Exhibit 10.63

 

2006 EMPLOYEE RESTRICTED STOCK PLAN

 

1. PURPOSE OF THE PLAN

 

The purpose of this MCG Capital Corporation 2006 Employee Restricted Stock Plan
(this “Plan”) is to advance the interests of MCG Capital Corporation (the
“Company”) and its consolidated subsidiaries by providing to employees of the
Company and its consolidated subsidiaries additional incentives, to the extent
permitted by law, to exert their best efforts on behalf of the Company, to
increase their proprietary interest in the success of the Company, to reward
outstanding performance and to provide a means to attract and retain persons of
outstanding ability to the service of the Company. It is recognized that the
Company’s efforts to attract or retain these individuals will be facilitated
with this additional form of compensation.

 

2. ADMINISTRATION

 

This Plan shall be administered by the Compensation Committee (the “Committee”)
of the Company’s Board of Directors (“Board”), which Committee is comprised
solely of directors who are not interested persons of the Company within the
meaning of Section 2(a)(19) of the Investment Company Act of 1940, as amended
(the “Act”). The Committee shall interpret this Plan and, to the extent and in
the manner contemplated herein, shall exercise the discretion reserved to it
hereunder. The Committee from time to time may prescribe, amend and rescind
rules and regulations relating to this Plan and may make and approve all other
determinations necessary for its administration. The decision of the Committee
on any interpretation of this Plan or administration hereof, if in compliance
with the provisions of the Act and regulations promulgated thereunder, shall be
final and binding with respect to the Company.

 

3. SHARES SUBJECT TO THE PLAN

 

The shares subject to this Plan shall be shares of the Company’s common stock,
par value $0.01 per share (“Shares”). Subject to the provisions hereof
concerning adjustment, the total number of shares that may be awarded as
restricted shares under this Plan shall not exceed 3,500,000 Shares. Any Shares
that are granted pursuant to an award of restricted stock under this Plan but
that are subsequently forfeited pursuant to the terms of the Plan or an award
agreement shall again be available for granting under this Plan. Shares may be
made available under this Plan from authorized, un-issued, forfeited or
reacquired stock or partly from each.

 

4. PARTICIPANTS

 

(A) Employees. The Committee shall determine and designate from time to time
those employees of the Company and its consolidated subsidiaries who shall be
eligible to participate in this Plan (the “Participants”). The Committee shall
also determine the number of Shares to be offered from time to time to the
Participants. In making these determinations, the Committee may take into
account, among other things, the past service of such Participants on behalf of
the Company and its consolidated subsidiaries, the present and potential
contributions of such Participants to the success of the Company and its
consolidated subsidiaries and such other factors as the Committee from time to
time shall deem relevant in connection with accomplishing the purposes of this
Plan.

 

(B) Award Agreements. All Shares of restricted stock granted to Participants
under the Plan will be governed by an agreement. The agreement documenting the
award of any restricted stock granted pursuant to this Plan shall contain such
terms and conditions as the Committee from time to time shall deem advisable,
including but not limited to the lapsing of forfeiture restrictions, only in
such installments as the Committee may determine or otherwise prescribe.
Agreements governing 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.

 

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5. RESTRICTED STOCK

 

Each agreement governing an award of restricted stock shall state the number of
Shares subject to the award, the terms and conditions pursuant to which such
Participant shall acquire a non-forfeitable right to the Shares awarded as
restricted stock through the lapsing of forfeiture provisions and the timing of
the lapsing of forfeiture provisions, all as from time to time determined or
otherwise prescribed by the Committee. Shares awarded as restricted stock to
some or all of the Participants, as determined from time to time by the
Committee, may be subject to forfeiture provisions relating to continued
employment during stated periods of time and/or may include for key employees
and other Participants forfeiture provisions relating to the achievement of one
or more objective performance goals based upon attainment of specified levels of
any one or more of the following business criteria: dividend coverage, operating
income, growth in operating income, capital gains, asset quality, levels of
non-accrual or other challenged investments, and/or investment charge-offs,
and/or may also include any one or more of the following additional business
criteria: asset growth, revenue, revenue growth, operating efficiency, division,
group or corporate financial goals, total shareholder return, attainment of
strategic and operational initiatives, appreciation in and/or maintenance of the
price of the Shares or any other publicly-traded securities of the Company,
and/or comparisons with various stock market indices. The Committee shall have
the power to impose such other conditions or restrictions on Awards subject to
this Section as it may deem necessary or appropriate to ensure that such Awards
satisfy all requirements for “performance-based compensation” within the meaning
of Section 162(m) of the Internal Revenue Code.

 

6. LIMITATIONS ON RESTRICTED STOCK AWARDS

 

Grants of restricted stock awards shall be subject to the following limitations:

 

(A) No one Participant shall be granted awards of restricted stock relating to
more than 25% of the Shares available for issuance under this Plan.

