COVER
PROFESSIONAL BRANCH MANAGER PHANTOM STOCK AGREEMENT
This Professional Branch Manager 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 as a Professional
Branch Manager; 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 which
Employee may elect to be deferred 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 4.2
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3. Compensation Deferral Elections
Simultaneously with the execution of this Agreement, Employee
must direct Xxxx on a form prescribed by Xxxx (hereafter the
"Compensation Deferral Election" and attached as Exhibit A) to
defer a portion not to exceed $12,000.00 of Employee's
compensation for the calendar year, on a before tax basis, from
Employee's annual bonus or from Employee's compensation, in any
whole percentage Employee chooses, from a minimum of 1% to a
maximum of 15% (not to exceed $12,000.00 in the aggregate); or from
Employee's compensation in any monthly whole dollar amount Employee
chooses, from a minimum of $250.00 to a maximum of $1,000.00.
When electing to make deferrals of compensation under this
Agreement, Employee must make an irrevocable election for an
entire calendar year. Once a calendar year has begun, a deferral
election may not be changed or revoked during the calendar year
(except with respect to deferrals in future calendar years).
Notwithstanding the foregoing, however, in the event of Employee's
financial hardship, the Employee may apply to Xxxx for permission
to reduce or suspend deferral contributions for the remainder
of the calendar year or any part thereof. Xxxx has the sole
discretion as to the extent (if at all) it shall grant the
Employee's request. "Financial hardship" is defined as
financial need arising as a result of a sudden and unexpected
illness or accident of the Employee or a dependent, loss of
the Employee's property due to casualty, or other similar
extraordinary and unforeseeable circumstances arising as a
result of events beyond the control of Employee, but only
where such financial need is not and may not be relieved (i)
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through reimbursement or compensation by insurance or otherwise
or (ii) by liquidation of the Employee's assets, to the extent
the liquidation of such assets would not itself cause severe
financial hardship.
Employee may make changes in his or her deferral election
(including a revocation of further deferrals), effective for any
calendar year after the year in which he or she initially entered
into this Agreement by filing prior to January 1 of the subsequent
year a completed compensation deferral amendment in the form
prescribed by Xxxx (hereafter the "Compensation Deferral Amendment"
and attached as Exhibit B). If Employee fails to file a completed
Compensation Deferral Amendment prior to the beginning of a calendar
year, Employee will be deemed to have elected to keep Employee's
prior election in force for the new calendar year.
4. Professional Branch Manager Phantom Stock Account
In lieu of paying the deferred portion of Employee's
compensation to the Employee as earned, Xxxx will establish
a Professional Branch Manager Phantom Stock Account (the
"Account") on its books and records for the benefit of
Employee wherein Xxxx will credit to such Account dollar
amounts equal to the compensation deferred by the Employee
under this Agreement (hereafter the "Compensation Credit") to
be converted into Share Units. Each Compensation Credit will
be made as of a date not later than ten (10) business days
after the last day of the month during which the Compensation
Credit was earned by Employee. The number of Share Units into
which such Compensation Credit shall be converted (calculated
to four decimal places) will be determined as of the
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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. Additionally, Xxxx will "match"
the Compensation Credit on a monthly basis by contributing to
the Employee's Account a dollar amount equal to the Compensation
Credit (hereinafter the "Matched Credit") with the Matched
Credit converted into Share Units in the same manner as the
Compensation Credit (hereinafter the "Matched Share Units").
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 on 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").
5. 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 LMI Common
Stock) with respect thereto, Employee's Account will be
credited with additional Share Units and Matched Share Units,
equivalent to that number of phantom shares of LMI Common Stock
determined by dividing the amount of the dividend or other
distribution allocable to the Share Units and Matched Share
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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 business 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 and Matched 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.
6. Vesting Schedule of Share Units
Employee shall be fully and immediately vested in all Share
Units attributable to or resulting from Employee's Compensation
Credit.
