EXHIBIT 10.7
 
TRIANGLE CAPITAL CORPORATION
AMENDED AND RESTATED
2007 EQUITY INCENTIVE PLAN
 
Section 1.  Purposes.
 
1.1.  Generally.  This plan shall be known as the “Triangle Capital Corporation
Amended and Restated 2007 Equity Incentive Plan” (the “Plan”). The purpose of
the Plan is to promote the interests of Triangle Capital Corporation, a Maryland
corporation (the “Company”), its Affiliates (as defined herein) and its
stockholders by (i) attracting and retaining key officers, employees, and
directors of, the Company and its Affiliates; (ii) motivating such individuals
by means of individual performance-related incentives to achieve long-range
performance goals; (iii) encouraging ownership of stock in the Company by such
individuals; and (iv) linking their compensation to the long-term interests of
the Company and its stockholders. With respect to any awards granted under the
Plan that are intended to comply with the requirements of “performance-based
compensation” under Section 162(m) of the Code, the Plan shall be interpreted in
a manner consistent with such requirements.
 
1.2.  Amendment and Restatement.  This Plan amends and restates the Triangle
Capital Corporation 2007 Equity Incentive Plan adopted February 13, 2007 (the
“Prior Plan”) in its entirety. All Awards (as defined below) granted subsequent
to the date of this Plan’s adoption by the Company’s stockholders shall be
subject to the terms of this Plan.
 
Section 2.  Definitions.
 
As used in the Plan, the following terms shall have the meanings set forth
below:
 
(a) “1940 Act” means the Investment Company Act of 1940, as amended.
 
(b) “Affiliate” shall mean any wholly-owned consolidated subsidiary of the
Company.
 
(c) “Award” shall mean any Option or Restricted Share Award granted under the
Plan, whether singly, in combination or in tandem, to a Participant by the Board
pursuant to such terms, conditions, restrictions and/or limitations, if any, as
the Board may establish or which are required by applicable legal requirements.
 
(d) “Award Agreement” shall mean any written agreement, contract or other
instrument or document evidencing any Award, which may, but need not, be
executed or acknowledged by a Participant.
 
(e) “Board” shall mean the Board of Directors of the Company.
 
(f) “Cause” shall mean, unless otherwise defined in the applicable Award
Agreement, (i) the engaging by the Participant in willful misconduct that is
injurious to the Company or its Affiliates, or (ii) the embezzlement or
misappropriation of funds or property of the Company or its Affiliates by the
Participant. For purposes of this paragraph, no act, or failure to act, on the
Participant’s part shall be considered “willful” unless done, or omitted to be
done, by the Participant not in good faith and without reasonable belief that
the Participant’s action or omission was in the best interest of the Company.
Any determination of Cause for purposes of the Plan or any Award shall be made
by the Board in its sole discretion. Any such determination shall be final and
binding on a Participant.
 
(g) “Change in Control” shall mean, unless otherwise defined in the applicable
Award Agreement, any of the following events:
 
(i) any person or entity, including a “group” as defined in Section 13(d)(3) of
the Exchange Act, other than the Company or an Affiliate thereof or any employee
benefit plan of the Company or any of its Affiliates, becomes the beneficial
owner of the Company’s securities having 35% or more of the combined voting
power of the then outstanding securities of the Company that may be

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cast for the election of directors of the Company (other than as a result of an
issuance of securities initiated by the Company in the ordinary course of
business);
 
(ii) as the result of, or in connection with, any cash tender or exchange offer,
merger or other business combination or contested election, or any combination
of the foregoing transactions, less than a majority of the combined voting power
of the then outstanding securities of the Company or any successor company or
entity entitled to vote generally in the election of the directors of the
Company or such other corporation or entity after such transaction are held in
the aggregate by the holders of the Company’s securities entitled to vote
generally in the election of directors of the Company immediately prior to such
transaction;
 
(iii) during any period of two (2) consecutive years, individuals who at the
beginning of any such period constitute the Board cease for any reason to
constitute at least a majority thereof, unless the election, or the nomination
for election by the Company’s stockholders, of each Director of the Company
first elected during such period was approved by a vote of at least two-thirds
(2/3rds) of the Directors of the Company then still in office who were
(i) Directors of the Company at the beginning of any such period, and (ii) not
initially (a) appointed or elected to office as result of either an actual or
threatened election and/or proxy contest by or on behalf of a Person other than
the Board, or (b) designated by a Person who has entered into an agreement with
the Company to effect a transaction described in (i) or (ii) above or (iv) or
(v) below;
 
(iv) a complete liquidation or dissolution of the Company; or
 
(v) the sale or other disposition of all or substantially all of the assets of
the Company to any Person (other than a transfer to an Affiliate).
 
(h) “Code” shall mean the Internal Revenue Code of 1986, as amended from time to
time.
 
(i) “Committee” shall mean a committee of two or more members of the Board
appointed by the Board in accordance with Section 3.3.
 
