MAIN STREET CAPITAL CORPORATION
2008 EQUITY INCENTIVE PLAN
(A) General Purpose. The Plan has been established to advance the interests of Main
Street Capital Corporation (the Company) by providing for the grant of Awards to Participants. At
all times during such periods as the Company qualifies or is intended to qualify as a business
development company under the 1940 Act, the terms of the Plan shall be construed so as to conform
to the stock-based compensation requirements applicable to business development companies under
the 1940 Act. An Award or related transaction will be deemed to be permitted under the 1940 Act if
permitted by any exemptive or no-action relief granted by the Commission or its staff.
(B) Available Awards. The purpose of the Plan is to provide a means by which eligible
recipients of Awards may be given an opportunity to benefit from increases in the value of the
Companys Stock through the granting of Restricted Stock, Incentive Stock Options, Non-statutory
Stock Options, Dividend Equivalent Rights, Other Stock-Based Awards or Performance Awards.
(C) Eligible Participants. All key Employees and all Employee Directors are eligible
to be granted Awards by the Board under the Plan; provided that, no person shall be granted Awards
of Restricted Stock unless such person is an Employee of the Company or an Employee of a
wholly-owned subsidiary of the Company.
(A) 1940 Act means the Investment Company Act of 1940, as amended, and the rules and
regulations promulgated thereunder.
(B) Affiliate means any corporation or other entity that stands in a relationship to the
Company that would result in the Company and such corporation or other entity being treated as one
employer under Section 414(b) or Section 414(c) of the Code, except that in determining eligibility
for the grant of an Option by reason of service for an Affiliate, Sections 414(b) and 414(c) of the
Code shall be applied by substituting at least 50% for at least 80% under Section 1563(a)(1),
(2) and (3) of the Code and Treas. Regs. § 1.414(c)-2. The Company may at any time by amendment
provide that different ownership thresholds (consistent with Section 409A) apply. Notwithstanding
the foregoing provisions of this definition, except as otherwise determined by the Board, a
corporation or other entity shall be treated as an Affiliate only if its employees would be treated
as employees of the Company for purposes of the rules promulgated under the Securities Act of 1933,
as amended, with respect to the use of Form S-8.
(C) Award means an award of Restricted Stock, Incentive Stock Options, Non-statutory Stock
Options, Dividend Equivalent Rights, Other Stock-Based Awards or Performance Awards granted
pursuant to the Plan.
(D) Board means the Board of Directors of the Company.
(E) Cash Award means an award denominated in cash.
(F) Code means the Internal Revenue Code of 1986, as amended and in effect, or any successor
statute as from time to time in effect. Any reference to a provision of the Code shall be deemed to
include a reference to any applicable guidance (as determined by the Board) with respect to such
(G) Commission means the Securities and Exchange Commission.
(H) Committee means a committee of two or more members of the Board appointed by the Board
in accordance with Section 3(C).
(I) Company means Main Street Capital Corporation, a Maryland corporation.
(J) Continuous Service means the Participants uninterrupted service with the Company or an
Affiliate, whether as an Employee or Employee Director.
(K) Covered Transaction means any of (i) a consolidation, merger, stock sale or similar
transaction or series of related transactions in which the Company is not the surviving corporation
or which results in the acquisition of all or substantially all of the Companys then outstanding
common stock by a single person or entity or by a group of persons and/or entities acting in
concert, (ii) a sale or transfer of all or substantially all the Companys assets, (iii) a
dissolution or liquidation of the Company or (iv) following such time as the Company has a class of
equity securities listed on a national securities exchange or quoted on an inter-dealer quotation
system, a change in the membership of the Board for any reason such that the individuals who, as of
the Effective Date, constitute the Board of Directors of the Company (the Continuing Directors)
cease for any reason to constitute at least a majority of the Board (a Board Change); provided,
however, that any individual becoming a director after the Effective Date whose election or
nomination for election by the Companys shareholders was approved by a vote of at least a majority
of the Continuing Directors will be considered as though such individual were a Continuing
Director, but excluding for this purpose any such individual whose initial assumption of office
occurs as a result of either an actual or threatened election contest (as such terms are used in
Rule 14a-11 of Regulation 14A promulgated under the Securities Exchange Act of 1934, as amended) or
other actual or threatened solicitation of proxies or consents by or on behalf of any person or
entity other than the Board. Where a Covered Transaction involves a tender offer that is reasonably
expected to be followed by a merger described in clause (i) (as determined by the Board), the
Covered Transaction shall be deemed to have occurred upon consummation of the tender offer.
