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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): July 21, 2010
LPL Investment Holdings Inc.
(Exact name of registrant as specified in its charter)
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Delaware
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000-52609
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20-3717839 |
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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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One Beacon Street Boston MA
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02108 |
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(Address of Principal Executive Offices)
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(Zip Code) |
Registrants telephone number, including area code: (617) 423-3644
N/A
(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 8.01. Other Events
In connection with the proposed initial public offering of the common stock of LPL Investment
Holdings Inc. (the Company), the Company is filing the following
documents, each to be effective upon the consummation of the offering:
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the Companys Second Amended and Restated Bylaws and |
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a specimen common stock certificate. |
The
compensation committee of the Board of Directors also approved the LPL
Financial Corporation Executive Severance Plan
(the Severance Plan)
and employment agreements with each of the following
executive officers of the Company, the terms of each of which are described in the Companys
registration statement filed on June 4, 2010, as amended: Mark S. Casady; Esther M. Stearns;
Stephanie L. Brown; William E. Dwyer III; and Robert J. Moore. The
Severance Plan and employment agreements will
become effective upon consummation of the offering.
Each of the documents or agreements described above are filed as exhibits to the Current
Report on Form 8-K.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits
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3.1 |
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The Companys Second Amended and Restated Bylaws to be
effective upon the consummation of the offering. |
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4.1 |
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Specimen common stock certificate. |
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10.1 |
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Amended and Restated Executive Employment Agreement among Mark S. Casady, the Company,
LPL Holdings, Inc. and LPL Financial Corporation to be effective upon the
consummation of the offering. |
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10.2 |
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Amended and Restated Executive Employment Agreement among Esther M. Stearns, the Company,
LPL Holdings, Inc. and LPL Financial Corporation to be effective upon the
consummation of the offering. |
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10.3 |
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Amended and Restated Executive Employment Agreement among Stephanie L. Brown, the
Company, LPL Holdings, Inc. and LPL Financial Corporation to be effective upon
the consummation of the offering. |
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10.4 |
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Amended and Restated Executive Employment Agreement among William E. Dwyer III, the
Company, LPL Holdings, Inc. and LPL Financial Corporation to be effective upon
the consummation of the offering. |
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10.5 |
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Executive Employment Agreement among Robert J. Moore, the Company, LPL Holdings, Inc. and
LPL Financial Corporation to be effective upon the consummation of the offering. |
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10.6 |
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LPL Financial Corporation Executive Severance Plan to be effective upon the consummation of the offering. |
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused
this report to be signed on its behalf by the undersigned hereunto duly authorized.
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LPL INVESTMENT HOLDINGS INC.
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By: |
/s/ Robert J. Moore
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Name: |
Robert J. Moore |
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Title: |
Chief Financial Officer |
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Dated:
July 23, 2010
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Exhibit 3.1
LPL INVESTMENT HOLDINGS INC. (the Corporation)
SECOND AMENDED & RESTATED BYLAWS
SECTION 1 STOCKHOLDERS
Section 1.1. Annual Meeting.
An annual meeting of the stockholders for the election of directors to succeed those whose
term expire and for the transaction of such other business as may properly come before the meeting
shall be held at the place, if any, within or without the State of Delaware, on the date and at the
time that the Board of Directors shall each year fix. Unless stated otherwise in the notice of the
annual meeting of the stockholders of the Corporation, such annual meeting shall be at the
principal office of the Corporation.
Section 1.2. Advance Notice of Nominations and Proposals of Business.
Following the first annual meeting of stockholders that occurs at least 90 days following the
Corporations public announcement that Hellman & Friedman Capital Partners V, L.P., Hellman &
Friedman Capital Partners V (Parallel), L.P., Hellman & Friedman Capital Associates V, L.P.
(collectively, H&F) and TPG Partners IV, L.P. (TPG), together with their
respective affiliates or successors (collectively, the Sponsors), have ceased
collectively to beneficially own (directly or indirectly) 40% or more of the Corporations
outstanding shares of common stock, the following provisions of this Section 1.2 shall apply:
(a) Nominations of persons for election to the Board of Directors and proposals for other
business to be transacted by the stockholders at an annual meeting of stockholders may be made (i)
pursuant to the Corporations notice with respect to such meeting (or any supplement thereto), (ii)
by or at the direction of the Board of Directors or any committee thereof or (iii) by any
stockholder of record of the Corporation who (A) was a stockholder of record at the time of the
giving of the notice contemplated in Section 1.2(b), (B) is entitled to vote at such meeting and
(C) has complied with the notice procedures set forth in this Section 1.2(a). Subject to Section
1.2(i), clause (iii) of this Section 1.2 shall be the exclusive means for a stockholder to make
nominations or propose other business (other than matters properly brought pursuant to applicable
provisions of federal law, including the Securities Exchange Act of 1934 (as amended from time to
time, the Act)) before an annual meeting of stockholders.
(b) For nominations or other business to be properly brought before an annual meeting by a
stockholder pursuant to clause (iii) of Section 1.2(a), (i) the stockholder must have given timely
notice thereof in writing to the Secretary of the Corporation with the information contemplated by
Section 1.2(c), and (ii) the business must be a proper matter for stockholder action under the
General Corporation Law of the State of Delaware (the DGCL). The notice requirements of
this Section 1.2 shall be deemed satisfied by a stockholder with respect to business other than a
nomination if the stockholder has notified the Corporation of his, her or its intention to present
a proposal at an annual meeting in compliance with applicable rules and regulations promulgated
under the Act and such stockholders proposal has been
included in a proxy statement prepared by the Corporation to solicit proxies for such annual
meeting.
(c) To be timely, a stockholders notice must be delivered to the Secretary of the Corporation
at the principal executive offices of the Corporation on a date (i) not later than the close of
business on the 90th day nor earlier than the close of business on the 120th
day prior to the anniversary date of the prior years annual meeting or (ii) if there was no annual
meeting in the prior year or if the date of the current years annual meeting is more than 30 days
before or after the anniversary date of the prior years annual meeting, on or before 10 days after
the day on which the date of the current years annual meeting is first disclosed in a public
announcement. In no event shall any adjournment or postponement of an annual meeting or the
announcement thereof commence a new time period for the delivery of such notice. Such notice from
a stockholder must state (i) as to each nominee that the stockholder proposes for election or
reelection as a director, (A) all information relating to such nominee that would be required to be
disclosed in solicitations of proxies for the election of such nominee as a director pursuant to
Regulation 14A under the Act and such nominees written consent to serve as a director if elected,
and (B) a description of all direct and indirect compensation and other material monetary
arrangements, agreements or understandings during the past three years, and any other material
relationship, if any, between or concerning such stockholder and its respective affiliates or
associates, or others with whom they are acting in concert, on the one hand, and the proposed
nominee, and his or her respective affiliates or associates, on the other hand; (ii) as to each
proposal that the stockholder seeks to bring before the meeting, a brief description of such
proposal, the reasons for making the proposal at the meeting, the text of the proposal or business
(including the text of any resolutions proposed for consideration and in the event that such
business includes a proposal to amend the bylaws of the Corporation, the language of the proposed
amendment) and any material interest that the stockholder has in the proposal; and (iii) (A) the
name and address of the stockholder giving the notice and the Stockholder Associate Person (as
defined below), if any, on whose behalf the nomination or proposal is made, (B) the class (and, if
applicable, series) and number of shares of stock of the Corporation that are, directly or
indirectly, owned beneficially or of record by the stockholder or any Stockholder Associated Person
(as defined below), (C) any option, warrant, convertible security, stock appreciation right or
similar right with an exercise or conversion privilege or a settlement payment or mechanism at a
price related to any class (or, if applicable, series) of shares of stock of the Corporation or
with a value derived in whole or in part from the value of any class (or, if applicable, series) of
shares of stock of the Corporation, whether or not such instrument or right shall be subject to
settlement in the underlying class or series of capital stock of the Corporation or otherwise
(each, a Derivative Instrument) directly or indirectly owned beneficially or of record by
such stockholder or any Stockholder Associated Person and any other direct or indirect opportunity
to profit or share in any profit derived from any increase or decrease in the value of shares of
stock of the Corporation of the stockholder or any Stockholder Associated Person, (D) any proxy,
contract, arrangement, understanding or relationship pursuant to which such stockholder or any
Stockholder Associated Person has a right to vote any securities of the Corporation, (E) any
proportionate interest in shares of the Corporation or Derivative Instruments held, directly or
indirectly, by a general or limited partnership in which such stockholder or any Stockholder
Associated Person is a general partner or beneficially owns an interest in a general partner, (F)
any performance-related fees (other than an asset-based fee) that such stockholder or any
Stockholder Associated Person is entitled to based on any increase or
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decrease in the value of the shares of stock of the Corporation or Derivative Instruments, (G)
any other information relating to such stockholder and Stockholder Associated Person, if any,
required to be disclosed in a proxy statement or other filing required to be made in connection
with solicitations of proxies for, as applicable, the proposal and/or for the election of directors
in an election contest pursuant to and in accordance with Section 14(a) of the Act, (H) a
representation that the stockholder is a holder of record of the Corporation entitled to vote at
such meeting and intends to appear in person or by proxy at the meeting to propose such business or
nomination, and (I) whether either the stockholder intends to deliver a proxy statement and form of
proxy to holders of, in the case of a proposal, at least the percentage of the Corporations voting
shares required under applicable law to carry the proposal or, in the case of a nomination or
nominations, a sufficient number of holders of the Corporations voting shares reasonably believed
by such stockholder to be sufficient to elect such nominee or nominees or otherwise to solicit
proxies or votes from stockholders in support of such proposal or nomination. For purposes of
these bylaws, a Stockholder Associated Person of any stockholder means (i) any affiliate or
associate (as those terms are defined in Rule 12b-2 under the Act) of the stockholder that owns
beneficially or of record any capital stock or other securities of the Corporation and (ii) any
person acting in concert with such stockholder or any affiliate or associate of such stockholder
with respect to the capital stock or other securities of the Corporation. In addition, any nominee
proposed by a stockholder shall complete a questionnaire, in a form provided by the Corporation,
within 10 days of receipt of the form of questionnaire from the Corporation.
(d) Subject to the certificate of incorporation of the Corporation (the Certificate of
Incorporation), Section 1.2(i) and applicable law, only persons nominated in accordance with
procedures stated in this Section 1.2 shall be eligible for election as and to serve as a member of
the Board of Directors and the only business that shall be conducted at an annual meeting of
stockholders is the business that has been brought before the meeting in accordance with the
procedures set forth in this Section 1.2. The chairman of the meeting shall have the power and the
duty to determine whether a nomination or any proposal has been made according to the procedures
stated in this Section 1.2 and, if any nomination or proposal does not comply with this Section
1.2, unless otherwise required by law, the nomination or proposal shall be disregarded.
(e) For purposes of this Section 1.2, public announcement means disclosure in a press
release reported by the Dow Jones News Service, Associated Press or a comparable news service or in
a document publicly filed by the Corporation with the Securities and Exchange Commission pursuant
to Section 13, 14 or 15(d) of the Act.
(f) Notwithstanding the foregoing provisions of this Section 1.2, a stockholder shall also
comply with all applicable requirements of the Act and the rules and regulations thereunder with
respect to matters set forth in this Section 1.2. Nothing in this Section 1.2 shall affect any
rights, if any, of stockholders to request inclusion of proposals in the Corporations proxy
statement pursuant to applicable provisions of federal law, including the Act.
(g) Notwithstanding the foregoing provisions of this Section 1.2, unless otherwise required by
law, if the stockholder (or a qualified representative of the stockholder)
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does not appear at the annual or special meeting of stockholders of the Corporation to present
a nomination or proposed business, such nomination shall be disregarded and such proposed business
shall not be transacted, notwithstanding that proxies in respect of such vote may have been
received by the corporation. For purposes of this Section 1.2, to be considered a qualified
representative of the stockholder, a person must be a duly authorized officer, manager or partner
of such stockholder or must be authorized by a writing executed by such stockholder or an
electronic transmission delivered by such stockholder to act for such stockholder as proxy at the
meeting of stockholders and such person must produce such writing or electronic transmission, or a
reliable reproduction of the writing or electronic transmission, at the meeting of stockholders.
(h) Only such business shall be conducted at a special meeting of stockholders as shall have
been brought before the meeting pursuant to the Corporations notice of meeting. Nominations of
persons for election to the Board of Directors may be made at a special meeting of stockholders at
which directors are to be elected pursuant to the Corporations notice of meeting (1) by or at the
direction of the Board of Directors or any committee thereof or (2) provided that the Board of
Directors has determined that directors shall be elected at such meeting, by any stockholder of the
Corporation who is a stockholder of record at the time the notice provided for in this Section 1.2
is delivered to the Secretary of the Corporation, who is entitled to vote at the meeting and upon
such election and who complies with the notice procedures set forth in this Section 1.2. In the
event the Corporation calls a special meeting of stockholders for the purpose of electing one or
more directors to the Board of Directors, any such stockholder entitled to vote in such election of
directors may nominate a person or persons (as the case may be) for election to such position(s) as
specified in the corporations notice of meeting, if the stockholders notice required by paragraph
(b) of this Section 1.2 shall be delivered to the Secretary at the principal executive offices of
the Corporation not earlier than the close of business on the 120th day prior to such
special meeting and not later than the close of business on the later of the 90th day
prior to such special meeting or the tenth 10th day following the day on which public
announcement is first made of the date of the special meeting and of the nominees proposed by the
Board of Directors to be elected at such meeting. In no event shall the public announcement of an
adjournment or postponement of a special meeting commence a new time period (or extend any time
period) for the giving of a stockholders notice as described above.
(i) All provisions of this Section 1.2 are subject to, and nothing in this Section 1.2 shall
in any way limit the exercise, or the method or timing of the exercise of, the rights of any person
granted by the Corporation to nominate directors.
Section 1.3. Special Meetings; Notice.
Special meetings of the stockholders of the Corporation may be called only in the manner set
forth in the Certificate of Incorporation. Notice of every special meeting of the stockholders of
the Corporation shall state the purpose or purposes of such meeting. Except as otherwise required
by law, the business conducted at a special meeting of stockholders of the Corporation shall be
limited exclusively to the business set forth in the Corporations notice of meeting, and the
individual or group calling such meeting shall have exclusive authority to determine the business
included in such notice.
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Section 1.4. Notice of Meetings.
Notice of the place, if any, date and time of all meetings of stockholders of the Corporation,
the record date for determining the stockholders entitled to vote at the meeting (if such date is
different from the record date for stockholders entitled to notice of the meeting) and the means of
remote communications, if any, by which stockholders and proxy holders may be deemed present and
vote at such meeting, and, in the case of all special meetings of stockholders, the purpose or
purposes of the meeting, shall be given, not less than 10 nor more than 60 days before the date on
which such meeting is to be held, to each stockholder entitled to notice of the meeting.
The Corporation may postpone or cancel any previously called annual or special meeting of
stockholders of the Corporation by making a public announcement (as defined in Section 1.2(e)) of
such postponement or cancellation prior to the meeting. When a previously called annual or special
meeting is postponed to another time, date or place, if any, notice of the place (if any), date and
time of the postponed meeting, the record date for determining the stockholders entitled to vote at
the meeting (if such date is different from the record date for stockholders entitled to notice of
the meeting) and the means of remote communications, if any, by which stockholders and proxy
holders may be deemed present and vote at such postponed meeting, shall be given in conformity with
this Section 1.4.
When a meeting is adjourned to another time or place, notice need not be given of the
adjourned meeting if the time and place, if any, thereof and the means of remote communication, if
any, by which stockholders and proxy holders may be deemed to be present and vote at such adjourned
meeting are announced at the meeting at which the adjournment is taken; however, if the
date of any adjourned meeting is more than 30 days, a notice of the adjourned meeting shall be
given to each stockholder of record entitled to vote at the meeting, or if after the adjournment a
new record date for stockholders entitled to vote is fixed for the adjourned meeting the Board of
Directors shall fix a new record date for notice of such adjourned meeting in conformity herewith
to each stockholder of record entitled to vote at such adjourned meeting as of the record date for
notice of such adjourned meeting. At any adjourned meeting, any business may be transacted that
may have been transacted at the original meeting.
Section 1.5. Quorum.
At any meeting of the stockholders, the holders of shares of stock of the Corporation entitled
to cast a majority of the total votes entitled to be cast by the holders of all outstanding shares
of capital stock of the Corporation entitled to vote generally in the election of directors
(Voting Stock), present in person or by proxy, shall constitute a quorum for all
purposes, unless or except to the extent that the presence of a larger number is required by
applicable law or the Certificate of Incorporation. If a separate vote by one or more classes or
series is required, the holders of shares entitled to cast a majority of the total votes entitled
to be cast by the holders of the shares of the class or classes or series, present in person or
represented by proxy, shall constitute a quorum entitled to take action with respect to that vote
on that matter.
If a quorum shall fail to attend any meeting, the chairman of the meeting may adjourn the
meeting to another place, if any, date and time.
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Section 1.6. Organization.
The chairman of the Board or, in his or her absence, the person whom the Board of Directors
designates or, in the absence of that person or the failure of the Board of Directors to designate
a person, the Chief Executive Officer of the Corporation or, in his or her absence, the person
chosen by the holders of a majority of the shares of capital stock entitled to vote who are
present, in person or by proxy, shall call to order any meeting of the stockholders of the
Corporation and act as chairman of the meeting. In the absence of the Secretary of the
Corporation, the secretary of the meeting shall be the person the chairman appoints.
Section 1.7. Conduct of Business.
The chairman of any meeting of stockholders of the Corporation shall determine the order of
business and the rules of procedure for the conduct of such meeting, including the manner of voting
and the conduct of discussion as he or she determines to be in order. The chairman shall have the
power to adjourn the meeting to another place, if any, date and time. The date and time of the
opening and closing of the polls for each matter upon which the stockholders will vote at the
meeting shall be announced at the meeting. Except to the extent inconsistent with such rules and
regulations as adopted by the Board of Directors, the chairman of the meeting shall have the right
and authority to convene and (for any or no reason) to adjourn the meeting, to prescribe such
rules, regulations and procedures and to do all such acts as, in the judgment of such chairman, are
appropriate for the proper conduct of the meeting. Such rules, regulations or procedures, whether
adopted by the Board of Directors or prescribed by the chairman of the meeting, may include,
without limitation, the following: (i) the establishment of an agenda or order of business for the
meeting; (ii) rules and procedures for maintaining order at the meeting and the safety of those
present; (iii) limitations on attendance at or participation in the meeting to stockholders
entitled to vote at the meeting, their duly authorized and constituted proxies or such other
persons as the chairman of the meeting shall determine; (iv) restrictions on entry to the meeting
after the time fixed for the commencement thereof; and (v) limitations on the time allotted to
questions or comments by participants. The chairman of the meeting of stockholders, in addition to
making any other determinations that may be appropriate to the conduct of the meeting, shall, if
the facts warrant, determine and declare to the meeting that a nomination or matter of business was
not properly brought before the meeting and if such chairman should so determine, such chairman
shall so declare to the meeting and any such matter or business not properly brought before the
meeting shall not be transacted or considered. Unless and to the extent determined by the Board of
Directors or the chairman of the meeting, meetings of stockholders shall not be required to be held
in accordance with the rules of parliamentary procedure.
Section 1.8. Proxies; Inspectors.
(a) At any meeting of the stockholders, every stockholder entitled to vote may vote in person
or by proxy authorized by an instrument in writing or by a transmission permitted by applicable
law.
(b) Prior to a meeting of the stockholders of the Corporation, the Corporation shall appoint
one or more inspectors to act at a meeting of stockholders of the Corporation and make a written
report thereof. The Corporation may designate one or more persons as alternate
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inspectors to replace any inspector who fails to act. If no inspector or alternate is able to
act at a meeting of stockholders, the person presiding at the meeting may, and to the extent
required by applicable law, shall, appoint one or more inspectors to act at the meeting. Each
inspector, before beginning the discharge of his or her duties, shall take and sign an oath
faithfully to execute the duties of inspector with strict impartiality and according to the best of
his or her ability. The inspectors may appoint or retain other persons or entities to assist the
inspectors in the performance of the duties of inspectors. The inspectors shall have the duties
prescribed by applicable law.
Section 1.9. Voting.
Except as otherwise required by the rules or regulations of any stock exchange applicable to
the Corporation or pursuant to any law or regulation applicable to the Corporation or its
securities or by the Certificate of Incorporation or these bylaws, all matters other than the
election of directors shall be determined by a majority of the votes cast on the matter
affirmatively or negatively. All elections of directors shall be determined by a plurality of the
votes cast.
Section 1.10. Action by Written Consent.
Except as otherwise provided in the Certificate of Incorporation, any action required or
permitted to be taken by the stockholders of the Corporation may be effected by a consent in
writing by such stockholders.
Section 1.11. Stock List.
A complete list of stockholders of the Corporation entitled to vote at any meeting of
stockholders of the Corporation, arranged in alphabetical order for each class of stock and showing
the address of each such stockholder and the number of shares registered in the name of such
stockholder, shall be open to the examination of any such stockholder, for any purpose germane to a
meeting of the stockholders of the Corporation, for a period of at least 10 days before the meeting
(i) on a reasonably accessible electronic network, provided that the information required to gain
access to such list is provided with the notice of the meeting or (ii) during ordinary business
hours at the principal place of business of the Corporation; provided, however, if
the record date for determining the stockholders entitled to vote is less than 10 days before the
meeting date, the list shall reflect the stockholders entitled to vote as of the 10th day before
such meeting date. If the meeting is to be held at a place, then a list of stockholders entitled
to vote at the meeting shall be produced and kept at the time and place of the meeting during the
whole time thereof and may be examined by any stockholder who is present. If the meeting is to be
held solely by means of remote communication, then the list shall also be open to the examination
of any stockholder during the whole time of the meeting on a reasonably accessible electronic
network, and the information required to access such list shall be provided with the notice of the
meeting.
Except as otherwise provided by law, the stock ledger shall be the sole evidence of the
identity of the stockholders entitled to vote at a meeting and the number of shares held by each
stockholder.
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SECTION 2 BOARD OF DIRECTORS
Section 2.1. General Powers and Qualifications of Directors.
The business and affairs of the Corporation shall be managed by or under the direction of the
Board of Directors. In addition to the powers and authorities these bylaws expressly confer upon
them, the Board of Directors may exercise all such powers of the Corporation and do all such lawful
acts and things as are not by the DGCL or by the Certificate of Incorporation or by these bylaws
required to be exercised or done by the stockholders. Directors need not be stockholders of the
Corporation to be qualified for election or service as a director of the Corporation.
Section 2.2. Removal; Resignation.
Except as otherwise provided for in the Certificate of Incorporation, any director or the
entire Board of Directors may be removed, with or without cause, by the holders of a majority of
the voting power of the Voting Stock, voting together as a single class. Any director may resign
at any time upon notice given in writing, including by electronic transmission, to the Corporation.
Section 2.3. Regular Meetings.
Regular meetings of the Board of Directors shall be held at the place (if any), on the date
and at the time as shall have been established by the Board of Directors and publicized among all
directors. A notice of a regular meeting, the date of which has been so publicized, shall not be
required.
Section 2.4. Special Meetings.
Special meetings of the Board of Directors may be called by the President or by two or more
directors then in office or, if the Board of Directors then includes a director nominated or designated for nomination by TPG or H&F, by any director nominated or designated for nomination by TPG or H&F and shall be held at the place, if any, on the date and at the time as he,
she or they shall fix. Notice of the place, if any, date and time of each special meeting shall be
given to each director either (a) by mailing written notice thereof not less than five days before
the meeting, or (b) by telephone, facsimile or other means of electronic transmission providing
notice thereof not less than twenty-four hours before the meeting. Any and all business may be
transacted at a special meeting of the Board of Directors.
Section 2.5. Quorum.
At any meeting of the Board of Directors, a majority of the total number of directors then in
office shall constitute a quorum for all purposes, provided that so long as the Sponsors
collectively beneficially own (directly or indirectly) a majority of the voting power of the
Corporations Voting Stock, it shall be necessary to constitute a quorum, in addition to a majority
of the total number of directors then in office (a) that one director nominated or designated for
nomination by either TPG or H&F be present (other than attendance for the sole purpose of
objecting to the transaction of any business because the meeting is not lawfully called or
convened) and (b) for an action of the Board of Directors taken at a meeting to be valid, directors that constitute a quorum must be present at the time that the vote on such action is taken. For the avoidance of doubt, so long as the Sponsors collectively beneficially own (directly or indirectly) a majority of the voting power of the Corporations Voting Stock, if directors that constitute a quorum are not present at the time that the vote on any action is taken, a quorum shall not be constituted with respect to such action, and any vote taken with respect to such action shall not be a valid action of the Board of Directors, notwithstanding that a quorum of the Board of Directors may have been present at the commencement of such meeting. If a quorum shall fail to attend any meeting, a majority of those present may adjourn
the meeting to another place, if any, date or time, without further notice or waiver thereof.
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Section 2.6. Participation in Meetings By Conference Telephone or Other
Communications Equipment.
Members of the Board of Directors, or of any committee thereof, may participate in a meeting
of the Board of Directors or committee thereof by means of conference telephone or other
communications equipment by means of which all directors participating in the meeting can hear each
other director, and such participation shall constitute presence in person at the meeting.
Section 2.7. Conduct of Business.
At any meeting of the Board of Directors, business shall be transacted in the order and manner
that the Board of Directors may from time to time determine, and all matters shall be determined by
the vote of a majority of the directors present, provided a quorum is present at the time such
matter is acted upon, except as otherwise provided in the Certificate of Incorporation or these
bylaws or required by applicable law. The Board of Directors or any committee thereof may take
action without a meeting if all members thereof consent thereto in writing or by electronic
transmission, and the writing or writings, or electronic transmission or electronic transmissions,
are filed with the minutes of proceedings of the Board of Directors or any committee thereof. Such
filing shall be in paper form if the minutes are maintained in paper form and shall be in
electronic form if the minutes are maintained in electronic form.
Section 2.8. Compensation of Directors.
The Board of Directors shall be authorized to fix the compensation of directors. The
directors of the Corporation shall be paid their expenses, if any, of attendance at each meeting of
the Board of Directors and shall be reimbursed a fixed sum for attendance at each meeting of the
Board of Directors, paid an annual retainer or paid other compensation, including equity
compensation, as directors of the Corporation. No such payment shall preclude any director from
serving the Corporation in any other capacity and receiving compensation therefor. Members of
committees shall be paid compensation for attending committee meetings and/or have their expenses,
if any, of attendance of each meeting of such committee reimbursed.
SECTION 3 COMMITTEES
Section 3.1. Committees of the Board of Directors.
The Board of Directors may designate committees of the Board of Directors, with such lawfully
delegable powers and duties as it thereby confers, to serve at the pleasure of the Board of
Directors and shall, for those committees, appoint a director or directors to serve as the member
or members, designating, if it desires, other directors as alternate members who may replace any
absent or disqualified member at any meeting of such committee. In the absence or disqualification
of any member of any committee and any alternate member in his or her place, the member or members
of the committee present at the meeting and not disqualified from voting, whether or not he or she
or they constitute a quorum, may by unanimous vote appoint another member of the Board of Directors
to act at the meeting in the place of the absent or disqualified member. All provisions of this
Section 3.1 are subject to, and nothing in this Section 3.1 shall in any way limit the exercise or
method or timing of the exercise of, the rights
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of any person granted by the Corporation with respect to the existence, duties, composition or
conduct of any committee of the Board of Directors.
SECTION 4 OFFICERS
Section 4.1. Generally.
The officers of the Corporation shall consist of a President, one or more Vice Presidents, a
Secretary, a Treasurer and other officers as may from time to time be appointed by the Board of
Directors. Each officer shall hold office until his or her successor is elected and qualified or
until his or her earlier resignation or removal. Any number of offices may be held by the same
person. The salaries of officers appointed by the Board of Directors shall be fixed from time to
time by the Board of Directors or a committee thereof or by the officers as may be designated by
resolution of the Board of Directors.
Section 4.2. President.
Unless otherwise determined by the Board of Directors, the President shall be the Chief
Executive Officer of the Corporation. Subject to the provisions of these bylaws and to the
direction of the Board of Directors, he or she shall have the responsibility for the general
management and control of the business and affairs of the Corporation and shall perform all duties
and have all powers that are commonly incident to the office of chief executive or which are
delegated to him or her by the Board of Directors. He or she shall have the power to sign all
stock certificates, contracts and other instruments of the Corporation that are authorized and
shall have general supervision and direction of all of the other officers, employees and agents of
the Corporation.
Section 4.3. Vice President.
Each Vice President shall have the powers and duties delegated to him or her by the Board of
Directors or the President. One Vice President may be designated by the Board of Directors to
perform the duties and exercise the powers of the President in the event of the Presidents absence
or disability.
Section 4.4. Treasurer.
The Treasurer shall have the responsibility for maintaining the financial records of the
Corporation. He or she shall make such disbursements of the funds of the Corporation as are
authorized and shall render from time to time an account to the Board of Directors of all such
transactions and of the financial condition of the Corporation. The Treasurer shall also perform
other duties as the Board of Directors may from time to time prescribe.
Section 4.5. Secretary.
The Secretary shall issue all authorized notices for, and shall keep minutes of, all meetings
of the stockholders and the Board of Directors. He or she shall have charge of the corporate books
and shall perform other duties as the Board of Directors may from time to time prescribe.
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Section 4.6. Delegation of Authority.
The Board of Directors may from time to time delegate the powers or duties of any officer to
any other officer or agent, notwithstanding any provision hereof.
Section 4.7. Removal.
The Board of Directors may remove any officer of the Corporation at any time, with or without
cause.
Section 4.8. Action with Respect to Securities of Other Companies.
Unless otherwise directed by the Board of Directors, the President, or any officer of the
Corporation authorized by the President, shall have power to vote and otherwise act on behalf of
the Corporation, in person or by proxy, at any meeting of stockholders or equityholders of, or with
respect to any action of, stockholders or equityholders of any other entity in which the
Corporation may hold securities and otherwise to exercise any and all rights and powers which the
Corporation may possess by reason of its ownership of securities in such other entity.
SECTION 5 STOCK
Section 5.1. Certificates of Stock.
Shares of the capital stock of the Corporation may be certificated or uncertificated, as
provided in the DGCL. Stock certificates shall be signed by, or in the name of the Corporation by,
(i) the chairman of the Board (if any) or the vice-chairman of the Board (if any), the President or
a Vice President, and (ii) the Secretary or an Assistant Secretary, or the Treasurer or an
Assistant Treasurer, certifying the number of shares owned by such stockholder. Any signatures on
a certificate may be by facsimile.
Section 5.2. Transfers of Stock.
Transfers of stock shall be made only upon the transfer books of the Corporation kept at an
office of the Corporation (within or without the State of Delaware) or by transfer agents
designated to transfer shares of the stock of the Corporation.
Section 5.3. Lost, Stolen or Destroyed Certificates.
In the event of the loss, theft or destruction of any certificate of stock, another may be
issued in its place pursuant to regulations as the Board of Directors may establish concerning
proof of the loss, theft or destruction and concerning the giving of a satisfactory bond or
indemnity.
Section 5.4. Regulations.
The issue, transfer, conversion and registration of certificates of stock of the Corporation
shall be governed by other regulations as the Board of Directors may establish.
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Section 5.5. Record Date.
(a) In order that the Corporation may determine the stockholders entitled to notice of any meeting
of stockholders or any adjournment thereof, the Board of Directors may fix a record date, which
record date shall not precede the date upon which the resolution fixing the record date is adopted
by the Board of Directors, and which record date shall, unless otherwise required by law, not be
more than sixty (60) nor less than ten (10) days before the date of such meeting. If the Board of
Directors so fixes a date, such date shall also be the record date for determining the stockholders
entitled to vote at such meeting unless the Board of Directors determines, at the time it fixes
such record date, that a later date on or before the date of the meeting shall be the date for
making such determination. If no record date is fixed by the Board of Directors, the record date
for determining stockholders entitled to notice of or to vote at a meeting of stockholders shall be
at the close of business on the day next preceding the day on which notice is given, or, if notice
is waived, at the close of business on the day next preceding the day on which the meeting is held.
A determination of stockholders of record entitled to notice of or to vote at a meeting of
stockholders shall apply to any adjournment of the meeting; provided, however, that the Board of
Directors may fix a new record date for determination of stockholders entitled to vote at the
adjourned meeting, and in such case shall also fix as the record date for stockholders entitled to
notice of such adjourned meeting the same or an earlier date as that fixed for determination of
stockholders entitled to vote in accordance herewith at the adjourned meeting.
(b) In order that the corporation may determine the stockholders entitled to receive payment
of any dividend or other distribution or allotment of any rights, or entitled to exercise any
rights in respect of any change, conversion or exchange of stock or for the purpose of any other
lawful action, the Board of Directors may fix a record date, which shall not be more than sixty
(60) days prior to such other action. If no such record date is fixed, the record date for
determining stockholders for any such purpose shall be at the close of business on the day on which
the Board of Directors adopts the resolution relating thereto.
SECTION 6 INDEMNIFICATION AND ADVANCEMENT OF EXPENSES
Section 6.1. Indemnification.
The Corporation shall indemnify and hold harmless, to the fullest extent permitted by
applicable law as it presently exists or may hereafter be amended, any person (an Indemnitee) who
was or is made, or is threatened to be made, a party or is otherwise involved in any action, suit
or proceeding, whether civil, criminal, administrative or investigative (a Proceeding), by reason
of the fact that he or she, or a person for whom he or she is the legal representative, is or was a
director or an officer of the Corporation or, while a director or an officer of the Corporation, is
or was serving at the request of the Corporation as a director, officer, employee, member, trustee
or agent of another corporation or of a partnership, joint venture, trust, nonprofit entity or
other enterprise (including, but not limited to, service with respect to employee benefit plans)
(any such entity, an Other Entity), against all liability and loss suffered (including, but not
limited to, expenses (including, but not limited to, attorneys fees and expenses), judgments,
fines and amounts paid in settlement actually and reasonably incurred by such Indemnitee in
connection with such Proceeding). Notwithstanding the preceding sentence, the Corporation
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shall be required to indemnify an Indemnitee in connection with a Proceeding (or part thereof)
commenced by such Indemnitee only if the commencement of such Proceeding (or part thereof) by the
Indemnitee was authorized by the Board of Directors of the Corporation or the Proceeding (or part
thereof) relates to the enforcement of the Corporations obligations under this Section 6.1.
