Document:

Exhibit 10.3

 

MAIN STREET CAPITAL CORPORATION

DEFERRED COMPENSATION PLAN FOR NON-EMPLOYEE DIRECTORS

 

1.                                      Purpose and Effective Date.  The purpose of this Plan is to provide the non-employee members of the Board of Directors of the Company with an opportunity to defer payment of all or a portion of their annual retainer.  The Plan shall be effective as of June 3, 2013.

 

2.                                      Definitions. The following terms shall have the meanings given in this section unless a different meaning is clearly implied by the context:

 

(a)                                 “Board” means the board of directors of Main Street Capital Corporation.

 

(b)                                 “Company” means Main Street Capital Corporation.

 

(c)                                  “Deferred Compensation Account” means an account maintained for each director who makes a deferral election as described in Section 4.

 

(d)                                 “Fair Market Value” means the greater of (i) the closing price of the common stock of the Company on the trading day preceding the date the retainer or hypothetical dividend, as applicable, would otherwise be payable, as reported on the New York Stock Exchange - Composite Transactions or on such other exchange on which the Company’s common stock is traded and (ii) the most recently determined net asset value of the common stock of the Company immediately prior to or on each such applicable trading day.

 

(e)                                  “Plan” means the Main Street Capital Corporation Deferred Compensation Plan for Non-Employee Directors.

 

(f)                                   “Plan Administrator” means the Corporate Secretary of the Company or his or her designee.

 

(g)                                  “Retainer” means the annual cash retainer receivable for service as a director of the Company, but not lead director retainers, chairperson retainers, meeting fees, or any other compensation or expense reimbursement.

 

3.                                      Eligibility.  All members of the Board who are not employees of the Company or any subsidiary or affiliate of the Company shall be eligible to participate in the Plan.

 

4.                                      Election to Defer Retainer.

 

(a)                                 Manner and Amount of Deferral Election.  A participant may elect to defer receipt of all or a specified portion of the Retainer by giving written notice on an election form provided by the Plan Administrator specifying the amount of the deferral.  The amount of the deferral shall be $25,000, $50,000, $75,000, $100,000, or 100% of the Retainer, or such other amounts or percentages permitted by the Plan Administrator and specified on the election form.

 

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(b)                             Time of Election.  Elections to defer the Retainer shall be made at the following times:

 

(i)                                     A sitting director may elect to defer the Retainer, or change or discontinue a prior election to defer the Retainer, at such time or times during the calendar year as permitted by the Plan Administrator.  Such election shall be effective for Retainers paid in the following calendar year and thereafter.

 

(ii)                                  A nominee for election to director (who is not at the time of nomination a sitting director and was not previously eligible to participate in this Plan) may elect to defer the Retainer any time prior to election to the Board and prior to commencing service as a director.  Such deferral election shall be effective for Retainers paid on and following the director’s commencement of services as a director.

 

(iii)                               A sitting director who is a director as of the date of adoption of the Plan may elect to defer the Retainer no later than June 12, 2013.  Such deferral election shall be effective for Retainers paid on and following June 13, 2013.

 

(c)                                  Change in, or Discontinuance of, Deferral Election.  Unless changed or discontinued in accordance with Section 4(b)(i), a deferral election shall continue in effect with respect to each Retainer paid until the end of the participant’s service as a director.

 

5.                                      Deferred Compensation Accounts.  The Company shall establish on its books and records a Deferred Compensation Account for each participant, as provided below.

 

(a)                                 A deferred Retainer shall be credited to the participant’s Deferred Compensation Account.  The Company shall credit to the Deferred Compensation Account that number of phantom stock units that is equal to the number of whole and fractional shares of common stock of the Company that could be purchased at Fair Market Value with an amount equal to such deferral.

 

(b)                                 The phantom stock units held in a participant’s Deferred Compensation Account shall be credited with hypothetical dividends.  Hypothetical dividends are an amount equal to dividends actually paid, from time to time, on shares of the Company’s common stock, determined as if the number of phantom stock units credited to the participant’s Deferred Compensation Account were actual shares of common stock on the record date of such dividend. Hypothetical dividends will be treated as if they had been used to purchase at Fair Market Value the number of whole and fractional phantom stock units that could be purchased with an amount equal to such hypothetical dividends.

 

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6.                                      Payment of Deferred Compensation.

