PIPER JAFFRAY COMPANIES RESTRICTED STOCK AGREEMENT
Exhibit 10.2
XXXXX XXXXXXX COMPANIES
Name of Recipient: Brien O’Brien |
||
Total No. of Shares Covered: 361,633
|
Date of Issuance: March 1, 2010 | |
Vesting Schedule pursuant to Section 2: |
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| No. of Shares Which | ||
| Vesting Dates | Become Vested as of Such Date | |
| Date of Issuance | 11,259 | |
| 1 year after date of issuance | 87,594 | |
| 2 years after date of issuance | 87,594 | |
| 3 years after date of issuance | 87,593 | |
| 4 years after date of issuance | 87,593 | |
This is a Restricted Stock Agreement (“Agreement”) between Xxxxx Xxxxxxx Companies, a Delaware
corporation (the “Company”), and the above-named recipient (the “Recipient”).
Recitals
WHEREAS, a Securities Purchase Agreement, dated as of December 20, 2009 (the “Purchase
Agreement”), was entered into by the Company, Xxxxx Xxxxxxx Newco Inc., a Delaware corporation,
Advisory Research Holdings, Inc., a Delaware corporation (“ARI”), each of the persons listed on
Schedule I attached thereto (including the Recipient), and Brien X. X’Xxxxx, a natural
person, and TA Associates, Inc., a Delaware corporation, in their joint capacity as the
representatives of the Sellers thereunder;
WHEREAS, pursuant to the Purchase Agreement, the Company is obligated to issue restricted
stock to the Recipient as partial consideration for the Recipient’s ownership in ARI;
WHEREAS, a portion of the shares being issued in connection with this Agreement are being
deposited in escrow under the Indemnification Escrow Agreement, dated as of March 1, 2010, with
Xxxxx Fargo Bank, National Association as Escrow Agent (the “Escrow Agreement”).
NOW, THEREFORE, the Company hereby issues restricted stock to the Recipient under the
following terms.
Terms and Conditions
1. Grant of Restricted Stock.
(a) Subject to the terms and conditions of this Agreement, the Company hereby issues to the
Recipient the number of Shares specified at the beginning of this Agreement. All such Shares are
subject to certain restrictions provided for in this Agreement and are referred to collectively as
the “Restricted Shares” and each as a “Restricted Share.”
(b) The Restricted Shares will be evidenced by a book entry made in the records of the
Company’s transfer agent in the name of the Recipient (except in the case of Restricted Shares
which are being deposited in escrow under the Escrow Agreement). All restrictions provided for in
this Agreement will apply to each Restricted Share and to any other securities distributed with
respect to that Restricted Share. The Restricted Shares may not (until such Restricted Shares have
vested in the Recipient in accordance with all terms and conditions of this Agreement) be assigned
or transferred other than by will or the laws of descent and distribution or pursuant to the Escrow
Agreement, and shall not be subject to pledge, hypothecation, execution, attachment or similar
process. Each Restricted Share will remain restricted and subject to cancellation unless and until
that Restricted Share has vested in the Recipient in accordance with all of the terms and
conditions of this Agreement. Each book entry or stock certificate evidencing any Restricted Share
shall contain the notations or legends and stock transfer instructions or limitations which are
referred to in Section 8(a) hereof. With respect to any certificate evidencing Restricted Shares,
the Company may, in its reasonable discretion, retain custody of any such certificate throughout
the period during which any restrictions are in effect and require, as a condition to issuing any
such certificate, that the Recipient tender to the Company a stock power duly executed in blank
relating to such custody; provided that, promptly following the lapse of all restrictions
with respect to all or a portion of the Restricted Shares, the Company shall cause an appropriate
book entry to be made in the records of the Company’s transfer agent, or deliver to the Recipient a
certificate, for those shares as to which the restrictions have lapsed without any of the legends
referred to in Section 8(a) hereof (except any legends required by applicable state and federal
corporate and securities laws); provided further that, the Escrow Agent shall retain
custody of any Restricted Shares deposited in escrow pursuant to the Escrow Agreement until such
Restricted Shares are released from escrow pursuant to the Escrow Agreement.