Section 6.2. Advancement of Expenses.
The Corporation shall to the fullest extent not prohibited by applicable law pay the expenses
(including, but not limited to, attorneys fees and expenses) incurred by an Indemnitee in defending any proceeding in advance of its
final disposition, provided, however, that, to the extent required by law, such payment of expenses
in advance of the final disposition of the proceeding shall be made only upon receipt of an
undertaking by the Indemnitee to repay all amounts advanced if it should be ultimately determined
that the Indemnitee is not entitled to be indemnified under this Section 6 or otherwise.
Section 6.3. Claims.
If a claim for indemnification (following the final disposition of such proceeding) or
advancement of expenses under this Section 6 is not paid in full
within sixty (60) days after a written
claim therefor by the Indemnitee has been received by the Corporation, the Indemnitee may file suit
to recover the unpaid amount of such claim and, if successful in whole or in part, shall be
entitled to be paid the expense of prosecuting such claim to the fullest extent permitted by law.
In any such action the Corporation shall have the burden of proving that the Indemnitee is not
entitled to the requested indemnification or advancement of expenses under applicable law.
Section 6.4. Insurance.
The Corporation shall purchase and maintain insurance on behalf of any person who is or was a
director, officer, trustee, employee or agent of the Corporation, or was serving at the request of
the Corporation as a director, officer, trustee, employee or agent of an Other Entity, against any
liability asserted against the person and incurred by the person in any such capacity, or arising
out of his or her status as such, whether or not the Corporation would have the power or the
obligation to indemnify such person against such liability under the provisions of this Section 6.
Section 6.5. Non-Exclusivity of Rights.
The rights conferred on any Indemnitee by this Section 6 are not exclusive of other rights
arising under any bylaw, agreement, vote of directors or stockholders or otherwise, and shall inure
to the benefit of the heirs and legal representatives of such Indemnitee.
Section 6.6. Amounts Received from an Other Entity.
Subject to Section 6.7, the Corporations obligation, if any, to indemnify or to advance
expenses to any Indemnitee who was or is serving at the Corporations request as a director,
officer, employee, member, trustee or agent of an Other Entity shall be reduced by any amount such Indemnitee may
collect as indemnification or advancement of expenses from such Other Entity.
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Section 6.7. Indemnification Priority.
As between the Corporation and any other person (other than an entity directly or indirectly
controlled by the Corporation) who provide indemnification to the Indemnitees for their service to,
or on behalf of, the Corporation (collectively, the Secondary Indemnitors) (i) the Corporation
shall be the full indemnitor of first resort in respect of indemnification or advancement of
expenses in connection with any Jointly Indemnifiable Claims (as defined below), pursuant to and in
accordance with the terms of this Section 6, irrespective of any right of indemnification,
advancement of expenses or other right of recovery any Indemnitee may have from any Secondary
Indemnitor (i.e., the Corporations obligations to such Indemnitees are primary and any obligation
of any Secondary Indemnitor to advance expenses or to provide indemnification for the same loss or
liability incurred by such Indemnitees is secondary to the Corporations obligations), (ii) the
Corporation shall be required to advance the full amount of expenses incurred by any such
Indemnitee and shall be liable for the full amount of all liability and loss suffered by such
Indemnitee (including, but not limited to, expenses (including, but not limited to, attorneys fees
and expenses), judgments, fines and amounts paid in settlement actually and reasonably incurred by
such Indemnitee in connection with such Proceeding), without regard to any rights any such
Indemnitee may have against any Secondary Indemnitor, and (iii) the Corporation irrevocably waives,
relinquishes and releases each Secondary Indemnitor from any and all claims against such Secondary
Indemnitor for contribution, subrogation or any other recovery of any kind in respect thereof. The
Corporation shall indemnify each Secondary Indemnitor directly for any amounts that such Secondary
Indemnitor pays as indemnification or advancement on behalf of any such Indemnitee and for which
such Indemnitee may be entitled to indemnification from the Corporation in connection with Jointly
Indemnifiable Claims. No right of indemnification, advancement of expenses or other right of
recovery that an Indemnitee may have from any Secondary Indemnitor shall reduce or otherwise alter
the rights of the Indemnitee or the obligations of the Corporation hereunder. No advancement or
payment by any Secondary Indemnitor on behalf of any such Indemnitee with respect to any claim for
which such Indemnitee has sought indemnification from the Corporation shall affect the foregoing
and the Secondary Indemnitors shall be subrogated to the extent of such advancement or payment to
all of the rights of recovery of such Indemnitee against the Corporation. Each Indemnitee shall
execute all papers reasonably required and shall do all things that may be reasonably necessary to
secure the rights of such Indemnitees Secondary Indemnitors under this Section 6.7, including the
execution of such documents as may be necessary to enable the Secondary Indemnitors effectively to
bring suit to enforce such rights, including in the right of the Corporation. Each of the
Secondary Indemnitors shall be third-party beneficiaries with respect to this Section 6.7, entitled
to enforce this Section 6.7. As used in this Section 6.7, the term Jointly Indemnifiable Claims
shall be broadly construed and shall include, without limitation, any action, suit, proceeding or
other matter for which an Indemnitee shall be entitled to indemnification or advancement of
expenses from both a Secondary Indemnitor and the Corporation, whether pursuant to Delaware law,
any agreement or certificate of incorporation, bylaws, partnership agreement, operating agreement,
certificate of formation, certificate of limited partnership or comparable organizational documents
of the Corporation or the Secondary Indemnitors, as applicable.
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Section 6.8. Amendment or Repeal.
Any right to indemnification or to advancement of expenses of any Indemnitee arising hereunder
shall not be eliminated or impaired by an amendment to or repeal of this Section 6 after the
occurrence of the act or omission that is the subject of the civil, criminal, administrative or
investigative action, suit, proceeding or other matter for which indemnification or advancement of
expenses is sought.
Section 6.9. Other Indemnification and Advancement of Expenses.
This Section 6 shall not limit the right of the Corporation, to the extent and in the manner
permitted by law, to indemnify and to advance expenses to persons other than Indemnitees when and
as authorized by appropriate corporate action.
Section 6.10. Reliance.
Indemnitees who after the date of the adoption of this Section 6 become or remain an
Indemnitee described in Section 6.1 will be conclusively presumed to have relied on the rights to
indemnity, advancement of expenses and other rights contained in this Section 6 in entering into or
continuing the service. The rights to indemnification and to the advancement of expenses conferred
in this Section 6 will apply to claims made against any Indemnitee described in Section 6.1 arising
out of acts or omissions that occurred or occur either before or after the adoption of this Section
6 in respect of service as a director or officer of the corporation or other service described in
Section 6.1.
SECTION 7 NOTICES
Section 7.1. Notices.
Except as otherwise provided herein or permitted by applicable law, notices to directors and
stockholders shall be in writing and delivered personally or mainlined to the directors or
stockholders at their addresses appearing on the books of the Corporation. If mailed, notice to a
stockholder of the Corporation shall be deemed given when deposited in the mail, postage prepaid,
directed to a stockholder at such stockholders address as it appears on the records of the
Corporation. Without limiting the manner by which notice otherwise may be given effectively to
stockholders, any notice to stockholders of the Corporation may be given by electronic transmission
in the manner provided in Section 232 of the DGCL.
Section 7.2. Waivers.
A written waiver of any notice, signed by a stockholder or director, or a waiver by electronic
transmission by such person or entity, whether given before or after the time of the event for
which notice is to be given, shall be deemed equivalent to the notice required to be given to such
person or entity. Neither the business nor the purpose of any meeting need be specified in the
waiver. Attendance at any meeting shall constitute waiver of notice except attendance for the sole
purpose of objecting, at the beginning of the meeting, to the transaction of any business because
the meeting is not lawfully called or convened.
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SECTION 8 MISCELLANEOUS
Section 8.1. Corporate Seal.
The Board of Directors may provide a suitable seal, containing the name of the Corporation,
which seal shall be in the charge of the Secretary. If and when so directed by the Board of
Directors, duplicates of the seal may be kept and used by the Treasurer or by an Assistant
Secretary or Assistant Treasurer.
Section 8.2. Reliance upon Books, Reports, and Records.
Each director and each member of any committee designated by the Board of Directors of the
Corporation shall, in the performance of his or her duties, be fully protected in relying in good
faith upon the books and records of the Corporation and upon such information, opinions, reports or
statements presented to the Corporation by any of its officers, agents or employees, or committees
of the Board of Directors so designated, or by any other person or entity as to matters which such
director or committee member reasonably believes are within such other persons or entitys
professional or expert competence and that has been selected with reasonable care by or on behalf
of the Corporation.
Section 8.3. Fiscal Year.
The fiscal year of the Corporation shall be as fixed by the Board of Directors.
Section 8.4. Time Periods.
In applying any provision of these bylaws that requires that an act be done or not be done a
specified number of days before an event or that an act be done during a specified number of days
before an event, calendar days shall be used, the day of the doing of the act shall be excluded,
and the day of the event shall be included.
SECTION 9 AMENDMENTS
These bylaws may be altered, amended or repealed in accordance with the Certificate of
Incorporation and the DGCL.
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exv4w1
The following abbreviations, when used in the inscription on the face of this
certificate, shall be construed as though they were written out in full according to applicable
laws or regulations:
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THE SIGNATURE(S) TO THIS ASSIGNMENT MUST CORRESPOND WITH THE NAME(S) AS
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Signature(s) Guaranteed
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exv10w1
Exhibit 10.1
AGREEMENT
THIS AMENDED AND RESTATED EXECUTIVE EMPLOYMENT AGREEMENT (this Agreement) is entered
into this 23rd day of July, 2010, by and between Mark S. Casady (the Executive), LPL
Financial Corporation (the Company), LPL Holdings, Inc. (Holdings) and LPL
Investment Holdings Inc. (Investment Holdings) (with respect to Sections 3(b) and 4(c)
only), to be effective upon the Closing (as defined below).
WHEREAS, Executive is currently employed by the Company, and previously entered into an
employment agreement with Holdings, dated as of December 28, 2005 and amended as of June 1, 2008;
and
WHEREAS, the Company and the Executive desire to enter into this Agreement to set forth the
amended and restated terms of the Executives continued employment with the Company, effective as
of the closing of the 2010 initial public offering of common stock by Investment Holdings (the
Closing).
NOW, THEREFORE, in consideration of the foregoing premises and the mutual promises, terms,
provisions and conditions set forth in this Agreement, the parties hereby agree:
1. Employment. Subject to the terms and conditions set forth in this Agreement, the
Company hereby agrees to continue to employ the Executive, and the Executive hereby accepts the
terms of continued employment with the Company.
2. Term. Subject to earlier termination as hereafter provided, the Executives
employment hereunder shall have an original term of five (5) years commencing on the date of the
Closing (the Initial Term) and shall automatically be renewed thereafter for successive
terms of one year each, unless the Company provides notice to the Executive at least ninety (90)
days prior to the expiration of the Initial Term or any renewal term that the Agreement is not to
be renewed, in which event this Agreement and the Executives employment hereunder shall terminate
at the expiration of the then-current term. The term of this Agreement, as from time to time
renewed, is hereafter referred to as the term of this Agreement or the term hereof. In the
event that the Closing does not occur, this amendment and restatement of the Agreement shall be
void ab initio and of no force or effect and the pre-existing employment agreement shall remain in
effect.
3. Capacity and Performance.
a. During the term hereof, the Executive shall serve the Company as its Chief Executive
Officer, reporting to the Board of Directors of the Company (the Board).
b. During the term of this Agreement, the Company shall take all steps within its authority to
ensure that the Executive is elected and remains a member of the Board and, for so long as
Investment Holdings is a controlled company within the meaning of applicable stock exchange listing
requirements (a Controlled Company), Chairman of the Board, both subject to the
requirements of applicable law (including, without limitation, any
rules or regulations of any exchange on which the common stock of Investment Holdings or the
Company is listed, if applicable). The Company and Investment Holdings shall consult with the
Executive and permit the Executive to actively participate in the recruitment and selection of all
members of the Board and the Board of Directors of Investment Holdings (Investment Holdings
Board). The Company and Investment Holdings also shall consult with the Executive with
respect to the number of members of the Board and Investment Holdings Board and the number of such
members who are independent. During the term of this Agreement, Investment Holdings shall take all
steps within its authority to ensure that the Executive is elected and remains a member of the
Investment Holdings Board and, for so long as Investment Holdings is a Controlled Company, Chairman
of the Investment Holdings Board, both subject to the requirements of applicable law (including
without limitation, any rules or regulations of any exchange on which the common stock of
Investment Holdings or the Company is listed, if applicable), unless the Board or the Investment
Holdings Board, as applicable, determines after consulting with a recognized and independent
corporate governance expert that it is in the best interests of the Company and/or Investment
Holdings, as applicable, for the positions of Chairman and Chief Executive Officer to be held by
different individuals in order for the Company and/or Investment Holdings, as applicable, to comply
with corporate governance best practices.
c. During the term hereof, the Executive shall be employed by the Company on a full-time basis
and shall have such duties, authority and responsibilities as are commensurate with his position
and such other duties, consistent with his position, as may be designated from time to time by the
Investment Holdings Board.
d. During the term hereof, the Executive shall devote his full business time and his best
efforts to the discharge of his duties and responsibilities hereunder; provided,
however, that, subject to Section 9 hereof, the foregoing shall not be construed to prevent
the Executive from attending to personal investments and community and charitable service, provided
that such activities do not unreasonably interfere with the performance of Executives duties to
the Company. In addition, the Executive may serve on boards of directors and similar governing
bodies, and committees thereof, subject to the approval of the Investment Holdings Board, which
approval shall not be unreasonably withheld, and subject to Section 9 hereof. Notwithstanding the
foregoing, the Executive may continue to serve on those boards and committees on which the
Executive was serving at the time of the Closing, which boards and committees are listed on
Schedule 1(A) of this Agreement.
4. Compensation and Benefits. As compensation for all services performed by the
Executive during the term hereof:
a. Base Salary. During the term hereof, the Company shall pay the Executive a base
salary at the rate per annum as set forth on Schedule 1(B) of this Agreement, payable in
accordance with the regular payroll practices of the Company for its executives and subject to
increase from time to time by the Investment Holdings Board (or its compensation committee, the
Investment Holdings Compensation Committee). The Executives base salary may only be
decreased with the approval of the Executive and then only in an across-the-board salary reduction
in which all executives and other employees are subject to an equal percentage
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reduction. The Executives base salary, as from time to time increased or decreased in
accordance with Agreement, is hereafter referred to as the Base Salary.
b. Bonus Compensation.
i. The Executive shall be eligible to receive a full bonus, without pro-ration, for calendar
year 2010, determined in accordance with the Companys employee cash bonus plan as in effect
immediately prior to the Closing, as set forth in Schedule 1(C) hereto.
ii. Each calendar year thereafter during the term hereof, the Executive shall be eligible to
participate in the cash bonus plan or other incentive compensation plan in effect for employees of
the Company generally, under which, consistent with the requirements for performance-based
compensation under Section 162(m) of the Internal Revenue Code of 1986, as amended (the
Code), the plan elements described in clauses (A) and (C) below shall be not be decreased
from those applicable to the Executive under the bonus plan in effect immediately prior to the
Closing, and the plan element described in clause (B) below shall be substantially consistent with
past practice: (A) the target bonus, (B) the level of performance required to reach target and (C)
the opportunity to earn bonus compensation in excess of target, with respect to clauses (A) and (C)
as set forth on Schedule 1(D) hereto. Neither the Executives target bonus nor the
opportunity to earn bonus compensation in excess of target may be subject to an adverse change and
the level of performance required to reach target may not be materially adversely changed except
with the approval of Executive and then only in an across-the-board change which affects equally
all employees participating in the bonus plan. Such cash bonus shall be in addition to the Base
Salary. The Executives target bonus under the executive cash bonus plan is referred to hereafter
as the Target Bonus. In clarification of the foregoing, the actual bonus earned by the
Executive for any given calendar year, may be below, at or above the Target Bonus, based on actual
performance. Subject to any effective deferral election made available and elected by the
Executive, each bonus earned by the Executive hereunder shall be paid no later than March 15 of the
calendar year following the end of the calendar year for which the bonus was earned.
c. Equity Compensation. The Executive shall be eligible to participate in all equity
compensation plans and programs applicable to senior executives of the Company and shall receive
such grants as may be provided from time to time by Investment Holdings in the discretion of the
Investment Holdings Board or the Investment Holdings Compensation Committee. Each grant will be
subject to the terms and conditions of the applicable Investment Holdings equity compensation plan
and grant agreements which shall provide in relevant part that: (i) upon the occurrence of a
Change in Control occurring after the effective date of this Agreement, all outstanding equity
compensation awards held by the Executive will become fully vested and/or exercisable, as the case
may be, as of the date of the Change in Control; (ii) upon a termination of the Executives
employment for any reason, the portion of any equity compensation award which has not vested shall
terminate; (iii) in the event the Executives employment terminates for any reason other than for
Cause, death or disability, the Executive may exercise any vested portion of any stock option or
stock appreciation right (collectively, Stock Right) held by him on the date of
termination provided that he does so prior to the earlier of (A) ninety (90) days following
termination of employment and (B) the expiration of the
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scheduled term of the Stock Right; (iv) in the event the Executives employment is terminated
due to death or disability (as defined in Section 5(b)), then the Executive, or, as applicable in
the event of death, his beneficiary or estate, may exercise any vested portion of any Stock Right
held by the Executive on the date employment terminates for the shorter of (A) the period of twelve
(12) months following the termination date and (B) with respect to each Stock Right individually,
the expiration of the scheduled term of such Stock Right; and (v) upon a termination of the
Executives employment by the Company for Cause, all equity compensation awards shall be forfeited
immediately.
d. Vacations. During the term hereof, the Executive shall be eligible for the number
of weeks of vacation per year set forth on Schedule 1(E) to this Agreement, subject to the
vacation policies of the Company generally applicable to its executives, as in effect from time to
time, provided that the Executive shall not be barred from taking up to the maximum number of weeks
of vacation in any given year solely by reason of the Executives failure to work for a specified
period of time during such year prior to the time of such vacation.
e. Other Benefits. During the term hereof, the Executive shall be entitled to
participate in any and all employee benefit plans from time to time in effect for executives and/or
employees of the Company generally, provided that the Executive shall receive benefits
pursuant to plans, programs and policies (other than any equity-based compensation plan or program)
that are comparable, and no less favorable in the aggregate, to those benefits offered to him
immediately prior to the Closing.
f. Business Expenses. During the term hereof, the Company shall pay or reimburse the
Executive for all reasonable business expenses incurred or paid by the Executive in the performance
of his duties and responsibilities hereunder, subject to such reasonable substantiation and
documentation as the Company may require and otherwise consistent with the Companys policies
generally applicable to its executives, as in effect from time to time.
5. Termination of Employment and Severance Benefits. Notwithstanding the provisions
of Section 2 hereof, the Executives employment hereunder shall terminate prior to the expiration
of the term hereof under the circumstances specified below. Subject to the execution and
nonrevocation by the Executive, the Executives beneficiary, or the representative of the
Executives estate, as applicable, of a release of claims agreement (the Release) in the
form provided by the Company within the time period specified by the Company, which shall not
exceed 60 days following the date of termination, and provided that the Executive has complied in
all material respects with the terms and conditions of the Release, the Company shall provide the
Executive with the payments and benefits set forth below:
a. Termination due to Death. In the event of the Executives death during the term
hereof, the Executives employment hereunder shall immediately and automatically terminate. In such
event, the Company shall pay to the Executives designated beneficiary or, if no beneficiary has
been designated by the Executive, to his estate, Final Compensation which shall include
all of the following: (i) the Base Salary earned but not paid through the date of termination, (ii)
pay for any vacation time earned but not used through the date of termination, (iii) payment of any
annual bonus earned but not paid for the year preceding that in which the
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date of termination occurs, (iv) reimbursement for any business expenses incurred by the
Executive and reimbursable pursuant to Section 4(f) hereof but un-reimbursed on the date of
termination (clauses (i), (ii), (iii) and (iv), collectively, the Termination
Entitlements), (v) a bonus for the year in which the date of termination occurs determined by
multiplying the Target Bonus for that year by a fraction, the numerator of which is the number of
days the Executive was employed during the year in which the date of termination occurs, through
the date of termination, and the denominator of which is 365 (Pro-Rated Portion of Target
Bonus), (vi) a single lump-sum payment equal to the premium (including the additional amount
(if any) charged for administrative costs as permitted by the Federal law known as COBRA) of
continued health and dental plan participation under COBRA for the Executive (in the event of a
termination other than as a result of death) and for the Executives qualified beneficiaries (as
that term is defined under COBRA) for the one (1) year period immediately following the date of
termination (the Premium Payment) and, the Company shall have no further obligation to
the Executive hereunder, other than (A) obligations due to the Executive as of the date of
termination but not yet satisfied, such as, by way of example but not limitation, an uncorrected
error in Base Salary or an outstanding claim under one of the welfare plans or an uncorrected
error in the Executives retirement plan account, and (B) obligations which, whether or not due to
the Executive as of the date of termination, survive termination, such as, by way of example but
not limitation, rights to exercise vested stock options (all of the foregoing, under clauses (A)
and (B) hereof, the Surviving Company Obligations).
b. Termination due to Disability. The Company may terminate the Executives
employment hereunder, upon notice to the Executive, in the event that the Executive becomes
disabled through any illness, injury, accident or condition of either a physical or psychological
nature and, as a result, is unable to perform substantially all of his duties and responsibilities
hereunder, notwithstanding the provision of any reasonable accommodation, for any period of six (6)
consecutive months. During any period in which the Executive is disabled but prior to the
Executives date of termination, the Executive shall continue to receive all compensation and
benefits under Section 4 hereof while his employment continues. If any question shall arise as to
whether during any period the Executive is disabled through any illness, injury, accident or
condition of either a physical or psychological nature so as to be unable to perform substantially
all of his duties and responsibilities hereunder, the Executive may, and at the request of the
Company shall, submit to a medical examination by a physician selected by the Company to whom the
Executive has no reasonable objection to determine whether the Executive is so disabled and such
determination shall for the purposes of this Agreement be conclusive of the issue. In the event of
termination by the Company due to the Executives disability, the Company shall provide the
Executive with the Final Compensation and the Company shall have no further obligation to the
Executive hereunder, other than the Surviving Company Obligations. Notwithstanding any provision
herein to the contrary, if the Executive is entitled to a Premium Payment, the Premium Payment
shall be paid in a lump sum on the first business day that is the earlier of (i) six (6) months
following the date of termination, or (ii) at such time as otherwise permitted by law that would
not result in such additional taxation and penalties under Section 409A.
c. Retirement. The Executive may elect to retire voluntarily on thirty (30) days
notice to the Company, provided that the Executive is then at least 65 years of age. In
such
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event, the Company shall pay to the Executive the Final Compensation (other than the benefits
under clause (v) of the definition thereof (the Accrued Compensation)) and the Company
shall have no further obligation to the Executive hereunder, other than the Surviving Company
Obligations. Notwithstanding any provision herein to the contrary, if the Executive is entitled to
a Premium Payment, the Premium Payment shall be paid in a lump sum on the first business day that
is the earlier of (i) six (6) months following the date of termination, or (ii) at such time as
otherwise permitted by law that would not result in such additional taxation and penalties under
Section 409A.
d. Termination by the Company for Cause. The Company may terminate the Executives
employment at any time for Cause, which shall mean only (i) the intentional failure to
perform (excluding by reason of disability) or gross negligence or willful misconduct in the
performance of regular duties or other breach of fiduciary duty or material breach of this
Agreement which remains uncured after thirty (30) days notice specifying in reasonable detail the
nature of the failure, negligence, misconduct or breach and what is required of the Executive to
cure, (ii) conviction or plea of nolo contendere to a felony or (iii) fraud or embezzlement or
other dishonesty which has a material adverse effect on the Company. Before terminating the
Executive for Cause, (A) at least two-thirds (2/3) of the members of the Investment Holdings Board
(excluding the Executive, if a Board member) must conclude in good faith that, in their view, one
of the events described in subsection (i), (ii) or (iii) above has occurred and (B) such Board
determination must be made at a duly convened meeting of the Investment Holdings Board (X) of which
the Executive received written notice at least ten (10) days in advance, which notice shall have
set forth in reasonable detail the facts and circumstances claimed to provide a basis for the
Companys belief that one of the events described in subsection (i), (ii) or (iii) above occurred
and, in the case of an event under subsection (i), remains uncured at the expiration of the notice
period, and (Y) at which the Executive had a reasonable opportunity to make a statement and answer
the allegations against the Executive. In the event of the termination of the Executives
employment by the Company for Cause, the Company shall pay to the Executive the Termination
Entitlements and the Company shall have no further obligation to the Executive hereunder, other
than the Surviving Company Obligations. The parties acknowledge and agree that this definition of
Cause shall be applicable and controlling with respect to the grant agreements executed by the
Executive under any equity compensation plan or arrangement sponsored by Investment Holdings or the
Company.
e. Termination by the Company other than for Cause. The Company may terminate the
Executives employment hereunder other than for Cause at any time upon ten (10) days notice to the
Executive. Termination by the Company on or following expiration of the term hereof (other than a
termination due to the Executives death or disability or under circumstances that would constitute
Cause if this Agreement were still in effect) will be treated as a termination other than for
Cause under this Section 5(e). In the event of termination under this Section 5(e), the Executive
shall be entitled to receive the Accrued Compensation (other than the Premium Payment) and the
following additional payments as severance: (i) a bonus for the year in which the date of
termination occurs based on actual performance determined by multiplying the bonus that would have
been earned by the Executive had the Executive remained in service until the date required to earn
a full bonus for that year by a fraction, the numerator of which is the number of days the
Executive was employed during the year in which the date of
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termination occurs, through the date of termination, and the denominator of which is 365,
provided that if the bonus amount exceeds the Pro-Rated Portion of Target Bonus, such bonus amount
shall be limited to the Pro-Rated Portion of Target Bonus, and (ii) subject to Executives
continued compliance with his obligations under Sections 7, 8 and 9 hereof, (x) an amount equal to
the applicable Severance Multiplier multiplied by the sum of the Executives Base Salary and Target
Bonus for the year in which the date of termination occurs (or if no such Target Bonus has been
established for the Executive for the year in which the date of termination occurs, the Target
Bonus for the year immediately preceding the year in which the date of termination occurs) and (y)
for two years following the date of termination, continued participation of the Executive and his
qualified beneficiaries, as applicable, under the Companys group life, health, dental and vision
plans in which the Executive was participating immediately prior to the date of termination,
subject to any premium contributions required of the Executive at the rate in effect on the date of
termination of his employment, provided that, in the event that such health coverage continuation
would be discriminatory for federal income tax purposes, the Executive shall be permitted to
purchase, through the Company at COBRA rates if possible, and be reimbursed by the Company on a
quarterly basis in arrears for, equivalent health benefit coverage for the Executive and his
qualified beneficiaries. Subject to the foregoing, the Company shall have no further obligation
to the Executive hereunder, other than the Surviving Company Obligations. For purpose of this
Agreement, the Severance Multiplier shall be one (1) in the event of termination under
Section 5(e) or Section 5(f) and also in the event of a termination of the Executive under Section
5(g) and pursuant to which the Company makes the election under Section 9(b) hereof. Except as
otherwise provided in the Agreement, any payments due under Section 5(e), Section 5(f), Section
5(g) or Section 9(b), as applicable, shall be payable in equal monthly installments over the number
of years equal to the applicable Severance Multiplier; and, subject to Section 5(h), shall begin at
the Companys next regular payday following the 60th day after the effective date of termination
provided that the Executive has executed and not revoked the Release and is compliant in all
material respects with the Release terms and conditions. Notwithstanding the foregoing, the
pro-rated annual bonus earned by the Executive for the year in which the date of termination occurs
as calculated in accordance with this Section 5(e) shall be paid in a lump sum no later than March
15 of the calendar year following the end of the calendar year for which the bonus was earned. For
the avoidance of doubt, if the Executive does not execute a Release or if the Executive revokes an
executed Release within the time period permitted by law, the Executive shall not be entitled to
the payments and benefits, other than the Termination Entitlements, set forth in this Section 5.
f. Termination by the Executive for Good Reason. The Executive may terminate his
employment hereunder for Good Reason and, in that event, subject to Executives continued
compliance with his obligations under Sections 7, 8 and 9 hereof, shall be entitled to all payments
and benefits which the Executive would have been entitled to receive under Section 5(e) hereof as
if termination had occurred thereunder and the Company shall have no further obligation to the
Executive hereunder, other than the Surviving Company Obligations. Good Reason shall
mean only the occurrence, without the Executives express written consent (which may be withheld
for any or no reason) of any of the events or conditions described in the following subsections (i)
through (ix), provided that, except with respect to the event described in subsection (viii), the
Executive gives written notice to the Company of the occurrence of Good Reason within ninety (90)
days following the date on which the Executive first knew or
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reasonably should have known of such occurrence and the Company shall not have fully corrected
the situation within thirty (30) days following such notice. The following occurrences shall
constitute Good Reason for purposes of this Section 5(f): (i) a reduction in the Executives Base
Salary (other than as expressly permitted under Section 4(a) hereof); (ii) an adverse change in the
Executives bonus opportunity through reduction of the Target Bonus or the maximum available bonus
or a material adverse change in the goals or level of performance required to achieve the Target
Bonus (other than as expressly permitted under Section 4(b) hereof); (iii) a failure by the Company
to pay or provide to the Executive any compensation or benefits to which the Executive is entitled
hereunder; (iv) (A) a material adverse change in the Executives status, positions, titles,
offices, duties and responsibilities, authorities or reporting relationship from those in effect
immediately before such change; (B) the assignment to the Executive of any duties or
responsibilities that are substantially inconsistent with the Executives status, positions,
titles, offices or responsibilities as in effect immediately before such assignment; or (C) any
removal of the Executive from or failure to reappoint or reelect the Executive to any of such
positions, titles or offices; provided that termination of the Executives employment by
the Company for Cause, by the Executive other than for Good Reason pursuant to Section 5(g) hereof,
or a termination as a result of the Executives death or disability shall not be deemed to
constitute or result in Good Reason under this subsection (iv); (v) the Companys changing the
location of the Boston, Massachusetts headquarter offices to a location more than twenty-five (25)
miles from the location of such offices, or the Companys requiring the Executive to be based at a
location other than the Companys Boston headquarter offices; provided that in all such cases the
Company may require the Executive to travel on Company business including being temporarily based
at other Company locations as long as such travel is reasonable and is not materially greater or
different than the Executives travel requirements before the Closing; (vi) any material breach by
Investment Holdings or the Company of this Agreement, any agreement by Investment Holdings or the
Company to indemnify the Executive or any other material written agreement between Investment
Holdings or the Company and the Executive; (vii) the failure by the Company to obtain, before
completion of a Change in Control, an agreement in writing from any successor or assign to assume
and fully perform under this Agreement; (viii) the provision of notice by the Company of
non-renewal of this Agreement; or (ix) the failure to elect the Executive to, or the removal of the
Executive from, the Investment Holdings Board.
g. By the Executive Other than for Good Reason. The Executive may terminate his
employment hereunder at any time upon thirty (30) days notice to the Company. In the event of
termination by the Executive pursuant to this Section 5(g), the Investment Holdings Board may elect
to waive the period of notice, or any portion thereof, and, if the Investment Holdings Board so
elects, the Company will pay the Executive his Base Salary for the notice period (or for any
remaining portion of the period). The Company shall also provide the Employee the Accrued
Compensation and the Company shall have no further obligation to the Executive hereunder, other
than the Surviving Company Obligations. At the election of the Company, in accordance with and
subject to the provisions of Section 9(b) hereof and subject to the Executives continued
compliance with his obligations under Sections 7, 8 and 9 hereof, the Executive shall be entitled
to all payments and benefits which the Executive would have been entitled to receive under Section
5(e) hereof as if termination had occurred thereunder, but with a Severance Multiplier of one (1).
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h. Timing of Payments. In the event that at the time the Executive employment
terminates the Companys shares are publicly traded (as defined in Section 409A of the Code) or the
limitation on payments or provision of benefits imposed by Section 409A(a)(2)(B) would otherwise be
applicable, any amounts payable or benefits provided under Section 5 that would have been payable
during the six (6) months following the date of termination of employment with the Company and
would otherwise be considered deferred compensation subject to the additional twenty percent (20%)
tax imposed by Section 409A if paid within such six (6) month period shall be paid, in a lump sum
on the business day after the date that is the earlier of (x) six (6) months following the date of
termination, or (y) at such time as otherwise permitted by law that would not result in such
additional taxation and penalties under Section 409A. In addition, the administration of the
Release requirements described under this Section 5 shall be implemented such that where the period
for execution and non-revocation of a release spans more than one calendar year, any payment
contingent on the execution of the Release shall not be made until the second calendar year, or
later, as required by the applicable terms of this Agreement and Section 409A. All reimbursements
and in-kind benefits provided under this Agreement shall be made or provided in accordance with the
requirements of Section 409A including, where applicable, the requirement that (i) any
reimbursement is for expenses incurred during the period of time specified in this Agreement, (ii)
the amount of expenses eligible for reimbursement, or in kind benefits provided, during a calendar
year may not affect the expenses eligible for reimbursement, or in kind benefits to be provided, in
any other calendar year, (iii) the reimbursement of an eligible expense will be made no later than
the last day of the calendar year following the year in which the expense is incurred, and (iv) the
right to reimbursement or in kind benefits is not subject to liquidation or exchange for another
benefit. Notwithstanding the foregoing, the Company shall have no obligation to grant the
Executive a gross-up or other make-whole compensation for any tax imposed under Section 409A.
i. No Duty to Mitigate. The Executive shall not be required to mitigate the amount of
any cash payment or the value of any benefit provided for in this Agreement by seeking other
employment, by seeking benefits from another employer or other source, or by pursuing any other
type of mitigation. No payment or benefit provided for in this Agreement shall be offset or
reduced by the amount of any cash compensation or the value of any benefit provided to the
Executive in any subsequent employment or from any other source. Notwithstanding the foregoing, if
the Executive begins to participate in the group health plan of another employer which provides
benefits substantially similar to those provided by the Company pursuant to this Section 5, then
the Executive shall promptly notify the Company and the Company may discontinue the health plan
participation being provided the Executive pursuant to this Section 5.