 

(a)                                 Time and Manner of Payment.  A participant’s Deferred Compensation Account under the Plan shall be distributed in a lump sum within 90 days of the participant’s separation from service (within the meaning of section 409A of the Internal Revenue Code) with the Company.  In the event of a participant’s death prior to separation from service, the Deferred Compensation Account shall be distributed to the participant’s estate in a lump sum within 90 days of the date of death, provided, however, that if the Plan Administrator permits the designation of a beneficiary under the Plan, then the Deferred Compensation Account shall be distributed to such beneficiary or, if none, to the participant’s estate in a lump sum within 90 days of the date of death.

 

(b)                                 Medium of Payment.  Payments from the Deferred Compensation Account shall be made in whole shares of the Company’s common stock for each whole phantom stock unit, and in cash for any fractional phantom stock unit.  Shares of the Company’s common stock paid to directors under the Plan shall be paid with newly issued shares or shares purchased by the Company on the New York Stock Exchange or on such other exchange on which the Company’s common stock is traded.

 

7.                                      Unfunded Promise to Pay; No Segregation of Funds or Assets.  Nothing in this Plan shall require the segregation of any assets of the Company or any type of funding by the Company, it being the intention of the parties that the Plan be an unfunded arrangement for federal income tax purposes.  No participant shall have any rights to or interest in any specific assets or shares of common stock of the Company by reason of the Plan, and any participant’s rights to enforce payment of the obligations of the Company hereunder shall be those of a general creditor of the Company.

 

8.                                      Restricted Securities.  The shares of the Company’s common stock paid to directors under the Plan, whether newly issued shares or previously issued shares acquired by the Company, will be deemed to be “restricted securities” within the meaning of Rule 144 under the Securities Act of 1933.  Accordingly, such shares must be resold in compliance with the registration requirements of the Securities Act of 1933 or an exemption therefrom.

 

9.                                      Nonassignability.  The right of a participant to receive any unpaid portion of the participant’s Deferred Compensation Account shall not be assigned, transferred, pledged or encumbered or subjected in any manner to alienation or anticipation.

 

10.                               Administration.  This Plan shall be administered by the Plan Administrator, who shall have the authority to adopt rules and regulations for carrying out the Plan and to interpret, construe and implement the provisions thereof.  The Plan Administrator’s interpretation of the Plan shall be final and binding on all parties.  In the event of any stock split, reverse stock split, merger, reorganization, extraordinary dividend or other similar transaction or event affecting the common stock of the Company, the Plan Administrator is authorized to make appropriate adjustments to participants’ Deferred Compensation Accounts to reflect such transactions or events.

 

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11.                               Construction.  The Plan is intended to comply with Internal Revenue Code Section 409A and any regulations and guidance thereunder and shall be interpreted and operated in accordance with such intent.  The laws of the state of Texas shall govern all questions of law arising with respect to the Plan, without regard to the choice of law principles of any jurisdiction, except where the laws governing the Plan are preempted by the laws of the United States.  The Plan is intended to be construed so that participation in the Plan will be exempt from Section 16(b) of the Exchange Act pursuant to regulations and interpretations issued from time to time by the Securities and Exchange Commission.  If any provision of the Plan is held to be illegal or void, such illegality or invalidity shall not affect the remaining provisions of the Plan, but shall be fully severable, and the Plan shall be construed and enforced as if the illegal or invalid provision had never been inserted.  This document constitutes the entire Plan, and supersedes any prior oral or written agreements on the subject matter hereof.

 

12.                               Amendment and Termination.  The Board is authorized to make any amendments and modifications to the Plan at any time, and the Plan Administrator is authorized to make amendments and modifications to the Plan that he or she deems necessary for ease of administration and for carrying out the purpose of the Plan.  The Board may terminate the Plan and distribute the Deferred Compensation Accounts to participants in accordance with and subject to the rules of Treas. Reg. §1.409A-3(j)(4)(ix), or successor provisions, and any generally applicable guidance issued by the Internal Revenue Service permitting such termination and distribution.  Notwithstanding the foregoing, no such amendment, modification, or termination shall, without the consent of a participant, adversely affect the amounts theretofore accrued in the participant’s Deferred Compensation Account.

 

4Exhibit 10.4

 

MANAGEMENT AGREEMENT

 

THIS MANAGEMENT AGREEMENT (this “Agreement”) is made effective as of August 6, 2013 (the “Effective Date”), by and between Todd A. Reppert (“Mr. Reppert”), Main Street Capital Corporation, a Maryland corporation (the “Company”), and Main Street Capital Partners, LLC, a Delaware limited liability company (“MSCP” and, together with the Company, “Main Street”).