2. Vesting.
(a) Except as otherwise provided herein, the Restricted Shares will vest in the numbers and on
the dates specified in the Vesting Schedule at the beginning of this Agreement. Notwithstanding
the foregoing, all of the Restricted Shares shall vest upon the occurrence of a Change in Control.
For purposes of this Agreement, a “Change in Control” shall mean the happening of any of the
following events:
(i) An acquisition by any individual, entity or group (within the meaning of
Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the
“Exchange Act”)) (a “Person”) of beneficial ownership (within the meaning of Rule 13d-3
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promulgated under the Exchange Act) of 20% or more of either (1) the then outstanding
shares of common stock of the Company (the “Outstanding Company Common Stock”) or (2) the
combined voting power of the then outstanding voting securities of the Company entitled to
vote generally in the election of directors (the “Outstanding Company Voting Securities”);
excluding, however, the following: (1) Any acquisition directly from the Company, other than
an acquisition by virtue of the exercise of a conversion privilege unless the security being
so converted was itself acquired directly from the Company, (2) Any acquisition by the
Company, (3) Any acquisition by any employee benefit plan (or related trust) sponsored or
maintained by the Company or any entity controlled by the Company, or (4) Any acquisition
pursuant to a transaction which complies with clauses (1), (2) and (3) of subsection
(iii) of this Section 2(a); or
(ii) A change in the composition of the Board of Directors of the Company (the “Board”)
such that the individuals who, as of the date hereof, constitute the Board (such Board shall
be hereinafter referred to as the “Incumbent Board”) cease for any reason to constitute at
least a majority of the Board; provided, however, for purposes of this
Section 2(a), that any individual who becomes a member of the Board subsequent to the date
hereof, whose election, or nomination for election by the Company’s shareholders, was
approved by a vote of at least a majority of those individuals who are members of the Board
and who were also members of the Incumbent Board (or deemed to be such pursuant to this
proviso) shall be considered as though such individual were a member of the Incumbent Board;
but, provided, further, that any such individual whose initial assumption of
office occurs as a result of an actual or threatened election contest with respect to the
election or removal of directors or other actual or threatened solicitation of proxies or
consents by or on behalf of a Person other than the Board shall not be so considered as a
member of the Incumbent Board; or
(iii) Consummation of a reorganization, merger or consolidation or sale or other
disposition of all or substantially all of the assets of the Company (“Corporate
Transaction”); excluding, however, such a Corporate Transaction pursuant to which (1) all or
substantially all of the individuals and entities who are the beneficial owners,
respectively, of the Outstanding Company Common Stock and Outstanding Company Voting
Securities immediately prior to such Corporate Transaction will beneficially own, directly
or indirectly, more than 50% of, respectively, the outstanding shares of common stock, and
the combined voting power of the then outstanding voting securities entitled to vote
generally in the election of directors, as the case may be, of the corporation resulting
from such Corporate Transaction (including, without limitation, a corporation which as a
result of such transaction owns the Company or all or substantially all of the Company’s
assets either directly or through one or more subsidiaries) in substantially the same
proportions as their ownership, immediately prior to such Corporate Transaction, of the
Outstanding Company Common Stock and Outstanding Company Voting Securities, as the case may
be, (2) no Person (other than the Company, any employee benefit plan (or related trust) of
the Company or such corporation resulting from such Corporate Transaction) will beneficially
own, directly or indirectly, 20% or more of, respectively, the outstanding shares of common
stock of the corporation resulting from such Corporate Transaction or the combined voting
power of the outstanding voting securities of such
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corporation entitled to vote generally in the election of directors except to the extent
that such ownership existed prior to the Corporate Transaction, and (3) individuals who were
members of the Incumbent Board will constitute at least a majority of the members of the
board of directors of the corporation resulting from such Corporate Transaction; or
(iv) The approval by the shareholders of the Company of a complete liquidation or
dissolution of the Company.
