UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
8-K
CURRENT
REPORT
Pursuant
to Section 13 OR 15(d) of
The
Securities Exchange Act of 1934
Date
of
Report (Date of earliest event reported) June
13, 2008
Kohlberg
Capital Corporation
(Exact
name of registrant as specified in its charter)
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Delaware
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814-00735
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20-5951150
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(State
or other jurisdiction
of
incorporation)
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(Commission
File Number)
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(IRS
Employer Identification No.)
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295
MADISON AVENUE
NEW
YORK, NY
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10017
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(Address
of principal executive offices)
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(Zip
Code)
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Registrant's
telephone number, including area code: (212)
455-8300
(Former
name or former address, if changed since last report)
Check
the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions:
o
Written
communications
pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o
Soliciting
material pursuant to Rule 14a-12 under the
Exchange Act (17 CFR 240.14a-12)
o
Pre-commencement
communications pursuant to Rule
14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o
Pre-commencement
communications pursuant to Rule
13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 5.02.
Departure or Directors of Certain Officers; Election of Directors; Appointment
of Certain Officers; Compensatory Arrangements of Certain
Officers.
On
June 13, 2008, at the 2008 Annual Meeting of Shareholders (the “2008 Annual
Meeting”) of Kohlberg Capital Corporation (the “Company”), the Company’s
shareholders approved the Amended and Restated 2006 Equity Incentive Plan (the
“Restated Plan”). The Company’s Board of Directors (the “Board”) approved the
Restated Plan on February 5, 2008, subject to, and effective upon, approval
by
the Company’s shareholders.
The
Restated Plan includes the following changes:
| • |
An
increase to the maximum number of shares of the Company’s common stock
authorized for issuance under the Restated Plan from 1,500,000
to
2,000,000 shares; and
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| • |
Inclusion
of provisions allowing for the issuance of restricted stock to
officers
and employees.
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A
more
detailed summary of the changes adopted in the Restated Plan is set forth in
the
Company’s definitive proxy statement for the 2008 Annual Meeting (the “Proxy
Statement”), filed with the Securities and Exchange Commission on April 23,
2008. The foregoing summary of the Restated Plan and the summary contained
in
the Proxy Statement under the heading “Proposal No. 4 - Approval of Amended and
Restated 2006 Equity Incentive Plan” do not purport to be complete and are
qualified in their entirety by reference to the full text of the Restated Plan,
which is attached as Exhibit 10.1 to this Current Report on Form 8-K and is
incorporated herein by reference.
In
addition, on June 13, 2008 the following actions were taken by the
Board:
| • |
In
accordance with the terms of E.A. Kratzman’s employment agreement, the
Board approved the grant to Mr. Kratzman of a restricted stock
award for
41,771 shares, with such restricted stock award vesting 50% on
the third
anniversary of the grant date and 50% on the fourth anniversary
of the
grant date;
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| • |
The
Board approved the grant to Dayl W. Pearson and Michael I. Wirth
of
restricted stock awards for 41,771 and 16,708 shares, respectively,
with
such restricted stock awards vesting 50% on the third anniversary
of the
grant date and 50% on the fourth anniversary of the grant
date;
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| • |
The
Board approved $100,000 annual
cash compensation for Christopher Lacovara as compensation
for his duties
as Chairman of the Board;
and
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| • |
The
Board approved an increase in Dayl W. Pearson’s base salary to $400,000
and an increase in Mr. Pearson’s target performance-based cash bonus to
$500,000, with such increases effective July 1,
2008.
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Item
9.01. Financial Statements and Exhibits.
| 10.1 |
Amended
and Restated 2006 Equity Incentive
Plan.
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| 10.2 |
Form
of Restricted Stock
Agreement
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SIGNATURE
Pursuant
to the requirements of the Securities Exchange Act of 1934, as amended, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
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Kohlberg
Capital Corporation
(Registrant)
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June 19, 2008 (Date) |
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/s/
MICHAEL I. WIRTH
Michael I. Wirth Chief
Financial Officer
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Exhibit
Index
| 10.1 |
Amended
and Restated 2006 Equity Incentive
Plan.
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| 10.2 |
Form
of Restricted Stock
Agreement
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KOHLBERG
CAPITAL CORPORATION
AMENDED
AND RESTATED 2006 EQUITY INCENTIVE PLAN
1. PURPOSE
AND CERTAIN DEFINED TERMS
The
purpose of this Amended and Restated 2006 Equity Incentive Plan (the
“Plan”)
is to
advance the interests of the Company (as defined below) by providing for the
grant to employees and officers of Share-based awards, including without
limitation options to acquire Shares (as defined below) and, to the extent
permitted by exemptive or other relief that may be granted by the Securities
and
Exchange Commission (the "Commission")
or its
staff, Restricted Shares (as defined below) and options to acquire Restricted
Shares (collectively, the “Awards”).
At
all times during such periods as the Company qualifies or intends to qualify
as
a “business development company” under the Investment Company Act of 1940, as
amended (the “1940
Act”),
the
terms of the Plan shall be construed so as to conform to the share-based
compensation requirements applicable to “business development companies” under
the 1940 Act. Any employee or officer selected to receive an Award under the
Plan is referred to as a “participant.”
The
following terms, when used in the Plan, will have the meanings and be subject
to
the provisions set forth below:
“Affiliate”
means
any corporation or other entity that stands in a relationship to the Company
that would result in the Company and such corporation or other entity being
treated as one employer under Section 414(b) or Section 414(c) of the
Code, except that in determining eligibility for the grant of an Option by
reason of service for an Affiliate, Sections 414(b) and 414(c) of the Code
shall be applied by substituting “at least 50%” for “at least 80%” under
Section 1563(a)(1), (2) and (3) of the Code and Treas.