(j) “Covered Officer” shall mean at any date (i) any individual who, with
respect to the previous taxable year of the Company, was a “covered employee” of
the Company within the meaning of Section 162(m); provided, however, that the
term “Covered Officer” shall not include any such individual who is designated
by the Board, in its discretion, at the time of any Award or at any subsequent
time, as reasonably expected not to be such a “covered employee” with respect to
the current taxable year of the Company and (ii) any individual who is
designated by the Board, in its discretion, at the time of any Award or at any
subsequent time, as reasonably expected to be such a “covered employee” with
respect to the current taxable year of the Company or with respect to the
taxable year of the Company in which any applicable Award will be paid or
vested.
 
(k) “Director” shall mean a member of the Board.
 
(l) “Disability” shall mean, unless otherwise defined in the applicable Award
Agreement, a disability that would qualify as a total and permanent disability
under the Company’s then current long-term disability plan.
 
(m) “Employee” shall mean an officer or employee of the Company or of any
Affiliate.
 
(n) “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended
from time to time.
 
(o) “Fair Market Value” with respect to the Shares, shall mean, for purposes of
a grant of an Award as of any date, (i) the closing sales price of the Shares on
the Nasdaq stock market, or any other such exchange on which the shares are
traded, on such date, or in the absence of reported sales on such date, the
closing sales price on the immediately preceding date on which sales were
reported or (ii) in the event there is no public market for the Shares on such
date, the fair market value as determined, in good faith, by the Board in its
sole discretion (which, for purposes of Section 6.2, will in no event will be
less than the net asset value of such Shares on such date, as determined in
accordance with the 1940 Act and

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the rules thereunder), and for purposes of a sale of a Share as of any date, the
actual sales price on that date.
 
(p) “Incentive Stock Option” shall mean an option to purchase Shares from the
Company that is granted under Section 6 of the Plan and that is intended to meet
the requirements of Section 422 of the Code or any successor provision thereto.
 
(q) “Non-Qualified Stock Option” shall mean an option to purchase Shares from
the Company that is granted under Sections 6 or 9 of the Plan and is not
intended to be an Incentive Stock Option.
 
(r) “Non-Employee Director” shall mean a Director who is not an officer or
employee of the Company.
 
(s) “Option” shall mean an Incentive Stock Option or a Non-Qualified Stock
Option.
 
(t) “Option Price” shall mean the purchase price payable to purchase one Share
upon the exercise of an Option.
 
(u) “Participant” shall mean any Employee or Director.
 
(v) “Performance Award” shall mean any Award granted under Section 8 of the
Plan.
 
(w) “Person” shall mean any individual, corporation, partnership, limited
liability company, association, joint-stock company, trust, unincorporated
organization, government or political subdivision thereof or other entity.
 
(x) “Restricted Share” or “Restricted Share Award” shall mean any Share granted
under Sections 7 or 9 of the Plan.
 
(y) “Retirement” shall mean, unless otherwise defined in the applicable Award
Agreement, retirement of a Participant from the employ or service of the Company
or any of its Affiliates in accordance with the terms of the applicable Company
retirement plan or, if a Participant is not covered by any such plan, retirement
on or after such Participant’s 65th birthday.
 
(z) “SEC” shall mean the Securities and Exchange Commission or any successor
thereto.
 
(aa) “Section 16” shall mean Section 16 of the Exchange Act and the rules
promulgated thereunder and any successor provision thereto as in effect from
time to time.
 
(bb) “Section 162(m)” shall mean Section 162(m) of the Code and the regulations
promulgated thereunder and any successor provision thereto as in effect from
time to time.
 
(cc) “Shares” shall mean shares of the common stock, $0.001 par value, of the
Company.
 
(dd) “Substitute Awards” shall mean Awards granted solely in assumption of, or
in substitution for, outstanding awards previously granted by a company acquired
by the Company or with which the Company combines.
 
Section 3.  Administration.
 
3.1.  Administration by the Board.  The Board shall administer the Plan unless
and until it delegates administration to a Committee, as provided in Section 3.3
hereof.
 
3.2.  Powers of the Board.  The Board shall have the power, subject to the
express provisions of the Plan and applicable law:
 
(a) 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
provision of each Award granted, including the time or times when a Participant
shall be permitted to exercise an Award; and the number of Shares with respect
to which an Award shall be granted to each such Participant. Notwithstanding the
foregoing powers of the Board, any grants of Awards to Non-Employee Directors
under the Plan shall be automatic and shall not be changed

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without SEC approval, and the issuance of any Award to an Employee will be
approved by the required majority, as defined in Section 57(o) of the 1940 Act,
of the Company’s directors on the basis that such issuance is in the best
interests of the Company and its stockholders.
 
(b) 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.
 
(c) To amend the Plan or an Award as provided in Section 13.
 
(d) To terminate or suspend the Plan as provided in Section 13.
 
