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Exhibit 10.3

CAPITAL SOUTHWEST CORPORATION

Form of

Amended and Restated Non-Qualified Stock Option Agreement

This Amended and Restated Non-Qualified Stock Option Agreement (this
“Agreement”) is entered into as of September [__], 2015 (the “Effective Date”),
between Capital Southwest Corporation (the “Company”) and ____________________
(the “Optionee”).

WHEREAS, the Company and Optionee currently are parties to a Non-Qualified Stock
Option Agreement, dated August 28, 2014 (the “Prior Agreement”), and the Company
and Optionee desire to amend and restate the Prior Agreement; and

WHEREAS, this Agreement shall supersede and completely replace the Prior
Agreement as of the Effective Date.

NOW, THEREFORE, in consideration of the mutual covenants contained herein and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:

Date of Grant:
August 28, 2014
   
Name of Optionee:
[--------------------------------]
   
Number of Shares:
[------] Shares of Common Stock (the “Shares”)
   
Exercise Price Per Share:
$36.16 per Share, which exceeds the Fair Market Value of the Shares as of the
Date of Grant as determined in accordance with the Capital Southwest Corporation
2009 Stock Incentive Plan, as amended (the “Plan”)
   
Expiration Date:
August 28, 2024
   
Vesting Schedule:
1/3 exercisable beginning on the Trigger Event Date; an additional 1/3
exercisable beginning on the first anniversary of the Trigger Event Date; and
the final 1/3 exercisable beginning on the second anniversary of the Trigger
Event Date

The Company hereby awards to the Optionee an option (the “Option”) to purchase
from the Company, for the exercise price per share set forth above (the
“Exercise Price”), the number of shares of Common Stock of the Company set forth
above pursuant to the Plan.  The Option is not intended by the parties hereto to
be, and shall not be treated as, an “incentive stock option” within the meaning
of Section 422 of the Internal Revenue Code of 1986, as amended (the “Code”). 
The Option is not intended to be a Qualified Performance-Based Award under the
Plan.
 

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To the extent not controlled by the terms and conditions contained in the Plan,
the terms and conditions of the Option granted hereby shall be governed by this
Agreement.

1. No Right to Continued Employee Status

Nothing contained in this Agreement shall confer upon Optionee the right to the
continuation of his or her Employee status, or to interfere with the right of
the Company or other member of the Company Group, as applicable, to terminate
such relationship.

2. Vesting of Option

(a)                 The Option shall vest in accordance with the Vesting
Schedule set forth above.

(b)                Notwithstanding anything to the contrary, all unvested
Options shall automatically vest in full and become exercisable upon the
occurrence of any of the following events following the Trigger Event Date: (i)
a Change of Control; (ii) a Termination of Service by the Optionee for Good
Reason; (iii) a Termination of Service by the Company Group member employing the
Optionee without Cause, (iv) a Termination of Service due to the Optionee’s
Disability; or (v) a Termination of Service due to the Optionee’s death. 
Notwithstanding anything to the contrary, in the event a Change of Control or a
Termination of Service for one of the reasons described in this Section 2(b)
occurs on or before the Trigger Event Date, the Options shall vest in full and
become exercisable on the Trigger Event Date.  For purposes hereof,

i. “Good Reason” means the occurrence of any of the following: (A) a material
breach of the Optionee’s employment agreement by the employer; (B) a reduction
in the Optionee’s title or a material reduction in the Optionee’s duties,
authorities, and/or responsibilities; (C) a material reduction in the Optionee’s
compensation or benefits; or (D) a requirement by the employer, without the
Optionee’s consent, that the Optionee relocate to a location greater than
thirty‑five (35) miles from the Optionee’s place of residence; provided,
however, such events will not constitute “Good Reason” unless (1) the Optionee
gives the employer notice of the existence of an event described above within
ninety (90) days following the initial occurrence thereof, (2) the employer does
not remedy such event within thirty (30) days of receiving the notice described
in the preceding clause (1) and (3) the Optionee terminates employment within
twelve (12) months of the end of the cure period described in the preceding
clause (2); and

ii. “Trigger Event” means a transformative transaction intended to increase the
market value of the Company equity for the benefit of its shareholders, which
may involve, for example, a spinoff of one or more wholly-owned subsidiaries of
the Company (collectively, “Spinco”), a going private transaction, a leveraged
recapitalization, or termination of the Company’s regulated investment company
status; and

 
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iii. “Trigger Event Date” means the 90th day following the consummation of the
Trigger Event, unless the Trigger Event is a going private transaction, in which
case the Trigger Event Date shall be the closing date of such transaction.