Regs. § 1.414(c)-2; provided, that to the extent permitted under
Section 409A, “at least 20%” shall be used in lieu of “at least 50%”; and
further provided, that the lower ownership threshold described in this
definition (50% or 20% as the case may be) shall apply only if the same
definition of affiliation is used consistently with respect to all compensatory
stock options or stock awards (whether under the Plan or another plan). The
Company may at any time by amendment provide that different ownership thresholds
(consistent with Section 409A) apply. Notwithstanding the foregoing
provisions of this definition, except as otherwise determined by the Board,
a
corporation or other entity shall be treated as an Affiliate only if its
employees would be treated as employees of the Company for purposes of the
rules
promulgated under the Securities Act of 1933, as amended, with respect to the
use of Form S-8.
“Board”
means,
prior to Conversion, the board of managers of the LLC and, at and after
Conversion, the board of directors of the Corporation.
“Company”
means,
prior to Conversion, the LLC and, at and after Conversion, the
Corporation.
“Conversion”
means
the conversion of the LLC, pursuant to Section 265 of the Delaware General
Corporation Law and Section 216 of the Delaware Limited Liability Company Act,
to the Corporation.
“Corporation”
means
Kohlberg Capital Corporation, a Delaware corporation.
“LLC”
means
Kohlberg Capital, LLC, a Delaware limited liability company.
"Non-Employee
Director Plan"
means
the Company's 2008 Non-Employee Director Plan, as amended from time to time.
“Performance
Criteria”
or,
in
the singular, “Performance
Criterion,”
means
specified criteria, other than the mere continuation of employment or the mere
passage of time, the satisfaction of which is a condition for the grant,
exercisability, vesting or full enjoyment of an Award. For purposes of Awards
that are intended to qualify for the performance-based compensation exception
under Section 162(m) of the Code, a Performance Criterion will mean an
objectively determinable measure of performance relating to any or any
combination of the following (measured either absolutely or by reference to
an
index or indices and determined either on a consolidated basis or, as the
context permits, on a divisional, subsidiary, line of business, project or
geographical basis or in combinations thereof): sales; revenues; assets;
expenses; earnings before or after deduction for all or any portion of interest,
taxes, depreciation, or amortization, whether or not on a continuing operations
or an aggregate or per share basis; return on equity, investment, capital or
assets; one or more operating ratios; borrowing levels, leverage ratios or
credit rating; market share; capital expenditures; cash flow; stock price;
stockholder return; sales of particular products or services; customer
acquisition or retention; acquisitions and divestitures (in whole or in part);
joint ventures and strategic alliances; spin-offs, split-ups and the like;
reorganizations; or recapitalizations, restructurings, financings (issuance
of
debt or equity) or refinancings. A Performance Criterion and any targets with
respect thereto determined by the Administrator need not be based upon an
increase, a positive or improved result or avoidance of loss. To the extent
consistent with the requirements for satisfying the performance-based
compensation exception under Section 162(m) of the Code, the Board may
provide in the case of any Award intended to qualify for such exception that
one
or more of the Performance Criteria applicable to such Award will be adjusted
in
an objectively determinable manner to reflect events (for example, but without
limitation, acquisitions or dispositions) occurring during the performance
period that affect the applicable Performance Criterion or
Criteria.
“Restricted
Shares”
means
an award of Shares for so long as the Shares remain subject to restrictions
requiring that they be forfeited to the Corporation if specified conditions
are
not satisfied.
“Shares”
means,
prior to Conversion, the common units of the LLC and, at and after Conversion,
the common stock, $.01 par value per share, of the Corporation.
“Shareholders”
means,
prior to Conversion, the members of the LLC and, at and after Conversion, the
shareholders of the Corporation.
2. ADMINISTRATION
The
Plan
shall be administered by the Board unless and until it delegates administration
to a committee as provided herein; provided that a "required majority," as
defined in Section 57(o) of the 1940 Act, must approve each issuance of Awards
and Dividend Equivalent Rights in accordance with Section 61(a)(3)(A)(iv) of
the
1940 Act. The Board shall have discretionary authority, subject to the express
provisions of the Plan, (a) to grant Awards to such Eligible Persons (defined
below in Section 5 hereof) as the Board may select; (b) to determine the time
or
times when Awards shall be granted and the number of Shares subject to each
Award; (c) to determine the terms and conditions of each Award; (d) to
prescribe the form or forms of any instruments evidencing Awards and any other
instruments required under the Plan and to change such forms from time to time;
(e) to adopt, amend, and rescind rules and regulations for the
administration of the Plan; and (f) to interpret the Plan and to decide any
questions and settle all controversies and disputes that may arise in connection
with the Plan. Such determinations of the Board shall be conclusive and shall
bind all parties. Subject to Section 9 hereof, the Board shall also have the
authority, both generally and in particular instances, to waive compliance
by a
participant with any obligation to be performed by him or her under an Award,
to
waive any condition or provision of an Award, and to amend or cancel any Award
(and if an Award is canceled, to grant a new Award on such terms as the Board
shall specify), except that the Board may not take any action with respect
to an
outstanding Award that would adversely affect the rights of the participant
under such Award without such participant’s consent. Nothing in the preceding
sentence shall be construed as limiting the power of the Board to make
adjustments required by Sections 4(d) and 6(i) hereof or by applicable law.
In
the case of any Award intended to be eligible for the performance-based
compensation exception under Section 162(m) of the Internal Revenue Code of
1986, as amended (the “Code”),
the
Board will exercise its discretion consistent with qualifying the Award for
that
exception.
