable income for calendar year
2001 the excess (if any) of the property's fair market value on the date the
property is allocated over the purchase price thereof.
The following information is supplied in accordance with Treasury
Regulation ss. 1.83-2(e).
(1) The person who performed the services is:
Name:
Address: c/o MCG Capital Corporation
0000 Xxxxxx Xxxxxxxxx
Xxxxx 000
Xxxxxxxxx, XX 00000
Taxpayer Ident. No.:
Taxable Year: Calendar Year 2001
(2) The property with respect to which the election is being
made is _____ shares of the common stock of the Company.
(3) The property was transferred on ________, 2001. The taxable
year to which this election relates is calendar year 2001.
(4) The property is subject to forfeiture until restrictions
lapse. Following the Company's initial public offering,
subject to restrictions under federal and state
1
securities laws, the property as to which the forfeiture
restrictions have lapsed is freely transferable but property
as to which the forfeiture restrictions have not lapsed may
not be transferred (except for certain limited, specified
instances). In addition, prior to the Company's initial
public offering, property may not be transferred (subject to
certain limited, specified instances) whether or not the
forfeiture restrictions have lapsed. Restrictions with
respect to the shares will lapse on September 30, 2005,
provided that certain performance targets are met; provided,
however, if the specified performance targets are not met,
the forfeiture restrictions with respect to all such shares
will lapse on September 30, 2005, unless determined
otherwise.
(5) The fair market value at the time of transfer (determined
without regard to any restriction other than a restriction
which by its terms will never lapse) of the property with
respect to which this election is being made is $______ per
share.
(6) The amount paid for _______ shares is $______ per share. The
amount paid for _______ shares is $0 per share.
(7) A copy of this statement was furnished to the Company, for
whom Employee rendered the service underlying the transfer
of property.
(8) This statement is executed as of: ________, 2001.
---------------------------
Name:
2