6. Code Section 4999 Excise Tax.
a. Anything in this Agreement to the contrary notwithstanding, in the event that it shall be
determined that any payment or benefit (including any accelerated vesting of options or other
equity awards) made or provided, or to be made or provided, by the Company (or any successor
thereto or affiliate thereof) to or for the benefit of Executive, whether pursuant to the terms of
this Agreement, any other agreement, plan, program or arrangement of or with Investment Holdings or
the Company (or any successor thereto or affiliate thereof) or otherwise
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(a Payment), will be subject to the excise tax imposed by Section 4999 of the Code
or any comparable tax imposed by any replacement or successor provision of United States tax law,
then the Company will apply a limitation on the Payment amount as set forth in clause (i) below (a
Parachute Cap), unless the provisions of clause (ii) below apply.
i. If clause (ii) does not apply, the aggregate present value of the Payments under Sections
5(e), (f) or (g) of this Agreement (Agreement Payments) shall be reduced (but not below
zero) to the Reduced Amount. The Reduced Amount shall be an amount expressed in present
value which maximizes the aggregate present value of Agreement Payments without causing any Payment
to be subject to the limitation of deduction under Section 280G of the Code or the imposition of
any excise tax under Section 4999 of the Code. For purposes of this clause (i), present value
shall be determined in accordance with Section 280G(d)(4) of the Code. In the event that it is
determined that the amount of the Agreement Payments will be reduced in accordance with this clause
(i), the Agreement Payments shall be reduced on a nondiscretionary basis in such a way as to
minimize the reduction in the economic value deliverable to the Executive. In applying this
principle, the reduction shall be made in a manner consistent with the requirements of Section 409A
of the Code, and where more than one payment has the same value for this purpose and they are
payable at different times, they will be reduced on a pro-rata basis.
ii. It is the intention of the parties that the Parachute Cap apply only if application of the
Parachute Cap is beneficial to the Executive. Therefore, if the net amount that would be retained
by the Executive under this Agreement without the Parachute Cap, after payment of any excise tax
under Section 4999 of the Code, exceeds the net amount that would be retained by the Executive with
the Parachute Cap, then the Company shall not apply the Parachute Cap to the Executives payments.
b. All determinations to be made under this Section 6 shall be made by the nationally
recognized independent public accounting firm used by the Company immediately prior to the Change
in Control (Accounting Firm), which Accounting Firm shall provide its determinations and
any supporting calculations to the Company and the Executive within ten days of the termination
date. Any such determination by the Accounting Firm shall be binding upon the Company and the
Executive.
c. All of the fees and expenses of the Accounting Firm in performing the determinations
referred to in this Section 6 shall be borne solely by the Company.
7. Confidential Information.
a. The Executive acknowledges that the Company continually develops Confidential Information
(as defined in Section 13); that the Executive may develop Confidential Information for the
Company; and that the Executive may learn of Confidential Information during the course of
employment. The Executive shall not disclose to any Person or use, other than as required by
applicable law or for the performance of his duties and responsibilities to the Company, any
Confidential Information obtained by the Executive incident to his employment with the Company.
The Executive understands that this restriction shall continue to apply after his employment
terminates, regardless of the reason for such termination.
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b. All documents, records, tapes and other media of every kind and description containing
Confidential Information, and all copies, (the Documents), whether or not prepared by the
Executive, shall be the sole and exclusive property of the Company. The Executive shall return to
the Company no later than the time his employment terminates all Documents then in the Executives
possession or control.
8. Assignment of Rights to Intellectual Property. The Executive shall promptly and
fully disclose all Intellectual Property (as defined in Section 13) to the Company. The Executive
hereby assigns and agrees to assign to the Company (or as otherwise directed by the Company) the
Executives full right, title and interest in and to all Intellectual Property. The Executive
agrees to execute any and all applications for domestic and foreign patents, copyrights or other
proprietary rights and to do such other acts (including without limitation the execution and
delivery of instruments of further assurance or confirmation) requested by the Company to assign
the Intellectual Property to the Company and to permit the Company to enforce any patents,
copyrights or other proprietary rights to the Intellectual Property. All copyrightable works that
the Executive creates in the performance of his duties hereunder shall be considered work made for
hire.
9. Restricted Activities.
a. While the Executive is employed by the Company and, except as otherwise provided in Section
9(b) and 9(c) below, for the period of one (1) year following the termination of the Executives
employment for any reason (including retirement) (the Non-Competition Period), subject to
the Companys compliance with the post-employment terms of this Agreement, the Executive will not
engage or participate in, directly or indirectly, alone or as principal, agent, employee, employer,
consultant, investor or partner of, or assist in the management of, or provide advisory or other
services to, or own any stock or any other ownership interest in, or make any financial investment
in, any business or entity which is Competitive with the Company (as defined below); provided,
however, that it shall not be a violation of the foregoing (i) for the Executive to own not more
than two percent (2%) of the outstanding securities of any class of securities listed on a national
exchange or inter-dealer quotation system or (ii) following termination of the Executives
employment with the Company, for the Executive to provide services to any business or entity that
has a line of business, division, subsidiary or other affiliate that is Competitive with the
Company if the Executive is not employed in such line of business or division or by such subsidiary
or other affiliate and is not involved, directly or indirectly, in the management, supervision or
operations of such line of business, division, subsidiary or affiliate that is Competitive with the
Company. For purposes of this Agreement, a business or entity shall be considered Competitive
with the Company if such business or entity competes in any respect with a business in which
Investment Holdings and its subsidiaries were engaged (including, specifically, services related to
financial advisors), or any material products and/or services that Investment Holdings or its
subsidiaries were actively developing or designing as of the date the Executives employment with
the Company terminated, provided that, prior to such termination, the Executive knew of such other
business or such material product or such service under active development or design. In addition,
during the Non-Competition Period, the Executive will not (other than when acting on behalf of the
Company during the Executives employment) (i) solicit, or attempt to solicit,
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any existing or prospective customers, targets, suppliers, financial advisors, officers or
employees of Investment Holdings or any of its subsidiaries to terminate their relationship with
Investment Holdings or any of its subsidiaries or (ii) divert, or attempt to divert, from
Investment Holdings or any of its subsidiaries any of its customers, prospective customers,
targets, suppliers, financial advisors, officers or employees or (iii) hire or engage or otherwise
contract with, or attempt to hire or engage or otherwise contract with, any officers, employees or
financial advisors of Investment Holdings or any of its subsidiaries, whether to be an employee,
officer, agent, consultant or independent contractor; provided, however, that nothing in this
Section 9(a) shall be deemed to prohibit the Executive from soliciting a customer,
prospective customer, target or supplier of Investment Holdings or any of its subsidiaries during
the Non-Competition Period if such action relates solely to a business which is not Competitive
with the Company. A customer, prospective customer, target, supplier, financial advisor, officer
or employee of Investment Holdings or any of its subsidiaries is any one who was such within the
preceding twelve months, excluding, however, any prospective customer or target which was solicited
solely by mass mailing or general advertisement during that period and any officer, employee or
financial advisor whose relationship with Investment Holdings or the Company was terminated by
Investment Holdings or the Company or any of their subsidiaries other than for circumstances that
would constitute cause (within the meaning of any such definition applicable to such officer,
employee or financial advisor, or, if no such definition is applicable, cause as defined in the
existing equity compensation plan maintained with respect to employees of the Company) and provided
further, with respect to Investment Holdings subsidiaries, that the Executive during his
employment with the Company was introduced to, or otherwise knew of or should have known of the
relationship of, such customer, prospective customer, target, supplier, financial advisor or
employee to the subsidiary.
b. Notwithstanding anything herein to the contrary, in the event that the Executive terminates
his employment hereunder without Good Reason, the Executive shall, at the Companys election, which
election shall be provided to the Executive prior to the date of termination, (1) receive the
payments and benefits specified in Section 5(e) with a Severance Multiplier of one (1) and be
subject to a Non-Competition Period which shall continue for two (2) years following the date of
termination of the Executives employment, or (2) receive no payments and benefits specified in
Section 5(e) and be subject to a Non-Competition Period which shall continue for one (1) year
following the date of termination of the Executives employment.
c. The Executive may seek a waiver from the Company of his obligations pursuant to this
Section 9, which waiver shall not be unreasonably withheld or delayed. As of the date of the grant
of such waiver by the Company, all payments and benefits under the applicable provision of Section
5 shall cease other than the payment of Final Compensation, excluding the payments and benefits
under clause (v) of the definition thereof which shall cease or be reimbursed by the Executive on a
pro-rata basis for the waived time period of the one (1) year Non-Competition Period, as
applicable) or Accrued Compensation, as applicable).
10. Reasonableness; Enforcement. The Company and the Executive acknowledge that the
time, scope, geographic area and other provisions of Sections 7, 8 and 9 (the Covenants)
have been specifically negotiated by sophisticated parties and agree that all such
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provisions are reasonable under the circumstances of the activities contemplated by this
Agreement. The Executive acknowledges and agrees that the terms of the Covenants: (i) are
reasonable in light of all of the circumstances, (ii) are sufficiently limited to protect the
legitimate interests of the Company, (iii) impose no undue hardship, (iv) are not injurious to the
public, and (v) are essential to protect the business and goodwill of the Company and its
affiliates and are a material term of this Agreement which has induced the Company to agree to
provide for the payments and benefits described in this Agreement. The Executive further
acknowledges and agrees that the Executives breach of the Covenants will cause the Company and
Investment Holdings irreparable harm, which cannot be adequately compensated by money damages. The
Executive and the Company agree that, in the event of an actual or threatened breach of Section 9,
the Company shall be entitled to injunctive relief for any actual or threatened violation of any of
the Covenants in addition to any other remedies it may have at law or equity, including money
damages.
11. Survival. Provisions of this Agreement shall survive any termination if so
provided herein or if necessary or desirable to accomplish the purposes of other surviving
provisions, including without limitation the obligations of the Executive under Sections 7, 8, 9
and 10 hereof and the obligations of the Company pursuant to Section 5 hereof.
12. Conflicting Agreements. The Executive hereby represents and warrants that the
execution of this Agreement and the performance of his obligations hereunder will not breach or be
in conflict with any other agreement to which the Executive is a party or is bound and that the
Executive is not now subject to any covenants against competition or similar covenants or any court
order or other legal obligation that would affect the performance of his obligations hereunder.
The Executive will not disclose to or use on behalf of the Company any proprietary information of a
third party without such partys consent.
13. Definitions. Words or phrases which are initially capitalized or are within
quotation marks shall have the meanings provided in this Section and as provided elsewhere herein.
For purposes of this Agreement, the following definitions apply:
a. Change in Control means the consummation, after the date of Closing, of (i) any
transaction or series of related transactions, whether or not Investment Holdings is a party
thereto, after giving effect to which in excess of fifty percent (50%) of Investment Holdings
voting power is owned directly, or indirectly through one or more entities, by any person and its
affiliates or associates (as such terms are defined in the Exchange Act Rules) or any group
(as defined in the Exchange Act Rules) other than, in each case, Investment Holdings or
an affiliate of Investment Holdings immediately following the Closing, or (ii) a sale or other
disposition of all or substantially all of the consolidated assets of Investment Holdings (each of
the foregoing, a Business Combination), provided that, notwithstanding the foregoing, a
Change in Control shall not be deemed to occur as a result of a Business Combination following
which the individuals or entities who were beneficial owners of the outstanding securities entitled
to vote generally in the election of directors of Investment Holdings immediately prior to such
Business Combination beneficially own, directly or indirectly, 50% or more of the outstanding
securities entitled to vote generally in the election of directors of the resulting, surviving or
acquiring corporation in such transaction.
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b. Confidential Information means any confidential proprietary information relating
to the business of Investment Holdings, the Company or their affiliates or their respective
customers or clients which has an economic value to Investment Holdings, the Company or their
affiliates. Confidential Information does not include any information that enters the public
domain other than through a breach by the Executive of his duties to Investment Holdings or the
Company hereunder or which is obtained by the Executive from a third party which has no obligation
of confidentiality to Investment Holdings or the Company.
c. Intellectual Property means any invention, formula, process, discovery,
development, design, innovation or improvement (whether or not patentable or registrable under
copyright statutes) made, conceived, or first actually reduced to practice by the Executive solely
or jointly with others, during his employment by the Company; provided, however, that, as used in
this Agreement, the term Intellectual Property shall not apply to any invention that the
Executive develops on his own time, without using the equipment, supplies, facilities or trade
secret information of Investment Holdings or the Company, unless such invention relates at the time
of conception or reduction to practice of the invention (a) to the business of Investment Holdings
or the Company, (b) to the actual or demonstrably anticipated research or development of Investment
Holdings or the Company or (c) results from any work performed by the Executive for Investment
Holdings or the Company.
d. Person means an individual, a corporation, a limited liability company, an
association, a partnership, an estate, a trust and any other entity or organization, other than the
Company or any of its subsidiaries.
14. Withholding. All payments or other benefits, to the extent required by law, made
by the Company under this Agreement shall be reduced by any tax or other amounts required to be
withheld by the Company under applicable law.
15. Legal Fees. The Company shall at its election either pay directly the joint legal
expenses incurred by the Executive and the other executives of the Company with whom the Company is
entering into employment agreements effective as of the Closing in the negotiation and preparation
of their employment agreements or reimburse the Executive for his portion of such joint legal
expenses. In addition, all reasonable costs and expenses that are reasonably documented (including
court and arbitration costs and reasonable legal fees and expenses that reflect common practice
with respect to the matters involved) incurred by the Executive as a result of any claim, action or
proceeding arising out of this Agreement or the contesting, disputing or enforcing of any
provision, right or obligation under this Agreement shall be paid, or reimbursed to the Executive,
if, in the final resolution of the dispute, the Executive either recovers material monetary damages
(in cash or in kind, such as benefits) or is the prevailing party on a material non-monetary claim
(such as a dispute regarding a restrictive covenant).
16. Dispute Resolution.
a. Except as provided in Section 10, any dispute, controversy or claim between the parties
arising out of this Agreement or the Executives employment with the Company or termination of
employment shall be settled by arbitration conducted in the city in
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which the Executive is located administered by the American Arbitration Association under its
Employment Dispute Resolution Rules then in effect (except as modified by b. below).
b. In the event that a party requests arbitration (the Requesting Party), it shall
serve upon the other party (the Non-Requesting Party), within one hundred and eighty
(180) days of the date the Requesting Party knew, or reasonably should have known, of the facts on
which the controversy, dispute or claim is based, a written demand for arbitration stating the
substance of the controversy, dispute or claim, the contention of the party requesting arbitration
and the name and address of the arbitrator appointed by it. The Non-Requesting Party, within sixty
(60) days of such demand, shall accept the arbitrator or appoint a second arbitrator and notify the
other party of the name and address of this second arbitrator so selected, in which case the two
arbitrators shall appoint a third who shall be the sole arbitrator to hear the case. In the event
that the two arbitrators fail in any instance to appoint a third arbitrator within thirty (30) days
of the appointment of the second arbitrator, either arbitrator or any party to the arbitration may
apply to the American Arbitration Association for appointment of the third arbitrator in accordance
with the Rules, which arbitrator shall be the sole arbitrator to hear the case. Should the
Non-Requesting Party (upon whom a demand for arbitration has been served) fail or refuse to accept
the arbitrator appointed by the other party or to appoint an arbitrator within sixty (60) days, the
single arbitrator shall have the right to decide alone, and such arbitrators decision or award
shall be final and binding upon the parties.
c. The decision of the arbitrator shall be in writing; shall set forth the basis for the
decision; and shall be rendered within thirty (30) days following the hearing. The decision of the
arbitrator shall be final and binding upon the parties and may be enforced and executed upon in any
court having jurisdiction over the party against whom enforcement of such award is sought.
17. No Withholding of Undisputed Payments. During the pendency of any dispute or
controversy, the Company shall not withhold any payments or benefits due to the Executive, whether
under this Agreement or otherwise, except for the specific portion of any payment or benefit that
is the subject of a bona fide dispute between the parties.
18. Assignment. Neither the Company nor the Executive may make any assignment of this
Agreement or any interest herein, by operation of law or otherwise, without the prior written
consent of the other. This Agreement shall inure to the benefit of and be binding upon the Company
and the Executive, their respective successors, executors, administrators, heirs and permitted
assigns.
19. Severability. If any portion or provision of this Agreement shall to any extent
be declared illegal or unenforceable by a court of competent jurisdiction, then the remainder of
this Agreement, or the application of such portion or provision in circumstances other than those
as to which it is so declared illegal or unenforceable, shall not be affected thereby, and each
portion and provision of this Agreement shall be valid and enforceable to the fullest extent
permitted by law.
20. Waiver. No waiver of any provision hereof shall be effective unless made in
writing and signed by the waiving party. The failure of either party to require the performance of
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any term or obligation of this Agreement, or the waiver by either party of any breach of this
Agreement, shall not prevent any subsequent enforcement of such term or obligation or be deemed a
waiver of any subsequent breach.
21. Notices. Any and all notices, requests, demands and other communications provided
for by this Agreement shall be in writing and shall be effective when delivered in person or the
next business day following consignment for overnight delivery to a reputable national overnight
courier service or five business days following deposit in the United States mail, postage prepaid,
registered or certified, and addressed to the Executive at his last known address on the books of
the Company or, in the case of the Company, at its principal place of business, attention of the
Chairman of the Investment Holdings Board, or to such other address as a party may specify by
notice to the other actually received. Copies of any notices, requests, demands and other
communication to the Company by the Executive shall be sent by the to the investors at the
following address: c/o Texas Pacific Group, 301 Commerce Street, Suite 3300, Fort Worth, TX 76102,
Attn: Richard Schifter (Fax: 415-743-1501) and c/o Hellman & Friedman LLC, One Maritime Plaza,
12th Floor, San Francisco, CA 94111, Attn: Allen Thorpe (Fax: 415-835-5408).
22. Entire Agreement. This Agreement constitutes the entire agreement between the
parties and supersedes all prior communications, agreements and understandings, written or oral,
with respect to the terms and conditions of the Executives employment including, without
limitation, the applicable Executive Summary of Proposed Terms.
23. Amendment. This Agreement may be amended or modified only by a written instrument
signed by the Executive and by an authorized representative of the Company subject to prior
approval by the Investment Holdings Board.
24. Headings. The headings and captions in this Agreement are for convenience only
and in no way define or describe the scope or content of any provision of this Agreement.
25. Counterparts. This Agreement may be executed in two or more counterparts, each of
which shall be an original and all of which together shall constitute one and the same instrument.
26. Governing Law. This is a Massachusetts contract and shall be construed and
enforced under and be governed in all respects by the laws of the Commonwealth of Massachusetts,
without regard to the conflict of laws principles thereof.
[Remainder of page intentionally left blank]
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IN WITNESS WHEREOF, this Agreement has been executed as a sealed instrument by the Company, by
its duly authorized representative, and by the Executive, as of the date first above written.
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THE EXECUTIVE |
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THE COMPANY |
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By:
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/s/ Mark S. Casady |
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By: |
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/s/ Stephanie L. Brown |
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Name:Mark S. Casady
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Name: Stephanie L. Brown |
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Title: Secretary |
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HOLDINGS |
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By: |
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/s/ Stephanie L. Brown |
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Name: Stephanie L. Brown |
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Title: Secretary |
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INVESTMENT HOLDINGS (with respect to
Sections 3(b) and 4(c) only) |
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By: |
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/s/ Esther M. Stearns |
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Name: Esther M. Stearns |
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Title: President |
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Schedule 1
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Boards and Committees |
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Insured Retirement Institute
FINRA
Atlas Mountains Capital
One Step Forward Education Foundation |
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Base Salary |
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$800,000 |
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2010 Target Bonus |
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Target Bonus |
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$1,226,500 |
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Opportunity to Earn Bonus Compensation in Excess of Target Bonus: The amount of the
Executives bonus opportunity above Target Bonus (the Outperformance Bonus), and the
performance necessary to earn the Outperformance Bonus, shall be determined by the
Investment Holdings Compensation Committee on an annual basis after consultation with, and
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Annual Vacation |
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exv10w2
Exhibit 10.2
AGREEMENT
THIS AMENDED AND RESTATED EXECUTIVE EMPLOYMENT AGREEMENT (this Agreement) is entered
into this 23rd day of July, 2010, by and between Esther M. Stearns (the Executive), LPL
Financial Corporation (the Company), LPL Holdings, Inc. (Holdings) and LPL
Investment Holdings Inc. (Investment Holdings) (with respect to Section 4(c) only), to be
effective upon the Closing (as defined below).
WHEREAS, Executive is currently employed by the Company, and previously entered into an
employment agreement with Holdings, dated as of December 28, 2005 and amended as of June 1, 2008;
and
WHEREAS, the Company and the Executive desire to enter into this Agreement to set forth the
amended and restated terms of the Executives continued employment with the Company, effective as
of the closing of the 2010 initial public offering of common stock by Investment Holdings (the
Closing).
NOW, THEREFORE, in consideration of the foregoing premises and the mutual promises, terms,
provisions and conditions set forth in this Agreement, the parties hereby agree:
1. Employment. Subject to the terms and conditions set forth in this Agreement, the
Company hereby agrees to continue to employ the Executive, and the Executive hereby accepts the
terms of continued employment with the Company.
2. Term. Subject to earlier termination as hereafter provided, the Executives
employment hereunder shall have an original term of three (3) years commencing on the date of the
Closing (the Initial Term) and shall automatically be renewed thereafter for successive
terms of one year each, unless the Company provides notice to the Executive at least ninety (90)
days prior to the expiration of the Initial Term or any renewal term that the Agreement is not to
be renewed, in which event this Agreement and the Executives employment hereunder shall terminate
at the expiration of the then-current term. The term of this Agreement, as from time to time
renewed, is hereafter referred to as the term of this Agreement or the term hereof. In the
event that the Closing does not occur, this amendment and restatement of the Agreement shall be
void ab initio and of no force or effect and the pre-existing employment agreement shall remain in
effect.
3. Capacity and Performance.
a. During the term hereof, the Executive shall serve the Company as its President and Chief
Operating Officer, reporting to the Chief Executive Officer of the Company (the CEO).
b. During the term hereof, the Executive shall be employed by the Company on a full-time basis
and shall have such duties, authority and responsibilities as are
commensurate with her position and such other duties, consistent with her position, as may be
designated from time to time by the Board of Directors of Investment Holdings (the Investment
Holdings Board).
c. During the term hereof, the Executive shall devote her full business time and her best
efforts to the discharge of her duties and responsibilities hereunder; provided,
however, that, subject to Section 10 hereof, the foregoing shall not be construed to
prevent the Executive from attending to personal investments and community and charitable service,
provided that such activities do not unreasonably interfere with the performance of Executives
duties to the Company. In addition, the Executive may serve on boards of directors and similar
governing bodies, and committees thereof, subject to the approval of the Investment Holdings Board,
which approval shall not be unreasonably withheld, and subject to Section 10 hereof.
Notwithstanding the foregoing, the Executive may continue to serve on those boards and committees
on which the Executive was serving at the time of the Closing, which boards and committees are
listed on Schedule 1(A) of this Agreement.
4. Compensation and Benefits. As compensation for all services performed by the
Executive during the term hereof:
a. Base Salary. During the term hereof, the Company shall pay the Executive a base
salary at the rate per annum as set forth on Schedule 1(B) of this Agreement, payable in
accordance with the regular payroll practices of the Company for its executives and subject to
increase from time to time by the Investment Holdings Board (or its compensation committee, the
Investment Holdings Compensation Committee). The Executives base salary may only be
decreased with the approval of the CEO of the Company and then only in an across-the-board salary
reduction in which all executives and other employees are subject to an equal percentage reduction.
The Executives base salary, as from time to time increased or decreased in accordance with
Agreement, is hereafter referred to as the Base Salary.
b. Bonus Compensation.
i. The Executive shall be eligible to receive a full bonus, without pro-ration, for calendar
year 2010, determined in accordance with the Companys employee cash bonus plan as in effect
immediately prior to the Closing, as set forth in Schedule 1(C) hereto.
ii. Each calendar year thereafter during the term hereof, the Executive shall be eligible to
participate in the cash bonus plan or other incentive compensation plan in effect for employees of
the Company generally, under which, consistent with the requirements for performance-based
compensation under Section 162(m) of the Internal Revenue Code of 1986, as amended (the
Code), the plan elements described in clauses (A) and (C) below shall be not be decreased
from those applicable to the Executive under the bonus plan in effect immediately prior to the
Closing, and the plan element described in clause (B) below shall be substantially consistent with
past practice: (A) the target bonus, (B) the level of performance required to reach target and (C)
the opportunity to earn bonus compensation in excess of target, with respect to clauses (A) and (C)
as set forth on Schedule 1(D) hereto. Neither the Executives target bonus nor the
opportunity to earn bonus compensation in excess of target may be subject to an adverse change and
the level of performance required to reach target may not be materially
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adversely changed except with the approval of the CEO of the Company and then only in an
across-the-board change which affects equally all employees participating in the bonus plan. Such
cash bonus shall be in addition to the Base Salary. The Executives target bonus under the
executive cash bonus plan is referred to hereafter as the Target Bonus. In clarification
of the foregoing, the actual bonus earned by the Executive for any given calendar year, may be
below, at or above the Target Bonus, based on actual performance. Subject to any effective
deferral election made available and elected by the Executive, each bonus earned by the Executive
hereunder shall be paid no later than March 15 of the calendar year following the end of the
calendar year for which the bonus was earned.
c. Equity Compensation. The Executive shall be eligible to participate in all equity
compensation plans and programs applicable to senior executives of the Company and shall receive
such grants as may be provided from time to time by Investment Holdings in the discretion of the
Investment Holdings Board or the Investment Holdings Compensation Committee. Each grant will be
subject to the terms and conditions of the applicable Investment Holdings equity compensation plan
and grant agreements which shall provide in relevant part that: (i) upon the occurrence of a
Change in Control occurring after the effective date of this Agreement, all outstanding equity
compensation awards held by the Executive will become fully vested and/or exercisable, as the case
may be, as of the date of the Change in Control; (ii) upon a termination of the Executives
employment for any reason, the portion of any equity compensation award which has not vested shall
terminate; (iii) in the event the Executives employment terminates for any reason other than for
Cause, death or disability, the Executive may exercise any vested portion of any stock option or
stock appreciation right (collectively, Stock Right) held by her on the date of
termination provided that he does so prior to the earlier of (A) ninety (90) days following
termination of employment and (B) the expiration of the scheduled term of the Stock Right; (iv) in
the event the Executives employment is terminated due to death or disability (as defined in
Section 5(b)), then the Executive, or, as applicable in the event of death, her beneficiary or
estate, may exercise any vested portion of any Stock Right held by the Executive on the date
employment terminates for the shorter of (A) the period of twelve (12) months following the
termination date and (B) with respect to each Stock Right individually, the expiration of the
scheduled term of such Stock Right; and (v) upon a termination of the Executives employment by the
Company for Cause, all equity compensation awards shall be forfeited immediately.
d. Vacations. During the term hereof, the Executive shall be eligible for the number
of weeks of vacation per year set forth on Schedule 1(E) to this Agreement, subject to the
vacation policies of the Company generally applicable to its executives, as in effect from time to
time, provided that the Executive shall not be barred from taking up to the maximum number of weeks
of vacation in any given year solely by reason of the Executives failure to work for a specified
period of time during such year prior to the time of such vacation.
e. Other Benefits. During the term hereof, the Executive shall be entitled to
participate in any and all employee benefit plans from time to time in effect for executives and/or
employees of the Company generally, provided that the Executive shall receive benefits
pursuant to plans, programs and policies (other than any equity-based compensation plan or program)
that
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are comparable, and no less favorable in the aggregate, to those benefits offered to her
immediately prior to the Closing.
f. Business Expenses. During the term hereof, the Company shall pay or reimburse the
Executive for all reasonable business expenses incurred or paid by the Executive in the performance
of her duties and responsibilities hereunder, subject to such reasonable substantiation and
documentation as the Company may require and otherwise consistent with the Companys policies
generally applicable to its executives, as in effect from time to time.
5. Termination of Employment and Severance Benefits. Notwithstanding the provisions
of Section 2 hereof, the Executives employment hereunder shall terminate prior to the expiration
of the term hereof under the circumstances specified below. Subject to the execution, delivery and
nonrevocation by the Executive, the Executives beneficiary, or the representative of the
Executives estate, as applicable, of a release of claims agreement (the Release) in the
form provided by the Company within the time period specified by the Company, which shall not
exceed 60 days following the date of termination, and provided that the Executive has complied in
all material respects with the terms and conditions of the Release, the Company shall provide the
Executive with the payments and benefits set forth below:
a. Termination due to Death. In the event of the Executives death during the term
hereof, the Executives employment hereunder shall immediately and automatically terminate. In such
event, the Company shall pay to the Executives designated beneficiary or, if no beneficiary has
been designated by the Executive, to her estate, Final Compensation which shall include
all of the following: (i) the Base Salary earned but not paid through the date of termination, (ii)
pay for any vacation time earned but not used through the date of termination, (iii) payment of any
annual bonus earned but not paid for the year preceding that in which the date of termination
occurs, (iv) reimbursement for any business expenses incurred by the Executive and reimbursable
pursuant to Section 4(f) hereof but un-reimbursed on the date of termination (clauses (i), (ii),
(iii) and (iv), collectively, the Termination Entitlements), (v) a bonus for the year in
which the date of termination occurs determined by multiplying the Target Bonus for that year by a
fraction, the numerator of which is the number of days the Executive was employed during the year
in which the date of termination occurs, through the date of termination, and the denominator of
which is 365 (Pro-Rated Portion of Target Bonus), (vi) a single lump-sum payment equal to
the premium (including the additional amount (if any) charged for administrative costs as permitted
by the Federal law known as COBRA) of continued health and dental plan participation under COBRA
for the Executive (in the event of a termination other than as a result of death) and for the
Executives qualified beneficiaries (as that term is defined under COBRA) for the one (1) year
period immediately following the date of termination (the Premium Payment) and, the
Company shall have no further obligation to the Executive hereunder, other than (A) obligations due
to the Executive as of the date of termination but not yet satisfied, such as, by way of example
but not limitation, an uncorrected error in Base Salary or an outstanding claim under one of the
welfare plans or an uncorrected error in the Executives retirement plan account, and (B)
obligations which, whether or not due to the Executive as of the date of termination, survive
termination, such as, by way of example but not limitation, rights to exercise vested stock options
(all of the foregoing, under clauses (A) and (B) hereof, the Surviving Company
Obligations).
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b. Termination due to Disability. The Company may terminate the Executives
employment hereunder, upon notice to the Executive, in the event that the Executive becomes
disabled through any illness, injury, accident or condition of either a physical or psychological
nature and, as a result, is unable to perform substantially all of her duties and responsibilities
hereunder, notwithstanding the provision of any reasonable accommodation, for any period of six (6)
consecutive months. During any period in which the Executive is disabled but prior to the
Executives date of termination, the Executive shall continue to receive all compensation and
benefits under Section 4 hereof while her employment continues. If any question shall arise as to
whether during any period the Executive is disabled through any illness, injury, accident or
condition of either a physical or psychological nature so as to be unable to perform substantially
all of her duties and responsibilities hereunder, the Executive may, and at the request of the
Company shall, submit to a medical examination by a physician selected by the Company to whom the
Executive has no reasonable objection to determine whether the Executive is so disabled and such
determination shall for the purposes of this Agreement be conclusive of the issue. In the event of
termination by the Company due to the Executives disability, the Company shall provide the
Executive with the Final Compensation and the Company shall have no further obligation to the
Executive hereunder, other than the Surviving Company Obligations. Notwithstanding any provision
herein to the contrary, if the Executive is entitled to a Premium Payment, the Premium Payment
shall be paid in a lump sum on the first business day that is the earlier of (i) six (6) months
following the date of termination, or (ii) at such time as otherwise permitted by law that would
not result in such additional taxation and penalties under Section 409A.
c. Retirement. The Executive may elect to retire voluntarily on thirty (30) days
notice to the Company, provided that the Executive is then at least 65 years of age. In
such event, the Company shall pay to the Executive the Final Compensation (other than the benefits
under clause (v) of the definition thereof (the Accrued Compensation)) and the Company
shall have no further obligation to the Executive hereunder, other than the Surviving Company
Obligations. Notwithstanding any provision herein to the contrary, if the Executive is entitled to
a Premium Payment, the Premium Payment shall be paid in a lump sum on the first business day that
is the earlier of (i) six (6) months following the date of termination, or (ii) at such time as
otherwise permitted by law that would not result in such additional taxation and penalties under
Section 409A.
d. Termination by the Company for Cause. The Company may terminate the Executives
employment at any time for Cause, which shall mean only (i) the intentional failure to
perform (excluding by reason of disability) or gross negligence or willful misconduct in the
performance of regular duties or other breach of fiduciary duty or material breach of this
Agreement which remains uncured after thirty (30) days notice specifying in reasonable detail the
nature of the failure, negligence, misconduct or breach and what is required of the Executive to
cure, (ii) conviction or plea of nolo contendere to a felony or (iii) fraud or embezzlement or
other dishonesty which has a material adverse effect on the Company. Before terminating the
Executive for Cause, (A) at least two-thirds (2/3) of the members of the Investment Holdings Board
(excluding the Executive, if a Board member) must conclude in good faith that, in their view, one
of the events described in subsection (i), (ii) or (iii) above has occurred and (B) such Board
determination must be made at a duly convened meeting of the Investment Holdings
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Board (X) of which the Executive received written notice at least ten (10) days in advance,
which notice shall have set forth in reasonable detail the facts and circumstances claimed to
provide a basis for the Companys belief that one of the events described in subsection (i), (ii)
or (iii) above occurred and, in the case of an event under subsection (i), remains uncured at the
expiration of the notice period, and (Y) at which the Executive had a reasonable opportunity to
make a statement and answer the allegations against the Executive. In the event of the termination
of the Executives employment by the Company for Cause, the Company shall pay to the Executive the
Termination Entitlements and the Company shall have no further obligation to the Executive
hereunder, other than the Surviving Company Obligations. The parties acknowledge and agree that
this definition of Cause shall be applicable and controlling with respect to the grant agreements
executed by the Executive under any equity compensation plan or arrangement sponsored by Investment
Holdings or the Company.
e. Termination by the Company other than for Cause. The Company may terminate the
Executives employment hereunder other than for Cause at any time upon ten (10) days notice to the
Executive. Termination by the Company on or following expiration of the term hereof (other than a
termination due to the Executives death or disability or under circumstances that would constitute
Cause if this Agreement were still in effect) will be treated as a termination other than for
Cause under this Section 5(e). In the event of termination under this Section 5(e), the Executive
shall be entitled to receive (i) the Accrued Compensation (other than the Premium Payment), (ii) a
bonus for the year in which the date of termination occurs based on actual performance determined
by multiplying the bonus that would have been earned by the Executive had the Executive remained in
service until the date required to earn a full bonus for that year by a fraction, the numerator of
which is the number of days the Executive was employed during the year in which the date of
termination occurs, through the date of termination, and the denominator of which is 365, provided
that if the bonus amount exceeds the Pro-Rated Portion of Target Bonus, such bonus amount shall be
limited to the Pro-Rated Portion of the Target Bonus and (iii) for two years following the date of
termination, continued participation of the Executive and her qualified beneficiaries, as
applicable, under the Companys group life, health, dental and vision plans in which the Executive
was participating immediately prior to the date of termination, subject to any premium
contributions required of the Executive at the rate in effect on the date of termination of her
employment, provided that, in the event that such health coverage continuation would be
discriminatory for federal income tax purposes, the Executive shall be permitted to purchase,
through the Company at COBRA rates if possible, and be reimbursed by the Company on a quarterly
basis in arrears for, equivalent health benefit coverage for the Executive and her qualified
beneficiaries. In addition, subject to Executives continued compliance with the provisions of
Sections 8 and 9 and subject to Executives execution, delivery and non-revocation of a Release,
Executive shall be entitled to receive twenty-five percent (25%) of the Covenant Payment (as
defined in Section 7). For the avoidance of doubt, if the Executive does not execute a Release or
if the Executive revokes an executed Release within the time period permitted by law, the Executive
shall not be entitled to any payments and benefits, other than the Termination Entitlements, set
forth in this Section 5. Subject to the foregoing and the provisions of Section 7 to the extent
applicable, the Company shall have no further obligation to the Executive hereunder other than the
Surviving Company Obligations.