(L) Dividend Equivalent Rights has the meaning set forth in Section 13.
(M) Effective Date has the meaning set forth in Section 16.
(N) Employee means any person employed by the Company or an Affiliate.
(O) Employee Director means a member of the Board of Directors of the Company who is also an
Employee of the Company.
(P) Family Member means any child, stepchild, grandchild, parent, stepparent, grandparent,
spouse, former spouse, sibling, niece, nephew, mother-in-law, father-in-law, son-in-law,
daughter-in-law, brother-in-law, or sister-in-law, including adoptive relationships, any person
sharing the Participants household (other than a tenant or employee), a trust in which these
persons have more than fifty percent of the beneficial interest, a foundation in which these
persons (or the Participant) control the management of assets, and any other entity in which these
persons (or the Participant) own more than fifty percent of the voting interests.
(Q) Incentive Stock Option means an Option intended to qualify as an incentive stock option
within the meaning of Section 422 of the Code and the regulations promulgated thereunder.
(R) Non-Employee Director Plan means the 2008 Non-Employee Director Restricted Stock Plan,
as from time to time amended and in effect.
(S) Non-statutory Stock Option means an Option that is not an Incentive Stock Option.
(T) Option means an Incentive Stock Option or a Non-statutory Stock Option granted pursuant
to the Plan.
(U) Other Stock-Based Award means an Award described in Section 9 of this Plan that is not
covered by Section 7 or 8.
(V) Participant means a person to whom an Award is granted pursuant to the Plan.
(W) Performance Award means an Award made pursuant to this Plan that is subject to the
attainment of one or more performance goals.
(X) Performance Goal means a standard established by the Committee to determine in whole or
in part whether a Qualified Performance Award shall be earned.
(Y) Permitted Transferee means a Family Member of a Participant to whom an Award has been
transferred by gift.
(Z) Plan means this 2008 Equity Incentive Plan, as from time to time amended and in effect.
(AA) Qualified Performance Award means a Performance Award made to a Participant who is an
Employee that is intended to qualify as qualified performance-based compensation under Section
162(m) of the Code, as described in Section 10(B) of the Plan.
(BB) Restricted Stock means an Award of Stock for so long as the Stock remains subject to
restrictions requiring that it be forfeited to the Company if specified conditions are not
(CC) Securities Act means the Securities Act of 1933, as amended.
(DD) Stock means the common stock of the Company, par value $.01 per share.
(A) Administration By Board. The Board shall administer the Plan unless and until it
delegates administration to a Committee, as provided in Section 3(C).
(B) Powers of the Board. The Board shall have the power, subject to the express
provisions of the Plan and applicable law:
To determine from time to time which of the persons eligible under the Plan shall be
granted Awards; when and how each Award shall be granted and documented; what type or
combination of types of Awards shall be granted; the provisions of each Award granted,
including the time or times when a person shall be permitted to exercise an Award; and the
number of shares of Stock with respect to which an Award shall be granted to each such
To construe and interpret the Plan and Awards granted under it, and to establish, amend
and revoke rules and regulations for its administration. The Board, in the exercise of this
power, may correct any defect, omission or inconsistency in the Plan or in any Award
documentation, in such manner and to such extent as it shall deem necessary or expedient to
make the Plan fully effective.
To amend the Plan or an Award as provided in Section 14.
To terminate or suspend the Plan as provided in Section 15.
Generally, to exercise such powers and to perform such acts as the Board deems
necessary or expedient to promote the best interests of the Company and that are not in
conflict with the provisions of the Plan.