(e) 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.
 
3.3. Delegation to Committee.  The Board may delegate administration of the Plan
to a Committee or Committees of three (3) or more members of the Board, and the
term “Committee” shall apply to any persons to whom such authority has been
delegated. 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 Board references in the last sentence of this Section 3.3
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.
 
3.4.  Effects of Board’s 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.
 
Section 4.  Shares Available For Awards.
 
4.1.  Shares Available.  Subject to the provisions of Section 4.5 hereof, the
stock to be subject to Awards under the Plan shall be the Shares of the Company
and the maximum number of Shares with respect to which Awards may be granted
under the Plan shall be 900,000. If, after the effective date of the Plan, any
Shares covered by an Award granted under this Plan, or to which such an Award
relates, are forfeited, or if such an Award is settled for cash or otherwise
terminates, expires unexercised or is canceled or settled without the delivery
of Shares or with the delivery of a reduced number of Shares, then the Shares
covered by such Award, or to which such Award relates, or the number of Shares
otherwise counted against the aggregate number of Shares with respect to which
Awards may be granted, to the extent of any such settlement, reduction,
forfeiture, termination, expiration or cancellation, shall again become Shares
with respect to which Awards may be granted. In the event that any Award granted
hereunder is exercised through the delivery of Shares or in the event that
withholding tax liabilities arising from such Award are satisfied by the
withholding of Shares by the Company, the number of Shares available for Awards
under the Plan shall be increased by the number of Shares so surrendered or
withheld.
 
4.2.  Limits on Grants of Individual Awards.
 
(a) No individual Participant shall be granted Options under the Plan in any
calendar year that relate to more than 100,000 Shares.
 
(b) No individual Participant shall be granted Awards under the Plan relating to
more than 25% of the Shares reserved for issuance.
 
4.3.  Limits on Grants of Restricted Shares.  The combined maximum amount of
Restricted Shares that may be issued under the Plan will be 10% of the
outstanding Shares on the Effective Date (as defined in

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Section 15.1 below) plus 10% of the number of Shares issued or delivered by the
Company (other than pursuant to compensation plans) during the term of the Plan.
 
4.4.  Limits on Number of Awards.  The amount of voting securities that would
result from the exercise of all of the Company’s outstanding warrants, options
and rights, together with any Restricted Shares issued pursuant to the 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 Company’s outstanding warrants, options, and
rights issued to the Company’s directors, officers, and employees, together with
any Restricted Shares issued pursuant to the 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 Shares issued pursuant to the
Plan, at the time of issuance shall not exceed 20% of the outstanding voting
securities of the Company.
 
4.5.  Adjustments.  In the event that any dividend or other distribution
(whether in the form of cash, Shares, other securities or other property),
recapitalization, stock split, reverse stock split, reorganization, merger,
consolidation, split-up, spin-off, combination, repurchase or exchange of Shares
or other securities of the Company, issuance of warrants or other rights to
purchase Shares or other securities of the Company, or other similar corporate
transaction or event affects the Shares, then the Board shall in an equitable
and proportionate manner (and, as applicable, in such manner as is consistent
with Sections 422 and 409A of the Code and the regulations thereunder and with
Section 162(m)) either: (i) adjust any or all of (1) the aggregate number of
Shares or other securities of the Company (or number and kind of other
securities or property) with respect to which Awards may be granted under the
Plan; (2) the number of Shares or other securities of the Company (or number and
kind of other securities or property) subject to outstanding Awards under the
Plan, provided that the number of shares subject to any Award shall always be a
whole number; (3) the grant or exercise price with respect to any Award under
the Plan (but only provided that the SEC has issued an exemptive order or the
SEC’s staff has provided written confirmation allowing the Company to do so);
and (4) the limits on the number of Shares that may be granted to Participants
under the Plan in any calendar year; (ii) provide for an equivalent award in
respect of securities of the surviving entity of any merger, consolidation or
other transaction or event having a similar effect; or (iii) make provision for
a cash payment to the holder of an outstanding Award.
 
4.6.  Substitute Awards.  Any Shares issued by the Company as Substitute Awards
in connection with the assumption or substitution of outstanding grants from any
acquired corporation shall not reduce the Shares available for Awards under the
Plan.
 
4.7.  Sources of Shares Deliverable Under Awards.  Any Shares delivered pursuant
to an Award may consist, in whole or in part, of authorized and unissued Shares
or of issued Shares which have been reacquired by the Company.
 
4.8.  No Grants in Contravention of 1940 Act.  No Award may be granted under the
Plan if the grant of such Award would cause the Company to violate
Section 61(a)(3) of the Act, and, if otherwise approved for grant, shall be void
and of no effect. The grants of Awards under the Plan to Non-Employee Directors
shall be automatic and shall not be changed without SEC approval.
 
Section 5.  Eligibility.
 
Any Employee or Director shall be eligible to be designated a Participant;
provided, however, that Non-Employee Directors shall only be eligible to receive
Awards granted consistent with Section 9.
 