(b) Except as otherwise provided herein, if and when the Recipient’s employment with the
Company or an Affiliate is terminated by the Company for any reason other than Cause (as defined
below) or by the Recipient for any reason other than as specified in Section 2(d), then the
unvested Restricted Shares will, subject to Section 2(e), continue to vest in the numbers and on
the dates specified in the Vesting Schedule at the beginning of this Agreement.
(c) If the Recipient’s employment by the Company or an Affiliate is terminated by the Company
for Cause (as defined in Section 4 below), then any unvested Restricted Shares shall immediately
cease vesting as of the termination date and be cancelled in accordance with Section 4 of this
Agreement.
(d) If the Recipient’s employment by the Company or an Affiliate terminates because of the
Recipient’s death or long-term disability (as defined in the Company’s long-term disability plan, a
“Disability”), then the unvested Restricted Shares will immediately vest in full.
(e) If the Recipient engages in Restricted Activities (as defined below) at any time during
the Restricted Period (as defined in Section 5 of this Agreement), then those Restricted Shares
which are unvested at the time the Recipient begins to engage in the Restricted Activities shall
immediately cease vesting and be cancelled in accordance with Section 4 of this Agreement.
“Restricted Activities” consist of each of the following:
(i) the Recipient uses to the detriment of the Company, discloses or misappropriates
any Company-Related Information (as defined below), unless the Company or an Affiliate
consents otherwise in writing. “Company-Related Information” means any confidential or
secret knowledge or information of the Company or an Affiliate that the Recipient has
acquired or becomes acquainted with during the Recipient’s employment with the Company or an
Affiliate, including, without limitation, any confidential customer list, confidential
business information, confidential materials relating to the practices or procedures of the
Company or an Affiliate, or any other proprietary information of the Company or an
Affiliate; provided, however that Company-Related Information shall not include any
knowledge or information that is now published or which subsequently becomes generally
publicly known, other than as a direct or indirect result of the Recipient’s disclosure in
contradiction of this Section 2(e) (i);
(ii) the Recipient directly or indirectly, on behalf of the Recipient or any other
person, solicits, induces or encourages any person then employed by the Company
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or an Affiliate to terminate or otherwise modify their employment relationship with the
Company; or
(iii) the Recipient directly or indirectly, on behalf of the Recipient or any other
person, solicits or otherwise seeks to divert any customer, client or account of the Company
or any Affiliate away from engaging in business with the Company or any Affiliate.
(f) Nothing in this Agreement shall prevent the Recipient from (i) owning less than 1% of the
publicly traded equity securities of an enterprise engaged in the Asset Management business, (ii)
engaging in the management of the Recipient’s own investments or the investments of his spouse,
brothers, sisters, parents, nieces, nephews, or his descendants or any funds held in trust for the
benefit of the Recipient or such aforesaid mentioned persons, (iii) engaging in non-compensatory
activities for the benefit of religious, charitable or other non-profit institutions (including
participating in the management of investments held by such institutions); provided that during the
time Recipient is employed by the Company or its Affiliates, such activities shall not impair the
Recipient’s ability to devote his full working time, attention, skill and energies to the
performance of the Recipient’s duties and responsibilities to the Company and its Affiliates or
(iv) providing investment management services to a single institution, its related family group and
related trusts set forth on Schedule 2(f) hereto with respect to the investments of such
institution, its related family group and related trusts.
(g) Notwithstanding any other provisions of this Agreement to the contrary, the Board may, in
its sole discretion, declare at any time that the Restricted Shares, or any portion thereof, shall
vest immediately or, to the extent they otherwise would be forfeited pursuant to the terms of this
Agreement, shall vest in the numbers and on the dates specified in the Vesting Schedule at the
beginning of this Agreement, or in such other numbers and on such other dates as are determined by
the Board to be in the best interests of the Company as determined by the Board in its sole
discretion.
3. Effect of Vesting.
Upon the vesting of any Restricted Shares, such vested Restricted Shares will no longer be
subject to cancellation as provided in Section 2 or 4 of this Agreement.