(c)                 Except with respect to the Optionee’s Termination of Service
for one of the reasons described in Section 2(b), all unvested Options as of the
Optionee’s Termination of Service shall expire and be forfeited immediately upon
such Termination of Service.

(d)                 In the case of a Termination of Service, vested Options
(including Options vesting pursuant to Section 2(b)) shall be exercisable during
the six (6) months following the later of the date of termination and the
Trigger Event Date, subject in the case of a termination for Cause, to the
provisions of Section 7(e) of the Plan

3. Exercise; Transferability

(a)                 Exercise Method.  The Option shall be exercised by delivery
to the Company of (i) written notice of exercise stating the number of Shares
being purchased (in whole shares only) and such other information set forth on
the form of Notice of Exercise attached to this Agreement as Exhibit A and (ii)
a check or cash in the amount of the Exercise Price of the Shares covered by the
notice (or such other consideration as has been approved by the Board of
Directors consistent with the Plan).  Optionee may also exercise the Option
through a cashless exercise in accordance with the Plan and the Company’s rules
and procedures governing cashless exercises.  Any cashless exercise permitted
hereunder will be subject to any applicable limitations or restrictions imposed
under the Sarbanes-Oxley Act of 2002.

(b)                 Transferability.  Unless otherwise required by law, the
Option shall not be assignable or transferable other than by will, by the laws
of descent and distribution, or by a qualified domestic relations order, and may
be exercised during the lifetime of the Optionee only by the Optionee (or the
Optionee’s guardian or legal representative) or an alternate payee under a
qualified domestic relations order.

4. Certain Adjustments

Adjustments to the Option shall be effected in accordance with Section 16(a) of
the Plan.

5. Termination of Service

The transfer of Optionee’s employment to Spinco will not constitute a
Termination of Service under this Agreement and the Optionee will be considered,
for purposes of this Agreement, to be an Employee of the Company Group for so
long as Optionee’s employment with Spinco continues, notwithstanding that Spinco
ceases to be a subsidiary of the Company.

6. Notices

Any notice required to be given pursuant to this Agreement or the Plan shall be
in writing and shall be deemed to be delivered upon receipt or, in the case of
notices by the Company, five (5) days after deposit in the U.S. mail, postage
prepaid, addressed to Optionee at the address last provided by Optionee for his
or her employee records.
 

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7. Modification, Extension and Renewal of Options

The Board or Committee, as described in the Plan, may modify, extend or renew
the Option or accept its surrender (to the extent not yet exercised) and
authorize the granting of a new option in substitution for it (to the extent not
yet exercised), subject at all times to the Plan, the Code, and the applicable
laws of the State of Texas.  Notwithstanding the foregoing provisions of this
Section 7, no modification shall, without the consent of the Optionee, alter to
the Optionee’s detriment or impair any rights of the Optionee under this
Agreement except to the extent permitted under the Plan.

8. Agreement Subject to Plan; Applicable Law

This Agreement is made pursuant to the Plan and shall be interpreted to comply
therewith.  A copy of the Plan is attached hereto.  Any provision of this
Agreement inconsistent with the Plan shall be considered void and replaced with
the applicable provision of the Plan.  This Agreement shall be governed by the
laws of the State of Texas and subject to the exclusive jurisdiction of the
courts therein.  Unless otherwise provided herein, capitalized terms used herein
that are defined in the Plan and not defined herein shall have the meanings set
forth in the Plan.
 

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement on as of the
date first above written.

COMPANY:

CAPITAL SOUTHWEST CORPORATION

By:
   
Name:
 
Title:
     
OPTIONEE:
     
Name:
     
Address:
 

 
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EXHIBIT A

Capital Southwest Corporation

NON-QUALIFIED STOCK OPTION EXERCISE FORM

Date:
         
Attention:
   

The undersigned hereby elects to exercise all or a portion of the Options issued
to him/her by Capital Southwest Corporation (the “Company”) and dated August 28,
2014 (the “Options”) and to purchase ____________ shares of common stock of the
Company (the “Shares”) at an exercise price of _______ Dollars ($___) per share
or an aggregate purchase price of ________________________ Dollars ($_______)
(the “Exercise Price”).  Pursuant to the terms of the Option Agreement the
undersigned has delivered the Exercise Price herewith in full in cash or
______________.

Please issue a certificate or certificates representing said shares of common
stock in the name of the undersigned.

By:
         
Typed Name:
   

Address:

 

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