As long as Employee is continuously employed in good
standing by Xxxx for the following elapsed periods, Employee shall
vest in the Matched Share Units credited to Employee's Account
pursuant to the following vesting schedule (but such Matched Share
Units shall be subject to forfeiture as described in Paragraph 14
if Employee engages in competition):
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If After December 31 of the Year
of the Matched Credit, Employee
continues his Employment for a Then the Vested Portion of
Period which is: Matched Share Units shall be:
12 months or less -0-
Greater than 12 months, but 1/5 of Respective
24 months or less Matched Share Units
Greater than 24 months, but 2/5 of Respective
36 months or less Matched Share Units
Greater than 36 months, but 3/5 of Respective
48 months or less Matched Share Units
Greater than 48 months, but 4/5 of Respective
60 months or less Matched Share Units
Greater than 60 months All Respective
Matched Share Units
For purposes of determining Employee's vested portion of
Matched Share Units, Employee shall not be entitled to receive
any partial or pro-rated credit for having been employed by Xxxx
for any partial time period specified in the table above. If
Employee's employment with Xxxx terminates for any reason other
than death, disability or retirement (as such terms are defined
herein), whether involuntary or voluntary and for whatever cause
or no cause, Employee shall have no right or claim to any Matched
Share Units which have not vested to Employee pursuant to the
above Vesting Schedule and such non-vested Matched Share Units
shall belong exclusively to Xxxx.
In the event Employee's employment with Xxxx
terminates as a result of Employee's death, all Matched
Share Units shall be immediately deemed vested
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and belonging to Employee's estate or to Employee's beneficiary
if Employee has named a beneficiary as described in Paragraph 13.
In the event Employee's employment with Xxxx terminates as
a result of Employee's disability, all Matched Share Units shall
be immediately deemed vested and belonging to Employee. For
purposes of this Agreement, disability shall mean a medically
determinable physical or mental impairment which can be expected
to result in death or to last at least twelve months, and by
reason of which the Employee will be prevented from performing
his usual duties or any other similar duties available in Xxxx'x
employ.
Unless distribution of benefits is forfeited pursuant to
Paragraph 14 due to Employee engaging in competition, vesting
pursuant to this Paragraph shall continue after Employee retires
from Xxxx provided that such retirement occurs (i) on or after
Employee is age 65; (ii) on or after Employee is age 55 if the
sum of Employee's age at retirement and his or her years of
service with Xxxx equals at least 75; or (iii) on or after
Employee is age 60 if the Employee has a minimum of ten years of
service with Xxxx.
7. 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, garnishment or levy prior to distribution to
Employee. Since this Agreement is intended to be a non-qualified,
unfunded plan not subject to the Employment Retirement Income
Security Act of 1974, as amended, payments under this
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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.
8. 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.
9. 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 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,
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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 and Matched 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.
10. 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 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 and Matched Share
Units in the Account, determined as of the effective date
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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 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 the shareholder 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 Xxxx 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 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.
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11. 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 9 or
Paragraph 10 of this Agreement, any such accrued credits
(hereinafter "Treasury Xxxx 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.
12. Mode of Distribution
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 and vested Matched Share
Units in the Account (unless Xxxx elects to distribute cash for some
or all of the Share Units or vested Matched 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 LMI Common 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 share of LMI
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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
preceding the date a distribution is due, if Xxxx elects to
distribute stock, Employee will be subject to some market risk 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.
13. Timing of Distribution
Simultaneously with the execution of this Agreement, Employee
must make an election on a form prescribed by Xxxx (hereafter the
"Payment Option Election" and attached as Exhibit C) to receive the
benefits attributable to Share Units and corresponding Matched
Share Units payable under this Agreement either:
(i) in a lump sum one year after the respective Matched
Share Units have fully vested pursuant to Paragraph 6; or
(ii) in three annual installments with the first of such
installments occurring one year after the respective
Matched Share Units have fully vested pursuant to
Paragraph 6; or
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(iii) in a lump sum upon Employee's termination of
employment from Xxxx, but in no event earlier than one
year after the respective Matched Share Units have fully
vested pursuant to Paragraph 6; or
(iv) in three annual installments, with the first of
such installments occurring upon Employee's termination
of employment from Xxxx, but in no event earlier than one
year after the respective Matched Share Units have fully
vested pursuant to Paragraph 6.