Section 6.  Stock Options.
 
6.1.  Grant.  The Board shall have sole and complete authority to determine the
Participants to whom Options shall be granted, the number of Shares subject to
each Award, the exercise price (subject to Section 6.2 below) and the conditions
and limitations applicable to the exercise of each Option. The Board shall have
the authority to grant Incentive Stock Options, and to grant Non-Qualified Stock
Options. In the

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case of Incentive Stock Options, the terms and conditions of such grants shall
be subject to and comply with Section 422 of the Code, as from time to time
amended, and any regulations implementing such statute. A person who has been
granted an Option under this Plan may be granted additional Options under the
Plan if the Board shall so determine; provided, however, that to the extent the
aggregate Fair Market Value (determined at the time the Incentive Stock Option
is granted) of the Shares with respect to which all Incentive Stock Options are
exercisable for the first time by an Employee during any calendar year (under
all plans described in of Section 422(d) of the Code of the Employee’s employer
corporation and its parent and Affiliates) exceeds $100,000, such Options shall
be treated as Non-Qualified Stock Options.
 
6.2.  Price.  The Board in its sole discretion shall establish the Option Price
at the time each Option is granted. Except in the case of Substitute Awards, the
Option Price of an Option may not be less than one hundred percent (100%) of the
Fair Market Value of the Shares with respect to which the Option is granted on
the date of grant of such Option. Once established, the Option Price of any
Option may not be changed absent an exemptive order from the SEC or written
confirmation from its staff allowing the Company to do so.
 
6.3.  Term.  Subject to the Board’s authority under Section 3.2 and the
provisions of Section 6.5, each Option and all rights and obligations thereunder
shall expire on the date determined by the Board and specified in the Award
Agreement. The Board shall be under no duty to provide terms of like duration
for Options granted under the Plan. Notwithstanding the foregoing, no Option
shall be exercisable after the expiration of ten (10) years from the date such
Option was granted.
 
6.4.  Exercise.
 
(a) Each Option shall be exercisable at such times and subject to such terms and
conditions as the Board may, in its sole discretion, specify in the applicable
Award Agreement or thereafter. The Board shall have full and complete authority
to determine, subject to Section 6.5 herein, whether an Option will be
exercisable in full at any time or from time to time during the term of the
Option, or to provide for the exercise thereof in such installments, upon the
occurrence of such events and at such times during the term of the Option as the
Board may determine.
 
(b) The Board may impose such conditions with respect to the exercise of
Options, including without limitation, any relating to the application of
federal, state or foreign securities laws or the Code, as it may deem necessary
or advisable. The exercise of any Option granted hereunder shall be effective
only at such time as the sale of Shares pursuant to such exercise will not
violate any state or federal securities or other laws.
 
(c) An Option may be exercised in whole or in part at any time, with respect to
whole Shares only, within the period permitted thereunder for the exercise
thereof, and shall be exercised by written notice of intent to exercise the
Option, delivered to the Company at its principal office, and payment in full to
the Company at the direction of the Board of the amount of the Option Price for
the number of Shares with respect to which the Option is then being exercised.
 
(d) Payment of the Option Price shall be made in cash or cash equivalents, or,
at the discretion of the Board, (i) by transfer, either actually or by
attestation, to the Company of Shares that have been held by the Participant for
at least six (6) months (or such lesser period as may be permitted by the
Board), valued at the Fair Market Value of such Shares on the date of exercise
(or next succeeding trading date, if the date of exercise is not a trading
date), together with any applicable withholding taxes, such transfer to be upon
such terms and conditions as determined by the Board, or (ii) by a combination
of such cash (or cash equivalents) and such Shares; provided, however, that the
optionee shall not be entitled to tender Shares pursuant to successive,
substantially simultaneous exercises of an Option or any other stock option of
the Company. Subject to applicable securities laws, an Option may also be
exercised by delivering a notice of exercise of the Option and simultaneously
selling the Shares thereby acquired, pursuant to a brokerage or similar
agreement approved in advance by proper officers of the Company, using the
proceeds of such sale as payment of the Option Price, together with any
applicable withholding taxes. Until the optionee has been issued the Shares
subject to such exercise, he or she shall possess no rights as a stockholder
with respect to such Shares.

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6.5.  Ten Percent Stock Rule.  Notwithstanding any other provisions in the Plan,
if at the time an Option is otherwise to be granted pursuant to the Plan, the
optionee or rights holder owns directly or indirectly (within the meaning of
Section 424(d) of the Code) Shares of the Company possessing more than ten
percent (10%) of the total combined voting power of all classes of Stock of the
Company or its parent or Affiliate corporations (within the meaning of
Section 422(b)(6) of the Code), then any Incentive Stock Option to be granted to
such optionee or rights holder pursuant to the Plan shall satisfy the
requirement of Section 422(c)(5) of the Code, and the Option Price shall be not
less than one hundred ten percent (110%) of the Fair Market Value of the Shares
of the Company, and such Option by its terms shall not be exercisable after the
expiration of five (5) years from the date such Option is granted.
 
