COVER
KEY EMPLOYEE PHANTOM STOCK AGREEMENT
This Key Employee Phantom Stock Agreement (this "Agreement") is made
this __ day of _____________, 19___, by and between Xxxx Xxxxx Xxxx Xxxxxx,
Incorporated ("Xxxx") and _______________________ ("Employee").
WHEREAS, Employee has accepted employment by Xxxx; and
WHEREAS, Xxxx and Employee believe it to be mutually
advantageous to provide for the payment of certain compensation to
Employee upon the terms and conditions hereafter set forth,
Now therefore, Xxxx and Employee agree as follows:
1. Certain Monetary Compensation
In consideration of Employee's employment with Xxxx, Xxxx
shall be obligated to pay Employee certain compensation in an
amount to be determined pursuant to the terms and conditions of
this Agreement.
2. Phantom Share Units
Xxxx and Employee agree that the certain compensation to be
paid by Xxxx to Employee shall not be paid currently but shall be
deferred, and as deferred, shall be deemed converted into units
that are economically equivalent to, but are not actual, shares of
Xxxx Xxxxx, Inc. ("LMI") Common Stock. These "phantom" shares of
LMI Common Stock are referred to as "Share Units."
Exhibit 4.1
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3. Key Employee Phantom Stock Account
Xxxx will establish a Key Employee Phantom Stock Account
(the "Account") on its books and records for the benefit of
Employee wherein Xxxx will credit to such Account $___________
as certain deferred compensation (hereafter the "Compensation
Credit") to be converted into Share Units. The number of Share
Units into which such Compensation Credit shall be converted
(calculated to four decimal places) will be determined as of the
fifth trading day after the date the Compensation Credit is made
and will be equal to the amount of the Compensation Credit divided
by the fair market value of a share of LMI Common Stock,
determined as set forth below.
Fair market value of a share of LMI Common Stock will equal the
five day average of the closing prices on the principal exchange
on which LMI Common Stock is traded for the four trading days
immediately preceding the applicable valuation date and the
valuation date (where the valuation date is the fifth trading day
after the date in which the account is credited), or, if LMI
Common Stock is not then traded on an exchange, such amount as is
determined by Xxxx using any reasonable method of valuation ("Fair
Market Value").
4. Adjustment to Account Upon Dividend by LMI
If, prior to the date Employee receives a payment from
Xxxx pursuant to this Agreement (a "Payment Date"), LMI
pays any dividend (other than in LMI Common Stock) upon
its Common Stock, or makes any distribution (other than
in its Common Stock) with respect thereto, Employee's
Account will be credited with additional Share Units,
equivalent to that number of phantom shares of LMI
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Common Stock determined by dividing the amount of the dividend
or other distribution allocable to the Share Units already
credited to the Account as of the record date for the dividend
or distribution, by 95% of the Fair Market Value of a share of
LMI Common Stock on the fifth trading day after the payment
date for the dividend or distribution.
In the event that, prior to a Payment Date, the number of
outstanding shares of LMI Common Stock is changed by reason of
a stock split, stock dividend, combination of shares or
recapitalization, or LMI Common Stock is converted into or
exchanged for other shares as a result of a merger, consolidation,
sale of assets or other reorganization or recapitalization, the
number of Share Units then credited to Employee's Account will be
appropriately adjusted so as to reflect such change (based upon
the best estimate of Xxxx as to relative values).
Nothing contained in this Agreement shall confer or be
construed as conferring upon Employee any rights as a stockholder
of LMI or any right to have access to the books and records of LMI
or any subsidiary.