(C) Delegation to Committee. The Board may delegate the administration of the Plan to
a Committee or Committees composed of not less than two members of the Board, each of whom shall be
(i) a Non-Employee Director for purposes of Exchange Act Section 16 and Rule 16b-3 thereunder,
(ii) an outside director for purposes of Section 162(m) and the regulations promulgated under the
Code, and each of whom shall be, subject to any applicable transitional rules for newly public
issuers, independent within the meaning of the listing standards of the Nasdaq stock market, and
the term Committee shall apply to any persons to whom such authority has been delegated; provided
that a required majority, as defined in Section 57(o) of the 1940 Act, must approve each issuance
of Awards and Dividend Equivalent Rights in accordance with Section 61(a)(3)(A)(iv) of the 1940
Act. If administration is delegated to a Committee, the Committee shall have, in connection with
the administration of the Plan, the powers theretofore possessed by the Board, including the power to delegate to a subcommittee
any of the administrative powers the Committee is authorized to exercise (and references in this
Plan to the Board, other than the Board reference at the end of this sentence and the Board
references in the last sentence of this subsection (c), shall thereafter be to the Committee or
subcommittee), subject, however, to such resolutions, not inconsistent with the provisions of the
Plan, as may be adopted from time to time by the Board. The Board may abolish the Committee at any
time and revest in the Board the administration of the Plan, unless such actions are prohibited by
the condition of exemptive relief obtained from the Commission.
(D) Effect of the Boards Decision. Determinations, interpretations and constructions
made by the Board in good faith shall not be subject to review by any person and shall be final,
binding and conclusive on all persons.
4. AWARD AGREEMENTS.
All Awards granted under the Plan will be evidenced by an agreement. The agreement
documenting the Award shall contain such terms and conditions as the Board shall deem advisable.
Agreements evidencing Awards made to different participants or at different times need not contain
similar provisions. In the case of any discrepancy between the terms of the Plan and the terms of
any Award agreement, the Plan provisions shall control.
5. SHARES SUBJECT TO THE PLAN; CERTAIN LIMITS.
(A) Share Reserve. The maximum aggregate number of shares of Stock that may be issued
under the Plan pursuant to grants of Restricted Stock or Other Stock-Based Awards or the exercise
of Options is two million (2,000,000) shares.
(B) Reversion of Shares to the Share Reserve. If any Award shall for any reason
expire or otherwise terminate, in whole or in part, the shares of Stock not acquired under such
Award shall revert to and again become available for issuance under the Plan.
(C) Type of Shares. The shares of Stock subject to the Plan may be unissued shares or
reacquired shares bought on the market or otherwise. No fractional shares of Stock will be
delivered under the Plan.
(D) Limits on Individual Grants. The maximum number of shares of Stock for which any
Employee or Employee Director may be granted Awards in any calendar year is five hundred thousand
(E) Limits on Grants of Restricted Stock. The combined maximum amount of Restricted
Stock that may be issued under the Plan and the Non-Employee Director Plan will be 10% of the
outstanding shares of Stock on the effective date of the plans plus 10% of the number of shares of
Stock issued or delivered by the Company (other than pursuant to compensation plans) during the
term of the plans. No one person shall be granted Awards of Restricted Stock relating to more than
25% of the shares available for issuance under this Plan.
(F) No Grants in Contravention of 1940 Act. At all times during such periods as the
Company qualifies or is intended to qualify as a business development company, no Award
may be granted under the Plan if the grant of such Award would cause the Company to violate
the 1940 Act, including, without limitation, Section 61(a)(3), and, if otherwise approved for
grant, shall be void and of no effect.
(G) Limits on Number of Awards. The amount of voting securities that would result
from the exercise of all of the Companys outstanding warrants, options, and rights, together with
any Restricted Stock issued pursuant to this Plan and the Non-Employee Director Plan, at the time
of issuance shall not exceed 25% of the outstanding voting securities of the Company, except that
if the amount of voting securities that would result from the exercise of all of the Companys
outstanding warrants, options, and rights issued to the Companys directors, officers, and
employees, together with any Restricted Stock issued pursuant to this Plan and the Non-Employee
Director Plan, would exceed 15% of the outstanding voting securities of the Company, then the total
amount of voting securities that would result from the exercise of all outstanding warrants,
options, and rights, together with any Restricted Stock issued pursuant to this Plan and the
Non-Employee Director Plan, at the time of issuance shall not exceed 20% of the outstanding voting
securities of the Company.