Notwithstanding Employee's election to the contrary, if the
total amount to be distributed from the 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 benefits 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 9,
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 business day
following termination of employment (but if the Employee has so
elected in the Payment Option Election, no earlier than the first
day of the calendar year following termination), Employee will be
entitled to receive one or more distributions under this Agreement
in accordance with the Payment Option Election.
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Employee from time to time may designate, on a form prescribed
by Xxxx, (hereafter the "Designation of Beneficiary(ies)" and
attached as Exhibit D) any person(s) to receive such distributions
as may be payable under this Agreement upon the Employee's death
(a "Beneficiary"). In the event of the death of Employee who has
an undistributed balance in his or her Account, then as of the
fifth business day after the date of death, the Employee's
Beneficiary will be entitled to receive the balance of the Account
in a single lump sum, or if Employee has so indicated in the
Employee's Payment Option Election, in the same manner as the
Account would have been distributed to the Employee had he or she
lived.
The amount of any distribution with respect to an Account will
be determined on the date Employee or his or her Beneficiary is
entitled to receive a distribution and, to the extent an Account
includes Share Units or vested Matched Share Units, will be based
on the Fair Market Value of LMI Common Stock as of the date
Employee or his or her Beneficiary is entitled to receive a
distribution.
14. Non-Compete Requirement
If Employee "engages in competition" with Xxxx prior to one
year after the Matched Share Units have fully vested pursuant to
Paragraph 6, Employee's claim to such respective Matched Share
Units, both vested and non-vested and including interest earned
thereon or any respective Treasury Xxxx Credits, shall be forfeited
in its entirety. Forfeited amounts shall revert to Xxxx.
(a) For purposes of this Agreement, Employee shall be deemed
to have "engaged in competition" with Xxxx if he or she:
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(i) discloses the names of or otherwise identifies any
of Xxxx'x customers to any person, firm, corporation, association,
or other entity for any reason or purpose whatsoever;
(ii) discloses to any person, firm, corporation,
association, or other entity any information regarding Xxxx'x
general business practices or procedures, methods of sale, list of
products, personnel information or any other information concerning
Xxxx'x business;
(iii) owns, manages, operates, controls, is employed by,
acts as an agent for, participates in or is connected in any manner
with the ownership, management, operation or control of any firm,
corporation, association or other entity which is engaged in
businesses which are or may be competitive to the business of Xxxx;
provided further that this restrictive covenant shall encompass the
State of Maryland and any other states where Xxxx is engaged in
business, and every city, county, and other political subdivision
of such states; or
(iv) solicits or calls, either by himself or at his or
her direction has any other person or firm solicit or call, any of
the customers of Xxxx on whom Employee called, with whom Employee
became acquainted, or of whom Employee learned during his
employment by Xxxx.
(b) It is the intention of Xxxx that this Paragraph
be given the broadest protection allowed by law with regard
to the restrictions herein contained. Each restriction
set forth in this Paragraph shall be construed as a
condition separate and apart from any other restriction
or condition. To the extent that any restriction contained
in the Paragraph is determined by any court of competent
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jurisdiction to be unenforceable by reason of it being extended
for too great a period of time, or as encompassing too large a
geographic area, or over too great a range of activity, or any
combination of these elements, then such restriction shall be
interpreted to extend only over the maximum period of time,
geographic area, and range of activities which the court deems
reasonable and enforceable.
15. 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 the non-deferred remainder of compensation of Employee.
16. 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
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arbitration proceeding, such relief to be afforded to Xxxx
pending the decision of the arbitrators.
17. 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.
Furthermore, Xxxx may end at any time Employee's employment as
a Professional Branch Manager. In the event Employee is no longer
employed as a Professional Branch Manager, Employee will no longer
be entitled to defer compensation pursuant to this Agreement.
However, as long as Employee continues to be employed in good
standing by Xxxx, Employee shall continue to be entitled to the
benefits due Employee under this Agreement.
18. Governing Law
This Agreement shall be governed, construed, and enforced
in accordance with the laws of the State of Maryland.
19. 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.
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20. 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.
21. 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 accept the terms of this Agreement or
sign this Agreement.
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:__________________________