5. Vesting Schedule of Share Units
Employee shall vest in the Share Units credited to
Employee's Account pursuant to the following vesting schedule
as long as Employee is continuously employed in good standing
by Xxxx for the following elapsed periods:
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If Elapsed Period of Employment Then the Vested Portion of
from date of this Agreement is: Share Units in Account shall be:
12 months or less -0-
Greater than 12 months, but
24 months or less 1/5 of Share Units
Greater than 24 months, but
36 months or less 2/5 of Share Units
Greater than 36 months, but
48 months or less 3/5 of Share Units
Greater than 48 months, but
60 months or less 4/5 of Share Units
Greater than 60 months All Share Units
For purposes of determining Employee's Vested Portion of Share
Units, Employee shall not be entitled to receive any partial or
pro-rated credit for having been employed by Xxxx for any partial
twelve month period specified in the table above. If Employee's
employment with Xxxx terminates for any reason other than death,
whether involuntary or voluntary and for whatever cause or no
cause, Employee shall have no right or claim to any Share Units
which have not vested pursuant to the above Vesting Schedule. In
the event Employee's employment with Xxxx terminates as a result
of Employee's death, all Share Units shall be immediately vested
and payment shall be made as described in Paragraph 12.
6. Assignment of Benefits
No amount payable, or other right or benefit, under this
Agreement, will, except as otherwise specifically provided by
this Agreement or by applicable law, be subject to sale,
assignment, transfer, pledge, encumbrance, attachment,
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garnishment or levy prior to distribution to Employee. Since
this Agreement is intended to be a non-qualified, unfunded plan
not subject to the Employee Retirement Income Security Act of
1974, as amended, payments under this Agreement will not be
subject to the provisions of any qualified domestic relations
order (as defined under the Internal Revenue Code) applicable to
an Employee's deferred compensation benefit.
Notwithstanding any provision herein to the contrary,
Employee acknowledges and agrees that any distribution payable
under this Agreement may be used at the discretion of Xxxx to
offset any debt owed by Employee to Xxxx at the date such
distribution would otherwise be paid. Employee expressly
authorizes Xxxx to withhold distributions payable under this
Agreement to offset any debts or other liabilities owed by
Employee to Xxxx. If Xxxx is aware of any errors, loans
outstanding or liabilities of Employee, Xxxx may withhold
distributions under this Agreement until such time as the
liabilities are satisfied or Xxxx has determined that a
liability no longer exists.
7. Unfunded Nature of the Agreement
Xxxx will not be required to purchase, hold or dispose of any
investments with respect to the Compensation Credits or Share
Units. Employee has no interest in the Account or in any
investments Xxxx may purchase with such amounts, except as a
general, unsecured creditor of Xxxx.
8. Elective Transfer to Phantom Treasury Bills In the Event of a
Merger of LMI
In the event of a merger or other corporate transaction,
the result of which is that securities of another entity
that are listed on the New York Stock Exchange
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or the American Stock Exchange or quoted on NASDAQ ("Publicly
Traded") are substituted for LMI Common Stock, Employee may
elect to have his or her entire (and only the entire) Account
accrue income based on the "T-Xxxx Rate," which, for purposes of
this Agreement, shall be defined as the rate equal to the per
annum rate for 26 week U.S. Government Treasury Bills sold at a
discount from face value at the most recent U.S. Government
auction and to be determined as of the first business day of
each calendar year and as of the first business day of July and
to be applicable until the next such determination date. Such an
elective transfer (i) must be made by written notice to Xxxx
received not later than five business days after the Employee is
notified by Xxxx of the right to make the election, (ii) will be
effective as of the date of the stock conversion giving rise to
the election, (iii) will be based upon an Account value, to the
extent of the Share Units in the Account, determined as of the
effective date of the transfer, but based on the last Fair Market
Value of a share of LMI Common Stock immediately prior to the
conversion, (iv) will be irrevocable as of such effective date,
and (v) will apply to all subsequent amounts credited to the
Account.
9. Elective Transfer to Phantom Treasury Bills in the Event of a
Change in Control of LMI
In the event of a Change in Control (as defined below),
Employee may elect to have his or her entire (and only the
entire) Account accrue income based on the T-Xxxx Rate. Such
an elective transfer (i) must be made by written notice to
Xxxx received not later than five business days after Employee
is notified by Xxxx of the right to make the election,
(ii) will be effective as of the fifth business day
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after Xxxx'x receipt of such written notice, (iii) will be
irrevocable as of such effective date, (iv) will be based
upon an Account value, to the extent of the Share Units in
the Account, determined as of the effective date of the transfer,
using the then Fair Market Value of LMI Common Stock, and (v)
will apply to any subsequent amounts credited to the Account.