(H) Date of Awards Grant: The date on which the required majority, as defined in
Section 57(o) of the 1940 Act, approves the issuance of an Award will be deemed the date on which
such Award is granted.
Only Employees of the Company and Employees of a wholly-owned subsidiary of the Company may be
granted Awards. By accepting any Award granted hereunder, the Participant agrees to the terms of
the Award and the Plan. Notwithstanding any provision of this Plan to the contrary, awards of an
acquired company that are converted, replaced or adjusted in connection with the acquisition may
contain terms and conditions that are inconsistent with the terms and conditions specified herein,
as determined by the Board.
7. OPTION PROVISIONS.
Each Option shall be evidenced by a written agreement containing such terms and conditions as
the Board shall deem appropriate. All Options shall be separately designated Incentive Stock
Options or Non-statutory Stock Options at the time of grant, and, if certificates are issued, a
separate certificate or certificates shall be issued for shares of Stock purchased on exercise of
each type of Option. The provisions of separate Options need not be identical, but, to the extent
relevant, each Option shall include (through incorporation by reference or otherwise) the substance
of each of the following provisions:
(A) Time and Manner of Exercise. Unless the Board expressly provides otherwise, an
Option will not be deemed to have been exercised until the Board receives a notice of exercise (in
a form acceptable to the Board) signed by the appropriate person and accompanied by any payment
required under the Award. If the Option is exercised by any person other than the Participant, the
Board may require satisfactory evidence that the person exercising the Option has the right to do
so. No Option shall be exercisable after the expiration of ten (10) years from the date on which it
(B) Exercise Price of an Option. The exercise price for each Option shall not be less
than the closing stock price on the NASDAQ Global Select Market on the date of grant (or the price
on such other national securities exchange on which the stock is traded if the stock is not traded
on the NASDAQ Global Select Market on date of grant). If the stock is not traded on any national
securities exchange on the date of grant, the exercise price will not be less than the net asset
value of a share of stock, as determined by the Board in good faith, on the date of grant. If the
exercise price as so determined would be less than the fair market value of the Stock within the
meaning of the regulations under Section 409A of the Code, then the Options shall not be granted.
In the case of an Option granted to a 10% Holder and intended to qualify as an Incentive Stock
Option, the exercise price will not be less than 110% of the current market value determined as of
the date of grant. A 10% Holder is an individual owning stock possessing more than 10% of the
total combined voting power of all classes of stock of the Company or its parent or subsidiary
corporations. No such Stock Option, once granted, may be repriced other than in accordance with the
1940 Act and the applicable stockholder approval requirements of the NASDAQ Global Select Market,
and in a manner that would continue to exclude the option from being subject to Section 409A of the
(C) Consideration. The purchase price for Stock acquired pursuant to an Option shall
be paid in full at the time of exercise either (i) in cash, or, if so permitted by the Board and if
permitted by the 1940 Act and otherwise legally permissible, (ii) through a broker-assisted
exercise program acceptable to the Board, (iii) through a net-settlement, using shares of Stock
received in the Option exercise or other shares of Stock owned by the Participant, (iv) by such
other means of payment as may be acceptable to the Board, or (v) in any combination of the
foregoing permitted forms of payment.
(D) Transferability of an Incentive Stock Option. An Incentive Stock Option shall not
be transferable except by will or by the laws of descent and distribution and shall be exercisable
during the lifetime of the Participant only by the Participant.
(E) Transferability of a Non-statutory Stock Option. A Non-statutory Stock Option
shall be transferable by will or by the laws of descent and distribution, or, to the extent
provided by the Board, by gift to a Permitted Transferee, and a Non-statutory Stock Option that is
nontransferable except at death shall be exercisable during the lifetime of the Participant only by
(F) Limitation on Repurchase Rights. If an Option gives the Company the right to
repurchase shares of Common Stock issued pursuant to the Plan upon termination of employment of
such Participant, the terms of such repurchase right must comply with the 1940 Act.
(G) Exercisability. The Board may determine the time or times at which an Option will
vest or become exercisable and the terms on which an Option requiring exercise will remain
exercisable. Notwithstanding the foregoing, vesting shall take place at the rate of at least 20%
per year over not more than five years from the date the award is granted, subject to reasonable
conditions such as continued employment; provided, however, that options may be subject to such
reasonable forfeiture conditions as the Board may choose to impose.