The
Board
may, in its discretion, delegate some or all of its powers with respect to
the
Plan to a committee (the “Committee”),
in
which event all references (as appropriate) to the Board hereunder shall be
deemed to refer to the Committee.
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.
3. EFFECTIVE
DATE AND TERM OF PLAN
The
Board, including a "required majority" as defined in Section 57(o) of the 1940
Act, adopted the Plan on December 11, 2006 and amended and restated the Plan
on
February 5, 2008. The Plan shall become effective on the date on which it is
approved by the Shareholders of the Company; provided, however, that the Plan
shall not be effective (i) with respect to awards of Restricted Shares unless
the Company has received an order of the Commission under Sections 6(c),
57(a)(4) and 57(i) of the 1940 Act and Rule 17d-1 under the 1940 Act; and (ii)
with respect to awards of Dividend Equivalent Rights unless the Company has
received an order of the Commission that permits such Award or grant (the
"Effective
Date").
No
Awards
shall be granted under the Plan after the completion of ten years from the
date
on which the Plan was adopted by the Board, but Awards previously granted may
extend beyond that date.
4. SHARES
SUBJECT TO THE PLAN
(a)
Number
of Shares.
Subject
to adjustment as provided in Section 4(d), the aggregate number of Shares that
may be the subject of Awards granted under the Plan shall be 2,000,000. If
any
option Award granted under the Plan terminates without having been exercised
in
full, or upon exercise is satisfied other than by delivery of Shares, or if
any
Share Award is repurchased by the Company, the number of Shares as to which
such
Award was not exercised shall be available for future grants.
The
maximum number of Shares for which any option Award may be granted to any person
in any calendar year shall be 1,000,000. The maximum number of Shares that
may
be granted to any person under other Awards (if any and to the extent permitted
under the 1940 Act) in any calendar year shall be 500,000. The foregoing
provisions will be construed in a manner consistent with Section 162(m) of
the
Code (if applicable) and Section 61 of the 1940 Act.
(b)
Shares
to be Delivered.
Shares
delivered under the Plan shall be authorized but unissued Shares, or if the
Board so decides in its sole discretion, previously issued Shares acquired
by
the Company and held in its treasury. Any Shares acquired by the Company will
be
acquired in accordance with the 1940 Act, including Section 23 of the 1940
Act.
No fractional Shares shall be delivered under the Plan.
(c)
Limits
on Number of Awards.
The
combined maximum amount of Restricted Stock that may be issued under the Plan
will be 10% of the outstanding Shares on the effective date of the Plan, 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. No one person
shall
be granted more than 25% of the Restricted Stock reserved for issuance under
this Plan. 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
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, 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.
(d)
Changes
in Shares.
In the
event of a Share dividend, Share split or combination of Shares,
recapitalization, or other change in the Shares, the number and kind of Shares
or securities of the Company subject to Awards then outstanding or subsequently
granted under the Plan, the exercise price of such Awards, the maximum number
of
Shares or securities that may be delivered under the Plan, and other relevant
provisions shall be appropriately adjusted by the Board, whose determination
shall be binding on all persons.
The
Board
may also adjust the number of Shares subject to outstanding Awards, the exercise
price of outstanding Awards, and the terms of outstanding Awards, to take into
consideration material changes in accounting practices or principles,
extraordinary dividends, consolidations or mergers (except those described
in
Section 6(i)), acquisitions or dispositions of securities or property, or any
other event if it is determined by the Board that such adjustment is appropriate
to avoid distortion in the operation of the Plan; provided, however, that the
exercise price of options granted under the Plan will not be adjusted unless
the
Company receives an exemptive order from the Commission or written confirmation
from the staff of the Commission that the Company may do so. References in
the
Plan to Shares will be construed to include any units, any stock or any other
securities resulting from an adjustment pursuant to this Section
4(d).
5. AWARDS;
ETC.
Persons
eligible to receive Awards under the Plan (“Eligible
Persons”)
shall
be those key employees and officers of the Company and, to the extent permitted
by exemptive or other relief that may be granted by the Commission or its staff,
employees of wholly-owned consolidated subsidiaries of the Company who, in
the
opinion of the Board, are in a position to make a significant contribution
to
the success of the Company and its subsidiaries. A subsidiary for purposes
of
the Plan shall be a corporation, limited liability company or other entity
in
which the Company owns, directly or indirectly, equity securities possessing
50%
or more of the total combined voting power of all classes of equity securities.
Notwithstanding the foregoing, in the case of an Award that is an incentive
option, an Eligible Person shall only be those employees of the Company or
of a
“parent corporation” or “subsidiary corporation” of the Company as those terms
are defined in Section 424 of the Code.
In
the
case of an Award of Restricted Shares (to the extent such Awards are permitted
by exemptive relief or other relief that may be granted by the Commission or
its
staff) that is intended to qualify as performance-based for the purposes of
Section 162(m) of the Code, the Plan and such Award will be construed to the
maximum extent permitted by law in a manner consistent with qualifying the
Award
for such exception. With respect to such Awards, the Board will pre-establish,
in writing, one or more specific Performance Criteria no later than 90 days
after the commencement of the period of service to which the performance relates
(or at such earlier time as is required to qualify the Award as
performance-based under Section 162(m) of the Code). The Performance Criteria
so
established shall serve as a condition to either the grant of the Award or
the
vesting of Shares subject to the Award, as determined by the Board. Prior to
grant or vesting, as the case may be, the Board will certify whether the
Performance Criteria have been attained and such determination will be final
and
conclusive. If the Performance Criteria with respect to the Award are not
attained, no other Award will be provided in substitution. No Award of
Restricted Shares that is intended to qualify as performance-based for the
purposes of section 162(m) of the Code may be granted after the first meeting
of
the Shareholders of the Company held in 2010 until the Performance Criteria
have
been resubmitted to and reapproved by the Shareholders of the Company in
accordance with the requirements of Section 162(m) of the Code, unless such
grant is made contingent upon such approval.