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f. Termination by the Executive for Good Reason. The Executive may terminate her
employment hereunder for Good Reason and, in that event, subject to Executives continued
compliance with her obligations under Sections 8 and 9 hereof, shall be entitled to all payments
and benefits which the Executive would have been entitled to receive under Section 5(e) hereof as
if termination had occurred thereunder. Good Reason shall mean only (A) the occurrence,
without the Executives express written consent (which may be withheld for any or no reason) of any
of the events or conditions described in the following subsections (i) through (viii), provided
that, except with respect to the event described in subsection (viii), the Executive gives written
notice to the Company of the occurrence of Good Reason within ninety (90) days following the date
on which the Executive first knew or reasonably should have known of such occurrence and the
Company shall not have fully corrected the situation within thirty (30) days following such notice
or (B) termination (for any or no reason) by written notice from the Executive given within the
thirty day period immediately following the twelve month anniversary of a Change of Control
occurring after the effective date of this Agreement. The following occurrences shall constitute
Good Reason for purposes of clause (A) of this Section 5(f): (i) a reduction in the Executives
Base Salary (other than as expressly permitted under Section 4(a) hereof); (ii) an adverse change
in the Executives bonus opportunity through reduction of the Target Bonus or the maximum available
bonus or a material adverse change in the goals or level of performance required to achieve the
Target Bonus (other than as expressly permitted under Section 4(b) hereof); (iii) a failure by the
Company to pay or provide to the Executive any compensation or benefits to which the Executive is
entitled hereunder; (iv) (A) a material adverse change in the Executives status, positions,
titles, offices, duties and responsibilities, authorities or reporting relationship from those in
effect immediately before such change; (B) the assignment to the Executive of any duties or
responsibilities that are substantially inconsistent with the Executives status, positions,
titles, offices or responsibilities as in effect immediately before such assignment; or (C) any
removal of the Executive from or failure to reappoint or reelect the Executive to any of such
positions, titles or offices; provided that termination of the Executives employment by
the Company for Cause, by the Executive other than for Good Reason pursuant to Section 5(g) hereof,
or a termination as a result of the Executives death or disability shall not be deemed to
constitute or result in Good Reason under this subsection (iv); (v) the Companys changing the
location of the San Diego, California headquarter offices to a location more than twenty-five (25)
miles from the location of such offices, or the Companys requiring the Executive to be based at a
location other than the Companys San Diego headquarter offices; provided that in all such cases
the Company may require the Executive to travel on Company business including being temporarily
based at other Company locations as long as such travel is reasonable and is not materially greater
or different than the Executives travel requirements before the Closing; (vi) any material breach
by Investment Holdings or the Company of this Agreement, any agreement by Investment Holdings or
the Company to indemnify the Executive or any other material written agreement between Investment
Holdings or the Company and the Executive; (vii) the
failure by the Company to obtain, before
completion of a Change in Control, an agreement in writing from any successor or assign to assume
and fully perform under this Agreement; or (viii) the provision of notice by the Company of
non-renewal of this Agreement. Subject to the foregoing and the provisions of Section 7 to the
extent applicable, the Company shall have no further obligation to the Executive hereunder other
than the Surviving Company Obligations.
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g. By the Executive Other than for Good Reason. The Executive may terminate her
employment hereunder at any time upon thirty (30) days notice to the Company. In the event of
termination by the Executive pursuant to this Section 5(g), the Investment Holdings Board may elect
to waive the period of notice, or any portion thereof, and, if the Investment Holdings Board so
elects, the Company will pay the Executive her Base Salary for the notice period (or for any
remaining portion of the period). The Company shall also provide the Employee the Accrued
Compensation and the Company shall have no further obligation to the Executive hereunder, other
than the Surviving Company Obligations.
h. Timing of Payments.
i. Except as otherwise provided in the Agreement, any payments due under Section 5(e), Section
5(f), Section 7 and Section 10(b), as applicable, shall be payable in equal monthly installments
over the number of years and/or portions thereof equal to the applicable Multiplier (as defined in
Section 7) and shall begin at the Companys next regular payday following the 60th day after the
effective date of termination provided that, if applicable, the Executive has executed and not
revoked the Release and is compliant in all material respects with the Release terms and
conditions. Notwithstanding the foregoing, the pro-rated annual bonus earned by the Executive for
the year in which the date of termination occurs as calculated in accordance with Section 5(e)
shall be paid in a lump sum no later than March 15 of the calendar year following the end of the
calendar year for which the bonus was earned.
ii. In the event that at the time the Executive employment terminates the Companys shares are
publicly traded (as defined in Section 409A of the Code) or the limitation on payments or provision
of benefits imposed by Section 409A(a)(2)(B) would otherwise be applicable, any amounts payable or
benefits provided under Section 5 that would have been payable during the six (6) months following
the date of termination of employment with the Company and would otherwise be considered deferred
compensation subject to the additional twenty percent (20%) tax imposed by Section 409A if paid
within such six (6) month period shall be paid, in a lump sum on the business day after the date
that is the earlier of (x) six (6) months following the date of termination, or (y) at such time as
otherwise permitted by law that would not result in such additional taxation and penalties under
Section 409A. In addition, the administration of the Release requirements described under this
Section 5 shall be implemented such that where the period for execution and non-revocation of a
release spans more than one calendar year, any payment contingent on the execution of the Release
shall not be made until the second calendar year, or later, as required by the applicable terms of
this Agreement and Section 409A. All reimbursements and in-kind benefits provided under this
Agreement shall be made or provided in accordance with the requirements of Section 409A including,
where applicable, the requirement that (i) any reimbursement is for expenses incurred during the
period of time specified in this Agreement, (ii) the amount of expenses eligible for reimbursement,
or in kind benefits provided, during a calendar year may not affect the expenses eligible for
reimbursement, or in kind benefits to be provided, in any other calendar year, (iii) the
reimbursement of an eligible expense will be made no later than the last day of the calendar year
following the year in which the expense is incurred, and (iv) the right to reimbursement or in kind
benefits is not subject to liquidation or exchange for another benefit. Notwithstanding the
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foregoing, the Company shall have no obligation to grant the Executive a gross-up or other
make-whole compensation for any tax imposed under Section 409A.
i. No Duty to Mitigate. The Executive shall not be required to mitigate the amount
of any cash payment or the value of any benefit provided for in this Agreement by seeking other
employment, by seeking benefits from another employer or other source, or by pursuing any other
type of mitigation. No payment or benefit provided for in this Agreement shall be offset or
reduced by the amount of any cash compensation or the value of any benefit provided to the
Executive in any subsequent employment or from any other source. Notwithstanding the foregoing,
if the Executive begins to participate in the group health plan of another employer which provides
benefits substantially similar to those provided by the Company pursuant to this Section 5, then
the Executive shall promptly notify the Company and the Company may discontinue the health plan
participation being provided the Executive pursuant to this Section 5.
6. Code Section 4999 Excise Tax.
a. Anything in this Agreement to the contrary notwithstanding, in the event that it shall be
determined that any payment or benefit (including any accelerated vesting of options or other
equity awards) made or provided, or to be made or provided, by the Company (or any successor
thereto or affiliate thereof) to or for the benefit of Executive, whether pursuant to the terms of
this Agreement, any other agreement, plan, program or arrangement of or with Investment Holdings or
the Company (or any successor thereto or affiliate thereof) or otherwise (a Payment),
will be subject to the excise tax imposed by Section 4999 of the Code or any comparable tax imposed
by any replacement or successor provision of United States tax law, then the Company will apply a
limitation on the Payment amount as set forth in clause (i) below (a Parachute Cap),
unless the provisions of clause (ii) below apply.
i. If clause (ii) does not apply, the aggregate present value of the Payments under Sections
5(e), (f) or (g) of this Agreement (Agreement Payments) shall be reduced (but not below
zero) to the Reduced Amount. The Reduced Amount shall be an amount expressed in present
value which maximizes the aggregate present value of Agreement Payments without causing any Payment
to be subject to the limitation of deduction under Section 280G of the Code or the imposition of
any excise tax under Section 4999 of the Code. For purposes of this clause (i), present value
shall be determined in accordance with Section 280G(d)(4) of the Code. In the event that it is
determined that the amount of the Agreement Payments will be reduced in accordance with this clause
(i), the Agreement Payments shall be reduced on a nondiscretionary basis in such a way as to
minimize the reduction in the economic value deliverable to the Executive. In applying this
principle, the reduction shall be made in a manner consistent with the requirements of Section 409A
of the Code, and where more than one payment has the same value for this purpose and they are
payable at different times, they will be reduced on a pro-rata basis.
ii. It is the intention of the parties that the Parachute Cap apply only if application of the
Parachute Cap is beneficial to the Executive. Therefore, if the net amount that would be retained
by the Executive under this Agreement without the Parachute Cap, after
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payment of any excise tax under Section 4999 of the Code, exceeds the net amount that would be
retained by the Executive with the Parachute Cap, then the Company shall not apply the Parachute
Cap to the Executives payments.
b. All determinations to be made under this Section 6 shall be made by the nationally
recognized independent public accounting firm used by the Company immediately prior to the Change
in Control (Accounting Firm), which Accounting Firm shall provide its determinations and
any supporting calculations to the Company and the Executive within ten days of the termination
date. Any such determination by the Accounting Firm shall be binding upon the Company and the
Executive.
c. All of the fees and expenses of the Accounting Firm in performing the determinations
referred to in this Section 6 shall be borne solely by the Company.
7. Covenant Payments. In the event of a termination of the Executive under Section
5(e) or Section 5(f), in consideration for the covenants contained in Sections 8, 9 and 10 and
provided that Executive is not otherwise in breach of Sections 8, 9 and 10 hereof, the Company
shall pay to Executive an amount equal to seventy-five percent (75%) of the Covenant Payment, as
hereinafter defined, at the time and in the form provided in Section 5(h). For purposes of this
Agreement, the Covenant Payment is an amount equal to the applicable Multiplier
multiplied by the sum of the Executives Base Salary and Target Bonus for the year in which the
date of termination occurs (or if no such Target Bonus has been established for the Executive for
the year in which the date of termination occurs, the Target Bonus for the year immediately
preceding the year in which the date of termination occurs) and the Multiplier shall be
(A) two (2) in the event of termination under Section 5(e) or Section 5(f) (other than due to Good
Reason resulting solely from notice of non-renewal of the term of this Agreement), in each case,
prior to the expiration of the Initial Term; (B) one and one half (1.5) in the event of a
termination under Section 5(e) or Section 5(f), in each case, on or following the expiration of the
Initial Term; and (C) one and one half (1.5) in the event of a termination at any time during the
term of this Agreement for Good Reason resulting solely from the provision by the Company of notice
of non-renewal of the term of this Agreement.
8. Confidential Information.
a. The Executive acknowledges that the Company continually develops Confidential Information
(as defined in Section 14); that the Executive may develop Confidential Information for the
Company; and that the Executive may learn of Confidential Information during the course of
employment. The Executive shall not disclose to any Person or use, other than as required by
applicable law or for the performance of her duties and responsibilities to the Company, any
Confidential Information obtained by the Executive incident to her employment with the Company.
The Executive understands that this restriction shall continue to apply after her employment
terminates, regardless of the reason for such termination.
b. All documents, records, tapes and other media of every kind and description containing
Confidential Information, and all copies, (the Documents), whether or not prepared by the
Executive, shall be the sole and exclusive property of the Company. The
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Executive shall return to the Company no later than the time her employment terminates all
Documents then in the Executives possession or control.
9. Assignment of Rights to Intellectual Property.
a. The Executive shall promptly and fully disclose all Intellectual Property (as defined in
Section 14) to the Company. The Executive hereby assigns and agrees to assign to the Company (or
as otherwise directed by the Company) the Executives full right, title and interest in and to all
Intellectual Property. The Executive agrees to execute any and all applications for domestic and
foreign patents, copyrights or other proprietary rights and to do such other acts (including
without limitation the execution and delivery of instruments of further assurance or confirmation)
requested by the Company to assign the Intellectual Property to the Company and to permit the
Company to enforce any patents, copyrights or other proprietary rights to the Intellectual
Property. All copyrightable works that the Executive creates in the performance of her duties
hereunder shall be considered work made for hire.
b. Notwithstanding the foregoing, to the extent this Section 9 is subject to the provisions of
California Labor Code Sections 2870, 2871 and 2872, Executives obligation to assign Executives
right, title and interest throughout the world in and to all Intellectual Property does not apply
to any inventions, designs, developments, contributions to or improvements of any works of
authorship, inventions, intellectual property, materials, documents or other work product
(including, without limitation, research, reports, software, databases, systems, applications,
presentations, textual works, content or audiovisual materials) (Works) that Executive
developed entirely on her own time without using the Companys equipment, supplies, facilities, or
Confidential Information except for those Works developed or created either alone or with third
parties, at any time during Executives employment by the Company and within the scope of such
employment and/or with the use of any the Company resources that either: (i) relate to either (A)
the business of Investment Holdings or the Company at the time of conception or reduction to
practice of the Work, or actual or demonstrably anticipated research or development of Investment
Holdings or the Company; or (ii) result from any Work performed by Executive for the Company.
Executive shall disclose all Works to the Company, even if Executive does not believe that
Executive is required under this Agreement, or pursuant to California Labor Code Section 2870, to
assign her interest in such Works to the Company.
10. Restricted Activities.
a. While the Executive is employed by the Company and, except as otherwise provided in Section
10(b) and Section 10(c) below, for the period of two (2) years following the termination of the
Executives employment in the event of a termination for which the Executive is entitled to a
Covenant Payment pursuant to Section 7 with a Multiplier of 2, and for a period of eighteen (18)
months following the termination of the Executives employment in the event of a termination for
which the Executive is entitled to a Covenant Payment pursuant to Section 7 with a Multiplier of
1.5, (as applicable, the Restricted Period), subject to the Companys compliance with the
post-employment terms of this Agreement, the Executive will not engage or participate in, directly
or indirectly, alone or as principal, agent, employee, employer, consultant, investor or partner
of, or assist in the management of, or provide advisory
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or other services to, or own any stock or any other ownership interest in, or make any
financial investment in, any business or entity which is Competitive with the Company (as defined
below); provided, however, that it shall not be a violation of the foregoing (i) for the Executive
to own not more than two percent (2%) of the outstanding securities of any class of securities
listed on a national exchange or inter-dealer quotation system or (ii) following termination of the
Executives employment with the Company, for the Executive to provide services to any business or
entity that has a line of business, division, subsidiary or other affiliate that is Competitive
with the Company if the Executive is not employed in such line of business or division or by such
subsidiary or other affiliate and is not involved, directly or indirectly, in the management,
supervision or operations of such line of business, division, subsidiary or affiliate that is
Competitive with the Company. For purposes of this Agreement, a business or entity shall be
considered Competitive with the Company if such business or entity competes in any
respect with a business in which Investment Holdings and its subsidiaries were engaged (including,
specifically, services related to financial advisors), or any material products and/or services
that Investment Holdings or its subsidiaries were actively developing or designing as of the date
the Executives employment with the Company terminated, provided that, prior to such termination,
the Executive knew of such other business or such material product or such service under active
development or design. In addition, during the Restricted Period, the Executive will not (other
than when acting on behalf of the Company during the Executives employment) (i) solicit, or
attempt to solicit, any existing or prospective customers, targets, suppliers, financial advisors,
officers or employees of Investment Holdings or any of its subsidiaries to terminate their
relationship with Investment Holdings or any of its subsidiaries or (ii) divert, or attempt to
divert, from Investment Holdings or any of its subsidiaries any of its customers, prospective
customers, targets, suppliers, financial advisors, officers or employees or (iii) hire or engage or
otherwise contract with, or attempt to hire or engage or otherwise contract with, any officers,
employees or financial advisors of Investment Holdings or any of its subsidiaries, whether to be an
employee, officer, agent, consultant or independent contractor; provided, however, that nothing in
this Section 10(a) shall be deemed to prohibit the Executive from soliciting a customer,
prospective customer, target or supplier of Investment Holdings or any of its subsidiaries during
the Restricted Period if such action relates solely to a business which is not Competitive with the
Company. A customer, prospective customer, target, supplier, financial advisor, officer or
employee of Investment Holdings or any of its subsidiaries is any one who was such within the
preceding twelve months, excluding, however, any prospective customer or target which was solicited
solely by mass mailing or general advertisement during that period and any officer, employee or
financial advisor whose relationship with Investment Holdings or the Company was terminated by
Investment Holdings or the Company or any of their subsidiaries other than for circumstances that
would constitute cause (within the meaning of any such definition applicable to such officer,
employee or financial advisor, or, if no such definition is applicable, cause as defined in the
existing equity compensation plan maintained with respect to employees of the Company) and provided
further, with respect to Investment Holdings subsidiaries, that the Executive during her
employment with the Company was introduced
to, or otherwise knew of or should have known of the
relationship of, such customer, prospective customer, target, supplier, financial advisor or
employee to the subsidiary.
b. Notwithstanding anything herein to the contrary and to the extent that the Investment
Holdings Compensation Committee, in its sole discretion, does not waive the
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obligation under this Section 10(b), in the event that the Executive terminates his employment
hereunder without Good Reason, the Executive shall, at the Companys election, which election shall
be provided to the Executive prior to the date of termination, (1) be subject to a Restricted
Period which shall continue for a period of no less than 1 month to no more than 12 months
following the date of termination of the Executives employment, as designated by Investment
Holdings, and shall receive the Covenant Payment described in Section 7 with a Multiplier equal to
a fraction, the numerator of which shall equal the number of months in the Restricted Period (up to
12 months) and the denominator of which shall be 12, or (2) receive no Covenant Payment and be
subject to no Restricted Period.
c. The Executive may seek a waiver from the Company of her obligations pursuant to this
Section 10, which waiver shall not be unreasonably withheld or delayed. As of the date of the
grant of such waiver by the Company, all payments and benefits under the applicable provision of
Section 5 shall cease other than the payment of Final Compensation, excluding the payments and
benefits under clause (v) of the definition thereof which shall cease or be reimbursed by the
Executive on a pro-rata basis for the waived time period of the Restricted Period, as applicable)
or Accrued Compensation, as applicable).
11. Reasonableness; Enforcement. The Company and the Executive acknowledge that the
time, scope, geographic area and other provisions of Sections 8, 9 and 10 (the Restrictive
Covenants) have been specifically negotiated by sophisticated parties and agree that all such
provisions are reasonable under the circumstances of the activities contemplated by this Agreement.
The Executive acknowledges and agrees that the terms of the Restrictive Covenants: (i) are
reasonable in light of all of the circumstances, (ii) are sufficiently limited to protect the
legitimate interests of the Company, (iii) impose no undue hardship, (iv) are not injurious to the
public, and (v) are essential to protect the business and goodwill of the Company and its
affiliates and are a material term of this Agreement which has induced the Company to agree to
provide for the payments and benefits described in this Agreement. The Executive further
acknowledges and agrees that the Executives breach of the Restrictive Covenants will cause the
Company and Investment Holdings irreparable harm, which cannot be adequately compensated by money
damages. The Executive and the Company agree that, in the event of an actual or threatened breach
of Section 10, the Company shall be entitled, to the extent enforceable under applicable law, to
injunctive relief for any actual or threatened violation of any of the Restrictive Covenants in
addition to any other remedies it may have at law or equity, including money damages.
12. Survival. Provisions of this Agreement shall survive any termination if so
provided herein or if necessary or desirable to accomplish the purposes of other surviving
provisions, including without limitation the obligations of the Executive under Sections 8, 9, 10
and 11 hereof and the obligations of the Company pursuant to Sections 5, 7 and 10(b) hereof.
13. Conflicting Agreements. The Executive hereby represents and warrants that the
execution of this Agreement and the performance of her obligations hereunder will not breach or be
in conflict with any other agreement to which the Executive is a party or is bound and that the
Executive is not now subject to any covenants against competition or similar covenants or any court
order or other legal obligation that would affect the performance of her obligations
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hereunder. The Executive will not disclose to or use on behalf of the Company any proprietary
information of a third party without such partys consent.
14. Definitions. Words or phrases which are initially capitalized or are within
quotation marks shall have the meanings provided in this Section and as provided elsewhere herein.
For purposes of this Agreement, the following definitions apply:
a. Change in Control means the consummation, after the date of Closing, of (i) any
transaction or series of related transactions, whether or not Investment Holdings is a party
thereto, after giving effect to which in excess of fifty percent (50%) of Investment Holdings
voting power is owned directly, or indirectly through one or more entities, by any person and its
affiliates or associates (as such terms are defined in the Exchange Act Rules) or any group
(as defined in the Exchange Act Rules) other than, in each case, Investment Holdings or
an affiliate of Investment Holdings immediately following the Closing, or (ii) a sale or other
disposition of all or substantially all of the consolidated assets of Investment Holdings (each of
the foregoing, a Business Combination), provided that, notwithstanding the foregoing, a
Change in Control shall not be deemed to occur as a result of a Business Combination following
which the individuals or entities who were beneficial owners of the outstanding securities entitled
to vote generally in the election of directors of Investment Holdings immediately prior to such
Business Combination beneficially own, directly or indirectly, 50% or more of the outstanding
securities entitled to vote generally in the election of directors of the resulting, surviving or
acquiring corporation in such transaction.
b. Confidential Information means any confidential proprietary information relating
to the business of Investment Holdings, the Company or their affiliates or their respective
customers or clients which has an economic value to Investment Holdings, the Company or their
affiliates. Confidential Information does not include any information that enters the public
domain other than through a breach by the Executive of her duties to Investment Holdings or the
Company hereunder or which is obtained by the Executive from a third party which has no obligation
of confidentiality to Investment Holdings or the Company.
c. Intellectual Property means any invention, formula, process, discovery,
development, design, innovation or improvement (whether or not patentable or registrable under
copyright statutes) made, conceived, or first actually reduced to practice by the Executive solely
or jointly with others, during her employment by the Company; provided, however, that, as used in
this Agreement, the term Intellectual Property shall not apply to any invention that the
Executive develops on her own time, without using the equipment, supplies, facilities or trade
secret information of Investment Holdings or the Company, unless such invention relates at the time
of conception or reduction to practice of the invention (a) to the business of Investment Holdings
or the Company, (b) to the actual or demonstrably anticipated research or development of Investment
Holdings or the Company or (c) results from any work performed by the Executive for Investment
Holdings or the Company.
d. Person means an individual, a corporation, a limited liability company, an
association, a partnership, an estate, a trust and any other entity or organization, other than the
Company or any of its subsidiaries.
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15. Withholding. All payments or other benefits, to the extent required by law, made
by the Company under this Agreement shall be reduced by any tax or other amounts required to be
withheld by the Company under applicable law.
16. Legal Fees. The Company shall at its election either pay directly the joint legal
expenses incurred by the Executive and the other executives of the Company with whom the Company is
entering into employment agreements effective as of the Closing in the negotiation and preparation
of their employment agreements or reimburse the Executive for her portion of such joint legal
expenses. In addition, all reasonable costs and expenses that are reasonably documented (including
court and arbitration costs and reasonable legal fees and expenses that reflect common practice
with respect to the matters involved) incurred by the Executive as a result of any claim, action or
proceeding arising out of this Agreement or the contesting, disputing or enforcing of any
provision, right or obligation under this Agreement shall be paid, or reimbursed to the Executive,
if, in the final resolution of the dispute, the Executive either recovers material monetary damages
(in cash or in kind, such as benefits) or is the prevailing party on a material non-monetary claim
(such as a dispute regarding a restrictive covenant).
17. Dispute Resolution.
a. Except as provided in Section 11, any dispute, controversy or claim between the parties
arising out of this Agreement or the Executives employment with the Company or termination of
employment shall be settled by arbitration conducted in the city in which the Executive is located
administered by the American Arbitration Association under its Employment Dispute Resolution Rules
then in effect (except as modified by b. below).
b. In the event that a party requests arbitration (the Requesting Party), it shall
serve upon the other party (the Non-Requesting Party), within one hundred and eighty
(180) days of the date the Requesting Party knew, or reasonably should have known, of the facts on
which the controversy, dispute or claim is based, a written demand for arbitration stating the
substance of the controversy, dispute or claim, the contention of the party requesting arbitration
and the name and address of the arbitrator appointed by it. The Non-Requesting Party, within sixty
(60) days of such demand, shall accept the arbitrator or appoint a second arbitrator and notify the
other party of the name and address of this second arbitrator so selected, in which case the two
arbitrators shall appoint a third who shall be the sole arbitrator to hear the case. In the event
that the two arbitrators fail in any instance to appoint a third arbitrator within thirty (30) days
of the appointment of the second arbitrator, either arbitrator or any party to the arbitration may
apply to the American Arbitration Association for appointment of the third arbitrator in accordance
with the Rules, which arbitrator shall be the sole arbitrator to hear the case. Should the
Non-Requesting Party (upon whom a demand for arbitration has been served) fail or refuse to accept
the arbitrator appointed by the other party or to appoint an arbitrator within sixty (60) days, the
single arbitrator shall have the right to decide alone, and such arbitrators decision or award
shall be final and binding upon the parties.
c. The decision of the arbitrator shall be in writing; shall set forth the basis for the
decision; and shall be rendered within thirty (30) days following the hearing. The decision of the
arbitrator shall be final and binding upon the parties and may be enforced and executed
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upon in any court having jurisdiction over the party against whom enforcement of such award is
sought.
18. No Withholding of Undisputed Payments. During the pendency of any dispute or
controversy, the Company shall not withhold any payments or benefits due to the Executive, whether
under this Agreement or otherwise, except for the specific portion of any payment or benefit that
is the subject of a bona fide dispute between the parties.
19. Assignment. Neither the Company nor the Executive may make any assignment of this
Agreement or any interest herein, by operation of law or otherwise, without the prior written
consent of the other. This Agreement shall inure to the benefit of and be binding upon the Company
and the Executive, their respective successors, executors, administrators, heirs and permitted
assigns.
20. Severability. If any portion or provision of this Agreement shall to any extent
be declared illegal or unenforceable by a court of competent jurisdiction, then the remainder of
this Agreement, or the application of such portion or provision in circumstances other than those
as to which it is so declared illegal or unenforceable, shall not be affected thereby, and each
portion and provision of this Agreement shall be valid and enforceable to the fullest extent
permitted by law.
21. Waiver. No waiver of any provision hereof shall be effective unless made in
writing and signed by the waiving party. The failure of either party to require the performance of
any term or obligation of this Agreement, or the waiver by either party of any breach of this
Agreement, shall not prevent any subsequent enforcement of such term or obligation or be deemed a
waiver of any subsequent breach.
22. Notices. Any and all notices, requests, demands and other communications provided
for by this Agreement shall be in writing and shall be effective when delivered in person or the
next business day following consignment for overnight delivery to a reputable national overnight
courier service or five business days following deposit in the United States mail, postage prepaid,
registered or certified, and addressed to the Executive at her last known address on the books of
the Company or, in the case of the Company, at its principal place of business, attention of the
Chairman of the Investment Holdings Board, or to such other address as a party may specify by
notice to the other actually received. Copies of any notices, requests, demands and other
communication to the Company by the Executive shall be sent by the to the investors at the
following address: c/o Texas Pacific Group, 301 Commerce Street, Suite 3300, Fort Worth, TX 76102,
Attn: Richard Schifter (Fax: 415-743-1501) and c/o Hellman & Friedman LLC, One Maritime Plaza,
12th Floor, San Francisco, CA 94111, Attn: Allen Thorpe (Fax: 415-835-5408).
23. Entire Agreement. This Agreement constitutes the entire agreement between the
parties and supersedes all prior communications, agreements and understandings, written or oral,
with respect to the terms and conditions of the Executives employment including, without
limitation, the applicable Executive Summary of Proposed Terms.
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24. Amendment. This Agreement may be amended or modified only by a written instrument
signed by the Executive and by an authorized representative of the Company subject to prior
approval by the Investment Holdings Board.
25. Headings. The headings and captions in this Agreement are for convenience only
and in no way define or describe the scope or content of any provision of this Agreement.
26. Counterparts. This Agreement may be executed in two or more counterparts, each of
which shall be an original and all of which together shall constitute one and the same instrument.
27. Governing Law. This is a Massachusetts contract and shall be construed and
enforced under and be governed in all respects by the laws of the Commonwealth of Massachusetts,
without regard to the conflict of laws principles thereof.
[Remainder of page intentionally left blank]
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IN WITNESS WHEREOF, this Agreement has been executed as a sealed instrument by the Company, by
its duly authorized representative, and by the Executive, as of the date first above written.
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THE EXECUTIVE |
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THE COMPANY |
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By:
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/s/ Esther M. Stearns |
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By: |
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/s/ Stephanie L. Brown |
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Name: Esther M. Stearns
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Name: Stephanie L. Brown
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Title: Secretary |
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HOLDINGS |
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By: |
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/s/ Stephanie L. Brown |
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Name: Stephanie L. Brown
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Title: Secretary |
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INVESTMENT HOLDINGS (with respect to
Section 4(c) only) |
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By: |
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/s/ Mark S. Casady |
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Name: Mark S. Casady
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Title: Chief Executive Officer |
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Schedule 1
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Boards and Committees |
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SIFMA Independent Firms Committee
The Childrens School La Jolla |
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(B) |
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Base Salary |
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$625,000 |
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2010 Target Bonus |
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$601,563 |
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Target Bonus |
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$601,563 |
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Opportunity to Earn Bonus Compensation in Excess of Target Bonus: The amount of the
Executives bonus opportunity above Target Bonus (the Outperformance Bonus), and the
performance necessary to earn the Outperformance Bonus, shall be determined by the
Investment Holdings Compensation Committee on an annual basis after consultation with, and
with good faith consideration of the views of, the CEO of the Company. |
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Annual Vacation |
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4 weeks. |
exv10w3
Exhibit 10.3
AGREEMENT
THIS AMENDED AND RESTATED EXECUTIVE EMPLOYMENT AGREEMENT (this Agreement) is entered
into this 23rd day of July, 2010, by and between Stephanie L. Brown (the Executive), LPL
Financial Corporation (the Company), LPL Holdings, Inc. (Holdings) and LPL
Investment Holdings Inc. (Investment Holdings) (with respect to Section 4(c) only), to be
effective upon the Closing (as defined below).
WHEREAS, Executive is currently employed by the Company, and previously entered into an
employment agreement with Holdings, dated as of December 28, 2005 and amended as of June 1, 2008;
and
WHEREAS, the Company and the Executive desire to enter into this Agreement to set forth the
amended and restated terms of the Executives continued employment with the Company, effective as
of the closing of the 2010 initial public offering of common stock by Investment Holdings (the
Closing).
NOW, THEREFORE, in consideration of the foregoing premises and the mutual promises, terms,
provisions and conditions set forth in this Agreement, the parties hereby agree:
1. Employment. Subject to the terms and conditions set forth in this Agreement, the
Company hereby agrees to continue to employ the Executive, and the Executive hereby accepts the
terms of continued employment with the Company.
2. Term. Subject to earlier termination as hereafter provided, the Executives
employment hereunder shall have an original term of three (3) years commencing on the date of the
Closing (the Initial Term) and shall automatically be renewed thereafter for successive
terms of one year each, unless the Company provides notice to the Executive at least ninety (90)
days prior to the expiration of the Initial Term or any renewal term that the Agreement is not to
be renewed, in which event this Agreement and the Executives employment hereunder shall terminate
at the expiration of the then-current term. The term of this Agreement, as from time to time
renewed, is hereafter referred to as the term of this Agreement or the term hereof. In the
event that the Closing does not occur, this amendment and restatement of the Agreement shall be
void ab initio and of no force or effect and the pre-existing employment agreement shall remain in
effect.
3. Capacity and Performance.
a. During the term hereof, the Executive shall serve the Company as its Managing Director,
General Counsel, reporting to the Chief Executive Officer of the Company (the CEO).
b. During the term hereof, the Executive shall be employed by the Company on a full-time basis
and shall have such duties, authority and responsibilities as are
commensurate with her position and such other duties, consistent with her position, as may be
designated from time to time by the Board of Directors of Investment Holdings (the Investment
Holdings Board).
c. During the term hereof, the Executive shall devote her full business time and her best
efforts to the discharge of her duties and responsibilities hereunder; provided,
however, that, subject to Section 9 hereof, the foregoing shall not be construed to prevent
the Executive from attending to personal investments and community and charitable service, provided
that such activities do not unreasonably interfere with the performance of Executives duties to
the Company. In addition, the Executive may serve on boards of directors and similar governing
bodies, and committees thereof, subject to the approval of the Investment Holdings Board, which
approval shall not be unreasonably withheld, and subject to Section 9 hereof. Notwithstanding the
foregoing, the Executive may continue to serve on those boards and committees on which the
Executive was serving at the time of the Closing, which boards and committees are listed on
Schedule 1(A) of this Agreement.