(H) Termination of Continuous Service. Unless the Board expressly provides otherwise,
immediately upon the cessation of a Participants Continuous Service that portion, if any, of any
Option held by the Participant or the Participants Permitted Transferee that is not then
exercisable will terminate and the balance will remain exercisable for the lesser of (i) a period
of three months or (ii) the period ending on the latest date on which such Option could have been
exercised without regard to this Section 6(h), and will thereupon terminate subject to the
following provisions (which shall apply unless the Board expressly provides otherwise):
if a Participants Continuous Service ceases by reason of death, or if a Participant
dies following the cessation of his or her Continuous Service but while any portion of any
Option then held by the Participant or the Participants Permitted Transferee is still
exercisable, the then exercisable portion, if any, of all Options held by the Participant or
the Participants Permitted Transferee immediately prior to the Participants death will
remain exercisable for the lesser of (A) the one year period ending with the first
anniversary of the Participants death or (B) the period ending on the latest date on which
such Option could have been exercised without regard to this Section 6(h)(i), and will
thereupon terminate; and
if the Board in its sole discretion determines that the cessation of a Participants
Continuous Service resulted for reasons that cast such discredit on the Participant as to
justify immediate termination of his or her Options, all Options then held by the
Participant or the Participants Permitted Transferee will immediately terminate.
8. RESTRICTED STOCK PROVISIONS.
Each grant of Restricted Stock shall be evidenced by a written agreement containing such terms
and conditions as the Board shall deem appropriate. The provisions of separate grants of Restricted
Stock need not be identical, but, to the extent relevant, each grant shall include (through
incorporation by reference or otherwise) the substance of each of the following provisions:
(A) Consideration. To the extent permitted by the 1940 Act, Awards of Restricted
Stock may be made in exchange for past services or other lawful consideration.
(B) Transferability of Restricted Stock. Except as the Board otherwise expressly
provides, Restricted Stock shall not be transferable other than by will or by the laws of descent
(C) Vesting. The Board may determine the time or times at which shares of Restricted
Stock will vest.
(D) Termination of Continuous Service. Unless the Board expressly provides otherwise,
immediately upon the cessation of a Participants Continuous Service that portion, if any, of any
Restricted Stock held by the Participant or the Participants Permitted Transferee that is not then
vested will thereupon terminate and the unvested shares will be returned to the Company and will be
available to be issued as Awards under this Plan.
9. OTHER STOCK-BASED AWARDS.
The Board shall have the authority to determine the Participants who shall receive an Other
Stock-Based Award, which shall consist of any right that is (i) not an Award described in Sections
7 or 8 above and (ii) an Award of Shares or an Award denominated or payable in, valued in whole or
in part by reference to, or otherwise based on or related to, Shares (including, without
limitation, securities convertible into Shares), as deemed by the Board to be consistent with the
purposes of the Plan. Subject to the terms of the Plan and any applicable Award agreement, the
Board shall determine the terms and conditions of any such Other Stock-Based Award.
10. PERFORMANCE AWARD.
Without limiting the type or number of Awards that may be made under the other provisions of
this Plan, an Award may be in the form of a Performance Award. The terms, conditions and
limitations applicable to an Award that is a Performance Award shall be determined by the
Committee. The Committee shall set performance goals in its discretion which, depending on the
extent to which they are met, will determine the value and/or amount of Performance Awards that
will be paid out to the Employee and/or the portion that may be exercised.
(A) Non-qualified Performance Awards. Performance Awards granted to Employees that
are not intended to qualify as qualified performance based compensation under Section 162(m) of the
Code shall be based on achievement of such goals and be subject to such terms, conditions and
restrictions as the Committee or its delegate shall determine.