6. TERMS
AND
CONDITIONS OF AWARDS
(a)
Code
Section 409A Exemption.
Except
as the Board otherwise determines, no option shall have deferral features,
or
shall be administered in a manner, that would cause such option to fail to
qualify for exemption from Section 409A of the Code. Any option resulting in
a
deferral of compensation subject to Section 409A of the Code shall be construed
to the maximum extent possible, as determined by the Board, consistent with
the
requirements of Section 409A of the Code.
(b)
Exercise
Price of Options.
The
exercise price of each option shall be determined by the Board. The
exercise price of an option will not be less than the current market value
of,
or if no such market value exists, the current net asset value of, the Shares
as
determined in good faith by the Board on the date of grant. Current market
value
shall be the closing price of the Common Stock on the NASDAQ Global Select
Market on the date of grant.
(c)
Duration
of Options.
An
option shall be exercisable during such period or periods as the Board may
specify. The latest date on which an option may be exercised (the “Expiration
Date”)
shall
be the date that is ten years from the date the option was granted or such
earlier date as may be specified by the Board at the time the option is
granted.
(d)
Exercise
of Options.
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(1)
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An
option shall vest or become exercisable at such time or times and
upon
such conditions as the Board shall specify. In the case of an option
not
immediately exercisable in full, the Board may at any time accelerate
the
time at which all or any part of the option may be exercised regardless
of
any adverse or potentially adverse tax consequences resulting from
such
acceleration.
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(2)
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Any
exercise of an option shall be in writing, signed by the proper person
and
furnished to the Company, accompanied by (i) such documents as may
be
required by the Board and (ii) payment in full as specified below in
Section 6(e) for the number of Shares for which the option is
exercised.
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(3)
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The
Board shall have the right to require that the participant exercising
the
option remit to the Company an amount sufficient to satisfy any federal,
state, or local withholding tax requirements (or make other arrangements
satisfactory to the Company with regard to such taxes) arising in
connection with the exercise of the option. If permitted by the Board
and
to the extent permitted under the 1940 Act, either at the time of
the
grant of the option or in connection with exercise, the participant
may
elect, at such time and in such manner as the Board may prescribe,
to
satisfy such withholding obligation by (i) delivering to the Company
Shares owned by such individual having a fair market value equal
to such
withholding obligation, or (ii) requesting that the Company withhold
from
the Shares to be delivered upon the exercise a number of Shares having
a
fair market value equal to such withholding
obligation.
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(4)
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If
an option is exercised by the executor or administrator of a deceased
participant, or by the person or persons to whom the option has been
transferred by the participant’s will or the applicable laws of descent
and distribution, the Company shall be under no obligation to deliver
Shares pursuant to such exercise until the Company is satisfied as
to the
authority of the person or persons exercising the
option.
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(e)
Payment
for and Delivery of Shares.
Shares
purchased upon exercise of an option under the Plan shall be paid for as
follows: (i) in cash, check acceptable to the Company (determined in accordance
with such guidelines as the Board may prescribe), or money order payable to
the
order of the Company, or (ii) if so permitted by the Board (which, in the case
of an incentive option, shall specify such method of payment at the time of
grant) and to the extent permitted by the 1940 Act and otherwise legally
permissible, (A) by delivery of an unconditional and irrevocable undertaking
by
a broker to deliver promptly to the Company sufficient funds to pay the exercise
price, or (B) by any combination of the permissible forms of payment.
(f)
Delivery
of Shares.
A
participant shall not have the rights of a Shareholder with regard to Awards
under the Plan except as to Shares actually received by him or her under the
Plan.
(g)
Dividend
Equivalents, Etc.
To the
extent permitted under the 1940 Act, the Board may provide for the payment
of
amounts in lieu of cash dividends or other cash distributions with respect
to
Shares subject to an Award; provided, however, that such grants must be approved
by order of the Commission.
(h)
Nontransferability
of Awards.
No
option, Share, or other Award may be transferred other than by will or by the
laws of descent and distribution, and during a participant’s lifetime an Award
may be exercised only by him or her.
(i)
Mergers,
etc.
To the
extent permitted under the 1940 Act, the following provisions shall apply in
the
event of a Covered Transaction (as defined below).
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(1)
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Subject
to subparagraph (2) below, all outstanding Awards requiring exercise
will
terminate and cease to be exercisable, and all other Awards to the
extent
not fully vested (including Awards subject to conditions not yet
satisfied
or determined) will be forfeited, as of the effective time of the
Covered
Transaction (as defined in subparagraph (3) herein), provided
that the Board may in its sole discretion on or prior to the effective
date of the Covered Transaction take any (or any combination of)
the
following actions: (i) make any outstanding option exercisable in
full,
(ii) remove any performance or other conditions or restrictions on
any
Award and (iii) in the event of a Covered Transaction under the terms
of
which holders of the Shares of the Company will receive upon consummation
thereof a payment for each such Share surrendered in the Covered
Transaction (whether cash, non-cash or a combination of the foregoing),
make or provide for a payment (with respect to some or all of the
Awards),
to the participant equal in the case of each affected Award to the
difference between (A) the fair market value of a Share times the
numbers
of Shares subject to such outstanding Award (to the extent then
exercisable at prices not in excess of the fair market value) and
(B) the
aggregate exercise price of all Shares subject to such outstanding
Award,
in each case on such payment terms (which need not be the same as
the
terms of payment to holders of Shares) and other terms, and subject
to
such conditions, as the Committee determines;
or
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(2)
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With
respect to an outstanding Award held by a participant who, following
the
Covered Transaction, will be employed by or otherwise providing services
to an entity which is a surviving or acquiring entity in the covered
transaction or any affiliate of such an entity, the Board may at
or prior
to the effective time of the Covered Transaction, in its sole discretion
and in lieu of the action described in subparagraph (1) above, arrange
to
have such surviving or acquiring entity or affiliate assume any Award
held
by such participant outstanding hereunder or grant a replacement
Award
which, in the judgment of the Board is substantially equivalent to
any
Award being replaced.