 

(B) In any fiscal year, no Participant may be granted awards under this Plan
related to more than 500,000 Shares.

 

(C) The total number of shares that may be outstanding as restricted shares
under all of the Company’s compensation plans shall not exceed ten (10) percent
of the total number of Shares authorized and outstanding at any time.

 

(D) 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 stock issued pursuant to this Plan and any other compensation plan of
the Company, at the time of issuance shall not exceed 25% of the outstanding
voting securities of the Company, provided, however, 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 stock issued pursuant to
this Plan and any other compensation plan of the Company, 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, at the time of issuance shall not exceed 20% of the
outstanding voting securities.

 

(E) Shares of restricted stock will not be granted under this Plan at any time
when the Shares are trading at a price below net asset value.

 

7. TRANSFERABILITY OF RESTRICTED STOCK

 

While subject to forfeiture provisions, Shares of restricted stock granted under
this Plan shall not be transferable other than to the spouse or lineal
descendants (including adopted children) of the Participant, any trust for the
benefit of the Participant or the benefit of the spouse or lineal descendants
(including adopted children) of the Participant, or the guardian or conservator
of the Participant (“Permitted Transferees”).

 

8. TERMINATION OF RESTRICTED STOCK AWARDS

 

A Participant’s rights to Shares awarded as restricted stock under this Plan
shall, under all circumstances, be set forth in the agreement governing the
award of such Shares of restricted stock.

 

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9. EFFECT OF CHANGE IN STOCK SUBJECT TO THE PLAN

 

Subject to any required action by the shareholders of the Company and the
provisions of applicable corporate law, the number of Shares that has been
authorized or reserved for issuance, grant or award under this Plan and the
number of Shares covered by any applicable vesting or forfeiture schedule
hereunder, shall be proportionately adjusted for (a) a division, combination or
reclassification of any of the Shares or (b) a dividend payable in Shares.

 

10. MISCELLANEOUS PROVISIONS

 

(A) The Board will review the Plan at least annually. In addition, the Committee
will review periodically the potential impact that issuances of awards under
this Plan could have on the Company’s earnings and net asset value per Share,
such review to take place prior to any decisions to grant awards under this
Plan, but in no event less frequently than annually.

 

(B) The Committee is authorized to take appropriate steps to ensure that neither
the grant of nor the lapsing of the forfeiture restrictions on awards under this
Plan would have an effect contrary to the interests of the Company’s
stockholders. This authority includes the authority to prevent or limit the
granting of additional awards under this Plan.

 

(C) The granting of any award under the Plan shall not impose upon the Company
any obligation to employ or continue to employ any Participant, and the right of
the Company and its subsidiaries to terminate the employment of any Participant
or other employee shall not be diminished or affected by reason of the fact that
an award has been made under the Plan to such Participant.

 

(D) All awards under this Plan shall be made within ten years from the earlier
of the date of adoption of this Plan (or any amendment thereto requiring
shareholder approval pursuant to the Code) or the date this Plan (or any
amendment thereto requiring shareholder approval pursuant to the Code) is
approved by the stockholders of the Company.

 

(E) A leave of absence granted to an employee does not constitute an
interruption in continuous employment for purposes of this Plan as long as the
leave of absence does not extend beyond 12 complete calendar months.

 

(F) Any notices given in writing shall be deemed given if delivered in person or
by certified mail; if given to the Company addressed to its Corporate Secretary
at MCG Capital Corporation, 1100 Wilson Boulevard, Suite 3000, Arlington, VA
22209.

 

(E) This Plan and all actions taken by those acting under this Plan shall be
governed by the substantive laws of Delaware without regard to any rules
regarding conflict-of-law or choice-of-law.

 

(F) All costs and expenses incurred in the operation and administration of this
Plan shall be borne by the Company.

 

11. AMENDMENT AND TERMINATION

 

The Board may modify, revise or terminate this Plan at any time and from time to
time, subject to applicable requirements in (a) the Company’s articles of
incorporation or by-laws and (b) applicable law and orders. The Board shall seek
stockholder approval of any action modifying a provision of the Plan where it is
determined that such stockholder approval is approprite under the provisions of
(a) applicable law or orders, or (b) the Company’s articles of incorporation or
by-laws. This Plan shall terminate when all Shares reserved for issuance

 

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hereunder have been issued and the forfeiture restrictions on all restricted
stock awards have lapsed, or by action of the Board pursuant to this paragraph,
whichever shall first occur.

 

12. EFFECTIVE DATE OF THE PLAN

 

The Plan shall become effective upon the latest to occur of (1) adoption by the
Board, and (2) approval of this Plan by the shareholders of the Company.

 

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