Section 7.  Restricted Shares.
 
7.1.  Grant.
 
(a) Subject to the provisions of the Plan and other applicable legal
requirements, the Board shall have sole and complete authority to determine the
Participants to whom Restricted Shares shall be granted, the number of
Restricted Shares to be granted to each Participant, the duration of the period
during which, and the conditions under which, the Restricted Shares may be
forfeited to the Company, and the other terms and conditions of such Awards. The
Restricted Share Awards shall be evidenced by Award Agreements in such form as
the Board shall from time to time approve, which agreements shall comply with
and be subject to the terms and conditions provided hereunder and any additional
terms and conditions established by the Board that are consistent with the terms
of the Plan.
 
(b) Each Restricted Share Award made under the Plan shall be for such number of
Shares as shall be determined by the Board and set forth in the Award Agreement
containing the terms of such Restricted Share Award. Such agreement shall set
forth a period of time during which the grantee must remain in the continuous
employment of the Company in order for the forfeiture and transfer restrictions
to lapse. If the Board so determines, the restrictions may lapse during such
restricted period in installments with respect to specified portions of the
Shares covered by the Restricted Share Award. The Award Agreement may also, in
the discretion of the Board, set forth performance or other conditions that will
subject the Shares to forfeiture and transfer restrictions. The Board may, at
its discretion, waive all or any part of the restrictions applicable to any or
all outstanding Restricted Share Awards.
 
(c) Notwithstanding Sections 7.1(a) and 7.1(b) hereof, any grants of Restricted
Shares to Non-Employee Directors under the Plan shall be automatic and shall not
be changed without SEC approval.
 
7.2.  Delivery of Shares and Transfer Restrictions.  At the time of a Restricted
Share Award, a certificate representing the number of Shares awarded thereunder
shall be registered in the name of the grantee. Such certificate shall be held
by the Company or any custodian appointed by the Company for the account of the
grantee subject to the terms and conditions of the Plan, and shall bear such a
legend setting forth the restrictions imposed thereon as the Board, in its
discretion, may determine. The applicable Award Agreement will specify whether a
grantee has the right to receive dividends with respect to the Restricted Shares
prior to the lapsing of transfer restrictions. Unless otherwise provided in the
applicable Award Agreement, the grantee shall have all other rights of a
stockholder with respect to the Restricted Shares, including the right to vote
such Shares, subject to the following restrictions: (i) the grantee shall not be
entitled to delivery of the stock certificate until the expiration of the
restricted period and the fulfillment of any other restrictive conditions set
forth in the Award Agreement with respect to such Shares; (ii) none of the
Shares may be transferred except for disposition by gift, will or the laws of
descent and distribution during such restricted period or until after the
fulfillment of any such other restrictive conditions; and (iii) except as
otherwise determined by the Board at or after grant, all of the Shares shall be
forfeited and all rights of the grantee to such Shares shall terminate, without
further obligation on the part of the Company, unless the grantee remains in the
continuous employment of the Company for the entire restricted period in
relation to which such Shares were granted and unless any other restrictive
conditions relating to the Restricted Share Award are met. Unless otherwise
provided in the applicable Award Agreement, any Shares, any other securities of
the Company and any other property (except for cash dividends) distributed with
respect to the

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Shares subject to Restricted Share Awards shall be subject to the same
restrictions, terms and conditions as such restricted Shares.
 
7.3.  Termination of Restrictions.  At the end of the restricted period and
provided that any other restrictive conditions of the Restricted Share Award are
met, or at such earlier time as otherwise determined by the Board, all
restrictions set forth in the Award Agreement relating to the Restricted Share
Award or in the Plan shall lapse as to the restricted Shares subject thereto,
and a stock certificate for the appropriate number of Shares, free of the
restrictions and restricted stock legend, shall be delivered to the Participant
or the Participant’s beneficiary or estate, as the case may be.
 
Section 8.  Performance Awards.
 
8.1.  Grant.  The Board shall have sole and complete authority to determine the
Employees who shall receive a Performance Award, which shall consist of a right
that is (i) denominated in cash or Shares (including but not limited to
Restricted Shares), (ii) valued, as determined by the Board, in accordance with
the achievement of such Employees’ individual performance goals during such
performance periods as the Board shall establish, and (iii) payable at such time
and in such form as the Board shall determine.
 
8.2.  Terms and Conditions.  Subject to the terms of the Plan and any applicable
Award Agreement, the Board shall determine the performance goals to be achieved
during any performance period, the length of any performance period, the amount
of any Performance Award and the amount and kind of any payment or transfer to
be made pursuant to any Performance Award, and may amend specific provisions of
the Performance Award; provided, however, that such amendment may not adversely
affect existing Performance Awards made within a performance period commencing
prior to implementation of the amendment.
 