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(3)
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For
purposes of this Section 6(i), a “Covered
Transaction”
is a (i) Share sale, consolidation, merger, or similar transaction
or
series of related transactions in which the Company is not the surviving
corporation or which results in the acquisition of all or substantially
all of the Company’s then outstanding Shares by a single person or entity
or by a group of persons and/or entities acting in concert; (ii)
a sale or
transfer of all or substantially all the Company’s assets, or (iii) a
dissolution or liquidation of the Company. Where a Covered Transaction
involves a tender offer that is reasonably expected to be followed
by a
merger described in clause (i) (as determined by the Board), the
Covered
Transaction shall be deemed to have occurred upon consummation of
the
tender offer.
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(j)
No
Grants in Contravention of the 1940 Act. At
all
times during such periods as the Company qualifies or intends to qualify as
a
“business development company,” no Award may be granted under the Plan if the
grant or terms of such Award would cause the Company to violate Section 61
of
the 1940 Act (or any other provision of the 1940 Act applicable to “business
development companies”), and, if approved for grant, such an Award will be void
and of no effect.
7. TERMINATION
OF EMPLOYMENT
(a)
Unless the Board expressly provides otherwise, immediately upon the cessation
of
the participant’s employment or services an Award requiring exercise will cease
to be exercisable and will terminate, and all other Awards to the extent not
already vested will be forfeited, except that:
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(1)
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subject
to (2) and (3) below, all vested options held by the participant
immediately prior the cessation of the participant’s employment, to the
extent then exercisable, will remain exercisable for the less of
(i) a
period of 90 days or (ii) the period ending on the latest date on
which
such option could have been exercised without regard to this Section
7(a)(1), and will thereupon
terminate;
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(2)
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all
vested options held by a participant immediately prior to the
participant’s death, to the extent then exercisable, will remain
exercisable for the lesser of (i) the 180 day period ending following
the
participant’s death or (ii) the period ending on the latest date on which
such option could have been exercised without regard to this Section
7(a),
and will thereupon terminate;
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(3)
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all
options (whether or not vested) held by a participant immediately
prior to
the cessation of the participant’s employment for “Cause” will immediately
terminate; for this purpose, “Cause”
shall have the same meaning as provided in the employment agreement
between the participant and the Company or its Affiliate, provided
that if
the participant is not a party to any such agreement, “Cause” shall mean
(i) the participant’s chronic alcoholism or drug addiction; (ii) fraud,
embezzlement, theft, dishonesty, or any deliberate misappropriation
of any
material amount of money or other assets or property of the Company
or any
of its Affiliates by the paragraph; (iii) willful failure to perform,
or
gross negligence in the performance of, the participant’s duties and
responsibilities to the Company and its Affiliates; (iv) the participant’s
material breach of any agreement between the participant and the
Company
or its Affiliates except where the breach is caused by incapacity
or
disability of the participant; (v) charge, indictment or conviction
of, or
plea of nolo contendere by, the participant to a felony or other
crime
involving moral turpitude; (vi) the participant’s material breach of his
fiduciary duties as an officer, trustee, or director of the Company
or any
of its Affiliates; (vii) the participant’s willful refusal or failure to
carry out a lawful and reasonable written directive of the Board
or its
designee, which failure or refusal does not cease within fifteen
(15) days
after written notice of such failure is given to the participant
by the
Company; or (viii) the participant willful misconduct which has,
or could
be reasonably expected to have, a material adverse effect upon the
business, interests or reputation of the Company or any of its Affiliates;
and
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(4)
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Except
as otherwise provided in an Award, after completion of the 90-day
(or
180-day) period, such Awards shall terminate to the extent not previously
exercised, expired, or terminated.
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No
option
shall be exercised or surrendered in exchange for a cash payment after the
Expiration Date.
(b) In
particular but not in limitation of the foregoing, the Board may provide in
the
case of any Award for post-termination exercise provisions different from those
expressly set forth in this Section 7, including without limitation terms
allowing a later exercise by a former employee (or, in the case of a former
employee who is deceased, the person or persons to whom the Award is transferred
by will or the laws of descent and distribution) as to all or any portion of
the
Award not exercisable immediately prior to termination of employment or other
service, but in no case may an Award be exercised after the Expiration
Date.
8. EMPLOYMENT
RIGHTS
Neither
the adoption of the Plan nor the grant of Awards shall confer upon any
participant any right to continue as an employee of the Company, its parent,
or
any subsidiary or affect in any way the right of the Company, its parent, or
a
subsidiary to terminate the participant’s relationship at any time. Except as
specifically provided by the Board in any particular case, the loss of existing
or potential profit in Awards granted under this Plan shall not constitute
an
element of damages in the event of termination of the relationship of a
participant even if the termination is in violation of an obligation of the
Company to the participant by contract or otherwise.