(B) Qualified Performance Awards. Performance Awards granted to Employees under the
Plan that are intended to qualify as qualified performance based compensation under Section 162(m)
of the Code shall be paid, vested or otherwise deliverable solely on account of the attainment of
one or more pre-established, objective Performance Goals established by the Committee prior to the
earlier to occur of (x) 90 days after the commencement of the period of service to which the
Performance Goal relates or (y) the lapse of 25% of the period of service (as scheduled in good
faith at the time the goal is established), and in any event while the outcome is substantially
uncertain. A Performance Goal is objective if a third party having knowledge of the relevant facts
could determine whether the goal is met. Such a Performance Goal may be based on one or more
business criteria that apply to the Employee, one or more business segments, units, or divisions of
the Company, or the Company as a whole, and if so desired by the Committee, by comparison with a
peer group of companies. A Performance Goal may include one or more of the following:
Stock price measures (including but not limited to growth measures and total
Net Investment Income or Net Realized Income per share (actual or targeted
Economic value added (EVA);
Net Investment Income or Net Realized Income measures;
Dividend and Dividends per share measures;
Cash flow and liquidity measures;
Return measures (including but not limited to return on capital employed, return
on equity, return on investment and return on assets);
Operating measures (including but not limited to productivity, efficiency, and
Expense targets (including but not limited to finding and development costs and
general and administrative expenses);
Corporate values measures (including but not limited to diversity commitment,
and ethics compliance).
Unless otherwise stated, such a Performance Goal need not be based upon an increase or
positive result under a particular business criterion and could include, for example, maintaining
the status quo or limiting economic losses (measured, in each case, by reference to specific
business criteria). In interpreting Plan provisions applicable to Performance Goals and Qualified
Performance Awards, it is the intent of the Plan to conform with the standards of Section 162(m) of
the Code and Treasury Regulation §1.162-27(e)(2)(i), as to grants to those Employees whose
compensation is, or is likely to be, subject to Section 162(m) of the Code, and the Committee in
establishing such goals and interpreting the Plan shall be guided by such provisions. Prior to the
payment of any compensation based on the achievement of Performance Goals, the Committee must
certify in writing that applicable Performance Goals and any of the material terms thereof were, in
fact, satisfied. Subject to the foregoing provisions, the terms, conditions and limitations
applicable to any Qualified Performance Awards made pursuant to this Plan shall be determined by
(A) Acceleration. The Board shall have the power to accelerate the time at which an
Award or any portion thereof vests or may first be exercised, regardless of the tax or other
consequences to the Participant or the Participants Permitted Transferee resulting from such
(B) Stockholder Rights. No Participant or other person shall be deemed to be the
holder of, or to have any of the rights of a holder with respect to, any shares of Stock subject to
an Option unless and until such Award has been delivered to the Participant or other person upon
exercise of the Award. Holders of Restricted Stock shall have all the rights of a holder upon
issuance of the Restricted Stock Award including, without limitation, voting rights and the right
to receive dividends.
(C) No Employment or Other Service Rights. Nothing in the Plan or any instrument
executed or Award granted pursuant thereto shall confer upon any Participant any right to continue
in the employment of, or to continue to serve as a director of, the Company or an
Affiliate or shall affect the right of the Company or an Affiliate to terminate (i) the
employment of the Participant (if the Participant is an Employee) with or without notice and with
or without cause or (ii) the service of an Employee Director (if the Participant is an Employee
Director) pursuant to the Bylaws of the Company or an Affiliate and any applicable provisions of
the corporate law of the state in which the Company or the Affiliate is incorporated. Nothing in
the Plan will be construed as giving any person any rights as a stockholder except as to shares of
Stock actually issued under the Plan. The loss of existing or potential profit in Awards will not
constitute an element of damages in the event of termination of service for any reason, even if the
termination is in violation of an obligation of the Company or an Affiliate to the Participant.
(D) Legal Conditions on Delivery of Stock. The Company will not be obligated to
deliver any shares of Stock pursuant to the Plan or to remove any restriction from shares of Stock
previously delivered under the Plan until: (i) the Company is satisfied that all legal matters in
connection with the issuance and delivery of such shares have been addressed and resolved; (ii) if
the outstanding Stock is at the time of delivery listed on any stock exchange or national market
system, the shares to be delivered have been listed or authorized to be listed on such exchange or
system upon official notice of issuance; and (iii) all conditions of the Award have been satisfied
or waived. If the sale of Stock has not been registered under the Securities Act, the Company may
require, as a condition to the grant or the exercise of the Award, such representations or
agreements as counsel for the Company may consider appropriate to avoid violation of the Securities
Act. The Company may require that certificates evidencing Stock issued under the Plan bear an
appropriate legend reflecting any restriction on transfer applicable to such Stock, and the Company
may hold the certificates pending lapse of the applicable restrictions.