4. Compensation and Benefits. As compensation for all services performed by the
Executive during the term hereof:
a. Base Salary. During the term hereof, the Company shall pay the Executive a base
salary at the rate per annum as set forth on Schedule 1(B) of this Agreement, payable in
accordance with the regular payroll practices of the Company for its executives and subject to
increase from time to time by the Investment Holdings Board (or its compensation committee, the
Investment Holdings Compensation Committee). The Executives base salary may only be
decreased with the approval of the CEO of the Company and then only in an across-the-board salary
reduction in which all executives and other employees are subject to an equal percentage reduction.
The Executives base salary, as from time to time increased or decreased in accordance with
Agreement, is hereafter referred to as the Base Salary.
b. Bonus Compensation.
i. The Executive shall be eligible to receive a full bonus, without pro-ration, for calendar
year 2010, determined in accordance with the Companys employee cash bonus plan as in effect
immediately prior to the Closing, as set forth in Schedule 1(C) hereto.
ii. Each calendar year thereafter during the term hereof, the Executive shall be eligible to
participate in the cash bonus plan or other incentive compensation plan in effect for employees of
the Company generally, under which, consistent with the requirements for performance-based
compensation under Section 162(m) of the Internal Revenue Code of 1986, as amended (the
Code), the plan elements described in clauses (A) and (C) below shall be not be decreased
from those applicable to the Executive under the bonus plan in effect immediately prior to the
Closing, and the plan element described in clause (B) below shall be substantially consistent with
past practice: (A) the target bonus, (B) the level of performance required to reach target and (C)
the opportunity to earn bonus compensation in excess of target, with respect to clauses (A) and (C)
as set forth on Schedule 1(D) hereto. Neither the Executives target bonus nor the
opportunity to earn bonus compensation in excess of target may be subject
to an adverse change and the level of performance required to reach target may not be
materially
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adversely changed except with the approval of the CEO of the Company and then only in an
across-the-board change which affects equally all employees participating in the bonus plan. Such
cash bonus shall be in addition to the Base Salary. The Executives target bonus under the
executive cash bonus plan is referred to hereafter as the Target Bonus. In clarification
of the foregoing, the actual bonus earned by the Executive for any given calendar year, may be
below, at or above the Target Bonus, based on actual performance. Subject to any effective
deferral election made available and elected by the Executive, each bonus earned by the Executive
hereunder shall be paid no later than March 15 of the calendar year following the end of the
calendar year for which the bonus was earned.
c. Equity Compensation. The Executive shall be eligible to participate in all equity
compensation plans and programs applicable to senior executives of the Company and shall receive
such grants as may be provided from time to time by Investment Holdings in the discretion of the
Investment Holdings Board or the Investment Holdings Compensation Committee. Each grant will be
subject to the terms and conditions of the applicable Investment Holdings equity compensation plan
and grant agreements which shall provide in relevant part that: (i) upon the occurrence of a
Change in Control occurring after the effective date of this Agreement, all outstanding equity
compensation awards held by the Executive will become fully vested and/or exercisable, as the case
may be, as of the date of the Change in Control; (ii) upon a termination of the Executives
employment for any reason, the portion of any equity compensation award which has not vested shall
terminate; (iii) in the event the Executives employment terminates for any reason other than for
Cause, death or disability, the Executive may exercise any vested portion of any stock option or
stock appreciation right (collectively, Stock Right) held by her on the date of
termination provided that he does so prior to the earlier of (A) ninety (90) days following
termination of employment and (B) the expiration of the scheduled term of the Stock Right; (iv) in
the event the Executives employment is terminated due to death or disability (as defined in
Section 5(b)), then the Executive, or, as applicable in the event of death, her beneficiary or
estate, may exercise any vested portion of any Stock Right held by the Executive on the date
employment terminates for the shorter of (A) the period of twelve (12) months following the
termination date and (B) with respect to each Stock Right individually, the expiration of the
scheduled term of such Stock Right; and (v) upon a termination of the Executives employment by the
Company for Cause, all equity compensation awards shall be forfeited immediately.
d. Vacations. During the term hereof, the Executive shall be eligible for the number
of weeks of vacation per year set forth on Schedule 1(E) to this Agreement, subject to the
vacation policies of the Company generally applicable to its executives, as in effect from time to
time, provided that the Executive shall not be barred from taking up to the maximum number of weeks
of vacation in any given year solely by reason of the Executives failure to work for a specified
period of time during such year prior to the time of such vacation.
e. Other Benefits. During the term hereof, the Executive shall be entitled to
participate in any and all employee benefit plans from time to time in effect for executives and/or
employees of the Company generally, provided that the Executive shall receive benefits
pursuant to plans, programs and policies (other than any equity-based compensation plan or program)
that
-3-
are comparable, and no less favorable in the aggregate, to those benefits offered to her
immediately prior to the Closing.
f. Business Expenses. During the term hereof, the Company shall pay or reimburse the
Executive for all reasonable business expenses incurred or paid by the Executive in the performance
of her duties and responsibilities hereunder, subject to such reasonable substantiation and
documentation as the Company may require and otherwise consistent with the Companys policies
generally applicable to its executives, as in effect from time to time.
5. Termination of Employment and Severance Benefits. Notwithstanding the provisions
of Section 2 hereof, the Executives employment hereunder shall terminate prior to the expiration
of the term hereof under the circumstances specified below. Subject to the execution, delivery and
nonrevocation by the Executive, the Executives beneficiary, or the representative of the
Executives estate, as applicable, of a release of claims agreement (the Release) in the
form provided by the Company within the time period specified by the Company, which shall not
exceed 60 days following the date of termination, and provided that the Executive has complied in
all material respects with the terms and conditions of the Release, the Company shall provide the
Executive with the payments and benefits set forth below:
a. Termination due to Death. In the event of the Executives death during the term
hereof, the Executives employment hereunder shall immediately and automatically terminate. In such
event, the Company shall pay to the Executives designated beneficiary or, if no beneficiary has
been designated by the Executive, to her estate, Final Compensation which shall include
all of the following: (i) the Base Salary earned but not paid through the date of termination, (ii)
pay for any vacation time earned but not used through the date of termination, (iii) payment of any
annual bonus earned but not paid for the year preceding that in which the date of termination
occurs, (iv) reimbursement for any business expenses incurred by the Executive and reimbursable
pursuant to Section 4(f) hereof but un-reimbursed on the date of termination (clauses (i), (ii),
(iii) and (iv), collectively, the Termination Entitlements), (v) a bonus for the year in
which the date of termination occurs determined by multiplying the Target Bonus for that year by a
fraction, the numerator of which is the number of days the Executive was employed during the year
in which the date of termination occurs, through the date of termination, and the denominator of
which is 365 (Pro-Rated Portion of Target Bonus), (vi) a single lump-sum payment equal to
the premium (including the additional amount (if any) charged for administrative costs as permitted
by the Federal law known as COBRA) of continued health and dental plan participation under COBRA
for the Executive (in the event of a termination other than as a result of death) and for the
Executives qualified beneficiaries (as that term is defined under COBRA) for the one (1) year
period immediately following the date of termination (the Premium Payment) and, the
Company shall have no further obligation to the Executive hereunder, other than (A) obligations due
to the Executive as of the date of termination but not yet satisfied, such as, by way of example
but not limitation, an uncorrected error in Base Salary or an outstanding claim under one of the
welfare plans or an uncorrected error in the Executives retirement plan account, and (B)
obligations which, whether or not due to the Executive as of the date of termination, survive
termination, such as, by way of example
but not limitation, rights to exercise vested stock options (all of the foregoing, under
clauses (A) and (B) hereof, the Surviving Company Obligations).
-4-
b. Termination due to Disability. The Company may terminate the Executives
employment hereunder, upon notice to the Executive, in the event that the Executive becomes
disabled through any illness, injury, accident or condition of either a physical or psychological
nature and, as a result, is unable to perform substantially all of her duties and responsibilities
hereunder, notwithstanding the provision of any reasonable accommodation, for any period of six (6)
consecutive months. During any period in which the Executive is disabled but prior to the
Executives date of termination, the Executive shall continue to receive all compensation and
benefits under Section 4 hereof while her employment continues. If any question shall arise as to
whether during any period the Executive is disabled through any illness, injury, accident or
condition of either a physical or psychological nature so as to be unable to perform substantially
all of her duties and responsibilities hereunder, the Executive may, and at the request of the
Company shall, submit to a medical examination by a physician selected by the Company to whom the
Executive has no reasonable objection to determine whether the Executive is so disabled and such
determination shall for the purposes of this Agreement be conclusive of the issue. In the event of
termination by the Company due to the Executives disability, the Company shall provide the
Executive with the Final Compensation and the Company shall have no further obligation to the
Executive hereunder, other than the Surviving Company Obligations. Notwithstanding any provision
herein to the contrary, if the Executive is entitled to a Premium Payment, the Premium Payment
shall be paid in a lump sum on the first business day that is the earlier of (i) six (6) months
following the date of termination, or (ii) at such time as otherwise permitted by law that would
not result in such additional taxation and penalties under Section 409A.
c. Retirement. The Executive may elect to retire voluntarily on thirty (30) days
notice to the Company, provided that the Executive is then at least 65 years of age. In
such event, the Company shall pay to the Executive the Final Compensation (other than the benefits
under clause (v) of the definition thereof (the Accrued Compensation)) and the Company
shall have no further obligation to the Executive hereunder, other than the Surviving Company
Obligations. Notwithstanding any provision herein to the contrary, if the Executive is entitled to
a Premium Payment, the Premium Payment shall be paid in a lump sum on the first business day that
is the earlier of (i) six (6) months following the date of termination, or (ii) at such time as
otherwise permitted by law that would not result in such additional taxation and penalties under
Section 409A.
d. Termination by the Company for Cause. The Company may terminate the Executives
employment at any time for Cause, which shall mean only (i) the intentional failure to
perform (excluding by reason of disability) or gross negligence or willful misconduct in the
performance of regular duties or other breach of fiduciary duty or material breach of this
Agreement which remains uncured after thirty (30) days notice specifying in reasonable detail the
nature of the failure, negligence, misconduct or breach and what is required of the Executive to
cure, (ii) conviction or plea of nolo contendere to a felony or (iii) fraud or embezzlement or
other dishonesty which has a material adverse effect on the Company. Before terminating the
Executive for Cause, (A) at least two-thirds (2/3) of the members of the Investment Holdings
Board (excluding the Executive, if a Board member) must conclude in good faith that, in their view,
one of the events described in subsection (i), (ii) or (iii) above has occurred and (B) such Board
determination must be made at a duly convened meeting of the Investment Holdings
-5-
Board (X) of which
the Executive received written notice at least ten (10) days in advance, which notice shall have
set forth in reasonable detail the facts and circumstances claimed to provide a basis for the
Companys belief that one of the events described in subsection (i), (ii) or (iii) above occurred
and, in the case of an event under subsection (i), remains uncured at the expiration of the notice
period, and (Y) at which the Executive had a reasonable opportunity to make a statement and answer
the allegations against the Executive. In the event of the termination of the Executives
employment by the Company for Cause, the Company shall pay to the Executive the Termination
Entitlements and the Company shall have no further obligation to the Executive hereunder, other
than the Surviving Company Obligations. The parties acknowledge and agree that this definition of
Cause shall be applicable and controlling with respect to the grant agreements executed by the
Executive under any equity compensation plan or arrangement sponsored by Investment Holdings or the
Company.
e. Termination by the Company other than for Cause. The Company may terminate the
Executives employment hereunder other than for Cause at any time upon ten (10) days notice to the
Executive. Termination by the Company on or following expiration of the term hereof (other than a
termination due to the Executives death or disability or under circumstances that would constitute
Cause if this Agreement were still in effect) will be treated as a termination other than for
Cause under this Section 5(e). In the event of termination under this Section 5(e), the Executive
shall be entitled to receive the Accrued Compensation (other than the Premium Payment) and the
following additional payments as severance: (i) a bonus for the year in which the date of
termination occurs based on actual performance determined by multiplying the bonus that would have
been earned by the Executive had the Executive remained in service until the date required to earn
a full bonus for that year by a fraction, the numerator of which is the number of days the
Executive was employed during the year in which the date of termination occurs, through the date of
termination, and the denominator of which is 365, provided that if the bonus amount exceeds the
Pro-Rated Portion of Target Bonus, such bonus amount shall be limited to the Pro-Rated Portion of
Target Bonus, and (ii) subject to Executives continued compliance with her obligations under
Sections 7, 8 and 9 hereof, (x) an amount equal to the applicable Severance Multiplier multiplied
by the sum of the Executives Base Salary and Target Bonus for the year in which the date of
termination occurs (or if no such Target Bonus has been established for the Executive for the year
in which the date of termination occurs, the Target Bonus for the year immediately preceding the
year in which the date of termination occurs) and (y) for two years following the date of
termination, continued participation of the Executive and her qualified beneficiaries, as
applicable, under the Companys group life, health, dental and vision plans in which the Executive
was participating immediately prior to the date of termination, subject to any premium
contributions required of the Executive at the rate in effect on the date of termination of her
employment, provided that, in the event that such health coverage continuation would be
discriminatory for federal income tax purposes, the Executive shall be permitted to purchase,
through the Company at COBRA rates if possible, and be reimbursed by the Company on a quarterly
basis in arrears for, equivalent health benefit
coverage for the Executive and her qualified beneficiaries. Subject to the foregoing, the
Company shall have no further obligation to the Executive hereunder, other than the Surviving
Company Obligations. For purpose of this Agreement, the Severance Multiplier shall be
(A) two (2) in the event of termination under Section 5(e) or Section 5(f) (other than due to Good
Reason resulting solely from notice of non-renewal of the term of this Agreement), in each case,
-6-
prior to the expiration of the Initial Term; (B) one and one half (1.5) in the event of a
termination under Section 5(e) or Section 5(f), in each case, on or following the expiration of the
Initial Term; (C) one and one half (1.5) in the event of a termination at any time during the term
of this Agreement for Good Reason resulting solely from the provision by the Company of notice of
non-renewal of the term of this Agreement; and (D) one (1) in the event of a termination of the
Executive under Section 5(g) and pursuant to which the Company makes the election under Section
9(b) hereof. Except as otherwise provided in the Agreement, any payments due under Section 5(e),
Section 5(f), Section 5(g) or Section 9(b), as applicable, shall be payable in equal monthly
installments over the number of years and/or portions thereof equal to the applicable Severance
Multiplier; and, subject to Section 5(h), shall begin at the Companys next regular payday
following the 60th day after the effective date of termination provided that the Executive has
executed and not revoked the Release and is compliant in all material respects with the Release
terms and conditions. Notwithstanding the foregoing, the pro-rated annual bonus earned by the
Executive for the year in which the date of termination occurs as calculated in accordance with
this Section 5(e) shall be paid in a lump sum no later than March 15 of the calendar year following
the end of the calendar year for which the bonus was earned. For the avoidance of doubt, if the
Executive does not execute a Release or if the Executive revokes an executed Release within the
time period permitted by law, the Executive shall not be entitled to the payments and benefits,
other than the Termination Entitlements, set forth in this Section 5.
f. Termination by the Executive for Good Reason. The Executive may terminate her
employment hereunder for Good Reason and, in that event, subject to Executives continued
compliance with her obligations under Sections 7, 8 and 9 hereof, shall be entitled to all payments
and benefits which the Executive would have been entitled to receive under Section 5(e) hereof as
if termination had occurred thereunder and the Company shall have no further obligation to the
Executive hereunder, other than the Surviving Company Obligations. Good Reason shall mean
only (A) the occurrence, without the Executives express written consent (which may be withheld for
any or no reason) of any of the events or conditions described in the following subsections (i)
through (viii), provided that, except with respect to the event described in subsection (viii), the
Executive gives written notice to the Company of the occurrence of Good Reason within ninety (90)
days following the date on which the Executive first knew or reasonably should have known of such
occurrence and the Company shall not have fully corrected the situation within thirty (30) days
following such notice or (B) termination (for any or no reason) by written notice from the
Executive given within the thirty day period immediately following the twelve month anniversary of
a Change of Control occurring after the effective date of this Agreement. The following
occurrences shall constitute Good Reason for purposes of clause (A) of this Section 5(f): (i) a
reduction in the Executives Base Salary (other than as expressly permitted under Section 4(a)
hereof); (ii) an adverse change in the Executives bonus opportunity through reduction of the
Target Bonus or the maximum available bonus or a material adverse change in the goals or level of
performance required to achieve the Target
Bonus (other than as expressly permitted under Section 4(b) hereof); (iii) a failure by the
Company to pay or provide to the Executive any compensation or benefits to which the Executive is
entitled hereunder; (iv) (A) a material adverse change in the Executives status, positions,
titles, offices, duties and responsibilities, authorities or reporting relationship from those in
effect immediately before such change; (B) the assignment to the Executive of any duties or
responsibilities that are substantially inconsistent with the Executives status, positions,
-7-
titles, offices or responsibilities as in effect immediately before such assignment; or (C) any
removal of the Executive from or failure to reappoint or reelect the Executive to any of such
positions, titles or offices; provided that termination of the Executives employment by
the Company for Cause, by the Executive other than for Good Reason pursuant to Section 5(g) hereof,
or a termination as a result of the Executives death or disability shall not be deemed to
constitute or result in Good Reason under this subsection (iv); (v) the Companys changing the
location of the Boston, Massachusetts headquarter offices to a location more than twenty-five (25)
miles from the location of such offices, or the Companys requiring the Executive to be based at a
location other than the Companys Boston headquarter offices; provided that in all such cases the
Company may require the Executive to travel on Company business including being temporarily based
at other Company locations as long as such travel is reasonable and is not materially greater or
different than the Executives travel requirements before the Closing; (vi) any material breach by
Investment Holdings or the Company of this Agreement, any agreement by Investment Holdings or the
Company to indemnify the Executive or any other material written agreement between Investment
Holdings or the Company and the Executive; (vii) the failure by the Company to obtain, before
completion of a Change in Control, an agreement in writing from any successor or assign to assume
and fully perform under this Agreement; or (viii) the provision of notice by the Company of
non-renewal of this Agreement.
g. By the Executive Other than for Good Reason. The Executive may terminate her
employment hereunder at any time upon thirty (30) days notice to the Company. In the event of
termination by the Executive pursuant to this Section 5(g), the Investment Holdings Board may elect
to waive the period of notice, or any portion thereof, and, if the Investment Holdings Board so
elects, the Company will pay the Executive her Base Salary for the notice period (or for any
remaining portion of the period). The Company shall also provide the Employee the Accrued
Compensation and the Company shall have no further obligation to the Executive hereunder, other
than the Surviving Company Obligations. At the election of the Company, in accordance with and
subject to the provisions of Section 9(b) hereof and subject to the Executives continued
compliance with her obligations under Sections 7, 8 and 9 hereof, the Executive shall be entitled
to all payments and benefits which the Executive would have been entitled to receive under Section
5(e) hereof as if termination had occurred thereunder, but with a Severance Multiplier of one (1).
h. Timing of Payments. In the event that at the time the Executive employment
terminates the Companys shares are publicly traded (as defined in Section 409A of the Code) or the
limitation on payments or provision of benefits imposed by Section 409A(a)(2)(B) would otherwise be
applicable, any amounts payable or benefits provided under Section 5 that would have been payable
during the six (6) months following the date of termination of employment with the Company and
would otherwise be considered deferred
compensation subject to the additional twenty percent (20%) tax imposed by Section 409A if
paid within such six (6) month period shall be paid, in a lump sum on the business day after the
date that is the earlier of (x) six (6) months following the date of termination, or (y) at such
time as otherwise permitted by law that would not result in such additional taxation and penalties
under Section 409A. In addition, the administration of the Release requirements described under
this Section 5 shall be implemented such that where the period for execution and non-revocation of
a release spans more than one calendar year, any payment contingent on the execution of the
-8-
Release shall not be made until the second calendar year, or later, as required by the applicable terms of
this Agreement and Section 409A. All reimbursements and in-kind benefits provided under this
Agreement shall be made or provided in accordance with the requirements of Section 409A including,
where applicable, the requirement that (i) any reimbursement is for expenses incurred during the
period of time specified in this Agreement, (ii) the amount of expenses eligible for reimbursement,
or in kind benefits provided, during a calendar year may not affect the expenses eligible for
reimbursement, or in kind benefits to be provided, in any other calendar year, (iii) the
reimbursement of an eligible expense will be made no later than the last day of the calendar year
following the year in which the expense is incurred, and (iv) the right to reimbursement or in kind
benefits is not subject to liquidation or exchange for another benefit. Notwithstanding the
foregoing, the Company shall have no obligation to grant the Executive a gross-up or other
make-whole compensation for any tax imposed under Section 409A.
i. No Duty to Mitigate. The Executive shall not be required to mitigate the amount of
any cash payment or the value of any benefit provided for in this Agreement by seeking other
employment, by seeking benefits from another employer or other source, or by pursuing any other
type of mitigation. No payment or benefit provided for in this Agreement shall be offset or
reduced by the amount of any cash compensation or the value of any benefit provided to the
Executive in any subsequent employment or from any other source. Notwithstanding the foregoing, if
the Executive begins to participate in the group health plan of another employer which provides
benefits substantially similar to those provided by the Company pursuant to this Section 5, then
the Executive shall promptly notify the Company and the Company may discontinue the health plan
participation being provided the Executive pursuant to this Section 5.
6. Code Section 4999 Excise Tax.
a. Anything in this Agreement to the contrary notwithstanding, in the event that it shall be
determined that any payment or benefit (including any accelerated vesting of options or other
equity awards) made or provided, or to be made or provided, by the Company (or any successor
thereto or affiliate thereof) to or for the benefit of Executive, whether pursuant to the terms of
this Agreement, any other agreement, plan, program or arrangement of or with Investment Holdings or
the Company (or any successor thereto or affiliate thereof) or otherwise (a Payment),
will be subject to the excise tax imposed by Section 4999 of the Code or any comparable tax imposed
by any replacement or successor provision of United States tax law, then the Company will apply a
limitation on the Payment amount as set forth in clause (i) below (a Parachute Cap),
unless the provisions of clause (ii) below apply.
i. If clause (ii) does not apply, the aggregate present value of the Payments under Sections
5(e), (f) or (g) of this Agreement (Agreement Payments) shall be reduced (but not below
zero) to the Reduced Amount. The Reduced Amount shall be an amount expressed in present
value which maximizes the aggregate present value of Agreement Payments without causing any Payment
to be subject to the limitation of deduction under Section 280G of the Code or the imposition of
any excise tax under Section 4999 of the Code. For purposes of this clause (i), present value
shall be determined in accordance with Section 280G(d)(4) of the Code. In the event that it is
determined that the amount of the Agreement
-9-
Payments will be reduced in accordance with this clause
(i), the Agreement Payments shall be reduced on a nondiscretionary basis in such a way as to
minimize the reduction in the economic value deliverable to the Executive. In applying this
principle, the reduction shall be made in a manner consistent with the requirements of Section 409A
of the Code, and where more than one payment has the same value for this purpose and they are
payable at different times, they will be reduced on a pro-rata basis.
ii. It is the intention of the parties that the Parachute Cap apply only if application of the
Parachute Cap is beneficial to the Executive. Therefore, if the net amount that would be retained
by the Executive under this Agreement without the Parachute Cap, after payment of any excise tax
under Section 4999 of the Code, exceeds the net amount that would be retained by the Executive with
the Parachute Cap, then the Company shall not apply the Parachute Cap to the Executives payments.
b. All determinations to be made under this Section 6 shall be made by the nationally
recognized independent public accounting firm used by the Company immediately prior to the Change
in Control (Accounting Firm), which Accounting Firm shall provide its determinations and
any supporting calculations to the Company and the Executive within ten days of the termination
date. Any such determination by the Accounting Firm shall be binding upon the Company and the
Executive.
c. All of the fees and expenses of the Accounting Firm in performing the determinations
referred to in this Section 6 shall be borne solely by the Company.
7. Confidential Information.
a. The Executive acknowledges that the Company continually develops Confidential Information
(as defined in Section 13); that the Executive may develop Confidential Information for the
Company; and that the Executive may learn of Confidential Information during the course of
employment. The Executive shall not disclose to any Person or use, other than as required by
applicable law or for the performance of her duties and responsibilities to the Company, any
Confidential Information obtained by the Executive incident to her employment with the Company.
The Executive understands that this restriction shall continue to apply after her employment
terminates, regardless of the reason for such termination.
b. All documents, records, tapes and other media of every kind and description containing
Confidential Information, and all copies, (the Documents), whether or not prepared by the
Executive, shall be the sole and exclusive property of the Company. The
Executive shall return to the Company no later than the time her employment terminates all
Documents then in the Executives possession or control.
8. Assignment of Rights to Intellectual Property. The Executive shall promptly and
fully disclose all Intellectual Property (as defined in Section 13) to the Company. The Executive
hereby assigns and agrees to assign to the Company (or as otherwise directed by the Company) the
Executives full right, title and interest in and to all Intellectual Property. The Executive
agrees to execute any and all applications for domestic and foreign patents, copyrights or other
proprietary rights and to do such other acts (including without limitation the execution and
-10-
delivery of instruments of further assurance or confirmation) requested by the Company to assign
the Intellectual Property to the Company and to permit the Company to enforce any patents,
copyrights or other proprietary rights to the Intellectual Property. All copyrightable works that
the Executive creates in the performance of her duties hereunder shall be considered work made for
hire.
9. Restricted Activities.
a. While the Executive is employed by the Company and, except as otherwise provided in Section
9(b) and Section 9(c) below, for the period of two (2) years following the termination of the
Executives employment for any reason (including retirement) or, in the event of a termination for
which the Executive is entitled to severance pay calculated with a Severance Multiplier of 1.5, for
a period of eighteen (18) months following such termination, (as applicable, the
Non-Competition Period), subject to the Companys compliance with the post-employment
terms of this Agreement, the Executive will not engage or participate in, directly or indirectly,
alone or as principal, agent, employee, employer, consultant, investor or partner of, or assist in
the management of, or provide advisory or other services to, or own any stock or any other
ownership interest in, or make any financial investment in, any business or entity which is
Competitive with the Company (as defined below); provided, however, that it shall not be a
violation of the foregoing (i) for the Executive to own not more than two percent (2%) of the
outstanding securities of any class of securities listed on a national exchange or inter-dealer
quotation system or (ii) following termination of the Executives employment with the Company, for
the Executive to provide services to any business or entity that has a line of business, division,
subsidiary or other affiliate that is Competitive with the Company if the Executive is not employed
in such line of business or division or by such subsidiary or other affiliate and is not involved,
directly or indirectly, in the management, supervision or operations of such line of business,
division, subsidiary or affiliate that is Competitive with the Company. For purposes of this
Agreement, a business or entity shall be considered Competitive with the Company if such
business or entity competes in any respect with a business in which Investment Holdings and its
subsidiaries were engaged (including, specifically, services related to financial advisors), or any
material products and/or services that Investment Holdings or its subsidiaries were actively
developing or designing as of the date the Executives employment with the Company terminated,
provided that, prior to such termination, the Executive knew of such other business or such
material product or such service under active development or design. In addition, during the
Non-Competition Period, the Executive will not (other than when acting on behalf of the Company
during the Executives employment) (i) solicit, or attempt to solicit, any existing or prospective customers, targets, suppliers,
financial advisors, officers or employees of Investment Holdings or any of its subsidiaries to
terminate their relationship with Investment Holdings or any of its subsidiaries or (ii) divert, or
attempt to divert, from Investment Holdings or any of its subsidiaries any of its customers,
prospective customers, targets, suppliers, financial advisors, officers or employees or (iii) hire
or engage or otherwise contract with, or attempt to hire or engage or otherwise contract with, any
officers, employees or financial advisors of Investment Holdings or any of its subsidiaries,
whether to be an employee, officer, agent, consultant or independent contractor; provided, however,
that nothing in this Section 9(a) shall be deemed to prohibit the Executive from soliciting
a customer, prospective customer, target or supplier of Investment Holdings or any of its
subsidiaries during
-11-
the Non-Competition Period if such action relates solely to a business which is
not Competitive with the Company. A customer, prospective customer, target, supplier, financial
advisor, officer or employee of Investment Holdings or any of its subsidiaries is any one who was
such within the preceding twelve months, excluding, however, any prospective customer or target
which was solicited solely by mass mailing or general advertisement during that period and any
officer, employee or financial advisor whose relationship with Investment Holdings or the Company
was terminated by Investment Holdings or the Company or any of their subsidiaries other than for
circumstances that would constitute cause (within the meaning of any such definition applicable
to such officer, employee or financial advisor, or, if no such definition is applicable, cause as
defined in the existing equity compensation plan maintained with respect to employees of the
Company) and provided further, with respect to Investment Holdings subsidiaries, that the
Executive during her employment with the Company was introduced to, or otherwise knew of or should
have known of the relationship of, such customer, prospective customer, target, supplier, financial
advisor or employee to the subsidiary.
b. Notwithstanding anything herein to the contrary and to the extent that the Investment
Holdings Compensation Committee, in its sole discretion, does not waive the obligation under this
Section 9(b), in the event that the Executive terminates her employment hereunder without
Good Reason, the Executive shall, at the Companys election, which election shall be provided to
the Executive prior to the date of termination, (1) receive the payments and benefits specified in
Section 5(e) with a Severance Multiplier of one (1) and be subject to a Non-Competition Period
which shall continue for two (2) years following the date of termination of the Executives
employment, or (2) receive no payments and benefits specified in Section 5(e) and be subject to a
Non-Competition Period which shall continue for one (1) year following the date of termination of
the Executives employment.
c. The Executive may seek a waiver from the Company of her obligations pursuant to this
Section 9, which waiver shall not be unreasonably withheld or delayed. As of the date of the grant
of such waiver by the Company, all payments and benefits under the applicable provision of Section
5 shall cease other than the payment of Final Compensation, excluding the payments and benefits
under clause (v) of the definition thereof which shall cease or be reimbursed by the Executive on a
pro-rata basis for the waived time period of the Non-Competition Period, as applicable) or Accrued
Compensation, as applicable).
10. Reasonableness; Enforcement. The Company and the Executive acknowledge that the
time, scope, geographic area and other provisions of Sections 7, 8 and 9 (the Covenants)
have been specifically negotiated by sophisticated parties and agree that all such provisions are
reasonable under the circumstances of the activities contemplated by this Agreement. The Executive
acknowledges and agrees that the terms of the Covenants: (i) are reasonable in light of all of the
circumstances, (ii) are sufficiently limited to protect the legitimate interests of the Company,
(iii) impose no undue hardship, (iv) are not injurious to the public, and (v) are essential to
protect the business and goodwill of the Company and its affiliates and are a material term of this
Agreement which has induced the Company to agree to provide for the payments and benefits described
in this Agreement. The Executive further acknowledges and agrees that the Executives breach of
the Covenants will cause the Company and Investment Holdings irreparable harm, which cannot be
adequately compensated by money
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damages. The Executive and the Company agree that, in the event of
an actual or threatened breach of Section 9, the Company shall be entitled to injunctive relief for
any actual or threatened violation of any of the Covenants in addition to any other remedies it may
have at law or equity, including money damages.
11. Survival. Provisions of this Agreement shall survive any termination if so
provided herein or if necessary or desirable to accomplish the purposes of other surviving
provisions, including without limitation the obligations of the Executive under Sections 7, 8, 9
and 10 hereof and the obligations of the Company pursuant to Section 5 hereof.
12. Conflicting Agreements. The Executive hereby represents and warrants that the
execution of this Agreement and the performance of her obligations hereunder will not breach or be
in conflict with any other agreement to which the Executive is a party or is bound and that the
Executive is not now subject to any covenants against competition or similar covenants or any court
order or other legal obligation that would affect the performance of her obligations hereunder.
The Executive will not disclose to or use on behalf of the Company any proprietary information of a
third party without such partys consent.
13. Definitions. Words or phrases which are initially capitalized or are within
quotation marks shall have the meanings provided in this Section and as provided elsewhere herein.
For purposes of this Agreement, the following definitions apply:
a. Change in Control means the consummation, after the date of Closing, of (i) any
transaction or series of related transactions, whether or not Investment Holdings is a party
thereto, after giving effect to which in excess of fifty percent (50%) of Investment Holdings
voting power is owned directly, or indirectly through one or more entities, by any person and its
affiliates or associates (as such terms are defined in the Exchange Act Rules) or any group
(as defined in the Exchange Act Rules) other than, in each case, Investment Holdings or
an affiliate of Investment Holdings immediately following the Closing, or (ii) a sale or other
disposition of all or substantially all of the consolidated assets of Investment Holdings (each of
the foregoing, a Business Combination), provided that, notwithstanding the foregoing, a
Change in Control shall not be deemed to occur as a result of a Business Combination following
which the individuals or entities who were beneficial owners of the outstanding
securities entitled to vote generally in the election of directors of Investment Holdings
immediately prior to such Business Combination beneficially own, directly or indirectly, 50% or
more of the outstanding securities entitled to vote generally in the election of directors of the
resulting, surviving or acquiring corporation in such transaction.
b. Confidential Information means any confidential proprietary information relating
to the business of Investment Holdings, the Company or their affiliates or their respective
customers or clients which has an economic value to Investment Holdings, the Company or their
affiliates. Confidential Information does not include any information that enters the public
domain other than through a breach by the Executive of her duties to Investment Holdings or the
Company hereunder or which is obtained by the Executive from a third party which has no obligation
of confidentiality to Investment Holdings or the Company.
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c. Intellectual Property means any invention, formula, process, discovery,
development, design, innovation or improvement (whether or not patentable or registrable under
copyright statutes) made, conceived, or first actually reduced to practice by the Executive solely
or jointly with others, during her employment by the Company; provided, however, that, as used in
this Agreement, the term Intellectual Property shall not apply to any invention that the
Executive develops on her own time, without using the equipment, supplies, facilities or trade
secret information of Investment Holdings or the Company, unless such invention relates at the time
of conception or reduction to practice of the invention (a) to the business of Investment Holdings
or the Company, (b) to the actual or demonstrably anticipated research or development of Investment
Holdings or the Company or (c) results from any work performed by the Executive for Investment
Holdings or the Company.
d. Person means an individual, a corporation, a limited liability company, an
association, a partnership, an estate, a trust and any other entity or organization, other than the
Company or any of its subsidiaries.