 

The Company, MSCP and Mr. Reppert (each a “Party” and collectively, the “Parties” to this Agreement), intending to be legally bound, agree as follows:

 

Recitals:

 

WHEREAS, simultaneous to entering into this Agreement, Mr. Reppert retired, effective immediately, as a member of the board of directors and as Executive Vice Chairman of the Company; and

 

WHEREAS, Main Street desires to continue to retain Mr. Reppert as a non-employee manager and member of the investment committee (“Manager”) of Main Street Mezzanine Management, LLC and Main Street Capital II GP, LLC, the general partners (the “General Partners”) of Main Street Mezzanine Fund, LP and Main Street Capital II, LP, respectively, wholly owned small business investment company subsidiaries (the “SBICs”) of the Company while certain regulatory approvals are sought; and

 

WHEREAS, MSCP, a wholly owned subsidiary of the Company, is the investment manager of the SBICs.

 

Agreement:

 

Services.  Main Street hereby agrees to retain Mr. Reppert and Mr. Reppert hereby accepts such engagement upon the terms and conditions hereinafter set forth.

 

Duties.  Mr. Reppert shall continue to serve as a Manager to the General Partners of the SBICs on behalf of Main Street and shall fulfill such other duties as are typical, customary and consistent with such role or as are assigned to him from time to time by Main Street.  During the Term (defined below), Mr. Reppert shall devote a reasonable amount of his time and attention to effectively perform his duties hereunder. The relationship between Main Street and Mr. Reppert is that of principal-independent contractor and the activities conducted by the parties pursuant to this Agreement shall not create a partnership, joint venture or employer-employee relationship between them.

 

Compensation.  In consideration for the services to be rendered by Mr. Reppert hereunder and for all rights and covenants granted herein, MSCP shall pay to Mr. Reppert a fee of $41,666.00 per month of the Term, which fee shall be payable on the last day of each month, prorated for any partial month.  This fee shall be paid in accordance with the customary practices of Main Street and subject to such deductions, if any, as are required by applicable law and regulations.  Mr. Reppert will also be reimbursed for all costs and expenses reasonably incurred by him in accordance with

 

 

the performance of his duties herein pursuant to Main Street’s normal expense reimbursement policies.

 

Term.  The engagement of Mr. Reppert hereunder shall commence on the date first set forth above and continue month to month until terminated by any Party in its sole discretion upon 10 days written notice to the other Parties, subject to approval of the U.S. Small Business Administration (the “Term”).

 

Indemnity Agreement.  For the avoidance of doubt, Mr. Reppert is serving as a Manager of the General Partners at the request of Main Street, and therefore the Indemnity Agreement between the Company and Mr. Reppert dated October 4, 2007 (the “Indemnity Agreement”) shall fully cover his actions in such role, and the term of the Indemnity Agreement shall extend to at least 10 years from the date he no longer serves in such role.

 

Termination.  Upon termination of the Agreement pursuant to its terms, Mr. Reppert shall be entitled to his unpaid fee, if any, up to the date of such termination.  Except for such payments of unpaid fees and any payments pursuant to the Indemnity Agreement, Mr. Reppert will not be entitled to or eligible to receive any benefits, injunctive or other equitable relief, damages or other payments of any kind under this Agreement.  Subsequent to the termination of this Agreement, Mr. Reppert will also remain reasonably available for periodic consulting on Main Street matters as requested by Main Street for no additional consideration.

 

Noncompete.  (a) In consideration for (i) Main Street entering into this Agreement and (ii) the Company accelerating the vesting of all of the unvested shares of restricted stock of the Company previously granted to Mr. Reppert, which Mr. Reppert acknowledges constitute good and valuable consideration, Mr. Reppert agrees that, during a 90 day period beginning at the end of the Term (the “Noncompete Period”), he shall not, directly or indirectly, without the prior written consent of the Company:

 

(i)            refer any investment opportunity that meets Main Street’s or its affiliates investment strategies to any institutional investor, including business development companies, small business investment companies or other institutional funds or investors that would be considered competitive to Main Street’s customary investment activities, but excluding a fund managed by Mr. Reppert and any individual industry or business knowledgeable co-investors, unless the investment opportunity has been previously offered to Main Street for investment and/or co-investment therein and passed on by Main Street for participation; or

 

(ii)           (A) induce or attempt to induce any employee of Main Street or any of its affiliates to leave their employ; (B) employ, retain or otherwise engage (other than on Main Street’s or any of its affiliates’ behalf) as an employee, independent contractor, consultant or otherwise, any such employee of Main Street or any of its affiliates; or (C) induce or attempt to induce any investor, supplier, lender, consultant or other person or entity to cease doing business with Main Street or any of its affiliates.