(E) Withholding Obligations. Each grant or exercise of an Award granted hereunder
shall be subject to the Participants having made arrangements satisfactory to the Board for the
full and timely satisfaction of all federal, state, local and other tax withholding requirements
applicable to such grant, exercise or exchange. The Company or its designated third party
administrator shall have the right to deduct applicable taxes from any Award payment and withhold,
at the time of delivery or vesting of cash or shares of Stock under this Plan, an appropriate
amount of cash or number of shares of Stock or a combination thereof for payment of taxes or other
amounts required by law or to take such other action as may be necessary in the opinion of the
Company to satisfy all obligations for withholding of such taxes. The Committee may also permit
withholding to be satisfied by the transfer to the Company of shares of Stock theretofore owned by
the holder of the Award with respect to which withholding is required. If shares of Stock are used
to satisfy tax withholding, such shares shall be valued based on the fair market value when the tax
withholding is required to be made.
(F) Section 409A. Awards under the Plan are intended either to qualify for an
exemption from Section 409A or to comply with the requirements thereof, and shall be construed
12. ADJUSTMENTS UPON CHANGES IN STOCK.
(A) Capitalization Adjustments. In the event of a stock dividend, stock split or
combination of shares (including a reverse stock split), recapitalization or other change in the
Companys capital structure, the Board will make appropriate adjustments to the maximum
number of shares specified in Section 5(A) that may be delivered under the Plan, to the
maximum per-participant share limit described in Section 5(D) and will also make appropriate
adjustments to the number and kind of shares of stock or securities subject to Awards then
outstanding or subsequently granted, any exercise prices relating to Awards and any other provision
of Awards affected by such change. To the extent consistent with qualification of Incentive Stock
Options under Section 422 of the Code, the performance-based compensation rules of Section 162(m),
and continued exclusion from or compliance with Section 409A of the Code, where applicable, the
Board may also make adjustments of the type described in the preceding sentence to take into
account distributions to stockholders other than those provided for in such sentence, or any other
event, if the Board determines that adjustments are appropriate to avoid distortion in the
operation of the Plan and to preserve the value of Awards granted hereunder; provided, however,
that the exercise price of Awards granted under the Plan will not be adjusted unless the Company
receives an exemptive order from the Securities and Exchange Commission or written confirmation
from the staff of the Securities and Exchange Commission that the Company may do so.
(B) Covered Transaction. Except as otherwise provided in an Award, in the event of a
Covered Transaction in which there is an acquiring or surviving entity, the Board may provide for
the assumption of some or all outstanding Awards, or for the grant of new awards in substitution
therefor, by the acquirer or survivor or an affiliate of the acquirer or survivor, in each case on
such terms and subject to such conditions as the Board determines. In the absence of such an
assumption or if there is no substitution, except as otherwise provided in the Award, each Award
will become fully vested or exercisable prior to the Covered Transaction on a basis that gives the
holder of the Award a reasonable opportunity, as determined by the Board, to participate as a
stockholder in the Covered Transaction following vesting or exercise, and the Award will terminate
upon consummation of the Covered Transaction.
13. DIVIDEND EQUIVALENT RIGHTS.
The Board may provide for the payment of amounts in lieu of cash dividends or other cash
distributions (Dividend Equivalent Rights) with respect to Stock subject to an Award; provided,
however, that grants of Dividend Equivalent Rights must be approved by order of the Securities and
Exchange Commission. The Board may impose such terms, restrictions and conditions on Dividend
Equivalent Rights, including the date such rights will terminate, as it deems appropriate, and may
terminate, amend or suspend such Dividend Equivalent Rights at any time without the consent of the
Participant or Participants to whom such Dividend Equivalent Rights have been granted, if any.