9. DISCONTINUANCE,
CANCELLATION, AMENDMENT, AND TERMINATION
The
Board
may at any time or times amend the Plan or any outstanding Award for any purpose
which may at the time be permitted by law, and may at any time terminate the
Plan as to any future grants of Awards; provided
that,
except as otherwise expressly provided in the Plan the Board may not, without
the participant’s consent, alter the terms of an Award so as to affect adversely
the participant’s rights under the Award, unless the Board expressly reserved
the right to do so at the time of the Award. Any amendments to the Plan shall
be
conditioned upon Shareholder approval only to the extent, if any, such approval
is required by law (including the Code), as determined by the
Board.
10. LIMITATION
OF LIABILITY
Notwithstanding
anything to the contrary in the Plan, neither the Company, any subsidiary,
nor
the Board, nor any person acting on behalf of the Company, any subsidiary,
or
the Board, shall be liable to any participant or to the estate or beneficiary
of
any participant or to any other holder of an option by reason of any
acceleration of income, or any additional tax, asserted by reason of the failure
of an option to satisfy the requirements of Section 409A or by reason of Section
4999 of the Code; provided, that nothing in this Section 10 shall limit the
ability of the Board to provide by separate express written agreement with
a
participant for a gross-up payment or other payment in connection with any
such
tax or additional tax.
11. WAIVER
OF
JURY TRIAL
By
accepting an Award under the Plan, each participant waives any right to a trial
by jury in any action, proceeding or counterclaim concerning any rights under
the Plan and any Award, or under any amendment, waiver, consent, instrument,
document or other agreement delivered or which in the future may be delivered
in
connection therewith, and agrees that any such action, proceedings or
counterclaim shall be tried before a court and not before a jury. By accepting
an Award under the Plan, each participant certifies that no officer,
representative, or attorney of the Company has represented, expressly or
otherwise, that the Company would not, in the event of any action, proceeding
or
counterclaim, seek to enforce the foregoing waivers.
12. LEGAL
CONDITIONS ON DELIVERY OF SHARES
The
Company will not be obligated to deliver any Shares pursuant to the Plan or
to
remove any restriction from Shares previously delivered under the Plan until:
(i) the Company is satisfied that all legal matters in connection with the
issuance and delivery of such Shares have been addressed and resolved; (ii)
if
the outstanding Shares are at the time of delivery listed on any stock exchange
or national market system, the Shares to be delivered have been listed or
authorized to be listed on such exchange or system upon official notice of
issuance; and (iii) all conditions of the Award have been satisfied or waived.
If the sale of Shares has not been registered under the Securities Act of 1933,
as amended (the “Securities
Act”),
the
Company may require, as a condition to exercise of the Award, such
representations or agreements as counsel for the Company may consider
appropriate to avoid violation of the Securities Act. The Company may require
that certificates evidencing Shares issued under the Plan bear an appropriate
legend reflecting any restriction on transfer applicable to such Shares, and
the
Company may hold the certificates pending lapse of the applicable
restrictions.
Name
of
Grantee:
Kohlberg
Capital Corporation
Restricted
Stock Award Agreement
KOHLBERG
CAPITAL CORPORATION STRONGLY ENCOURAGES YOU TO SEEK THE ADVICE OF YOUR OWN
LEGAL
AND FINANCIAL ADVISORS WITH RESPECT TO YOUR AWARD AND ITS TAX
CONSEQUENCES.
Kohlberg
Capital Corporation
295
Madison Avenue
6th
Floor
New
York,
NY 10017
Ladies
and Gentlemen:
The
undersigned Grantee (the “Grantee”) (i) acknowledges receipt of an award (the
“Award”)
of
restricted stock from Kohlberg
Capital Corporation,
a
Delaware corporation (the “Company”),
under
the Company’s Amended and Restated 2006 Equity Incentive Plan (the “Plan”),
subject to the terms set forth below and in the Plan, a copy of which Plan,
as
in effect on the date hereof, is attached hereto as Exhibit A;
and
(ii) agrees with the Company as follows:
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1.
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Effective
Date.
This Restricted Stock Award Agreement (the “Award
Agreement”)
shall take effect as of [Ÿ],
which is the grant date of the Award (the “Grant
Date”).
The Grantee shall be the record owner of the Shares on the Grant
Date.
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2.
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Shares
Subject to Award.
The Award consists of a total of [Ÿ]
shares of Common Stock of the Company, par value $.01 per share (the
“Shares”) with a Fair Market Value on the Grant Date of $[Ÿ]
per Share and $[Ÿ]
([Ÿ]
DOLLARS) in the aggregate.
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The
Grantee’s rights to the Shares are subject to the restrictions described in this
Award Agreement and the Plan (which is incorporated herein by reference with
the
same effect as if set forth herein in full) in addition to such other
restrictions, if any, as may be imposed by law.
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3.
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Nontransferability
of Shares.
Except as provided in this Award Agreement or the Plan, the Shares
acquired by the Grantee pursuant to this Award Agreement shall not
be
sold, transferred, pledged, assigned or otherwise encumbered or disposed
and are subject to a substantial risk of
forfeiture.
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4.
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Forfeiture
Risk.
If the Grantee's Employment with the Company and its subsidiaries
ceases
for any reason, then any and all outstanding and unvested Shares
acquired
by the Grantee hereunder shall be automatically and immediately forfeited.