4. Cancellation of Unvested Restricted Shares.
(a) Any Restricted Shares that have not previously vested shall cease to vest and shall be
cancelled immediately if:
(i) the Recipient attempts to pledge, encumber, assign, transfer or otherwise
dispose of any of the Restricted Shares (except as permitted by Section 1(b) of this
Agreement) or the Restricted Shares become subject to attachment or any similar
involuntary transfer or seizure in violation of this Agreement;
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(ii) the Recipient engages in Restricted Activities (as described by Section 2(e) of
this Agreement) during the Restricted Period (as defined in Section 5 of this Agreement); or
(iii) the Recipient’s employment by the Company or an Affiliate is terminated by the
Company for Cause.
(b) Upon the cancellation of any unvested Restricted Shares pursuant to this Section 4, the
Recipient shall thereafter have no right, title or interest whatever in such unvested Restricted
Shares, and, if the Company does not have custody of any and all certificates representing
Restricted Shares so cancelled, the Recipient shall immediately return to the Company any and all
certificates representing Restricted Shares so cancelled. Additionally, the Recipient will deliver
to the Company a stock power duly executed in blank relating to any and all certificates
representing such cancelled Restricted Shares or, if such stock power has previously been tendered
to the Company, the Company will be authorized to deem such previously tendered stock power
delivered, and the Company will be authorized to cancel any and all certificates representing
Restricted Shares so cancelled and to cause a book entry to be made in the records of the Company’s
transfer agent in the name of the Recipient evidencing any Restricted Shares that vested prior to
cancellation of unvested Restricted Shares under this Section 4. If the Restricted Shares are
evidenced by a book entry made in the records of the Company’s transfer agent, then the Company
will be authorized to cause such book entry to be adjusted to reflect the number of Restricted
Shares so cancelled.
(c) “Cause” hereunder means:
(i) Recipient’s conviction of any misdemeanor involving deceit, dishonesty or fraud or
any felony, or guilty or nolo contendere plea with respect thereto, that in the Company’s
reasonable determination affects Recipient’s fitness to perform his or her duties with the
Company;
(ii) any intentional and/or willful act of fraud or dishonesty by Recipient related to
or connected with Recipient’s employment by the Company or otherwise reasonably likely to
cause material harm to the Company or its reputation;
(iii) an intentional act or omission by Recipient that constitutes (A) a violation of
any law, rule or regulation that is material to the Company or (B) a material violation of
any material Company policy relating to deceit, dishonesty, fraud, or securities-trading
activities;
(iv) Recipient’s engagement in conduct that subjects the Recipient to statutory
disqualification pursuant to Section 15(b) of the Exchange Act and the regulations
promulgated thereunder.
(d) Nothing in this Agreement shall prevent the Recipient from challenging the Company’s
determination that Cause exists.
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5. Covenant Regarding Restricted Activities.
The Recipient hereby covenants not to engage in any Restricted Activities (a) during the
period that he or she is employed by the Company or any Affiliate, and (b) during the 18 month
period following the date that Recipient’s employment with the Company or an Affiliate is
terminated (the “Restricted Period”). The Recipient acknowledges and agrees that the breach of this
covenant would cause irreparable damage to the Company and that the Company will not have an
adequate remedy at law. Therefore, the obligations of the Recipient under this Section 5 shall be
enforceable by a decree of specific performance issued by any court of competent jurisdiction, and
appropriate injunctive relief may be applied for and granted in connection therewith without proof
of actual damages. Such remedies shall, however, be cumulative and not exclusive and shall be in
addition to any other remedies which the Company may have under this Agreement or otherwise.
6. Stockholder Rights.
As of the date of issuance specified at the beginning of this Agreement, the Recipient shall
have all of the rights of a stockholder of the Company with respect to the Restricted Shares,
except as otherwise specifically provided in this Agreement.