14. AMENDMENT OF THE PLAN AND AWARDS.
The Board may at any time or times amend the Plan or any outstanding Award for any purpose
which may at the time be permitted by law, and may at any time terminate the Plan as to any future
grants of Awards; provided, that except as otherwise expressly provided in the Plan the Board may
not, without the Participants consent, alter the terms of an Award so as to affect substantially
and adversely the Participants rights under the Award, unless the Board expressly reserved the
right to do so at the time of the grant of the Award. Any amendments to the Plan shall be
conditioned upon stockholder approval only to the extent, if any, such approval is
required by law (including the Code and applicable stock exchange requirements), as determined
by the Board.
15. TERMINATION OR SUSPENSION OF THE PLAN.
(A) Plan Term. The Board may suspend or terminate the Plan at any time. Unless sooner
terminated, the Plan shall terminate on the day before the tenth (10th) anniversary of the date the
Plan is initially adopted by the Board or approved by the stockholders of the Company, whichever is
earlier. No Awards may be granted under the Plan while the Plan is suspended or after it is
(B) No Impairment of Rights. Suspension or termination of the Plan shall not impair
rights and obligations under any Awards granted while the Plan is in effect except with the written
consent of the Participant.
16. EFFECTIVE DATE OF PLAN.
The Plan shall become effective upon approval by the stockholders of the Company, which
approval shall be within twelve (12) months before or after the date the Plan is adopted by the
Board; provided, however, that the Plan shall not be effective with respect to an Award of
Restricted Stock or the grant of Dividend Equivalent Rights unless the Company has received an
order of the Commission that permits such Award or grant (the Effective Date).
17. 1940 ACT.
No provision of this Plan is intended to contravene any portion of the 1940 Act, and in the
event of any conflict between the provisions of the Plan or any Award and the 1940 Act, the
applicable Section of the 1940 Act shall control and all Awards under the Plan shall be so
modified. All Participants holding such modified Awards shall be notified of the change to their
Awards and such change shall be binding on such Participants.
18. INFORMATION RIGHTS OF PARTICIPANTS.
The Company shall provide to each Participant who acquires Stock pursuant to the Plan, not
less frequently than annually, copies of annual financial statements (which need not be audited).
The Company shall not be required to provide such statements to key employees whose duties in
connection with the Company assure their access to equivalent information.
If any provision of this Plan or any Award is or becomes or is deemed to be invalid, illegal,
or unenforceable in any jurisdiction or as to any Participant or Award, or would disqualify this
Plan or any Award under any applicable law, such provision shall be construed or deemed amended to
conform to the applicable laws, or if it cannot be construed or deemed amended without, in the
determination of the Board, materially altering the intent of this Plan or the Award, such
provision shall be stricken as to such jurisdiction, Participant or Award and the remainder of this
Plan and any such Award shall remain in full force and effect.
20. OTHER COMPENSATION ARRANGEMENTS.
The existence of the Plan or the grant of any Award will not in any way affect the Companys
right to award a person bonuses or other compensation in addition to Awards under the Plan.
21. WAIVER OF JURY TRIAL.
By accepting an Award under the Plan, each Participant waives any right to a trial by jury in
any action, proceeding or counterclaim concerning any rights under the Plan and any Award, or under
any amendment, waiver, consent, instrument, document or other agreement delivered or which in the
future may be delivered in connection therewith, and agrees that any such action, proceedings or
counterclaim shall be tried before a court and not before a jury. By accepting an Award under the
Plan, each Participant certifies that no officer, representative, or attorney of the Company has
represented, expressly or otherwise, that the Company would not, in the event of any action,
proceeding or counterclaim, seek to enforce the foregoing waivers.
22. LIMITATION ON LIABILITY.
Notwithstanding anything to the contrary in the Plan, neither the Company nor the Board, nor
any person acting on behalf of the Company or the Board, shall be liable to any Participant or to
the estate or beneficiary of any Participant by reason of any acceleration of income, or any
additional tax, asserted by reason of the failure of an Award to satisfy the requirements of
Section 422 or Section 409A or by reason of Section 4999 of the Code; provided, that nothing in
this Section 22 shall limit the ability of the Board or the Company to provide by express agreement
with a Participant for a gross-up payment or other payment in connection with any such tax or
23. GOVERNING LAW.
The Plan and all Awards and actions hereunder shall be governed by the laws of the state of
Texas, with regard to the choice of law principles of any jurisdiction.
Revised: May 12, 2009