A "Change in Control" will be deemed to occur upon the
happening of any of the following events (a "Change Event"):
(i) the approval by shareholders of LMI (i.e. LMI) of any
agreement to merge or consolidate LMI with or into another
corporation (with LMI not surviving), or to sell or otherwise
dispose of all or substantially all of the assets of LMI, (ii)
the approval by shareholders of Xxxx (i.e. LMI) of any agreement to
merge or consolidate Xxxx with or into another corporation (with
Xxxx not surviving), or to sell or otherwise dispose of all or
substantially all of the assets of Xxxx or (iii) a determination
by the Board of Directors of LMI that, in connection with any
proposed tender or exchange offer for voting securities of LMI,
any person has become the direct or indirect beneficial owner
of securities representing 40% or more of the combined voting
power of LMI's then outstanding securities; provided, however,
that: (A) a Change in Control will be deemed not to have
occurred if, not later than five business days after a Change
Event described in clause (i) or (ii), that Change Event is
designated by the affirmative vote of 75% or more of the
directors who were members of LMI or Xxxx'x Board of Directors
immediately prior to the Change Event as not constituting a
Change in Control for purposes of this Agreement; and (B) if a
Change Event described in clause (i) or (ii) occurs with
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respect to a portion of LMI or Xxxx, the Change in Control, if
any, shall be deemed to have occurred only with respect to the
employees transferred in connection therewith.
10. Treasury Xxxx Credits
In the event that Employee elects to have his or her account
accrue income based on the T-Xxxx Rate pursuant to Paragraph 8 or
Paragraph 9 of this Agreement, any such accrued credits that are
based on the T-Xxxx Rate will be made to the account as of
June 30 and December 31 of each year and immediately prior to
distribution to Employee or his or her beneficiary.
11. Mode of Distributions
Xxxx will make all distributions under this Agreement in
shares of LMI Common Stock or in cash, or in a combination of
both, at Xxxx'x option. Xxxx, in its sole discretion, will
decide whether to distribute stock or cash to Employee. There
is no limit on the total number of shares of LMI Common Stock that
may be distributed under this Agreement. If Xxxx elects in any
case to distribute LMI Common Stock under this Agreement, Employee
will receive (i) shares equal to the whole number of Share Units
in the Account (unless Xxxx elects to distribute cash for some or
all of the Share Units), and cash in lieu of any fractional share
based on 100% of the Fair Market Value of a share of LMI Common
Stock as of the day Employee is entitled to the distribution and
(ii) if any portion of the Account accrues credits based on the
T-Xxxx Rate and is to be settled in stock, whole shares equal to
the number (rounded down) determined by dividing the amount owed
with respect to such portion by 100% of the Fair Market Value of a
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share of LMI Common Stock as of the day Employee is entitled
to the distribution and cash equal to the balance (i.e., no
fractional shares will be issued).
Employee acknowledges that, because Fair Market Value will be
measured by taking into account stock prices over a five day
period, Employee will be subject to some market risk if Xxxx
elects to distribute stock and if the trading price of LMI Common
Stock declines during the five day period. After the date of
distribution, Employee must make his or her own decision as to
whether to sell or retain the shares received under this Agreement.
Any brokerage commissions or other charges incurred in the event
Employee decides to sell such shares will be the sole
responsibility of the Employee, not Xxxx.
12. Timing of Distributions
Simultaneously with the execution of this Agreement,
Employee must make an irrevocable election on a form prescribed
by Xxxx (hereafter the "Payment Option Election" and attached
as Exhibit A) to receive distributions under this Agreement
either (i) each time Employee's Share Units vest pursuant to
Paragraph 5; (ii) in three annual installments with the first
of such installments occurring when all Share Units are vested
pursuant to Paragraph 5; (iii) in a Lump Sum at the time
Employee's employment with Xxxx terminates; or (iv) in three
annual installments with the first of such installments occurring
when Employee's employment with Xxxx terminates. Employee
acknowledges that, regardless of whether Employee elects under
this Agreement to receive distributions as Share Units vest,
in annual installments or at the time Employee's employment
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terminates, Employee bears all economic risks and market risks
associated with LMI Common Stock.