14. Withholding. All payments or other benefits, to the extent required by law, made
by the Company under this Agreement shall be reduced by any tax or other amounts required to be
withheld by the Company under applicable law.
15. Legal Fees. The Company shall at its election either pay directly the joint legal
expenses incurred by the Executive and the other executives of the Company with whom the Company is
entering into employment agreements effective as of the Closing in the negotiation and preparation
of their employment agreements or reimburse the Executive for her portion of such joint legal
expenses. In addition, all reasonable costs and expenses that are reasonably documented (including
court and arbitration costs and reasonable legal fees and expenses that reflect common practice
with respect to the matters involved) incurred by the Executive as a result of any claim, action or
proceeding arising out of this Agreement or the contesting, disputing or enforcing of any
provision, right or obligation under this Agreement shall be paid, or reimbursed to the Executive,
if, in the final resolution of the dispute, the Executive either recovers material monetary damages
(in cash or in kind, such as benefits) or is the prevailing party on a material non-monetary claim
(such as a dispute regarding a restrictive covenant).
16. Dispute Resolution.
a. Except as provided in Section 10, any dispute, controversy or claim between the parties
arising out of this Agreement or the Executives employment with the Company or termination of
employment shall be settled by arbitration conducted in the city in which the Executive is located
administered by the American Arbitration Association under its Employment Dispute Resolution Rules
then in effect (except as modified by b. below).
b. In the event that a party requests arbitration (the Requesting Party), it shall
serve upon the other party (the Non-Requesting Party), within one hundred and eighty
(180) days of the date the Requesting Party knew, or reasonably should have known, of the facts on
which the controversy, dispute or claim is based, a written demand for arbitration stating the
substance of the controversy, dispute or claim, the contention of the party requesting arbitration
and the name and address of the arbitrator appointed by it. The Non-Requesting Party, within
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sixty (60) days of such demand, shall accept the arbitrator or appoint a second arbitrator and notify the
other party of the name and address of this second arbitrator so selected, in which case the two
arbitrators shall appoint a third who shall be the sole arbitrator to hear the case. In the event
that the two arbitrators fail in any instance to appoint a third arbitrator within thirty (30) days
of the appointment of the second arbitrator, either arbitrator or any party to the arbitration may
apply to the American Arbitration Association for appointment of the third arbitrator in accordance
with the Rules, which arbitrator shall be the sole arbitrator to hear the case. Should the
Non-Requesting Party (upon whom a demand for arbitration has been served) fail or refuse to accept
the arbitrator appointed by the other party or to appoint an arbitrator within sixty (60) days, the
single arbitrator shall have the right to decide alone, and such arbitrators decision or award
shall be final and binding upon the parties.
c. The decision of the arbitrator shall be in writing; shall set forth the basis for the
decision; and shall be rendered within thirty (30) days following the hearing. The decision of the
arbitrator shall be final and binding upon the parties and may be enforced and executed upon in any
court having jurisdiction over the party against whom enforcement of such award is sought.
17. No Withholding of Undisputed Payments. During the pendency of any dispute or
controversy, the Company shall not withhold any payments or benefits due to the Executive, whether
under this Agreement or otherwise, except for the specific portion of any payment or benefit that
is the subject of a bona fide dispute between the parties.
18. Assignment. Neither the Company nor the Executive may make any assignment of this
Agreement or any interest herein, by operation of law or otherwise, without the prior written
consent of the other. This Agreement shall inure to the benefit of and be binding upon the Company
and the Executive, their respective successors, executors, administrators, heirs and permitted
assigns.
19. Severability. If any portion or provision of this Agreement shall to any extent
be declared illegal or unenforceable by a court of competent jurisdiction, then the remainder of
this Agreement, or the application of such portion or provision in circumstances other than those
as to which it is so declared illegal or unenforceable, shall not be affected thereby, and each
portion and provision of this Agreement shall be valid and enforceable to the fullest extent
permitted by law.
20. Waiver. No waiver of any provision hereof shall be effective unless made in
writing and signed by the waiving party. The failure of either party to require the performance of
any term or obligation of this Agreement, or the waiver by either party of any breach of this
Agreement, shall not prevent any subsequent enforcement of such term or obligation or be deemed a
waiver of any subsequent breach.
21. Notices. Any and all notices, requests, demands and other communications provided
for by this Agreement shall be in writing and shall be effective when delivered in person or the
next business day following consignment for overnight delivery to a reputable national overnight
courier service or five business days following deposit in the United States mail, postage prepaid,
registered or certified, and addressed to the Executive at her last known
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address on the books of
the Company or, in the case of the Company, at its principal place of business, attention of the
Chairman of the Investment Holdings Board, or to such other address as a party may specify by
notice to the other actually received. Copies of any notices, requests, demands and other
communication to the Company by the Executive shall be sent by the to the investors at the
following address: c/o Texas Pacific Group, 301 Commerce Street, Suite 3300, Fort Worth, TX 76102,
Attn: Richard Schifter (Fax: 415-743-1501) and c/o Hellman & Friedman LLC, One Maritime Plaza,
12th Floor, San Francisco, CA 94111, Attn: Allen Thorpe (Fax: 415-835-5408).
22. Entire Agreement. This Agreement constitutes the entire agreement between the
parties and supersedes all prior communications, agreements and understandings, written or oral,
with respect to the terms and conditions of the Executives employment including, without
limitation, the applicable Executive Summary of Proposed Terms.
23. Amendment. This Agreement may be amended or modified only by a written instrument
signed by the Executive and by an authorized representative of the Company subject to prior
approval by the Investment Holdings Board.
24. Headings. The headings and captions in this Agreement are for convenience only
and in no way define or describe the scope or content of any provision of this Agreement.
25. Counterparts. This Agreement may be executed in two or more counterparts, each of
which shall be an original and all of which together shall constitute one and the same instrument.
26. Governing Law. This is a Massachusetts contract and shall be construed and
enforced under and be governed in all respects by the laws of the Commonwealth of Massachusetts,
without regard to the conflict of laws principles thereof.
[Remainder of page intentionally left blank]
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IN WITNESS WHEREOF, this Agreement has been executed as a sealed instrument by the Company, by
its duly authorized representative, and by the Executive, as of the date first above written.
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THE EXECUTIVE |
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THE COMPANY |
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By:
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/s/ Stephanie L. Brown |
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By: |
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/s/ Mark S. Casady |
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Name:
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Stephanie L. Brown
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Name: Mark S. Casady |
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Title: Chief Executive Officer |
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HOLDINGS |
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By: |
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/s/ Mark S. Casady |
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Name: Mark S. Casady |
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Title: Chief Executive
Officer |
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INVESTMENT HOLDINGS (with respect to
Section 4(c) only)
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By: |
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/s/ Mark S. Casady |
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Name: Mark S. Casady |
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Title: Chief Executive
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Schedule 1
(A) |
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Boards and Committees |
FINRAs National Adjudicatory Councils Statutory Disqualification Committee
FINRAs Independent Broker/Dealer Committee
FINRAs Membership Committee
FINRAs SIFMA Private Client Legal Committee
FINRAs IRI Governmental Relations Committee
Financial Services Roundtable
Financial Services Roundtables Lawyers Council
Financial Services Regulatory Oversight Committee
Financial Services Securities Working Group
Boston Philharmonic Orchestra Board
Boston Ballet Board of Overseers
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Base Salary |
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$375,000 |
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(C) |
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2010 Target Bonus |
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$375,000 |
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(D) |
|
Target Bonus |
|
|
|
$375,000 |
|
|
|
Opportunity to Earn Bonus Compensation in Excess of Target Bonus: The amount of the
Executives bonus opportunity above Target Bonus (the Outperformance Bonus), and the
performance necessary to earn the Outperformance Bonus, shall be determined by the
Investment Holdings Compensation Committee on an annual basis after consultation with, and
with good faith consideration of the views of, the CEO of the Company. |
|
(E) |
|
Annual Vacation |
|
|
|
4 weeks. |
exv10w4
Exhibit 10.4
AGREEMENT
THIS AMENDED AND RESTATED EXECUTIVE EMPLOYMENT AGREEMENT (this Agreement) is entered
into this 23rd day of July, 2010, by and between William E. Dwyer III (the Executive), LPL
Financial Corporation (the Company), LPL Holdings, Inc. (Holdings) and LPL
Investment Holdings Inc. (Investment Holdings) (with respect to Section 4(c) only), to be
effective upon the Closing (as defined below).
WHEREAS, Executive is currently employed by the Company, and previously entered into an
employment agreement with Holdings, dated as of December 28, 2005 and amended as of June 1, 2008;
and
WHEREAS, the Company and the Executive desire to enter into this Agreement to set forth the
amended and restated terms of the Executives continued employment with the Company, effective as
of the closing of the 2010 initial public offering of common stock by Investment Holdings (the
Closing).
NOW, THEREFORE, in consideration of the foregoing premises and the mutual promises, terms,
provisions and conditions set forth in this Agreement, the parties hereby agree:
1. Employment. Subject to the terms and conditions set forth in this Agreement, the
Company hereby agrees to continue to employ the Executive, and the Executive hereby accepts the
terms of continued employment with the Company.
2. Term. Subject to earlier termination as hereafter provided, the Executives
employment hereunder shall have an original term of three (3) years commencing on the date of the
Closing (the Initial Term) and shall automatically be renewed thereafter for successive
terms of one year each, unless the Company provides notice to the Executive at least ninety (90)
days prior to the expiration of the Initial Term or any renewal term that the Agreement is not to
be renewed, in which event this Agreement and the Executives employment hereunder shall terminate
at the expiration of the then-current term. The term of this Agreement, as from time to time
renewed, is hereafter referred to as the term of this Agreement or the term hereof. In the
event that the Closing does not occur, this amendment and restatement of the Agreement shall be
void ab initio and of no force or effect and the pre-existing employment agreement shall remain in
effect.
3. Capacity and Performance.
a. During the term hereof, the Executive shall serve the Company as its Managing Director,
President National Sales and Marketing, reporting to the Chief Executive Officer of the Company
(the CEO).
b. During the term hereof, the Executive shall be employed by the Company on a full-time basis
and shall have such duties, authority and responsibilities as are commensurate with his position
and such other duties, consistent with his position, as may be designated from time to time by the
Board of Directors of Investment Holdings (the Investment Holdings Board).
c. During the term hereof, the Executive shall devote his full business time and his best
efforts to the discharge of his duties and responsibilities hereunder; provided,
however, that, subject to Section 9 hereof, the foregoing shall not be construed to prevent
the Executive from attending to personal investments and community and charitable service, provided
that such activities do not unreasonably interfere with the performance of Executives duties to
the Company. In addition, the Executive may serve on boards of directors and similar governing
bodies, and committees thereof, subject to the approval of the Investment Holdings Board, which
approval shall not be unreasonably withheld, and subject to Section 9 hereof. Notwithstanding the
foregoing, the Executive may continue to serve on those boards and committees on which the
Executive was serving at the time of the Closing, which boards and committees are listed on
Schedule 1(A) of this Agreement.
4. Compensation and Benefits. As compensation for all services performed by the
Executive during the term hereof:
a. Base Salary. During the term hereof, the Company shall pay the Executive a base
salary at the rate per annum as set forth on Schedule 1(B) of this Agreement, payable in
accordance with the regular payroll practices of the Company for its executives and subject to
increase from time to time by the Investment Holdings Board (or its compensation committee, the
Investment Holdings Compensation Committee). The Executives base salary may only be
decreased with the approval of the CEO of the Company and then only in an across-the-board salary
reduction in which all executives and other employees are subject to an equal percentage reduction.
The Executives base salary, as from time to time increased or decreased in accordance with
Agreement, is hereafter referred to as the Base Salary.
b. Bonus Compensation.
i. The Executive shall be eligible to receive a full bonus, without pro-ration, for calendar
year 2010, determined in accordance with the Companys employee cash bonus plan as in effect
immediately prior to the Closing, as set forth in Schedule 1(C) hereto.
ii. Each calendar year thereafter during the term hereof, the Executive shall be eligible to
participate in the cash bonus plan or other incentive compensation plan in effect for employees of
the Company generally, under which, consistent with the requirements for performance-based
compensation under Section 162(m) of the Internal Revenue Code of 1986, as amended (the
Code), the plan elements described in clauses (A) and (C) below shall be not be decreased
from those applicable to the Executive under the bonus plan in effect immediately prior to the
Closing, and the plan element described in clause (B) below shall be substantially consistent with
past practice: (A) the target bonus, (B) the level of performance required to reach target and (C)
the opportunity to earn bonus compensation in excess of target,
-2-
with respect to clauses (A) and (C) as set forth on Schedule 1(D) hereto. Neither the
Executives target bonus nor the opportunity to earn bonus compensation in excess of target may be
subject to an adverse change and the level of performance required to reach target may not be
materially adversely changed except with the approval of the CEO of the Company and then only in an
across-the-board change which affects equally all employees participating in the bonus plan. Such
cash bonus shall be in addition to the Base Salary. The Executives target bonus under the
executive cash bonus plan is referred to hereafter as the Target Bonus. In clarification
of the foregoing, the actual bonus earned by the Executive for any given calendar year, may be
below, at or above the Target Bonus, based on actual performance. Subject to any effective
deferral election made available and elected by the Executive, each bonus earned by the Executive
hereunder shall be paid no later than March 15 of the calendar year following the end of the
calendar year for which the bonus was earned.
c. Equity Compensation. The Executive shall be eligible to participate in all equity
compensation plans and programs applicable to senior executives of the Company and shall receive
such grants as may be provided from time to time by Investment Holdings in the discretion of the
Investment Holdings Board or the Investment Holdings Compensation Committee. Each grant will be
subject to the terms and conditions of the applicable Investment Holdings equity compensation plan
and grant agreements which shall provide in relevant part that: (i) upon the occurrence of a
Change in Control occurring after the effective date of this Agreement, all outstanding equity
compensation awards held by the Executive will become fully vested and/or exercisable, as the case
may be, as of the date of the Change in Control; (ii) upon a termination of the Executives
employment for any reason, the portion of any equity compensation award which has not vested shall
terminate; (iii) in the event the Executives employment terminates for any reason other than for
Cause, death or disability, the Executive may exercise any vested portion of any stock option or
stock appreciation right (collectively, Stock Right) held by him on the date of
termination provided that he does so prior to the earlier of (A) ninety (90) days following
termination of employment and (B) the expiration of the scheduled term of the Stock Right; (iv) in
the event the Executives employment is terminated due to death or disability (as defined in
Section 5(b)), then the Executive, or, as applicable in the event of death, his beneficiary or
estate, may exercise any vested portion of any Stock Right held by the Executive on the date
employment terminates for the shorter of (A) the period of twelve (12) months following the
termination date and (B) with respect to each Stock Right individually, the expiration of the
scheduled term of such Stock Right; and (v) upon a termination of the Executives employment by the
Company for Cause, all equity compensation awards shall be forfeited immediately.
d. Vacations. During the term hereof, the Executive shall be eligible for the number
of weeks of vacation per year set forth on Schedule 1(E) to this Agreement, subject to the
vacation policies of the Company generally applicable to its executives, as in effect from time to
time, provided that the Executive shall not be barred from taking up to the maximum number of weeks
of vacation in any given year solely by reason of the Executives failure to work for a specified
period of time during such year prior to the time of such vacation.
-3-
e. Other Benefits. During the term hereof, the Executive shall be entitled to
participate in any and all employee benefit plans from time to time in effect for executives and/or
employees of the Company generally, provided that the Executive shall receive benefits
pursuant to plans, programs and policies (other than any equity-based compensation plan or program)
that are comparable, and no less favorable in the aggregate, to those benefits offered to him
immediately prior to the Closing.
f. Business Expenses. During the term hereof, the Company shall pay or reimburse the
Executive for all reasonable business expenses incurred or paid by the Executive in the performance
of his duties and responsibilities hereunder, subject to such reasonable substantiation and
documentation as the Company may require and otherwise consistent with the Companys policies
generally applicable to its executives, as in effect from time to time.
5. Termination of Employment and Severance Benefits. Notwithstanding the provisions
of Section 2 hereof, the Executives employment hereunder shall terminate prior to the expiration
of the term hereof under the circumstances specified below. Subject to the execution, delivery and
nonrevocation by the Executive, the Executives beneficiary, or the representative of the
Executives estate, as applicable, of a release of claims agreement (the Release) in the
form provided by the Company within the time period specified by the Company, which shall not
exceed 60 days following the date of termination, and provided that the Executive has complied in
all material respects with the terms and conditions of the Release, the Company shall provide the
Executive with the payments and benefits set forth below:
a. Termination due to Death. In the event of the Executives death during the term
hereof, the Executives employment hereunder shall immediately and automatically terminate. In such
event, the Company shall pay to the Executives designated beneficiary or, if no beneficiary has
been designated by the Executive, to his estate, Final Compensation which shall include
all of the following: (i) the Base Salary earned but not paid through the date of termination, (ii)
pay for any vacation time earned but not used through the date of termination, (iii) payment of any
annual bonus earned but not paid for the year preceding that in which the date of termination
occurs, (iv) reimbursement for any business expenses incurred by the Executive and reimbursable
pursuant to Section 4(f) hereof but un-reimbursed on the date of termination (clauses (i), (ii),
(iii) and (iv), collectively, the Termination Entitlements), (v) a bonus for the year in
which the date of termination occurs determined by multiplying the Target Bonus for that year by a
fraction, the numerator of which is the number of days the Executive was employed during the year
in which the date of termination occurs, through the date of termination, and the denominator of
which is 365 (Pro-Rated Portion of Target Bonus), (vi) a single lump-sum payment equal to
the premium (including the additional amount (if any) charged for administrative costs as permitted
by the Federal law known as COBRA) of continued health and dental plan participation under COBRA
for the Executive (in the event of a termination other than as a result of death) and for the
Executives qualified beneficiaries (as that term is defined under COBRA) for the one (1) year
period immediately following the date of termination (the Premium Payment) and, the
Company shall have no further obligation to the Executive hereunder, other than (A) obligations due
to the Executive as of the date of termination but not yet satisfied, such as, by way of example
but not limitation, an uncorrected
-4-
error in Base Salary or an outstanding claim under one of the welfare plans or an uncorrected
error in the Executives retirement plan account, and (B) obligations which, whether or not due to
the Executive as of the date of termination, survive termination, such as, by way of example but
not limitation, rights to exercise vested stock options (all of the foregoing, under clauses (A)
and (B) hereof, the Surviving Company Obligations).
b. Termination due to Disability. The Company may terminate the Executives
employment hereunder, upon notice to the Executive, in the event that the Executive becomes
disabled through any illness, injury, accident or condition of either a physical or psychological
nature and, as a result, is unable to perform substantially all of his duties and responsibilities
hereunder, notwithstanding the provision of any reasonable accommodation, for any period of six (6)
consecutive months. During any period in which the Executive is disabled but prior to the
Executives date of termination, the Executive shall continue to receive all compensation and
benefits under Section 4 hereof while his employment continues. If any question shall arise as to
whether during any period the Executive is disabled through any illness, injury, accident or
condition of either a physical or psychological nature so as to be unable to perform substantially
all of his duties and responsibilities hereunder, the Executive may, and at the request of the
Company shall, submit to a medical examination by a physician selected by the Company to whom the
Executive has no reasonable objection to determine whether the Executive is so disabled and such
determination shall for the purposes of this Agreement be conclusive of the issue. In the event of
termination by the Company due to the Executives disability, the Company shall provide the
Executive with the Final Compensation and the Company shall have no further obligation to the
Executive hereunder, other than the Surviving Company Obligations. Notwithstanding any provision
herein to the contrary, if the Executive is entitled to a Premium Payment, the Premium Payment
shall be paid in a lump sum on the first business day that is the earlier of (i) six (6) months
following the date of termination, or (ii) at such time as otherwise permitted by law that would
not result in such additional taxation and penalties under Section 409A.
c. Retirement. The Executive may elect to retire voluntarily on thirty (30) days
notice to the Company, provided that the Executive is then at least 65 years of age. In
such event, the Company shall pay to the Executive the Final Compensation (other than the benefits
under clause (v) of the definition thereof (the Accrued Compensation)) and the Company
shall have no further obligation to the Executive hereunder, other than the Surviving Company
Obligations. Notwithstanding any provision herein to the contrary, if the Executive is entitled to
a Premium Payment, the Premium Payment shall be paid in a lump sum on the first business day that
is the earlier of (i) six (6) months following the date of termination, or (ii) at such time as
otherwise permitted by law that would not result in such additional taxation and penalties under
Section 409A.
d. Termination by the Company for Cause. The Company may terminate the Executives
employment at any time for Cause, which shall mean only (i) the intentional failure to
perform (excluding by reason of disability) or gross negligence or willful misconduct in the
performance of regular duties or other breach of fiduciary duty or material breach of this
Agreement which remains uncured after thirty (30) days notice specifying in reasonable detail
-5-
the nature of the failure, negligence, misconduct or breach and what is required of the
Executive to cure, (ii) conviction or plea of nolo contendere to a felony or (iii) fraud or
embezzlement or other dishonesty which has a material adverse effect on the Company. Before
terminating the Executive for Cause, (A) at least two-thirds (2/3) of the members of the Investment
Holdings Board (excluding the Executive, if a Board member) must conclude in good faith that, in
their view, one of the events described in subsection (i), (ii) or (iii) above has occurred and (B)
such Board determination must be made at a duly convened meeting of the Investment Holdings Board
(X) of which the Executive received written notice at least ten (10) days in advance, which notice
shall have set forth in reasonable detail the facts and circumstances claimed to provide a basis
for the Companys belief that one of the events described in subsection (i), (ii) or (iii) above
occurred and, in the case of an event under subsection (i), remains uncured at the expiration of
the notice period, and (Y) at which the Executive had a reasonable opportunity to make a statement
and answer the allegations against the Executive. In the event of the termination of the
Executives employment by the Company for Cause, the Company shall pay to the Executive the
Termination Entitlements and the Company shall have no further obligation to the Executive
hereunder, other than the Surviving Company Obligations. The parties acknowledge and agree that
this definition of Cause shall be applicable and controlling with respect to the grant agreements
executed by the Executive under any equity compensation plan or arrangement sponsored by Investment
Holdings or the Company.
e. Termination by the Company other than for Cause. The Company may terminate the
Executives employment hereunder other than for Cause at any time upon ten (10) days notice to the
Executive. Termination by the Company on or following expiration of the term hereof (other than a
termination due to the Executives death or disability or under circumstances that would constitute
Cause if this Agreement were still in effect) will be treated as a termination other than for
Cause under this Section 5(e). In the event of termination under this Section 5(e), the Executive
shall be entitled to receive the Accrued Compensation (other than the Premium Payment) and the
following additional payments as severance: (i) a bonus for the year in which the date of
termination occurs based on actual performance determined by multiplying the bonus that would have
been earned by the Executive had the Executive remained in service until the date required to earn
a full bonus for that year by a fraction, the numerator of which is the number of days the
Executive was employed during the year in which the date of termination occurs, through the date of
termination, and the denominator of which is 365, provided that if the bonus amount exceeds the
Pro-Rated Portion of Target Bonus, such bonus amount shall be limited to the Pro-Rated Portion of
Target Bonus, and (ii) subject to Executives continued compliance with his obligations under
Sections 7, 8 and 9 hereof, (x) an amount equal to the applicable Severance Multiplier multiplied
by the sum of the Executives Base Salary and Target Bonus for the year in which the date of
termination occurs (or if no such Target Bonus has been established for the Executive for the year
in which the date of termination occurs, the Target Bonus for the year immediately preceding the
year in which the date of termination occurs) and (y) for two years following the date of
termination, continued participation of the Executive and his qualified beneficiaries, as
applicable, under the Companys group life, health, dental and vision plans in which the Executive
was participating immediately prior to the date of termination, subject to any premium
contributions required of the Executive at the rate in effect on the date of termination of his
employment, provided that, in the event that such health
-6-
coverage continuation would be discriminatory for federal income tax purposes, the Executive
shall be permitted to purchase, through the Company at COBRA rates if possible, and be reimbursed
by the Company on a quarterly basis in arrears for, equivalent health benefit coverage for the
Executive and his qualified beneficiaries. Subject to the foregoing, the Company shall have no
further obligation to the Executive hereunder, other than the Surviving Company Obligations. For
purpose of this Agreement, the Severance Multiplier shall be (A) two (2) in the event of
termination under Section 5(e) or Section 5(f) (other than due to Good Reason resulting solely from
notice of non-renewal of the term of this Agreement), in each case, prior to the expiration of the
Initial Term; (B) one and one half (1.5) in the event of a termination under Section 5(e) or
Section 5(f), in each case, on or following the expiration of the Initial Term; (C) one and one
half (1.5) in the event of a termination at any time during the term of this Agreement for Good
Reason resulting solely from the provision by the Company of notice of non-renewal of the term of
this Agreement; and (D) one (1) in the event of a termination of the Executive under Section 5(g)
and pursuant to which the Company makes the election under Section 9(b) hereof. Except as
otherwise provided in the Agreement, any payments due under Section 5(e), Section 5(f), Section
5(g) or Section 9(b), as applicable, shall be payable in equal monthly installments over the number
of years and/or portions thereof equal to the applicable Severance Multiplier; and, subject to
Section 5(h), shall begin at the Companys next regular payday following the 60th day after the
effective date of termination provided that the Executive has executed and not revoked the Release
and is compliant in all material respects with the Release terms and conditions. Notwithstanding
the foregoing, the pro-rated annual bonus earned by the Executive for the year in which the date of
termination occurs as calculated in accordance with this Section 5(e) shall be paid in a lump sum
no later than March 15 of the calendar year following the end of the calendar year for which the
bonus was earned. For the avoidance of doubt, if the Executive does not execute a Release or if
the Executive revokes an executed Release within the time period permitted by law, the Executive
shall not be entitled to the payments and benefits, other than the Termination Entitlements, set
forth in this Section 5.
f. Termination by the Executive for Good Reason. The Executive may terminate his
employment hereunder for Good Reason and, in that event, subject to Executives continued
compliance with his obligations under Sections 7, 8 and 9 hereof, shall be entitled to all payments
and benefits which the Executive would have been entitled to receive under Section 5(e) hereof as
if termination had occurred thereunder and the Company shall have no further obligation to the
Executive hereunder, other than the Surviving Company Obligations. Good Reason shall mean
only (A) the occurrence, without the Executives express written consent (which may be withheld for
any or no reason) of any of the events or conditions described in the following subsections (i)
through (viii), provided that, except with respect to the event described in subsection (viii), the
Executive gives written notice to the Company of the occurrence of Good Reason within ninety (90)
days following the date on which the Executive first knew or reasonably should have known of such
occurrence and the Company shall not have fully corrected the situation within thirty (30) days
following such notice or (B) termination (for any or no reason) by written notice from the
Executive given within the thirty day period immediately following the twelve month anniversary of
a Change of Control occurring after the effective date of this Agreement. The following
occurrences shall constitute Good Reason for purposes of clause (A) of this Section 5(f): (i) a
reduction in the Executives Base Salary (other
-7-
than as expressly permitted under Section 4(a) hereof); (ii) an adverse change in the
Executives bonus opportunity through reduction of the Target Bonus or the maximum available bonus
or a material adverse change in the goals or level of performance required to achieve the Target
Bonus (other than as expressly permitted under Section 4(b) hereof); (iii) a failure by the Company
to pay or provide to the Executive any compensation or benefits to which the Executive is entitled
hereunder; (iv) (A) a material adverse change in the Executives status, positions, titles,
offices, duties and responsibilities, authorities or reporting relationship from those in effect
immediately before such change; (B) the assignment to the Executive of any duties or
responsibilities that are substantially inconsistent with the Executives status, positions,
titles, offices or responsibilities as in effect immediately before such assignment; or (C) any
removal of the Executive from or failure to reappoint or reelect the Executive to any of such
positions, titles or offices; provided that termination of the Executives employment by
the Company for Cause, by the Executive other than for Good Reason pursuant to Section 5(g) hereof,
or a termination as a result of the Executives death or disability shall not be deemed to
constitute or result in Good Reason under this subsection (iv); (v) the Companys changing the
location of the Boston, Massachusetts headquarter offices to a location more than twenty-five (25)
miles from the location of such offices, or the Companys requiring the Executive to be based at a
location other than the Companys Boston headquarter offices; provided that in all such cases the
Company may require the Executive to travel on Company business including being temporarily based
at other Company locations as long as such travel is reasonable and is not materially greater or
different than the Executives travel requirements before the Closing; (vi) any material breach by
Investment Holdings or the Company of this Agreement, any agreement by Investment Holdings or the
Company to indemnify the Executive or any other material written agreement between Investment
Holdings or the Company and the Executive; (vii) the failure by the Company to obtain, before
completion of a Change in Control, an agreement in writing from any successor or assign to assume
and fully perform under this Agreement; or (viii) the provision of notice by the Company of
non-renewal of this Agreement.
g. By the Executive Other than for Good Reason. The Executive may terminate his
employment hereunder at any time upon thirty (30) days notice to the Company. In the event of
termination by the Executive pursuant to this Section 5(g), the Investment Holdings Board may elect
to waive the period of notice, or any portion thereof, and, if the Investment Holdings Board so
elects, the Company will pay the Executive his Base Salary for the notice period (or for any
remaining portion of the period). The Company shall also provide the Employee the Accrued
Compensation and the Company shall have no further obligation to the Executive hereunder, other
than the Surviving Company Obligations. At the election of the Company, in accordance with and
subject to the provisions of Section 9(b) hereof and subject to the Executives continued
compliance with his obligations under Sections 7, 8 and 9 hereof, the Executive shall be entitled
to all payments and benefits which the Executive would have been entitled to receive under Section
5(e) hereof as if termination had occurred thereunder, but with a Severance Multiplier of one (1).
h. Timing of Payments. In the event that at the time the Executive employment
terminates the Companys shares are publicly traded (as defined in Section 409A of the Code) or the
limitation on payments or provision of benefits imposed by Section
-8-
409A(a)(2)(B) would otherwise be applicable, any amounts payable or benefits provided under
Section 5 that would have been payable during the six (6) months following the date of termination
of employment with the Company and would otherwise be considered deferred compensation subject to
the additional twenty percent (20%) tax imposed by Section 409A if paid within such six (6) month
period shall be paid, in a lump sum on the business day after the date that is the earlier of (x)
six (6) months following the date of termination, or (y) at such time as otherwise permitted by law
that would not result in such additional taxation and penalties under Section 409A. In addition,
the administration of the Release requirements described under this Section 5 shall be implemented
such that where the period for execution and non-revocation of a release spans more than one
calendar year, any payment contingent on the execution of the Release shall not be made until the
second calendar year, or later, as required by the applicable terms of this Agreement and Section
409A. All reimbursements and in-kind benefits provided under this Agreement shall be made or
provided in accordance with the requirements of Section 409A including, where applicable, the
requirement that (i) any reimbursement is for expenses incurred during the period of time specified
in this Agreement, (ii) the amount of expenses eligible for reimbursement, or in kind benefits
provided, during a calendar year may not affect the expenses eligible for reimbursement, or in kind
benefits to be provided, in any other calendar year, (iii) the reimbursement of an eligible expense
will be made no later than the last day of the calendar year following the year in which the
expense is incurred, and (iv) the right to reimbursement or in kind benefits is not subject to
liquidation or exchange for another benefit. Notwithstanding the foregoing, the Company shall have
no obligation to grant the Executive a gross-up or other make-whole compensation for any tax
imposed under Section 409A.
i. No Duty to Mitigate. The Executive shall not be required to mitigate the amount of
any cash payment or the value of any benefit provided for in this Agreement by seeking other
employment, by seeking benefits from another employer or other source, or by pursuing any other
type of mitigation. No payment or benefit provided for in this Agreement shall be offset or
reduced by the amount of any cash compensation or the value of any benefit provided to the
Executive in any subsequent employment or from any other source. Notwithstanding the foregoing, if
the Executive begins to participate in the group health plan of another employer which provides
benefits substantially similar to those provided by the Company pursuant to this Section 5, then
the Executive shall promptly notify the Company and the Company may discontinue the health plan
participation being provided the Executive pursuant to this Section 5.
6. Code Section 4999 Excise Tax.
a. Anything in this Agreement to the contrary notwithstanding, in the event that it shall be
determined that any payment or benefit (including any accelerated vesting of options or other
equity awards) made or provided, or to be made or provided, by the Company (or any successor
thereto or affiliate thereof) to or for the benefit of Executive, whether pursuant to the terms of
this Agreement, any other agreement, plan, program or arrangement of or with Investment Holdings or
the Company (or any successor thereto or affiliate thereof) or otherwise (a Payment),
will be subject to the excise tax imposed by Section 4999 of the Code or any comparable tax imposed
by any replacement or successor provision of United States tax law,
-9-
then the Company will apply a limitation on the Payment amount as set forth in clause (i)
below (a Parachute Cap), unless the provisions of clause (ii) below apply.
i. If clause (ii) does not apply, the aggregate present value of the Payments under Sections
5(e), (f) or (g) of this Agreement (Agreement Payments) shall be reduced (but not below
zero) to the Reduced Amount. The Reduced Amount shall be an amount expressed in present
value which maximizes the aggregate present value of Agreement Payments without causing any Payment
to be subject to the limitation of deduction under Section 280G of the Code or the imposition of
any excise tax under Section 4999 of the Code. For purposes of this clause (i), present value
shall be determined in accordance with Section 280G(d)(4) of the Code. In the event that it is
determined that the amount of the Agreement Payments will be reduced in accordance with this clause
(i), the Agreement Payments shall be reduced on a nondiscretionary basis in such a way as to
minimize the reduction in the economic value deliverable to the Executive. In applying this
principle, the reduction shall be made in a manner consistent with the requirements of Section 409A
of the Code, and where more than one payment has the same value for this purpose and they are
payable at different times, they will be reduced on a pro-rata basis.
ii. It is the intention of the parties that the Parachute Cap apply only if application of the
Parachute Cap is beneficial to the Executive. Therefore, if the net amount that would be retained
by the Executive under this Agreement without the Parachute Cap, after payment of any excise tax
under Section 4999 of the Code, exceeds the net amount that would be retained by the Executive with
the Parachute Cap, then the Company shall not apply the Parachute Cap to the Executives payments.
b. All determinations to be made under this Section 6 shall be made by the nationally
recognized independent public accounting firm used by the Company immediately prior to the Change
in Control (Accounting Firm), which Accounting Firm shall provide its determinations and
any supporting calculations to the Company and the Executive within ten days of the termination
date. Any such determination by the Accounting Firm shall be binding upon the Company and the
Executive.
c. All of the fees and expenses of the Accounting Firm in performing the determinations
referred to in this Section 6 shall be borne solely by the Company.