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Kohlberg
Capital Corporation
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Restricted
Stock Award Agreement
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Page 2
of 6
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The
Grantee hereby (i) appoints the Company as the attorney-in-fact of the Grantee
to take such actions as may be necessary or appropriate to effectuate a transfer
of the record ownership of any Shares that are unvested and forfeited hereunder,
(ii) agrees to deliver to the Company, as a precondition to the issuance of
any
certificate or certificates with respect to unvested Shares hereunder, one
or
more stock powers, endorsed in blank, with respect to such Shares, and (iii)
agrees to sign such other powers and take such other actions as the Company
may
reasonably request to accomplish the transfer or forfeiture of any unvested
Shares that are forfeited hereunder.
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5.
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Book
Entry Form.
Unvested Shares are to be held in book entry form and the Grantee
agrees
that the Company may give stop transfer instructions to the depositary,
stock transfer agent or other keeper of the Company’s stock records to
ensure compliance with the provisions
hereof.
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6.
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Certificates
for Unvested Shares.
The Company may, upon request, issue the Grantee a certificate
representing unvested Shares. The administrative costs and risk of
loss of
such certificated shares are the sole responsibility of the Grantee.
In
addition to any legend required by applicable law, any certificates
issued
representing Shares shall contain a legend substantially in the following
form:
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THE
TRANSFERABILITY OF THIS CERTIFICATE AND THE SHARES OF STOCK REPRESENTED HEREBY
ARE SUBJECT TO THE TERMS AND CONDITIONS (INCLUDING FORFEITURE) OF THE KOHLBERG
CAPITAL CORPORATION AMENDED AND RESTATED 2006 EQUITY INCENTIVE PLAN AND A
RESTRICTED STOCK AWARD AGREEMENT ENTERED INTO BETWEEN THE REGISTERED OWNER
AND
KOHLBERG CAPITAL CORPORATION, DATED AS OF [Ÿ],
BETWEEN KOHLBERG CAPITAL CORPORATION AND [Ÿ].
COPIES
OF SUCH PLAN AND AWARD AGREEMENT ARE ON FILE IN THE OFFICES OF KOHLBERG CAPITAL
CORPORATION.
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7.
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Vesting
of Shares.
Unless earlier vested pursuant to the Plan, the Shares acquired hereunder
shall Vest during the Grantee’s Employment by the Company or a subsidiary
thereof in accordance with the provisions of this Section 8 and applicable
provisions of the Plan, as follows:
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[Ÿ]
For
purposes of this Award Agreement, “Vest” shall mean, with respect to any Share,
the lapsing of the restrictions described herein with respect to such Share
and
the terms “Vesting” and “Vested” shall be construed accordingly.
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8.
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Settlement
of Vested Shares.
Each Share that is vested in accordance with this Award Agreement
shall be
settled by the issuance of a whole share of Common Stock.
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Unless
a
Section 83(b) election is made within 30 days of the Grant Date, Vested Shares
shall be treated as compensation and shall be taxed at normal federal, state
and
local income tax rates at the fair value of the Shares on the Vesting date.
The
Grantee must also pay Medicare taxes and social security taxes, as may be
limited by an annual cap of total compensation, in respect of the compensation
income resulting from the Vesting of Shares.
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Kohlberg
Capital Corporation
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Restricted
Stock Award Agreement
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Page
3 of 6
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The
Company's obligation to deliver a certificate upon Vesting representing such
Vested Shares shall be subject to the Grantee’s satisfaction of all applicable
federal, state and local income and employment tax withholding obligations.
The
Grantee
may
satisfy such obligation(s), in whole or in part, by (i) delivering to the
Company a check for the amount required to be withheld or (ii) if permitted
under the 1940 Act and as the Board in its sole discretion approves in any
specific or general case, having the Company withhold Shares or delivering
to
the Company already-owned shares of Common Stock, in either case having a fair
market value equal to the amount required to be withheld, as determined by
the
Board. In
addition, to the extent that the Company so chooses, the Company can hold back
100% of the Grantee's compensation earned after such obligations arose and
such
held back amount shall be applied by the Company to satisfy such
obligations.
Prior
to any release of any Vested Shares in the form of certificates representing
such shares of Common Stock, the Grantee must pay, in advance, all of the
Grantee’s share of federal, state and local income and related payroll taxes in
respect of such Shares.
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9.
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Delivery
of Vested Shares.
For any Vested Shares that have been requested to be settled by the
Grantee, the Company will take such steps as it deems necessary or
appropriate to record and manifest such Shares for delivery to the
Grantee
without restriction on transferability. At the direction of the Grantee,
delivery may be either in book-entry form through the Depository
Trust
Company (or a nominee thereof) to an account at the Grantee’s direction or
certificated, without the aforesaid legend, and issued and delivered
to
the Grantee.
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10.
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Fractional
Shares.
Fractional shares shall not Vest hereunder, and when any provision
hereof
may cause a fractional share to Vest, any Vesting in such fractional
share
shall be postponed until such fractional share and other fractional
shares
equal a Vested whole share.
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11.
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Dividends,
etc.
The Grantee shall be entitled to (i) receive any and all dividends
or
other distributions paid with respect to those vested and unvested
Shares
of which the Grantee is the record owner on the record date for such
dividend or other distribution, whether or not Vested at such time,
in the
same form and amount as any holder of Stock receives, and (ii) vote
any
Shares of which the Grantee is the record owner on the record date
for
such vote; provided,
however,
that any property (other than cash) distributed with respect to a
share of
Stock (the “Associated
Share”)
acquired hereunder, by reason of a stock dividend, stock split or
other
similar adjustment to the Stock pursuant to Section 4(d) of the Plan,
shall be subject to the restrictions of this Award Agreement in the
same
manner and for so long as the Associated Share remains subject to
such
restrictions, and shall be promptly forfeited if and when the Associated
Share is so forfeited. Notwithstanding the foregoing, the Grantee
shall
elect, and hereby irrevocably appoints the Company’s Chairman of the Board
and the Company’s Secretary as the Grantee’s attorneys-in-fact to elect on
Grantee’s behalf in the absence of an election from Grantee, to receive
cash distributions under the Company’s dividend reinvestment plan in
respect of all unvested Shares under this Award
Agreement.