7. Tax Matters.
(a) The parties hereto agree that (i) the Recipient will file a Code Section 83(b) election
with respect to the Restricted Shares issued to the Recipient, (ii) for purposes of Code Section
83, the fair market value of the Restricted Shares shall (pursuant to Rev. Rul. 2007-49, 2007-31
I.R.B. 237) equal the amount considered paid for such Restricted Shares and (iii) the fair market
value of the Restricted Shares shall be equal to the value of such Restricted Shares as reflected
on the Section 338 Forms.
(b) The Company acknowledges that no federal, state or other taxes shall be withheld upon the
issuance of the Restricted Shares.
(c) The Recipient acknowledges that the Company has directed the Recipient to seek independent
advice regarding the applicable provisions of the Code (including their impact on the desirability
of making an election under Code Section 83(b)), the income tax laws of any municipality, state or
foreign country in which the Recipient may reside, and the tax consequences of the Recipient’s
death.
8. Restrictive Legends and Stop-Transfer Orders.
(a) Legends. The book entry or certificate representing the unvested Restricted
Shares shall contain a notation or bear the following legend (as well as any notations or
legends required by applicable state and federal corporate and securities laws) noting the
existence of the restrictions and the Company’s rights to reacquire the Restricted Shares
set forth in this Agreement:
“THE SHARES REPRESENTED BY THIS [BOOK ENTRY]
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[CERTIFICATE] MAY BE TRANSFERRED ONLY IN ACCORDANCE WITH THE TERMS
OF A RESTRICTED STOCK AGREEMENT BETWEEN THE COMPANY AND THE
STOCKHOLDER, A COPY OF WHICH IS ON FILE WITH THE SECRETARY OF THE
COMPANY.”
In addition, the book entry or certificate representing any shares issued pursuant
to this Agreement that are deposited in escrow pursuant to the Escrow Agreement
shall contain a notation or bear the following legend:
“THE SHARES REPRESENTED BY THIS [BOOK ENTRY] [CERTIFICATE] ARE
SUBJECT TO THE TERMS OF AN ESCROW AGREEMENT BETWEEN THE COMPANY, THE
STOCKHOLDER, AND CERTAIN OTHER PARTIES THERETO, A COPY OF WHICH IS
ON FILE WITH THE SECRETARY OF THE COMPANY.”
(b) Stop-Transfer Notices. The Recipient agrees that, in order to ensure compliance
with the restrictions referred to herein, the Company may issue appropriate “stop transfer”
instructions with respect to unvested Restricted Shares to its transfer agent, if any, and that, if
the Company transfers its own securities, it may make appropriate notations to the same effect in
its own records.
(c) Refusal to Transfer. The Company shall not be required (i) to transfer on its
books any Restricted Shares that have been sold or otherwise transferred in violation of any of the
provisions of this Agreement or (ii) to treat as owner of the Restricted Shares or to accord the
right to vote or pay dividends to any purchaser or other transferee to whom the Restricted Shares
shall have been so transferred.
(d) Removal of Legends and Termination of Stop Transfer Notices. The Company shall
remove, or cause to be removed, all restrictive legends and terminate, or cause to be terminated,
all stop-transfer notices referred to in this Section 8 (except any notations or legends required
by applicable state and federal corporate and securities laws) promptly following the vesting of
Restricted Shares (and, for any such shares deposited in escrow pursuant to the Escrow Agreement,
the release of such shares to the Recipient pursuant to the terms of the Escrow agreement). In the
event that less than all of the Restricted Shares represented by a book entry or certificate vest
on a particular date, the Company shall cause a separate book entry to be created or a separate
certificate to be issued representing the Restricted Shares which have vested, and such book entry
or certificate shall not be subject to such restrictive legends or stop transfer notices.
9. [Intentionally omitted.]
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10. No Promise of Continued Employment.
This Agreement shall not give the Recipient a right to continued employment with the Company
or any Affiliate, and the Company or Affiliate employing the Recipient may terminate his or her
employment at will, and otherwise deal with the Recipient without regard to this Agreement.
11. Binding Effect.
This Agreement shall be binding in all respects on the heirs, administrators, representatives,
executors and successors of the Recipient, and on the Company and its successors and assigns.