7. Confidential Information.
a. The Executive acknowledges that the Company continually develops Confidential Information
(as defined in Section 13); that the Executive may develop Confidential Information for the
Company; and that the Executive may learn of Confidential Information during the course of
employment. The Executive shall not disclose to any Person or use, other than as required by
applicable law or for the performance of his duties and responsibilities to the Company, any
Confidential Information obtained by the Executive incident to his employment with the Company.
The Executive understands that this restriction shall continue to apply after his employment
terminates, regardless of the reason for such termination.
-10-
b. All documents, records, tapes and other media of every kind and description containing
Confidential Information, and all copies, (the Documents), whether or not prepared by the
Executive, shall be the sole and exclusive property of the Company. The Executive shall return to
the Company no later than the time his employment terminates all Documents then in the Executives
possession or control.
8. Assignment of Rights to Intellectual Property. The Executive shall promptly and
fully disclose all Intellectual Property (as defined in Section 13) to the Company. The Executive
hereby assigns and agrees to assign to the Company (or as otherwise directed by the Company) the
Executives full right, title and interest in and to all Intellectual Property. The Executive
agrees to execute any and all applications for domestic and foreign patents, copyrights or other
proprietary rights and to do such other acts (including without limitation the execution and
delivery of instruments of further assurance or confirmation) requested by the Company to assign
the Intellectual Property to the Company and to permit the Company to enforce any patents,
copyrights or other proprietary rights to the Intellectual Property. All copyrightable works that
the Executive creates in the performance of his duties hereunder shall be considered work made for
hire.
9. Restricted Activities.
a. While the Executive is employed by the Company and, except as otherwise provided in Section
9(b) and Section 9(c) below, for the period of two (2) years following the termination of the
Executives employment for any reason (including retirement) or, in the event of a termination for
which the Executive is entitled to severance pay calculated with a Severance Multiplier of 1.5, for
a period of eighteen (18) months following such termination, (as applicable, the
Non-Competition Period), subject to the Companys compliance with the post-employment
terms of this Agreement, the Executive will not engage or participate in, directly or indirectly,
alone or as principal, agent, employee, employer, consultant, investor or partner of, or assist in
the management of, or provide advisory or other services to, or own any stock or any other
ownership interest in, or make any financial investment in, any business or entity which is
Competitive with the Company (as defined below); provided, however, that it shall not be a
violation of the foregoing (i) for the Executive to own not more than two percent (2%) of the
outstanding securities of any class of securities listed on a national exchange or inter-dealer
quotation system or (ii) following termination of the Executives employment with the Company, for
the Executive to provide services to any business or entity that has a line of business, division,
subsidiary or other affiliate that is Competitive with the Company if the Executive is not employed
in such line of business or division or by such subsidiary or other affiliate and is not involved,
directly or indirectly, in the management, supervision or operations of such line of business,
division, subsidiary or affiliate that is Competitive with the Company. For purposes of this
Agreement, a business or entity shall be considered Competitive with the Company if such
business or entity competes in any respect with a business in which Investment Holdings and its
subsidiaries were engaged (including, specifically, services related to financial advisors), or any
material products and/or services that Investment Holdings or its subsidiaries were actively
developing or designing as of the date the Executives employment with the Company terminated,
provided that, prior to such termination, the Executive knew of
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such other business or such material product or such service under active development or
design. In addition, during the Non-Competition Period, the Executive will not (other than when
acting on behalf of the Company during the Executives employment) (i) solicit, or attempt to
solicit, any existing or prospective customers, targets, suppliers, financial advisors, officers or
employees of Investment Holdings or any of its subsidiaries to terminate their relationship with
Investment Holdings or any of its subsidiaries or (ii) divert, or attempt to divert, from
Investment Holdings or any of its subsidiaries any of its customers, prospective customers,
targets, suppliers, financial advisors, officers or employees or (iii) hire or engage or otherwise
contract with, or attempt to hire or engage or otherwise contract with, any officers, employees or
financial advisors of Investment Holdings or any of its subsidiaries, whether to be an employee,
officer, agent, consultant or independent contractor; provided, however, that nothing in this
Section 9(a) shall be deemed to prohibit the Executive from soliciting a customer,
prospective customer, target or supplier of Investment Holdings or any of its subsidiaries during
the Non-Competition Period if such action relates solely to a business which is not Competitive
with the Company. A customer, prospective customer, target, supplier, financial advisor, officer
or employee of Investment Holdings or any of its subsidiaries is any one who was such within the
preceding twelve months, excluding, however, any prospective customer or target which was solicited
solely by mass mailing or general advertisement during that period and any officer, employee or
financial advisor whose relationship with Investment Holdings or the Company was terminated by
Investment Holdings or the Company or any of their subsidiaries other than for circumstances that
would constitute cause (within the meaning of any such definition applicable to such officer,
employee or financial advisor, or, if no such definition is applicable, cause as defined in the
existing equity compensation plan maintained with respect to employees of the Company) and provided
further, with respect to Investment Holdings subsidiaries, that the Executive during his
employment with the Company was introduced to, or otherwise knew of or should have known of the
relationship of, such customer, prospective customer, target, supplier, financial advisor or
employee to the subsidiary.
b. Notwithstanding anything herein to the contrary and to the extent that the Investment
Holdings Compensation Committee, in its sole discretion, does not waive the obligation under this
Section 9(b), in the event that the Executive terminates his employment hereunder without
Good Reason, the Executive shall, at the Companys election, which election shall be provided to
the Executive prior to the date of termination, (1) receive the payments and benefits specified in
Section 5(e) with a Severance Multiplier of one (1) and be subject to a Non-Competition Period
which shall continue for two (2) years following the date of termination of the Executives
employment, or (2) receive no payments and benefits specified in Section 5(e) and be subject to a
Non-Competition Period which shall continue for one (1) year following the date of termination of
the Executives employment.
c. The Executive may seek a waiver from the Company of his obligations pursuant to this
Section 9, which waiver shall not be unreasonably withheld or delayed. As of the date of the grant
of such waiver by the Company, all payments and benefits under the applicable provision of Section
5 shall cease other than the payment of Final Compensation, excluding the payments and benefits
under clause (v) of the definition thereof which shall cease
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or be reimbursed by the Executive on a pro-rata basis for the waived time period of the
Non-Competition Period, as applicable) or Accrued Compensation, as applicable).
10. Reasonableness; Enforcement. The Company and the Executive acknowledge that the
time, scope, geographic area and other provisions of Sections 7, 8 and 9 (the Covenants)
have been specifically negotiated by sophisticated parties and agree that all such provisions are
reasonable under the circumstances of the activities contemplated by this Agreement. The Executive
acknowledges and agrees that the terms of the Covenants: (i) are reasonable in light of all of the
circumstances, (ii) are sufficiently limited to protect the legitimate interests of the Company,
(iii) impose no undue hardship, (iv) are not injurious to the public, and (v) are essential to
protect the business and goodwill of the Company and its affiliates and are a material term of this
Agreement which has induced the Company to agree to provide for the payments and benefits described
in this Agreement. The Executive further acknowledges and agrees that the Executives breach of
the Covenants will cause the Company and Investment Holdings irreparable harm, which cannot be
adequately compensated by money damages. The Executive and the Company agree that, in the event of
an actual or threatened breach of Section 9, the Company shall be entitled to injunctive relief for
any actual or threatened violation of any of the Covenants in addition to any other remedies it may
have at law or equity, including money damages.
11. Survival. Provisions of this Agreement shall survive any termination if so
provided herein or if necessary or desirable to accomplish the purposes of other surviving
provisions, including without limitation the obligations of the Executive under Sections 7, 8, 9
and 10 hereof and the obligations of the Company pursuant to Section 5 hereof.
12. Conflicting Agreements. The Executive hereby represents and warrants that the
execution of this Agreement and the performance of his obligations hereunder will not breach or be
in conflict with any other agreement to which the Executive is a party or is bound and that the
Executive is not now subject to any covenants against competition or similar covenants or any court
order or other legal obligation that would affect the performance of his obligations hereunder.
The Executive will not disclose to or use on behalf of the Company any proprietary information of a
third party without such partys consent.
13. Definitions. Words or phrases which are initially capitalized or are within
quotation marks shall have the meanings provided in this Section and as provided elsewhere herein.
For purposes of this Agreement, the following definitions apply:
a. Change in Control means the consummation, after the date of Closing, of (i) any
transaction or series of related transactions, whether or not Investment Holdings is a party
thereto, after giving effect to which in excess of fifty percent (50%) of Investment Holdings
voting power is owned directly, or indirectly through one or more entities, by any person and its
affiliates or associates (as such terms are defined in the Exchange Act Rules) or any group
(as defined in the Exchange Act Rules) other than, in each case, Investment Holdings or
an affiliate of Investment Holdings immediately following the Closing, or (ii) a sale or other
disposition of all or substantially all of the consolidated assets of Investment Holdings (each of
the foregoing, a Business Combination), provided that, notwithstanding the foregoing,
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a Change in Control shall not be deemed to occur as a result of a Business Combination
following which the individuals or entities who were beneficial owners of the outstanding
securities entitled to vote generally in the election of directors of Investment Holdings
immediately prior to such Business Combination beneficially own, directly or indirectly, 50% or
more of the outstanding securities entitled to vote generally in the election of directors of the
resulting, surviving or acquiring corporation in such transaction.
b. Confidential Information means any confidential proprietary information relating
to the business of Investment Holdings, the Company or their affiliates or their respective
customers or clients which has an economic value to Investment Holdings, the Company or their
affiliates. Confidential Information does not include any information that enters the public
domain other than through a breach by the Executive of his duties to Investment Holdings or the
Company hereunder or which is obtained by the Executive from a third party which has no obligation
of confidentiality to Investment Holdings or the Company.
c. Intellectual Property means any invention, formula, process, discovery,
development, design, innovation or improvement (whether or not patentable or registrable under
copyright statutes) made, conceived, or first actually reduced to practice by the Executive solely
or jointly with others, during his employment by the Company; provided, however, that, as used in
this Agreement, the term Intellectual Property shall not apply to any invention that the
Executive develops on his own time, without using the equipment, supplies, facilities or trade
secret information of Investment Holdings or the Company, unless such invention relates at the time
of conception or reduction to practice of the invention (a) to the business of Investment Holdings
or the Company, (b) to the actual or demonstrably anticipated research or development of Investment
Holdings or the Company or (c) results from any work performed by the Executive for Investment
Holdings or the Company.
d. Person means an individual, a corporation, a limited liability company, an
association, a partnership, an estate, a trust and any other entity or organization, other than the
Company or any of its subsidiaries.
14. Withholding. All payments or other benefits, to the extent required by law, made
by the Company under this Agreement shall be reduced by any tax or other amounts required to be
withheld by the Company under applicable law.
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15. Legal Fees. The Company shall at its election either pay directly the joint legal
expenses incurred by the Executive and the other executives of the Company with whom the Company is
entering into employment agreements effective as of the Closing in the negotiation and preparation
of their employment agreements or reimburse the Executive for his portion of such joint legal
expenses. In addition, all reasonable costs and expenses that are reasonably documented (including
court and arbitration costs and reasonable legal fees and expenses that reflect common practice
with respect to the matters involved) incurred by the Executive as a result of any claim, action or
proceeding arising out of this Agreement or the contesting, disputing or enforcing of any
provision, right or obligation under this Agreement shall be paid, or reimbursed to the Executive,
if, in the final resolution of the dispute, the Executive either recovers material monetary damages
(in cash or in kind, such as benefits) or is the prevailing party on a material non-monetary claim
(such as a dispute regarding a restrictive covenant).
16. Dispute Resolution.
a. Except as provided in Section 10, any dispute, controversy or claim between the parties
arising out of this Agreement or the Executives employment with the Company or termination of
employment shall be settled by arbitration conducted in the city in which the Executive is located
administered by the American Arbitration Association under its Employment Dispute Resolution Rules
then in effect (except as modified by b. below).
b. In the event that a party requests arbitration (the Requesting Party), it shall
serve upon the other party (the Non-Requesting Party), within one hundred and eighty
(180) days of the date the Requesting Party knew, or reasonably should have known, of the facts on
which the controversy, dispute or claim is based, a written demand for arbitration stating the
substance of the controversy, dispute or claim, the contention of the party requesting arbitration
and the name and address of the arbitrator appointed by it. The Non-Requesting Party, within sixty
(60) days of such demand, shall accept the arbitrator or appoint a second arbitrator and notify the
other party of the name and address of this second arbitrator so selected, in which case the two
arbitrators shall appoint a third who shall be the sole arbitrator to hear the case. In the event
that the two arbitrators fail in any instance to appoint a third arbitrator within thirty (30) days
of the appointment of the second arbitrator, either arbitrator or any party to the arbitration may
apply to the American Arbitration Association for appointment of the third arbitrator in accordance
with the Rules, which arbitrator shall be the sole arbitrator to hear the case. Should the
Non-Requesting Party (upon whom a demand for arbitration has been served) fail or refuse to accept
the arbitrator appointed by the other party or to appoint an arbitrator within sixty (60) days, the
single arbitrator shall have the right to decide alone, and such arbitrators decision or award
shall be final and binding upon the parties.
c. The decision of the arbitrator shall be in writing; shall set forth the basis for the
decision; and shall be rendered within thirty (30) days following the hearing. The decision of the
arbitrator shall be final and binding upon the parties and may be enforced and executed upon in any
court having jurisdiction over the party against whom enforcement of such award is sought.
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17. No Withholding of Undisputed Payments. During the pendency of any dispute or
controversy, the Company shall not withhold any payments or benefits due to the Executive, whether
under this Agreement or otherwise, except for the specific portion of any payment or benefit that
is the subject of a bona fide dispute between the parties.
18. Assignment. Neither the Company nor the Executive may make any assignment of this
Agreement or any interest herein, by operation of law or otherwise, without the prior written
consent of the other. This Agreement shall inure to the benefit of and be binding upon the Company
and the Executive, their respective successors, executors, administrators, heirs and permitted
assigns.
19. Severability. If any portion or provision of this Agreement shall to any extent
be declared illegal or unenforceable by a court of competent jurisdiction, then the remainder of
this Agreement, or the application of such portion or provision in circumstances other than those
as to which it is so declared illegal or unenforceable, shall not be affected thereby, and each
portion and provision of this Agreement shall be valid and enforceable to the fullest extent
permitted by law.
20. Waiver. No waiver of any provision hereof shall be effective unless made in
writing and signed by the waiving party. The failure of either party to require the performance of
any term or obligation of this Agreement, or the waiver by either party of any breach of this
Agreement, shall not prevent any subsequent enforcement of such term or obligation or be deemed a
waiver of any subsequent breach.
21. Notices. Any and all notices, requests, demands and other communications provided
for by this Agreement shall be in writing and shall be effective when delivered in person or the
next business day following consignment for overnight delivery to a reputable national overnight
courier service or five business days following deposit in the United States mail, postage prepaid,
registered or certified, and addressed to the Executive at his last known address on the books of
the Company or, in the case of the Company, at its principal place of business, attention of the
Chairman of the Investment Holdings Board, or to such other address as a party may specify by
notice to the other actually received. Copies of any notices, requests, demands and other
communication to the Company by the Executive shall be sent by the to the investors at the
following address: c/o Texas Pacific Group, 301 Commerce Street, Suite 3300, Fort Worth, TX 76102,
Attn: Richard Schifter (Fax: 415-743-1501) and c/o Hellman & Friedman LLC, One Maritime Plaza,
12th Floor, San Francisco, CA 94111, Attn: Allen Thorpe (Fax: 415-835-5408).
22. Entire Agreement. This Agreement constitutes the entire agreement between the
parties and supersedes all prior communications, agreements and understandings, written or oral,
with respect to the terms and conditions of the Executives employment including, without
limitation, the applicable Executive Summary of Proposed Terms.
23. Amendment. This Agreement may be amended or modified only by a written instrument
signed by the Executive and by an authorized representative of the Company subject to prior
approval by the Investment Holdings Board.
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24. Headings. The headings and captions in this Agreement are for convenience only
and in no way define or describe the scope or content of any provision of this Agreement.
25. Counterparts. This Agreement may be executed in two or more counterparts, each of
which shall be an original and all of which together shall constitute one and the same instrument.
26. Governing Law. This is a Massachusetts contract and shall be construed and
enforced under and be governed in all respects by the laws of the Commonwealth of Massachusetts,
without regard to the conflict of laws principles thereof.
[Remainder of page intentionally left blank]
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IN WITNESS WHEREOF, this Agreement has been executed as a sealed instrument by the Company, by
its duly authorized representative, and by the Executive, as of the date first above written.
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THE EXECUTIVE |
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THE COMPANY |
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By:
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/s/ William E. Dwyer III |
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By: |
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/s/ Stephanie L. Brown |
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Name:
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William E. Dwyer III
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Name: Stephanie L. Brown |
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Title: Secretary |
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HOLDINGS |
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By: |
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/s/ Stephanie L. Brown |
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Name: Stephanie L. Brown |
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Title: Secretary |
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INVESTMENT HOLDINGS (with respect to
Section 4(c) only)
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By: |
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/s/ Mark S. Casady |
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Name: Mark S. Casady |
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Title: Chief Executive Officer |
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Schedule 1
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Boards and Committees |
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Financial Services Institute
Securities Industry and Financial Markets Association (and the Private Client Services
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Base Salary |
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2010 Target Bonus |
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Target Bonus |
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Opportunity to Earn Bonus Compensation in Excess of Target Bonus: The amount of the
Executives bonus opportunity above Target Bonus (the Outperformance Bonus), and the
performance necessary to earn the Outperformance Bonus, shall be determined by the
Investment Holdings Compensation Committee on an annual basis after consultation with, and
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Annual Vacation |
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exv10w5
Exhibit 10.5
AGREEMENT
THIS EXECUTIVE
EMPLOYMENT AGREEMENT (this Agreement) is entered
into this 23rd day of
July, 2010, by and between Robert J. Moore (the Executive), LPL Financial Corporation
(the Company), LPL Holdings, Inc. (Holdings) and LPL Investment Holdings Inc.
(Investment Holdings) (with respect to Section 4(c) only), to be effective upon the
Closing (as defined below).
WHEREAS, Executive is currently employed by the Company; and
WHEREAS, the Company and the Executive desire to enter into this Agreement to set forth the
terms of the Executives continued employment with the Company, effective as of the closing of the
2010 initial public offering of common stock by Investment Holdings (the Closing).
NOW, THEREFORE, in consideration of the foregoing premises and the mutual promises, terms,
provisions and conditions set forth in this Agreement, the parties hereby agree:
1. Employment. Subject to the terms and conditions set forth in this Agreement, the
Company hereby agrees to continue to employ the Executive, and the Executive hereby accepts the
terms of continued employment with the Company.
2. Term. Subject to earlier termination as hereafter provided, the Executives
employment hereunder shall have an original term of three (3) years commencing on the date of the
Closing (the Initial Term) and shall automatically be renewed thereafter for successive
terms of one year each, unless the Company provides notice to the Executive at least ninety (90)
days prior to the expiration of the Initial Term or any renewal term that the Agreement is not to
be renewed, in which event this Agreement and the Executives employment hereunder shall terminate
at the expiration of the then-current term. The term of this Agreement, as from time to time
renewed, is hereafter referred to as the term of this Agreement or the term hereof. In the
event that the Closing does not occur, this Agreement shall be void ab initio and of no force or
effect.
3. Capacity and Performance.
a. During the term hereof, the Executive shall serve the Company as its Chief Financial
Officer, reporting to the Chief Executive Officer of the Company (the CEO).
b. During the term hereof, the Executive shall be employed by the Company on a full-time basis
and shall have such duties, authority and responsibilities as are commensurate with his position
and such other duties, consistent with his position, as may be designated from time to time by the
Board of Directors of Investment Holdings (the Investment Holdings Board).
c. During the term hereof, the Executive shall devote his full business time and his best
efforts to the discharge of his duties and responsibilities hereunder; provided,
however, that, subject to Section 10 hereof, the foregoing shall not be construed to
prevent the Executive from attending to personal investments and community and charitable service,
provided that such activities do not unreasonably interfere with the performance of Executives
duties to the Company. In addition, the Executive may serve on boards of directors and similar
governing bodies, and committees thereof, subject to the approval of the Investment Holdings Board,
which approval shall not be unreasonably withheld, and subject to Section 10 hereof.
Notwithstanding the foregoing, the Executive may continue to serve on those boards and committees
on which the Executive was serving at the time of the Closing, which boards and committees are
listed on Schedule 1(A) of this Agreement.
4. Compensation and Benefits. As compensation for all services performed by the
Executive during the term hereof:
a. Base Salary. During the term hereof, the Company shall pay the Executive a base
salary at the rate per annum as set forth on Schedule 1(B) of this Agreement, payable in
accordance with the regular payroll practices of the Company for its executives and subject to
increase from time to time by the Investment Holdings Board (or its compensation committee, the
Investment Holdings Compensation Committee). The Executives base salary may only be
decreased with the approval of the CEO of the Company and then only in an across-the-board salary
reduction in which all executives and other employees are subject to an equal percentage reduction.
The Executives base salary, as from time to time increased or decreased in accordance with
Agreement, is hereafter referred to as the Base Salary.
b. Bonus Compensation.
i. The Executive shall be eligible to receive a full bonus, without pro-ration, for calendar
year 2010, determined in accordance with the Companys employee cash bonus plan as in effect
immediately prior to the Closing, as set forth in Schedule 1(C) hereto.
ii. Each calendar year thereafter during the term hereof, the Executive shall be eligible to
participate in the cash bonus plan or other incentive compensation plan in effect for employees of
the Company generally, under which, consistent with the requirements for performance-based
compensation under Section 162(m) of the Internal Revenue Code of 1986, as amended (the
Code), the plan elements described in clauses (A) and (C) below shall be not be decreased
from those applicable to the Executive under the bonus plan in effect immediately prior to the
Closing, and the plan element described in clause (B) below shall be substantially consistent with
past practice: (A) the target bonus, (B) the level of performance required to reach target and (C)
the opportunity to earn bonus compensation in excess of target, with respect to clauses (A) and (C)
as set forth on Schedule 1(D) hereto. Neither the Executives target bonus nor the
opportunity to earn bonus compensation in excess of target may be subject to an adverse change and
the level of performance required to reach target may not be materially adversely changed except
with the approval of the CEO of the Company and then only in an across-the-board change which
affects equally all employees participating in the bonus plan. Such cash bonus shall be in
addition to the Base Salary. The Executives target bonus under the
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executive cash bonus plan is referred to hereafter as the Target Bonus. In
clarification of the foregoing, the actual bonus earned by the Executive for any given calendar
year, may be below, at or above the Target Bonus, based on actual performance. Subject to any
effective deferral election made available and elected by the Executive, each bonus earned by the
Executive hereunder shall be paid no later than March 15 of the calendar year following the end of
the calendar year for which the bonus was earned.
c. Equity Compensation. The Executive shall be eligible to participate in all equity
compensation plans and programs applicable to senior executives of the Company and shall receive
such grants as may be provided from time to time by Investment Holdings in the discretion of the
Investment Holdings Board or the Investment Holdings Compensation Committee. Each grant will be
subject to the terms and conditions of the applicable Investment Holdings equity compensation plan
and grant agreements which shall provide in relevant part that: (i) upon the occurrence of a
Change in Control occurring after the effective date of this Agreement, all outstanding equity
compensation awards held by the Executive will become fully vested and/or exercisable, as the case
may be, as of the date of the Change in Control; (ii) upon a termination of the Executives
employment for any reason, the portion of any equity compensation award which has not vested shall
terminate; (iii) in the event the Executives employment terminates for any reason other than for
Cause, death or disability, the Executive may exercise any vested portion of any stock option or
stock appreciation right (collectively, Stock Right) held by him on the date of
termination provided that he does so prior to the earlier of (A) ninety (90) days following
termination of employment and (B) the expiration of the scheduled term of the Stock Right; (iv) in
the event the Executives employment is terminated due to death or disability (as defined in
Section 5(b)), then the Executive, or, as applicable in the event of death, his beneficiary or
estate, may exercise any vested portion of any Stock Right held by the Executive on the date
employment terminates for the shorter of (A) the period of twelve (12) months following the
termination date and (B) with respect to each Stock Right individually, the expiration of the
scheduled term of such Stock Right; and (v) upon a termination of the Executives employment by the
Company for Cause, all equity compensation awards shall be forfeited immediately.
d. Vacations. During the term hereof, the Executive shall be eligible for the number
of weeks of vacation per year set forth on Schedule 1(E) to this Agreement, subject to the
vacation policies of the Company generally applicable to its executives, as in effect from time to
time, provided that the Executive shall not be barred from taking up to the maximum number of weeks
of vacation in any given year solely by reason of the Executives failure to work for a specified
period of time during such year prior to the time of such vacation.
e. Other Benefits. During the term hereof, the Executive shall be entitled to
participate in any and all employee benefit plans from time to time in effect for executives and/or
employees of the Company generally, provided that the Executive shall receive benefits
pursuant to plans, programs and policies (other than any equity-based compensation plan or program)
that are comparable, and no less favorable in the aggregate, to those benefits offered to him
immediately prior to the Closing.
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f. Business Expenses. During the term hereof, the Company shall pay or reimburse the
Executive for all reasonable business expenses incurred or paid by the Executive in the performance
of his duties and responsibilities hereunder, subject to such reasonable substantiation and
documentation as the Company may require and otherwise consistent with the Companys policies
generally applicable to its executives, as in effect from time to time.
5. Termination of Employment and Severance Benefits. Notwithstanding the provisions
of Section 2 hereof, the Executives employment hereunder shall terminate prior to the expiration
of the term hereof under the circumstances specified below. Subject to the execution, delivery and
nonrevocation by the Executive, the Executives beneficiary, or the representative of the
Executives estate, as applicable, of a release of claims agreement (the Release) in the
form provided by the Company within the time period specified by the Company, which shall not
exceed 60 days following the date of termination, and provided that the Executive has complied in
all material respects with the terms and conditions of the Release, the Company shall provide the
Executive with the payments and benefits set forth below:
a. Termination due to Death. In the event of the Executives death during the term
hereof, the Executives employment hereunder shall immediately and automatically terminate. In such
event, the Company shall pay to the Executives designated beneficiary or, if no beneficiary has
been designated by the Executive, to his estate, Final Compensation which shall include
all of the following: (i) the Base Salary earned but not paid through the date of termination, (ii)
pay for any vacation time earned but not used through the date of termination, (iii) payment of any
annual bonus earned but not paid for the year preceding that in which the date of termination
occurs, (iv) reimbursement for any business expenses incurred by the Executive and reimbursable
pursuant to Section 4(f) hereof but un-reimbursed on the date of termination (clauses (i), (ii),
(iii) and (iv), collectively, the Termination Entitlements), (v) a bonus for the year in
which the date of termination occurs determined by multiplying the Target Bonus for that year by a
fraction, the numerator of which is the number of days the Executive was employed during the year
in which the date of termination occurs, through the date of termination, and the denominator of
which is 365 (Pro-Rated Portion of Target Bonus), (vi) a single lump-sum payment equal to
the premium (including the additional amount (if any) charged for administrative costs as permitted
by the Federal law known as COBRA) of continued health and dental plan participation under COBRA
for the Executive (in the event of a termination other than as a result of death) and for the
Executives qualified beneficiaries (as that term is defined under COBRA) for the one (1) year
period immediately following the date of termination (the Premium Payment) and, the
Company shall have no further obligation to the Executive hereunder, other than (A) obligations due
to the Executive as of the date of termination but not yet satisfied, such as, by way of example
but not limitation, an uncorrected error in Base Salary or an outstanding claim under one of the
welfare plans or an uncorrected error in the Executives retirement plan account, and (B)
obligations which, whether or not due to the Executive as of the date of termination, survive
termination, such as, by way of example but not limitation, rights to exercise vested stock options
(all of the foregoing, under clauses (A) and (B) hereof, the Surviving Company
Obligations).
b. Termination due to Disability. The Company may terminate the Executives
employment hereunder, upon notice to the Executive, in the event that the Executive
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becomes disabled through any illness, injury, accident or condition of either a physical or
psychological nature and, as a result, is unable to perform substantially all of his duties and
responsibilities hereunder, notwithstanding the provision of any reasonable accommodation, for any
period of six (6) consecutive months. During any period in which the Executive is disabled but
prior to the Executives date of termination, the Executive shall continue to receive all
compensation and benefits under Section 4 hereof while his employment continues. If any question
shall arise as to whether during any period the Executive is disabled through any illness, injury,
accident or condition of either a physical or psychological nature so as to be unable to perform
substantially all of his duties and responsibilities hereunder, the Executive may, and at the
request of the Company shall, submit to a medical examination by a physician selected by the
Company to whom the Executive has no reasonable objection to determine whether the Executive is so
disabled and such determination shall for the purposes of this Agreement be conclusive of the
issue. In the event of termination by the Company due to the Executives disability, the Company
shall provide the Executive with the Final Compensation and the Company shall have no further
obligation to the Executive hereunder, other than the Surviving Company Obligations.
Notwithstanding any provision herein to the contrary, if the Executive is entitled to a Premium
Payment, the Premium Payment shall be paid in a lump sum on the first business day that is the
earlier of (i) six (6) months following the date of termination, or (ii) at such time as otherwise
permitted by law that would not result in such additional taxation and penalties under Section
409A.
c. Retirement. The Executive may elect to retire voluntarily on thirty (30) days
notice to the Company, provided that the Executive is then at least 65 years of age. In
such event, the Company shall pay to the Executive the Final Compensation (other than the benefits
under clause (v) of the definition thereof (the Accrued Compensation)) and the Company
shall have no further obligation to the Executive hereunder, other than the Surviving Company
Obligations. Notwithstanding any provision herein to the contrary, if the Executive is entitled to
a Premium Payment, the Premium Payment shall be paid in a lump sum on the first business day that
is the earlier of (i) six (6) months following the date of termination, or (ii) at such time as
otherwise permitted by law that would not result in such additional taxation and penalties under
Section 409A.
d. Termination by the Company for Cause. The Company may terminate the Executives
employment at any time for Cause, which shall mean only (i) the intentional failure to
perform (excluding by reason of disability) or gross negligence or willful misconduct in the
performance of regular duties or other breach of fiduciary duty or material breach of this
Agreement which remains uncured after thirty (30) days notice specifying in reasonable detail the
nature of the failure, negligence, misconduct or breach and what is required of the Executive to
cure, (ii) conviction or plea of nolo contendere to a felony or (iii) fraud or embezzlement or
other dishonesty which has a material adverse effect on the Company. Before terminating the
Executive for Cause, (A) at least two-thirds (2/3) of the members of the Investment Holdings Board
(excluding the Executive, if a Board member) must conclude in good faith that, in their view, one
of the events described in subsection (i), (ii) or (iii) above has occurred and (B) such Board
determination must be made at a duly convened meeting of the Investment Holdings Board (X) of which
the Executive received written notice at least ten (10) days in advance, which notice shall have
set forth in reasonable detail the facts and circumstances claimed to
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provide a basis for the Companys belief that one of the events described in subsection (i),
(ii) or (iii) above occurred and, in the case of an event under subsection (i), remains uncured at
the expiration of the notice period, and (Y) at which the Executive had a reasonable opportunity to
make a statement and answer the allegations against the Executive. In the event of the termination
of the Executives employment by the Company for Cause, the Company shall pay to the Executive the
Termination Entitlements and the Company shall have no further obligation to the Executive
hereunder, other than the Surviving Company Obligations. The parties acknowledge and agree that
this definition of Cause shall be applicable and controlling with respect to the grant agreements
executed by the Executive under any equity compensation plan or arrangement sponsored by Investment
Holdings or the Company.
e. Termination by the Company other than for Cause. The Company may terminate the
Executives employment hereunder other than for Cause at any time upon ten (10) days notice to the
Executive. Termination by the Company on or following expiration of the term hereof (other than a
termination due to the Executives death or disability or under circumstances that would constitute
Cause if this Agreement were still in effect) will be treated as a termination other than for
Cause under this Section 5(e). In the event of termination under this Section 5(e), the Executive
shall be entitled to receive (i) the Accrued Compensation (other than the Premium Payment), (ii) a
bonus for the year in which the date of termination occurs based on actual performance determined
by multiplying the bonus that would have been earned by the Executive had the Executive remained in
service until the date required to earn a full bonus for that year by a fraction, the numerator of
which is the number of days the Executive was employed during the year in which the date of
termination occurs, through the date of termination, and the denominator of which is 365, provided
that if the bonus amount exceeds the Pro-Rated Portion of Target Bonus, such bonus amount shall be
limited to the Pro-Rated Portion of the Target Bonus and (iii) for two years following the date of
termination, continued participation of the Executive and his qualified beneficiaries, as
applicable, under the Companys group life, health, dental and vision plans in which the Executive
was participating immediately prior to the date of termination, subject to any premium
contributions required of the Executive at the rate in effect on the date of termination of his
employment, provided that, in the event that such health coverage continuation would be
discriminatory for federal income tax purposes, the Executive shall be permitted to purchase,
through the Company at COBRA rates if possible, and be reimbursed by the Company on a quarterly
basis in arrears for, equivalent health benefit coverage for the Executive and his qualified
beneficiaries. In addition, subject to Executives continued compliance with the provisions of
Sections 8 and 9 and subject to Executives execution, delivery and non-revocation of a Release,
Executive shall be entitled to receive twenty-five percent (25%) of the Covenant Payment (as
defined in Section 7). For the avoidance of doubt, if the Executive does not execute a Release or
if the Executive revokes an executed Release within the time period permitted by law, the Executive
shall not be entitled to any payments and benefits, other than the Termination Entitlements, set
forth in this Section 5. Subject to the foregoing and the provisions of Section 7 to the extent
applicable, the Company shall have no further obligation to the Executive hereunder other than the
Surviving Company Obligations.
f. Termination by the Executive for Good Reason. The Executive may terminate his
employment hereunder for Good Reason and, in that event, subject to Executives
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continued compliance with his obligations under Sections 8 and 9 hereof, shall be entitled to
all payments and benefits which the Executive would have been entitled to receive under Section
5(e) hereof as if termination had occurred thereunder. Good Reason shall mean only (A)
the occurrence, without the Executives express written consent (which may be withheld for any or
no reason) of any of the events or conditions described in the following subsections (i) through
(viii), provided that, except with respect to the event described in subsection (viii), the
Executive gives written notice to the Company of the occurrence of Good Reason within ninety (90)
days following the date on which the Executive first knew or reasonably should have known of such
occurrence and the Company shall not have fully corrected the situation within thirty (30) days
following such notice or (B) termination (for any or no reason) by written notice from the
Executive given within the thirty day period immediately following the twelve month anniversary of
a Change of Control occurring after the effective date of this Agreement. The following
occurrences shall constitute Good Reason for purposes of clause (A) of this Section 5(f): (i) a
reduction in the Executives Base Salary (other than as expressly permitted under Section 4(a)
hereof); (ii) an adverse change in the Executives bonus opportunity through reduction of the
Target Bonus or the maximum available bonus or a material adverse change in the goals or level of
performance required to achieve the Target Bonus (other than as expressly permitted under Section
4(b) hereof); (iii) a failure by the Company to pay or provide to the Executive any compensation or
benefits to which the Executive is entitled hereunder; (iv) (A) a material adverse change in the
Executives status, positions, titles, offices, duties and responsibilities, authorities or
reporting relationship from those in effect immediately before such change; (B) the assignment to
the Executive of any duties or responsibilities that are substantially inconsistent with the
Executives status, positions, titles, offices or responsibilities as in effect immediately before
such assignment; or (C) any removal of the Executive from or failure to reappoint or reelect the
Executive to any of such positions, titles or offices; provided that termination of the
Executives employment by the Company for Cause, by the Executive other than for Good Reason
pursuant to Section 5(g) hereof, or a termination as a result of the Executives death or
disability shall not be deemed to constitute or result in Good Reason under this subsection (iv);
(v) the Companys changing the location of the San Diego, California headquarter offices to a
location more than twenty-five (25) miles from the location of such offices, or the Companys
requiring the Executive to be based at a location other than the Companys San Diego headquarter
offices; provided that in all such cases the Company may require the Executive to travel on Company
business including being temporarily based at other Company locations as long as such travel is
reasonable and is not materially greater or different than the Executives travel requirements
before the Closing; (vi) any material breach by Investment Holdings or the Company of this
Agreement, any agreement by Investment Holdings or the Company to indemnify the Executive or any
other material written agreement between Investment Holdings or the Company and the Executive;
(vii) the failure by the Company to obtain, before completion of a Change in Control, an agreement
in writing from any successor or assign to assume and fully perform under this Agreement; or (viii)
the provision of notice by the Company of non-renewa
l of this Agreement. Subject to the foregoing
and the provisions of Section 7 to the extent applicable, the Company shall have no further
obligation to the Executive hereunder other than the Surviving Company Obligations.
g. By the Executive Other than for Good Reason. The Executive may terminate his
employment hereunder at any time upon thirty (30) days notice to the Company.