8.3.  Payment of Performance Awards.  Performance Awards may be paid in a lump
sum or in installments following the close of the performance period or, in
accordance with the procedures established by the Board, on a deferred basis.
Termination of employment prior to the end of any performance period, other than
for reasons of death or Disability, will result in the forfeiture of the
Performance Award, and no payments will be made. An employee’s rights to any
Performance Award may not be sold, assigned, transferred, pledged, hypothecated
or otherwise encumbered or disposed of in any manner, except by will or the laws
of descent and distribution, and/or except as the Board may determine at or
after grant.
 
Section 9.  Non-Employee Director Awards.
 
9.1.  Each Non-Employee Director shall receive a grant of Restricted Shares at
the beginning of each one-year term of service on the Board, for which
forfeiture restrictions will lapse at the end of that year. The number of
Restricted Shares granted to each Non-Employee Director shall be the equivalent
of $30,000 worth of Shares based on the market value at the close of the Nasdaq
stock market on the date of grant. Notwithstanding the foregoing, and subject to
Sections 9.2 and 9.3 below, the Board may provide that all or a portion of a
Non-Employee Director’s annual retainer, meeting fees and/or other awards or
compensation as determined by the Board, be payable (either automatically or at
the election of a Non-Employee Director) in the form of Non-Qualified Stock
Options, Restricted Shares or unrestricted Shares; provided, however, that the
Company has received an order from the SEC that permits such Award. The Board
shall determine the terms and conditions of any such Awards, including the terms
and conditions which shall apply upon a termination of the Non-Employee
Director’s service as a member of the Board, and shall have full power and
authority in its discretion to administer such Awards, subject to the terms of
the Plan and applicable law.
 
9.2.  Subject to applicable legal requirements and Section 9.3 below, the Board
may also grant Awards to Non-Employee Directors pursuant to the terms of the
Plan, including any Award described in Sections 6 or 7 above.
 
9.3.  Any grants of Awards to Non-Employee Directors under the Plan shall be
automatic and shall not be changed without SEC approval.

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Section 10.  Provisions Applicable To Covered Officers And Performance Awards.
 
10.1.  Notwithstanding anything in the Plan to the contrary, unless the Board
determines that a Performance Award to be granted to a Covered Officer should
not qualify as “performance-based compensation” for purposes of Section 162(m),
Performance Awards granted to Covered Officers shall be subject to the terms and
provisions of this Section 10. Accordingly, unless otherwise determined by the
Board, if any provision of the Plan or any Award Agreement relating to such an
Award does not comply or is inconsistent with Section 162(m), such provision
shall be construed or deemed amended to the extent necessary to conform to such
requirements, and no provision shall be deemed to confer upon the Board
discretion to increase the amount of compensation otherwise payable to a Covered
Officer in connection with any such Award upon the attainment of the performance
criteria established by the Board.
 
10.2.  With respect to any Covered Officer, the maximum annual number of Shares
in respect of which all Performance Awards may be granted under Section 8 of the
Plan is 100,000 and the maximum amount of all Performance Awards that are
settled in cash and that may be granted under Section 8 of the Plan in any year
is $1,000,000.
 
10.3.  To the extent necessary to comply with Section 162(m), with respect to
grants of Performance Awards, no later than 90 days following the commencement
of each performance period (or such other time as may be required or permitted
by Section 162(m) of the Code), the Board shall, in writing, (1) select the
individual performance goal or goals applicable to the performance period,
(2) establish the various targets and bonus amounts which may be earned for such
performance period, and (3) specify the relationship between performance goals
and targets and the amounts to be earned by each Covered Officer for such
performance period. Following the completion of each performance period, the
Board shall certify in writing whether the applicable performance targets have
been achieved and the amounts, if any, payable to Covered Officers for such
performance period. In determining the amount earned by a Covered Officer for a
given performance period, subject to any applicable Award Agreement, the Board
shall have the right to reduce (but not increase) the amount payable at a given
level of performance to take into account additional factors that the Board may
deem relevant in its sole discretion to the assessment of individual performance
for the performance period.
 
Section 11.  Termination Of Employment.
 
The Board shall have the full power and authority to determine the terms and
conditions that shall apply to any Award upon a termination of employment with
the Company and Affiliates, including a termination by the Company with or
without Cause, by a Participant voluntarily, or by reason of death, Disability
or Retirement, and may provide such terms and conditions in the Award Agreement
or in such rules and regulations as it may prescribe.
 
Section 12.  Change In Control.
 
The Board may specify in the applicable Award Agreement at or after grant, or
otherwise by resolution prior to a Change in Control, that all or a portion of
the outstanding Awards shall vest, become immediately exercisable or payable and
have all restrictions lifted upon a Change in Control.
 
Section 13.  Amendment And Termination.
 