12. Agreement to Arbitrate.
The Company and the Recipient each agrees (i) that any dispute, claim or controversy arising
out of or relating directly or indirectly to the construction, performance or breach of this
Agreement (including, without limitation, the grant, issuance or cancellation of Restricted Shares)
shall be settled by arbitration, pursuant to the procedures set forth in the then in effect
Commercial Arbitration Rules (or any successor thereto), as applicable, of the American Arbitration
Association (the “AAA Rules”), shall be the sole and exclusive method for resolving any claim or
dispute (“Claim”) arising out of or relating to the rights and obligations of the parties under
this Agreement; (ii) one arbitrator shall be appointed pursuant to the AAA Rules to conduct any
such arbitration, (iii) all meetings of the parties and all hearings with respect to any such
arbitration shall take place in Chicago, Illinois, (iv) each party to the arbitration shall bear
its own costs and expenses (including, without limitation, all attorneys’ fees and expenses, except
to the extent otherwise required by applicable law), (v) all costs and expenses of the arbitration
proceeding (such as filing fees, the arbitrator’s fees, hearing expenses, etc.) shall be borne
equally by the parties hereto; (vi) the parties shall have the right to submit, and the arbitrator
shall consider, expert and/or other evidence as to the valuation of any Shares which are related to
the Claim in question; and (vii) the judgment, award or other determination of any arbitration
under the AAA Rules shall be final, conclusive and binding on all of the parties hereto.
Accordingly, the Company and the Recipient each waive their right (if any) to a trial before a
court judge and/or jury to resolve any such disputes. Nothing in this Section 12 shall prohibit any
party hereto from instituting litigation to enforce any final judgment, award or determination of
the arbitration. The parties agree that the judgment, award or other determination of any
arbitration under the AAA Rules shall be final, conclusive and binding on all of the parties
hereto. Each party hereto hereby irrevocably submits to the non-exclusive jurisdiction of the
United States District Court of the Northern District of Illinois or any state court sitting in
Xxxx County, Illinois (the “Jurisdictions”). Each party hereto irrevocably consents to service of
process by registered mail or personal service and waives any objection on the grounds of personal
jurisdiction, venue or inconvenience of the forum with respect to the Jurisdictions. Each party
hereto further agrees that each other party hereto may initiate litigation in any court of
competent jurisdiction to execute any judicial judgment enforcing or not enforcing any award,
judgment or determination of the arbitration.
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13. Choice of Law.
Subject to Section 12, this Agreement is entered into under and the relationship between the
parties shall be governed by the laws of the State of Delaware and shall be construed and
interpreted thereunder, without giving effect to choice-of-law principles.
14. Termination; Modification.
In the event that any one or more of the Restricted Activities described in Section 2(e) above
shall for any reason be held to be unenforceable, invalid or illegal for any reason including, but
not limited to, being excessively broad as to duration, geographical scope, activity or subject,
such restriction shall be construed or modified by limiting and reducing it, so as to provide the
Company with the maximum protection of its business interests and the intent of the parties as set
forth herein and yet be valid and enforceable under the applicable law as it shall then exist.
15. Entire Agreement.
This Agreement, the Purchase Agreement and the Escrow Agreement set forth the entire agreement
and understanding of the parties hereto with respect to the issuance and sale of the Restricted
Shares and supersede all prior agreements, arrangements, plans, and understandings relating to the
issuance and sale of the Restricted Shares.
16. Amendment and Waiver.
Except as otherwise provided herein, this Agreement may be amended, waived, modified, or
canceled only by a written instrument executed by the parties or, in the case of a waiver, by the
party waiving compliance.
[Signature page follows]
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IN WITNESS WHEREOF, the Recipient and the Company have executed this Agreement as of the date
of issuance specified at the beginning of this Agreement.
| BRIEN O’BRIEN | ||||
| /s/ Brien O’ Xxxxx | ||||
| XXXXX JAFFRAY COMPANIES | ||||
| By /s/ Xxxxxx X. Xxxx | ||||
| Its Chairman and Chief Executive Officer | ||||
Signature Page to Restricted Stock Agreement