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Kohlberg
Capital Corporation
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Restricted
Stock Award Agreement
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Page 4
of 6
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12.
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Sale
of Vested Shares.
The Common Stock issued in respect of Vested Shares hereunder may
be
traded only during the Company’s open period trading window as established
by the Company’s policies and procedures manual, Corporate
Governance: Insider Trading Policy.
The
Grantee understands that the sale of any Share, once it has Vested,
will
remain subject to (i) satisfaction of applicable tax withholding
requirements, if any, with respect to the Vesting or transfer of
such
Share; (ii) the completion of any administrative steps (for example,
but without limitation, the transfer of certificates) that the Company
may
reasonably impose and (iii) applicable requirements of federal and
state securities laws.
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13.
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Provisions
of the Plan.
This Grant is subject in its entirety to the provisions of the Plan,
which
are incorporated herein by reference. A copy of the Plan as in effect
on
the date of the grant of this Award has been furnished to the Grantee
and
the Grantee agrees to be bound by the terms of the Plan and this
Award. In
the event of any conflict between the terms of this Award and the
Plan,
the terms of this Award shall
control.
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14.
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Certain
Tax Matters.
The Grantee expressly acknowledges the following:
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A.
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The
Grantee has been advised to confer promptly with a professional tax
advisor to consider whether the Grantee should make a so-called “83(b)
election” with respect to the Shares. Any such election, to be effective,
must be made in accordance with applicable regulations and within
thirty
(30) days following the date this Award is granted and the Grantee
must
provide the Company with a copy of the 83(b) election prior to filing.
The
Company has made no recommendation to the Grantee with respect to
the
advisability of making such an
election.
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B.
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The
award or Vesting of the Shares acquired hereunder, and the payment
of
dividends with respect to such Shares, may give rise to “wages” subject to
withholding. The Grantee expressly acknowledges and agrees that his
or her
rights hereunder are subject to his or her promptly paying to the
Company
in cash (or by such other means as may be acceptable to the Company
in its
discretion), all taxes required to be withheld in connection with
such
award, Vesting or payment. Notwithstanding the foregoing, the Board
shall,
at the election of the Grantee or may otherwise if the Grantee does
not
otherwise provide for the payment of all taxes required to be withheld
in
connection with such award, Vesting or payment, hold back Shares
from an
Award or permit the Grantee to tender previously owned shares of
Stock in
satisfaction of tax withholding requirements (but not in excess of
the
applicable minimum statutory withholding
rate).
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15.
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Definitions.
Capitalized terms defined in this Award Agreement are used herein
as so
defined. Capitalized terms used in this Award Agreement and not otherwise
defined herein shall have the meaning provided in the
Plan.
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16.
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Change
in Capital Structure.
In accordance with Section 4(d) of the Plan, the terms of this Award
Agreement shall be adjusted as the Board determines is equitably
required
in the event the Company effects one or more stock dividends, stock
split-ups, subdivisions or consolidations of shares or other similar
changes in capitalization.
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Kohlberg
Capital Corporation
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Restricted
Stock Award Agreement
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Page 5
of 6
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17.
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Stock
Power.
With respect to any Shares that are forfeited in accordance with
this
Award Agreement, the Grantee hereby irrevocably appoints the Company’s
Chairman of the Board and the Company’s Secretary as the Grantee’s
attorneys-in-fact to transfer any forfeited Shares on the books of
the
Company with full power of substitution in the premises. The Company’s
Chairman and Secretary shall use the authority so granted in this
Section
18 to cancel any Shares that are forfeited in accordance with the
terms of
this Award Agreement.
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18.
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No
Employment Commitment; Tax Treatment.
Nothing herein contained shall be deemed to be or constitute an agreement
or commitment by the Company or any of its subsidiaries to continue
the
Grantee in its employ. The Company makes no representation about
the tax
treatment to the Grantee with respect to receipt or settlement of
the
restricted Shares or acquiring, holding or disposing of the
Shares.
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19.
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Grantee
Bound by Plan.
The Grantee hereby acknowledges that a copy of the Plan as in effect
on
the date hereof has been made available to the Grantee and agrees
to be
bound by all the terms and provisions thereof (as such Plan may be
amended
from time to time in accordance with the terms
thereof).
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20.
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Binding
Effect.
Subject to the limitations stated above and in the Plan, this Award
Agreement shall be binding upon and inure to the benefit of the Grantee
and his or her legatees, distributees, and personal representatives
and to
the successors of the Company.
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21.
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General.
For purposes of this Award Agreement and any determinations to be
made by
the Board or the Committee, as the case may be, hereunder, the
determinations by the Board or the Committee, as the case may be,
shall be
binding upon the Grantee and any transferee.
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[Remainder
of the page intentionally left blank]
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Kohlberg
Capital Corporation
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Restricted
Stock Award Agreement
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Page 6
of 6
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Very
truly yours,
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Address:
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Dated:_______________
The
foregoing Restricted Stock
Award
is hereby accepted:
KOHLBERG
CAPITAL CORPORATION
_______________________________
Name: Michael
I. Wirth
Title: Chief
Financial Officer
[SIGNATURE
PAGE TO RESTRICTED STOCK AWARD AGREEMENT]