13.1.  Amendments to the Plan.  The Board may amend, alter, suspend, discontinue
or terminate the Plan or any portion thereof at any time; provided that no such
amendment, alteration, suspension, discontinuation or termination shall be made
without stockholder approval if such approval is necessary to comply with any
tax or regulatory requirement.
 
13.2.  Amendments to Awards.  Subject to the restrictions of Section 6.2 above
and Section 13.5 below, the Board may waive any conditions or rights under,
amend any terms of or alter, suspend, discontinue, cancel or terminate, any
Award theretofore granted, prospectively or retroactively; provided that any
such waiver, amendment, alteration, suspension, discontinuance, cancellation or
termination that would materially and

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adversely affect the rights of any Participant or any holder or beneficiary of
any Award theretofore granted shall not to that extent be effective without the
consent of the affected Participant, holder or beneficiary.
 
13.3.  Adjustments of Awards Upon the Occurrence of Certain Unusual or
Nonrecurring Events.  The Board is hereby authorized to make equitable and
proportionate adjustments in the terms and conditions of, and the criteria
included in, Awards in recognition of unusual or nonrecurring events (and shall
make such adjustments for events described in Section 4.5 hereof) affecting the
Company or any Affiliate, or the financial statements of the Company or any
Affiliate, or of changes in applicable laws, regulations or accounting
principles.
 
13.4.  Section 409A Compliance.  No Award (or modification thereof) shall
provide for deferral of compensation that does not comply with Section 409A of
the Code unless the Board, at the time of grant, specifically provides that the
Award is not intended to comply with Section 409A of the Code. Notwithstanding
any provision of this Plan to the contrary, if one or more of the payments or
benefits received or to be received by a Participant pursuant to an Award would
cause the Participant to incur any additional tax or interest under Section 409A
of the Code, the Board may reform such provision to maintain to the maximum
extent practicable the original intent of the applicable provision without
violating the provisions of Section 409A of the Code.
 
13.5.  Exercise Price of Awards.  Once established, the exercise price of an
Award shall not be changed absent an exemptive order from the SEC or written
confirmation from its staff that the Company may do so.
 
Section 14.  General Provisions.
 
14.1.  Limited Transferability of Awards.  Except as otherwise provided in the
Plan, no Award shall be assigned, alienated, pledged, attached, sold or
otherwise transferred or encumbered by a Participant, except by gift, will or
the laws of descent and distribution. In addition, no transfer or disposition of
an Award shall be effective to bind the Company unless the Company shall have
been furnished with written notice thereof and an authenticated copy of the gift
affidavit, will and/or such other evidence as the Board may deem necessary or
appropriate to establish the validity of the transfer.
 
14.2.  Dividends.  In the sole and complete discretion of the Board, an Award
may provide the Participant with dividends, payable in cash, Shares, other
securities or other property on a current or deferred basis. All dividends which
are not paid currently may, at the Board’s discretion, accrue interest, be
reinvested into additional Shares, or, in the case of dividends credited in
connection with Performance Awards, be credited as additional Performance Awards
and paid to the Participant if and when, and to the extent that, payment is made
pursuant to such Award. The total number of Shares available for grant under
Section 4 shall not be reduced to reflect any dividends that are reinvested into
additional Shares or credited as Performance Awards.
 
14.3.  No Rights to Awards.  No Person shall have any claim to be granted any
Award, and there is no obligation for uniformity of treatment of Participants or
holders or beneficiaries of Awards. The terms and conditions of Awards need not
be the same with respect to each Participant.
 
14.4.  Share Certificates.  All certificates for Shares or other securities of
the Company or any Affiliate delivered under the Plan pursuant to any Award or
the exercise thereof shall be subject to such stop transfer orders and other
restrictions as the Board may deem advisable under the Plan or the rules,
regulations and other requirements of the SEC or any state securities commission
or regulatory authority, any stock exchange or other market upon which such
Shares or other securities are then listed, and any applicable Federal or state
laws, and the Board may cause a legend or legends to be put on any such
certificates to make appropriate reference to such restrictions.
 
14.5.  Withholding.  A Participant may be required to pay to the Company or any
Affiliate and the Company or any Affiliate shall have the right and is hereby
authorized to withhold from any Award, from any payment due or transfer made
under any Award or under the Plan, or from any compensation or other amount
owing to a Participant the amount (in cash, Shares, other securities, other
Awards or other property) of any applicable withholding or other tax-related
obligations in respect of an Award, its exercise or any other

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transaction involving an Award, or any payment or transfer under an Award or
under the Plan and to take such other action as may be necessary in the opinion
of the Company to satisfy all obligations for the payment of such taxes. The
Board may provide for additional cash payments to holders of Options to defray
or offset any tax arising from the grant, vesting, exercise or payment of any
Award.
 