 

(b)  In the event of a breach by Mr. Reppert of this Noncompete section, the terms of such covenant will be extended by the period of the duration of such breach.  Mr. Reppert shall not, at

 

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any time during or after the Noncompete Period, disparage Main Street or any affiliate, member, manager, director, officer, employee, independent contractor or agent of Main Street to any person or otherwise interfere with Main Street’s or any of its affiliates’ relationship with any current or potential investor, supplier, lender or consultant of Main Street or any of its affiliates. If Mr. Reppert breaches any of the covenants set forth in this Noncompete section, Main Street will be entitled to (A) damages from Mr. Reppert, as the case may be; (B) obtain injunctive or other equitable relief to restrain any breach or threatened breach and otherwise to specifically enforce the provisions of this Noncompete section, it being agreed that money damages alone are inadequate to compensate Main Street and are an inadequate remedy for such breach;  and (C) any other remedy or remedies available at law or in equity.

 

Release.  In exchange for the consideration provided and described in the Noncompete section herein and Main Street’s release below, Mr. Reppert and his affiliates, for themselves, their heirs, executors, administrators, successors and assigns, do fully and forever release and discharge Main Street and its affiliates as the parties released, from all actions, lawsuits, grievances, and claims of any nature whatsoever, excluding fraud, willful misconduct or gross negligence of the parties released hereby.  In exchange for the services provided by Mr. Reppert hereunder and his release above, Main Street and its affiliates, for themselves, their heirs, executors, administrators, successors and assigns, do fully and forever release and discharge Mr. Reppert and his affiliates as the parties released, from all actions, lawsuits, grievances, and claims of any nature whatsoever, excluding fraud, willful misconduct or gross negligence of the parties released hereby.  The releases above specifically include, but are not limited to, all claims arising under any federal, state or local fair employment practice laws, workers’ compensation laws, and any other employee relations statute, executive order, law and ordinance, including, but not limited to, Chapter 21 of the Texas Labor Code; the Age Discrimination in Employment Act, Title VII of the Civil Rights Acts of 1964, as amended; the Civil Rights Act of 1991; the Americans With Disabilities Act of 1990, as amended; The Employee Retirement Income Security Act of 1974, as amended; the Family and Medical Leave Act, as amended; any state or local human rights law; and any tort or contract cause of action or theory.  Notwithstanding the foregoing, nothing herein shall preclude either party from enforcing the terms of this Agreement or the Indemnity Agreement.

 

Confidentiality.  Mr. Reppert agrees to protect all confidential and proprietary information of Main Street and its affiliates from unauthorized disclosure or access, and undertakes not to use any such information for any unlawful purpose.

 

Successors and Assigns.  This Agreement shall be binding upon Main Street and Mr. Reppert and will inure to the benefit of Main Street, its affiliates, successors and assigns.

 

Waiver.  Neither the failure nor any delay by any Party in exercising any right, power or privilege under this Agreement will operate as a waiver of such right, power or privilege, and no single or partial exercise of any such right, power or privilege will preclude any other or further exercise of such right, power or privilege or the exercise of any other right, power or privilege.

 

Governing Law.  This Agreement will be governed by the laws applied by courts of the State of Texas to contracts entered into within that state by parties residing within that state.

 

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Severability.  Whenever possible, each provision and term of this Agreement will be interpreted in a manner to be effective and valid, but if any provision or term of this Agreement is held to be prohibited or invalid, then such provision or term will be ineffective only to the extent of such prohibition or invalidity, without invalidating or affecting in any manner whatsoever the remainder of such provision or term or the remaining provisions or terms of this Agreement.

 

Entire Agreement.  This Agreement constitutes the entire agreement between the Parties with respect to the subject matter of this Agreement and supersedes all prior written and oral agreements and understandings between the Parties with respect to the subject matter of this Agreement.  This Agreement may not be amended except by a written agreement executed by the Party to be charged with the amendment.

 

[Signature Page Follows]

 

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IN WITNESS WHEREOF, the Parties have executed and delivered this Agreement on the date first above written.

 

 

	
 
    	
/s/ Todd A. Reppert
    
	
 
    	
Todd A. Reppert
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
COMPANY:
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
MAIN STREET CAPITAL   CORPORATION
    
	
 
    	
a Maryland   corporation
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Vincent D. Foster
    
	
 
    	
Name:
    	
Vincent D. Foster
    
	
 
    	
Title:
    	
Chief Executive Officer
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
MSCP:
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
MAIN STREET CAPITAL   PARTNERS, LLC
    
	
 
    	
a Delaware   limited liability company
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Vincent D. Foster
    
	
 
    	
Name:
    	
Vincent D. Foster
    
	
 
    	
Title:
    	
Senior Managing Director
    

 

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