Notwithstanding Employee's election to the contrary, if the
total amount to be distributed from Employee's Account is less
than $20,000.00, the distribution will be made as a lump sum.
Furthermore, in the event that Employee's employment with Xxxx
has terminated for any reason and Employee's distributions under
this Agreement are to be paid in installments rather than in a
single lump sum, then (regardless of whether there has or has not
been a merger or Change in Control of LMI or Xxxx), Employee will
be deemed to have automatically made an elective transfer to
Phantom Treasury Bills pursuant to the terms described in
Paragraph 8, effective as of the fifth trading day after the date
Employee's employment is terminated. In the event that Employee's
employment with Xxxx terminates for any reason other than death,
then, as of the fifth trading day following termination of
employment, Employee will be entitled to receive any distributions
owing to Employee under this Agreement in accordance with the
Payment Option Election.
Employee may from time to time designate, on a form
prescribed by Xxxx, (hereafter the "Designation of
Beneficiary(ies)" and attached as Exhibit B), any person(s) to
receive any distributions as may be payable under this Agreement
upon Employee's death (a "Beneficiary"). If Employee does not
designate a Beneficiary, any distributions to be made under this
Agreement shall, upon Employee's death, be payable to Employee's
estate. In the event of the death of Employee, then, as of
the fifth business day after the date of death, Employee's
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Beneficiary or estate will be entitled to receive the balance of
Employee's Account in a single lump sum, or, if Employee has so
indicated in the Payment Option Election, in the same manner as
the Account would have been paid to Employee had he or she lived.
13. FICA or Payroll Tax
Any FICA or other payroll tax which may be imposed on Employee
with respect to the deferred compensation under this Agreement will
be, unless otherwise determined by Xxxx, deducted from other
non-deferred compensation of Employee.
14. Disputes Subject to Arbitration
Employee agrees that any controversy or dispute arising under
this Agreement or out of Employee's employment by Xxxx (including,
but not limited to, claims arising under the Civil Rights Act of
1964, the Civil Rights Act of 1991, the Age Discrimination in
Employment Act of 1967, and analogous state statutes) shall be
submitted for arbitration upon demand of either party in
accordance with the rules of the National Association of
Securities Dealers, Inc. or the New York Stock Exchange, Inc.,
provided, however, that in the event of termination of Employee's
employment, Xxxx shall be entitled to seek injunctive relief or
confess judgment against Employee pursuant to the terms of any
other applicable agreement and that Xxxx shall be entitled to
apply for and obtain from any state or federal court such relief
before or after the commencement of any arbitration proceeding,
such relief to be afforded to Xxxx pending the decision of the
arbitrators.
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15. Employment-At-Will
Employee and Xxxx agree and acknowledge that this Agreement
shall not be construed as a contract of employment. Xxxx
maintains an employment-at-will policy. As Employee is free to
end his or her employment with Xxxx at any time for any reason or
no reason, Xxxx is free to end the employment with Employee at any
time for any reason or no reason.
16. Governing Law
This Agreement shall be governed, construed, and enforced in
accordance with the laws of the State of Maryland.
17. Effectiveness of this Agreement
If any part of this Agreement shall be held invalid or
unenforceable, that part shall be deemed modified as necessary to
make it effective, and the remaining provisions of this Agreement
shall remain in effect.
18. Entire Understanding of Parties
This Agreement incorporates the entire understanding between
Employee and Xxxx on the subject matter herein and may be not
changed except by a writing signed by a duly authorized officer
of Xxxx and Employee.
19. Assistance of Counsel
Employee acknowledges that Employee was given the opportunity
to read this Agreement and to seek the assistance of counsel
before Employee decided to join Xxxx, accept the terms of this
Agreement or sign this Agreement.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed as of the date first hereinabove written.
EMPLOYEE:
______________________________
Signature
______________________________
Print Full Name
XXXX XXXXX XXXX XXXXXX, INCORPORATED
BY:___________________________