14.6.  Award Agreements.  Each Award hereunder shall be evidenced by an Award
Agreement that shall be delivered to the Participant and may specify the terms
and conditions of the Award and any rules applicable thereto. In the event of a
conflict between the terms of the Plan and any Award Agreement, the terms of the
Plan shall prevail. The Board shall, subject to applicable law, determine the
date an Award is deemed to be granted. The Board or, except to the extent
prohibited under applicable law, its delegate(s) may establish the terms of
agreements or other documents evidencing Awards under this Plan and may, but
need not, require as a condition to any such agreement’s or document’s
effectiveness that such agreement or document be executed by the Participant,
including by electronic signature or other electronic indication of acceptance,
and that such Participant agree to such further terms and conditions as
specified in such agreement or document. The grant of an Award under this Plan
shall not confer any rights upon the Participant holding such Award other than
such terms, and subject to such conditions, as are specified in this Plan as
being applicable to such type of Award (or to all Awards) or as are expressly
set forth in the agreement or other document evidencing such Award.
 
14.7.  No Limit on Other Compensation Arrangements.  Nothing contained in the
Plan shall prevent the Company or any Affiliate from adopting or continuing in
effect other compensation arrangements, which may, but need not, provide for the
grant of Options or Restricted Shares.
 
14.8.  No Right to Employment.  The grant of an Award shall not be construed as
giving an Employee the right to be retained in the employ of the Company or any
Affiliate. Further, the Company or an Affiliate may at any time dismiss an
Employee from employment, free from any liability or any claim under the Plan,
unless otherwise expressly provided in an Award Agreement.
 
14.9.  No Rights as Stockholder.  Subject to the provisions of the Plan and the
applicable Award Agreement, no Participant or holder or beneficiary of any Award
shall have any rights as a stockholder with respect to any Shares to be
distributed under the Plan until such person has become a holder of such Shares.
Notwithstanding the foregoing, in connection with each grant of Restricted
Shares hereunder, the applicable Award Agreement shall specify if and to what
extent the Participant shall not be entitled to the rights of a stockholder in
respect of such Restricted Shares.
 
14.10.  Governing Law.  The validity, construction and effect of the Plan and
any rules and regulations relating to the Plan and any Award Agreement shall be
determined in accordance with the laws of the State of Maryland without giving
effect to conflicts of laws principles.
 
14.11.  Severability.  If any provision of the Plan or any Award is, or becomes,
or is deemed to be invalid, illegal or unenforceable in any jurisdiction or as
to any Person or Award, or would disqualify the Plan or any Award under any law
deemed applicable by the Board, 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 the Plan or the Award, such provision shall be stricken as to such
jurisdiction, Person or Award and the remainder of the Plan and any such Award
shall remain in full force and effect.
 
14.12.  Other Laws.  The Board may refuse to issue or transfer any Shares or
other consideration under an Award if, acting in its sole discretion, it
determines that the issuance or transfer of such Shares or such other
consideration might violate any applicable law or regulation (including
applicable non-U.S. laws or regulations) or entitle the Company to recover the
same under Exchange Act Section 16(b), and any payment tendered to the Company
by a Participant, other holder or beneficiary in connection with the exercise of
such Award shall be promptly refunded to the relevant Participant, holder or
beneficiary.
 
14.13.  No Trust or Fund Created.  Neither the Plan nor any Award shall create
or be construed to create a trust or separate fund of any kind or a fiduciary
relationship between the Company or any Affiliate and a Participant or any other
Person. To the extent that any Person acquires a right to receive payments from

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the Company or any Affiliate pursuant to an Award, such right shall be no
greater than the right of any unsecured general creditor of the Company or any
Affiliate.
 
14.14.  No Fractional Shares.  No fractional Shares shall be issued or delivered
pursuant to the Plan or any Award, and the Board shall determine whether cash,
other securities or other property shall be paid or transferred in lieu of any
fractional Shares or whether such fractional Shares or any rights thereto shall
be canceled, terminated or otherwise eliminated.
 
14.15.  Headings.  Headings are given to the sections and subsections of the
Plan solely as a convenience to facilitate reference. Such headings shall not be
deemed in any way material or relevant to the construction or interpretation of
the Plan or any provision thereof.
 
14.16.  1940 Act.  No provision of this Plan shall 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 changes to their Awards and such
change shall be binding on such Participant.
 
Section 15.  Term Of The Plan.
 
15.1.  Effective Date.  The Plan shall become effective upon approval by the
stockholders of the Company and the Board; provided, however, that the Plan
shall not be effective with respect to any Award to a Non-Employee Director or
any award of Restricted Shares unless the Company has received an order from the
SEC that permits such Award.
 
15.2.  Expiration Date.  No new Awards shall be granted under the Plan after the
tenth anniversary of the Effective Date. Unless otherwise expressly provided in
the Plan or in an applicable Award Agreement, any Award granted hereunder may,
and the authority of the Board to amend, alter, adjust, suspend, discontinue or
terminate any such Award or to waive any conditions or rights under any such
Award shall, continue after the tenth anniversary of the Effective Date.

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