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In the event of termination by the Executive pursuant to this Section 5(g), the Investment
Holdings Board may elect to waive the period of notice, or any portion thereof, and, if the
Investment Holdings Board so elects, the Company will pay the Executive his Base Salary for the
notice period (or for any remaining portion of the period). The Company shall also provide the
Employee the Accrued Compensation and the Company shall have no further obligation to the Executive
hereunder, other than the Surviving Company Obligations.
h. Timing of Payments.
i. Except as otherwise provided in the Agreement, any payments due under Section 5(e), Section
5(f), Section 7 and Section 10(b), as applicable, shall be payable in equal monthly installments
over the number of years and/or portions thereof equal to the applicable Multiplier (as defined in
Section 7) and shall begin at the Companys next regular payday following the 60th day after the
effective date of termination provided that, if applicable, the Executive has executed and not
revoked the Release and is compliant in all material respects with the Release terms and
conditions. Notwithstanding the foregoing, the pro-rated annual bonus earned by the Executive for
the year in which the date of termination occurs as calculated in accordance with Section 5(e)
shall be paid in a lump sum no later than March 15 of the calendar year following the end of the
calendar year for which the bonus was earned.
ii. In the event that at the time the Executive employment terminates the Companys shares are
publicly traded (as defined in Section 409A of the Code) or the limitation on payments or provision
of benefits imposed by Section 409A(a)(2)(B) would otherwise be applicable, any amounts payable or
benefits provided under Section 5 that would have been payable during the six (6) months following
the date of termination of employment with the Company and would otherwise be considered deferred
compensation subject to the additional twenty percent (20%) tax imposed by Section 409A if paid
within such six (6) month period shall be paid, in a lump sum on the business day after the date
that is the earlier of (x) six (6) months following the date of termination, or (y) at such time as
otherwise permitted by law that would not result in such additional taxation and penalties under
Section 409A. In addition, the administration of the Release requirements described under this
Section 5 shall be implemented such that where the period for execution and non-revocation of a
release spans more than one calendar year, any payment contingent on the execution of the Release
shall not be made until the second calendar year, or later, as required by the applicable terms of
this Agreement and Section 409A. All reimbursements and in-kind benefits provided under this
Agreement shall be made or provided in accordance with the requirements of Section 409A including,
where applicable, the requirement that (i) any reimbursement is for expenses incurred during the
period of time specified in this Agreement, (ii) the amount of expenses eligible for reimbursement,
or in kind benefits provided, during a calendar year may not affect the expenses eligible for
reimbursement, or in kind benefits to be provided, in any other calendar year, (iii) the
reimbursement of an eligible expense will be made no later than the last day of the calendar year
following the year in which the expense is incurred, and (iv) the right to reimbursement or in kind
benefits is not subject to liquidation or exchange for another benefit. Notwithstanding the
foregoing, the Company shall have no obligation to grant the Executive a gross-up or other
make-whole compensation for any tax imposed under Section 409A.
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i. No Duty to Mitigate. The Executive shall not be required to mitigate the amount
of any cash payment or the value of any benefit provided for in this Agreement by seeking other
employment, by seeking benefits from another employer or other source, or by pursuing any other
type of mitigation. No payment or benefit provided for in this Agreement shall be offset or
reduced by the amount of any cash compensation or the value of any benefit provided to the
Executive in any subsequent employment or from any other source. Notwithstanding the foregoing,
if the Executive begins to participate in the group health plan of another employer which provides
benefits substantially similar to those provided by the Company pursuant to this Section 5, then
the Executive shall promptly notify the Company and the Company may discontinue the health plan
participation being provided the Executive pursuant to this Section 5.
6. Code Section 4999 Excise Tax.
a. Anything in this Agreement to the contrary notwithstanding, in the event that it shall be
determined that any payment or benefit (including any accelerated vesting of options or other
equity awards) made or provided, or to be made or provided, by the Company (or any successor
thereto or affiliate thereof) to or for the benefit of Executive, whether pursuant to the terms of
this Agreement, any other agreement, plan, program or arrangement of or with Investment Holdings or
the Company (or any successor thereto or affiliate thereof) or otherwise (a Payment),
will be subject to the excise tax imposed by Section 4999 of the Code or any comparable tax imposed
by any replacement or successor provision of United States tax law, then the Company will apply a
limitation on the Payment amount as set forth in clause (i) below (a Parachute Cap),
unless the provisions of clause (ii) below apply.
i. If clause (ii) does not apply, the aggregate present value of the Payments under Sections
5(e), (f) or (g) of this Agreement (Agreement Payments) shall be reduced (but not below
zero) to the Reduced Amount. The Reduced Amount shall be an amount expressed in present
value which maximizes the aggregate present value of Agreement Payments without causing any Payment
to be subject to the limitation of deduction under Section 280G of the Code or the imposition of
any excise tax under Section 4999 of the Code. For purposes of this clause (i), present value
shall be determined in accordance with Section 280G(d)(4) of the Code. In the event that it is
determined that the amount of the Agreement Payments will be reduced in accordance with this clause
(i), the Agreement Payments shall be reduced on a nondiscretionary basis in such a way as to
minimize the reduction in the economic value deliverable to the Executive. In applying this
principle, the reduction shall be made in a manner consistent with the requirements of Section 409A
of the Code, and where more than one payment has the same value for this purpose and they are
payable at different times, they will be reduced on a pro-rata basis.
ii. It is the intention of the parties that the Parachute Cap apply only if application of the
Parachute Cap is beneficial to the Executive. Therefore, if the net amount that would be retained
by the Executive under this Agreement without the Parachute Cap, after payment of any excise tax
under Section 4999 of the Code, exceeds the net amount that would be retained by the Executive with
the Parachute Cap, then the Company shall not apply the Parachute Cap to the Executives payments.
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b. All determinations to be made under this Section 6 shall be made by the nationally
recognized independent public accounting firm used by the Company immediately prior to the Change
in Control (Accounting Firm), which Accounting Firm shall provide its determinations and
any supporting calculations to the Company and the Executive within ten days of the termination
date. Any such determination by the Accounting Firm shall be binding upon the Company and the
Executive.
c. All of the fees and expenses of the Accounting Firm in performing the determinations
referred to in this Section 6 shall be borne solely by the Company.
7. Covenant Payments. In the event of a termination of the Executive under Section
5(e) or Section 5(f), in consideration for the covenants contained in Sections 8, 9 and 10 and
provided that Executive is not otherwise in breach of Sections 8, 9 and 10 hereof, the Company
shall pay to Executive an amount equal to seventy-five percent (75%) of the Covenant Payment, as
hereinafter defined, at the time and in the form provided in Section 5(h). For purposes of this
Agreement, the Covenant Payment is an amount equal to the applicable Multiplier
multiplied by the sum of the Executives Base Salary and Target Bonus for the year in which the
date of termination occurs (or if no such Target Bonus has been established for the Executive for
the year in which the date of termination occurs, the Target Bonus for the year immediately
preceding the year in which the date of termination occurs) and the Multiplier shall be
(A) two (2) in the event of termination under Section 5(e) or Section 5(f) (other than due to Good
Reason resulting solely from notice of non-renewal of the term of this Agreement), in each case,
prior to the expiration of the Initial Term; (B) one and one half (1.5) in the event of a
termination under Section 5(e) or Section 5(f), in each case, on or following the expiration of the
Initial Term; and (C) one and one half (1.5) in the event of a termination at any time during the
term of this Agreement for Good Reason resulting solely from the provision by the Company of notice
of non-renewal of the term of this Agreement.
8. Confidential Information.
a. The Executive acknowledges that the Company continually develops Confidential Information
(as defined in Section 14); that the Executive may develop Confidential Information for the
Company; and that the Executive may learn of Confidential Information during the course of
employment. The Executive shall not disclose to any Person or use, other than as required by
applicable law or for the performance of his duties and responsibilities to the Company, any
Confidential Information obtained by the Executive incident to his employment with the Company.
The Executive understands that this restriction shall continue to apply after his employment
terminates, regardless of the reason for such termination.
b. All documents, records, tapes and other media of every kind and description containing
Confidential Information, and all copies, (the Documents), whether or not prepared by the
Executive, shall be the sole and exclusive property of the Company. The Executive shall return to
the Company no later than the time his employment terminates all Documents then in the Executives
possession or control.
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9. Assignment of Rights to Intellectual Property.
a. The Executive shall promptly and fully disclose all Intellectual Property (as defined in
Section 14) to the Company. The Executive hereby assigns and agrees to assign to the Company (or
as otherwise directed by the Company) the Executives full right, title and interest in and to all
Intellectual Property. The Executive agrees to execute any and all applications for domestic and
foreign patents, copyrights or other proprietary rights and to do such other acts (including
without limitation the execution and delivery of instruments of further assurance or confirmation)
requested by the Company to assign the Intellectual Property to the Company and to permit the
Company to enforce any patents, copyrights or other proprietary rights to the Intellectual
Property. All copyrightable works that the Executive creates in the performance of his duties
hereunder shall be considered work made for hire.
b. Notwithstanding the foregoing, to the extent this Section 9 is subject to the provisions of
California Labor Code Sections 2870, 2871 and 2872, Executives obligation to assign Executives
right, title and interest throughout the world in and to all Intellectual Property does not apply
to any inventions, designs, developments, contributions to or improvements of any works of
authorship, inventions, intellectual property, materials, documents or other work product
(including, without limitation, research, reports, software, databases, systems, applications,
presentations, textual works, content or audiovisual materials) (Works) that Executive
developed entirely on his own time without using the Companys equipment, supplies, facilities, or
Confidential Information except for those Works developed or created either alone or with third
parties, at any time during Executives employment by the Company and within the scope of such
employment and/or with the use of any the Company resources that either: (i) relate to either (A)
the business of Investment Holdings or the Company at the time of conception or reduction to
practice of the Work, or actual or demonstrably anticipated research or development of Investment
Holdings or the Company; or (ii) result from any Work performed by Executive for the Company.
Executive shall disclose all Works to the Company, even if Executive does not believe that
Executive is required under this Agreement, or pursuant to California Labor Code Section 2870, to
assign his interest in such Works to the Company.
10. Restricted Activities.
a. While the Executive is employed by the Company and, except as otherwise provided in Section
10(b) and Section 10(c) below, for the period of two (2) years following the termination of the
Executives employment in the event of a termination for which the Executive is entitled to a
Covenant Payment pursuant to Section 7 with a Multiplier of 2, and for a period of eighteen (18)
months following the termination of the Executives employment in the event of a termination for
which the Executive is entitled to a Covenant Payment pursuant to Section 7 with a Multiplier of
1.5, (as applicable, the Restricted Period), subject to the Companys compliance with the
post-employment terms of this Agreement, the Executive will not engage or participate in, directly
or indirectly, alone or as principal, agent, employee, employer, consultant, investor or partner
of, or assist in the management of, or provide advisory or other services to, or own any stock or
any other ownership interest in, or make any financial investment in, any business or entity which
is Competitive with the Company (as defined below); provided, however, that it shall not be a
violation of the foregoing (i) for the Executive to own not more than two percent (2%) of the
outstanding securities of any class of securities listed on a national exchange or inter-dealer
quotation system or (ii) following termination of the
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Executives employment with the Company, for the Executive to provide services to any business
or entity that has a line of business, division, subsidiary or other affiliate that is Competitive
with the Company if the Executive is not employed in such line of business or division or by such
subsidiary or other affiliate and is not involved, directly or indirectly, in the management,
supervision or operations of such line of business, division, subsidiary or affiliate that is
Competitive with the Company. For purposes of this Agreement, a business or entity shall be
considered Competitive with the Company if such business or entity competes in any
respect with a business in which Investment Holdings and its subsidiaries were engaged (including,
specifically, services related to financial advisors), or any material products and/or services
that Investment Holdings or its subsidiaries were actively developing or designing as of the date
the Executives employment with the Company terminated, provided that, prior to such termination,
the Executive knew of such other business or such material product or such service under active
development or design. In addition, during the Restricted Period, the Executive will not (other
than when acting on behalf of the Company during the Executives employment) (i) solicit, or
attempt to solicit, any existing or prospective customers, targets, suppliers, financial advisors,
officers or employees of Investment Holdings or any of its subsidiaries to terminate their
relationship with Investment Holdings or any of its subsidiaries or (ii) divert, or attempt to
divert, from Investment Holdings or any of its subsidiaries any of its customers, prospective
customers, targets, suppliers, financial advisors, officers or employees or (iii) hire or engage or
otherwise contract with, or attempt to hire or engage or otherwise contract with, any officers,
employees or financial advisors of Investment Holdings or any of its subsidiaries, whether to be an
employee, officer, agent, consultant or independent contractor; provided, however, that nothing in
this Section 10(a) shall be deemed to prohibit the Executive from soliciting a customer,
prospective customer, target or supplier of Investment Holdings or any of its subsidiaries during
the Restricted Period if such action relates solely to a business which is not Competitive with the
Company. A customer, prospective customer, target, supplier, financial advisor, officer or
employee of Investment Holdings or any of its subsidiaries is any one who was such within the
preceding twelve months, excluding, however, any prospective customer or target which was solicited
solely by mass mailing or general advertisement during that period and any officer, employee or
financial advisor whose relationship with Investment Holdings or the Company was terminated by
Investment Holdings or the Company or any of their subsidiaries other than for circumstances that
would constitute cause (within the meaning of any such definition applicable to such officer,
employee or financial advisor, or, if no such definition is applicable, cause as defined in the
existing equity compensation plan maintained with respect to employees of the Company) and provided
further, with respect to Investment Holdings subsidiaries, that the Executive during his
employment with the Company was introduced to, or otherwise knew of or should have known of the
relationship of, such customer, prospective customer, target, supplier, financial advisor or
employee to the subsidiary.
b. Notwithstanding anything herein to the contrary and to the extent that the Investment
Holdings Compensation Committee, in its sole discretion, does not waive the obligation under this
Section 10(b), in the event that the Executive terminates his employment hereunder without Good
Reason, the Executive shall, at the Companys election, which election shall be provided to the
Executive prior to the date of termination, (1) be subject to a Restricted Period which shall
continue for a period of no less than 1 month to no more than 12 months following the date of
termination of the Executives employment, as designated by Investment
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Holdings, and shall receive the Covenant Payment described in Section 7 with a Multiplier
equal to a fraction, the numerator of which shall equal the number of months in the Restricted
Period (up to 12 months) and the denominator of which shall be 12, or (2) receive no Covenant
Payment and be subject to no Restricted Period.
c. The Executive may seek a waiver from the Company of his obligations pursuant to this
Section 10, which waiver shall not be unreasonably withheld or delayed. As of the date of the
grant of such waiver by the Company, all payments and benefits under the applicable provision of
Section 5 shall cease other than the payment of Final Compensation, excluding the payments and
benefits under clause (v) of the definition thereof which shall cease or be reimbursed by the
Executive on a pro-rata basis for the waived time period of the Restricted Period, as applicable)
or Accrued Compensation, as applicable).
11. Reasonableness; Enforcement. The Company and the Executive acknowledge that the
time, scope, geographic area and other provisions of Sections 8, 9 and 10 (the Restrictive
Covenants) have been specifically negotiated by sophisticated parties and agree that all such
provisions are reasonable under the circumstances of the activities contemplated by this Agreement.
The Executive acknowledges and agrees that the terms of the Restrictive Covenants: (i) are
reasonable in light of all of the circumstances, (ii) are sufficiently limited to protect the
legitimate interests of the Company, (iii) impose no undue hardship, (iv) are not injurious to the
public, and (v) are essential to protect the business and goodwill of the Company and its
affiliates and are a material term of this Agreement which has induced the Company to agree to
provide for the payments and benefits described in this Agreement. The Executive further
acknowledges and agrees that the Executives breach of the Restrictive Covenants will cause the
Company and Investment Holdings irreparable harm, which cannot be adequately compensated by money
damages. The Executive and the Company agree that, in the event of an actual or threatened breach
of Section 10, the Company shall be entitled, to the extent enforceable under applicable law, to
injunctive relief for any actual or threatened violation of any of the Restrictive Covenants in
addition to any other remedies it may have at law or equity, including money damages.
12. Survival. Provisions of this Agreement shall survive any termination if so
provided herein or if necessary or desirable to accomplish the purposes of other surviving
provisions, including without limitation the obligations of the Executive under Sections 8, 9, 10
and 11 hereof and the obligations of the Company pursuant to Sections 5, 7 and 10(b) hereof.
13. Conflicting Agreements. The Executive hereby represents and warrants that the
execution of this Agreement and the performance of his obligations hereunder will not breach or be
in conflict with any other agreement to which the Executive is a party or is bound and that the
Executive is not now subject to any covenants against competition or similar covenants or any court
order or other legal obligation that would affect the performance of his obligations hereunder.
The Executive will not disclose to or use on behalf of the Company any proprietary information of a
third party without such partys consent.
-13-
14. Definitions. Words or phrases which are initially capitalized or are within
quotation marks shall have the meanings provided in this Section and as provided elsewhere herein.
For purposes of this Agreement, the following definitions apply:
a. Change in Control means the consummation, after the date of Closing, of (i) any
transaction or series of related transactions, whether or not Investment Holdings is a party
thereto, after giving effect to which in excess of fifty percent (50%) of Investment Holdings
voting power is owned directly, or indirectly through one or more entities, by any person and its
affiliates or associates (as such terms are defined in the Exchange Act Rules) or any group
(as defined in the Exchange Act Rules) other than, in each case, Investment Holdings or
an affiliate of Investment Holdings immediately following the Closing, or (ii) a sale or other
disposition of all or substantially all of the consolidated assets of Investment Holdings (each of
the foregoing, a Business Combination), provided that, notwithstanding the foregoing, a
Change in Control shall not be deemed to occur as a result of a Business Combination following
which the individuals or entities who were beneficial owners of the outstanding securities entitled
to vote generally in the election of directors of Investment Holdings immediately prior to such
Business Combination beneficially own, directly or indirectly, 50% or more of the outstanding
securities entitled to vote generally in the election of directors of the resulting, surviving or
acquiring corporation in such transaction.
b. Confidential Information means any confidential proprietary information relating
to the business of Investment Holdings, the Company or their affiliates or their respective
customers or clients which has an economic value to Investment Holdings, the Company or their
affiliates. Confidential Information does not include any information that enters the public
domain other than through a breach by the Executive of his duties to Investment Holdings or the
Company hereunder or which is obtained by the Executive from a third party which has no obligation
of confidentiality to Investment Holdings or the Company.
c. Intellectual Property means any invention, formula, process, discovery,
development, design, innovation or improvement (whether or not patentable or registrable under
copyright statutes) made, conceived, or first actually reduced to practice by the Executive solely
or jointly with others, during his employment by the Company; provided, however, that, as used in
this Agreement, the term Intellectual Property shall not apply to any invention that the
Executive develops on his own time, without using the equipment, supplies, facilities or trade
secret information of Investment Holdings or the Company, unless such invention relates at the time
of conception or reduction to practice of the invention (a) to the business of Investment Holdings
or the Company, (b) to the actual or demonstrably anticipated research or development of Investment
Holdings or the Company or (c) results from any work performed by the Executive for Investment
Holdings or the Company.
d. Person means an individual, a corporation, a limited liability company, an
association, a partnership, an estate, a trust and any other entity or organization, other than the
Company or any of its subsidiaries.
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15. Withholding. All payments or other benefits, to the extent required by law, made
by the Company under this Agreement shall be reduced by any tax or other amounts required to be
withheld by the Company under applicable law.
16. Legal Fees. The Company shall at its election either pay directly the joint legal
expenses incurred by the Executive and the other executives of the Company with whom the Company is
entering into employment agreements effective as of the Closing in the negotiation and preparation
of their employment agreements or reimburse the Executive for his portion of such joint legal
expenses. In addition, all reasonable costs and expenses that are reasonably documented (including
court and arbitration costs and reasonable legal fees and expenses that reflect common practice
with respect to the matters involved) incurred by the Executive as a result of any claim, action or
proceeding arising out of this Agreement or the contesting, disputing or enforcing of any
provision, right or obligation under this Agreement shall be paid, or reimbursed to the Executive,
if, in the final resolution of the dispute, the Executive either recovers material monetary damages
(in cash or in kind, such as benefits) or is the prevailing party on a material non-monetary claim
(such as a dispute regarding a restrictive covenant).
17. Dispute Resolution.
a. Except as provided in Section 11, any dispute, controversy or claim between the parties
arising out of this Agreement or the Executives employment with the Company or termination of
employment shall be settled by arbitration conducted in the city in which the Executive is located
administered by the American Arbitration Association under its Employment Dispute Resolution Rules
then in effect (except as modified by b. below).
b. In the event that a party requests arbitration (the Requesting Party), it shall
serve upon the other party (the Non-Requesting Party), within one hundred and eighty
(180) days of the date the Requesting Party knew, or reasonably should have known, of the facts on
which the controversy, dispute or claim is based, a written demand for arbitration stating the
substance of the controversy, dispute or claim, the contention of the party requesting arbitration
and the name and address of the arbitrator appointed by it. The Non-Requesting Party, within sixty
(60) days of such demand, shall accept the arbitrator or appoint a second arbitrator and notify the
other party of the name and address of this second arbitrator so selected, in which case the two
arbitrators shall appoint a third who shall be the sole arbitrator to hear the case. In the event
that the two arbitrators fail in any instance to appoint a third arbitrator within thirty (30) days
of the appointment of the second arbitrator, either arbitrator or any party to the arbitration may
apply to the American Arbitration Association for appointment of the third arbitrator in accordance
with the Rules, which arbitrator shall be the sole arbitrator to hear the case. Should the
Non-Requesting Party (upon whom a demand for arbitration has been served) fail or refuse to accept
the arbitrator appointed by the other party or to appoint an arbitrator within sixty (60) days, the
single arbitrator shall have the right to decide alone, and such arbitrators decision or award
shall be final and binding upon the parties.
c. The decision of the arbitrator shall be in writing; shall set forth the basis for the
decision; and shall be rendered within thirty (30) days following the hearing. The decision of the
arbitrator shall be final and binding upon the parties and may be enforced and executed
-15-
upon in any court having jurisdiction over the party against whom enforcement of such award is
sought.
18. No Withholding of Undisputed Payments. During the pendency of any dispute or
controversy, the Company shall not withhold any payments or benefits due to the Executive, whether
under this Agreement or otherwise, except for the specific portion of any payment or benefit that
is the subject of a bona fide dispute between the parties.
19. Assignment. Neither the Company nor the Executive may make any assignment of this
Agreement or any interest herein, by operation of law or otherwise, without the prior written
consent of the other. This Agreement shall inure to the benefit of and be binding upon the Company
and the Executive, their respective successors, executors, administrators, heirs and permitted
assigns.
20. Severability. If any portion or provision of this Agreement shall to any extent
be declared illegal or unenforceable by a court of competent jurisdiction, then the remainder of
this Agreement, or the application of such portion or provision in circumstances other than those
as to which it is so declared illegal or unenforceable, shall not be affected thereby, and each
portion and provision of this Agreement shall be valid and enforceable to the fullest extent
permitted by law.
21. Waiver. No waiver of any provision hereof shall be effective unless made in
writing and signed by the waiving party. The failure of either party to require the performance of
any term or obligation of this Agreement, or the waiver by either party of any breach of this
Agreement, shall not prevent any subsequent enforcement of such term or obligation or be deemed a
waiver of any subsequent breach.
22. Notices. Any and all notices, requests, demands and other communications provided
for by this Agreement shall be in writing and shall be effective when delivered in person or the
next business day following consignment for overnight delivery to a reputable national overnight
courier service or five business days following deposit in the United States mail, postage prepaid,
registered or certified, and addressed to the Executive at his last known address on the books of
the Company or, in the case of the Company, at its principal place of business, attention of the
Chairman of the Investment Holdings Board, or to such other address as a party may specify by
notice to the other actually received. Copies of any notices, requests, demands and other
communication to the Company by the Executive shall be sent by the to the investors at the
following address: c/o Texas Pacific Group, 301 Commerce Street, Suite 3300, Fort Worth, TX 76102,
Attn: Richard Schifter (Fax: 415-743-1501) and c/o Hellman & Friedman LLC, One Maritime Plaza,
12th Floor, San Francisco, CA 94111, Attn: Allen Thorpe (Fax: 415-835-5408).
23. Entire Agreement. This Agreement constitutes the entire agreement between the
parties and supersedes all prior communications, agreements and understandings, written or oral,
with respect to the terms and conditions of the Executives employment including, without
limitation, the applicable Executive Summary of Proposed Terms.
-16-
24. Amendment. This Agreement may be amended or modified only by a written instrument
signed by the Executive and by an authorized representative of the Company subject to prior
approval by the Investment Holdings Board.
25. Headings. The headings and captions in this Agreement are for convenience only
and in no way define or describe the scope or content of any provision of this Agreement.
26. Counterparts. This Agreement may be executed in two or more counterparts, each of
which shall be an original and all of which together shall constitute one and the same instrument.
27. Governing Law. This is a Massachusetts contract and shall be construed and
enforced under and be governed in all respects by the laws of the Commonwealth of Massachusetts,
without regard to the conflict of laws principles thereof.
[Remainder of page intentionally left blank]
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IN WITNESS WHEREOF, this Agreement has been executed as a sealed instrument by the Company, by
its duly authorized representative, and by the Executive, as of the date first above written.
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THE EXECUTIVE |
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THE COMPANY |
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By:
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/s/ Robert J. Moore |
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By: |
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/s/ Stephanie L. Brown |
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Name: Robert J. Moore
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Name: Stephanie L. Brown |
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Title: Secretary |
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HOLDINGS |
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By: |
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/s/ Stephanie L. Brown |
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Name: Stephanie L. Brown |
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Title: Secretary |
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INVESTMENT HOLDINGS (with respect to
Section 4(c) only) |
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By: |
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/s/ Mark S. Casady |
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Name: Mark S. Casady |
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Title: Chief Executive Officer |
Schedule 1
(A) |
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Boards and Committees |
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Invest in Others Foundation
Chicago History Museum
Legal & General Investment Management America (this is a wholly owned subsidiary of Legal & General plc)
Global Capital Insights, LLC
Meadows Traverse City, LLC |
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(B) |
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Base Salary |
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$600,000 |
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(C) |
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2010 Target Bonus |
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$495,000 |
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Target Bonus |
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$495,000 |
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Opportunity to Earn Bonus Compensation in Excess of Target Bonus: The amount of the
Executives bonus opportunity above Target Bonus (the Outperformance Bonus), and the
performance necessary to earn the Outperformance Bonus, shall be determined by the
Investment Holdings Compensation Committee on an annual basis after consultation with, and
with good faith consideration of the views of, the CEO of the Company. |
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(E) |
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Annual Vacation |
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4 weeks. |
exv10w6
Exhibit 10.6
LPL FINANCIAL CORPORATION
EXECUTIVE SEVERANCE PLAN
Introduction
The purpose of Plan is to enable the Company and its subsidiaries to offer a form of
protection to members of the Executive Management Committee in the event their employment with the
Company or a subsidiary terminates.
Accordingly, the Board has adopted the Plan effective on the Effective Date as herein defined,
for selected members of the Executive Management Committee in an effort to assist in replacing the
loss of income caused by a termination of employment under the circumstances described herein.
The Plan supersedes any severance plans, policies and/or practices of the Company and any
subsidiary in effect for employees who participate in the Plan. The Severance Benefits payable
under this Plan apply to Qualifying Terminations on and after the Effective Date.
The Plan is intended to alleviate some of the financial hardship that Eligible Employees may
experience when their employment is terminated for a reason covered by the Plan. In essence, the
Severance Benefits are intended to be supplemental unemployment benefits. The Severance Benefits
are not intended as deferred compensation and no individual shall have a vested right in such
benefits.
The Company, as the Plan sponsor, has the sole discretion to determine whether an employee may
be considered eligible for Severance Benefits under the Plan. All actions taken by the Company
shall be in its role as the sponsor of the Plan, and not as a fiduciary. Nothing in the Plan will
be construed to give any employee the right to receive severance payments, except as set forth
herein, or to continue in the employment of the Company or any of its subsidiaries. The Plan is
unfunded, has no trustee, and is administered by the Compensation Committee of the Board (or such
other committee appointed by the Board for purposes of administering the Plan). The Plan is
intended to be an employee welfare benefit plan within the meaning of section 3(1) of ERISA and
it shall be administered as a top hat plan that is exempt from the substantive requirements of
ERISA.
All capitalized terms in this Introduction shall have the meaning ascribed to them in Article
2 below.
Article 1. Establishment, Term and Purpose
1.1 Establishment of the Plan. The Company hereby establishes an executive severance plan to
be known as the LPL Financial Corporation Executive Severance Plan.
1.2 Term of the Plan. The Plan, as set forth herein, will commence on the Effective Date and
will continue until terminated or amended by action of the Board or the Committee in accordance
with Section 12.6.
1
1.3 Purpose of the Plan. The purpose of the Plan is to provide Eligible Employees Severance
Benefits in the event of a Qualifying Termination.
Article 2. Definitions
Whenever used in the Plan, the following terms shall have the meanings set forth below and,
when the meaning is intended, the initial letter of the word is capitalized:
2.1 Accrued Compensation means (i) the Participants Base Salary paid through the
Participants Separation Date; (ii) reimbursement for reasonable business expenses incurred in the
ordinary course of the Participants duties prior to the Participants Separation Date and in
accordance with Company policies; provided claims for such reimbursement are submitted to the
Company within 60 days following the Participants Separation Date; and (iii) such employee
benefits, if any, as to which the Participant may be entitled under the Companys employee benefit
plans.
2.2 Base Salary means the Participants annual base salary in effect on the Separation Date.
2.3 Beneficiary means the Participants estate.
2.4 Board means the Board of Directors of LPL Investment Holdings Inc.
2.5 Cause means an Eligible Employees: (i) failure to substantially perform his usual
duties of employment with the Company (other than as a result of an illness or injury) for a period
of 10 days following notice by the Company to the Eligible Employee of such failure; (ii) fraud,
embezzlement, dishonesty or theft related to employment; (iii) an act or acts constituting a
felony, a violation of any federal or state securities or banking laws or a misdemeanor involving
moral turpitude; (iv) willful malfeasance, willful misconduct or gross negligence in connection
with the Eligible Employees employment duties or any act or omission that is injurious to the
financial condition or business reputation of the Company and its affiliates; or (v) breach of the
restrictive covenants in Sections 6.1, 6.2 or 6.3.
2.6 COBRA means the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended.
2.7 Code means the Internal Revenue Code of 1986, as amended.
2.8 Committee means the Compensation Committee of the Board, or any other committee
appointed by the Board to perform the functions of the Compensation Committee.
2.9 Company means LPL Financial Corporation or any successor thereto.
2.10 Effective Date means the closing of the 2010 initial public offering of common stock of
LPL Investment Holdings Inc.
2
2.11 Eligible Employee means each member of the Executive Management Committee who has not
entered into an employment or severance contract (other than the Plan) with the Company or an
affiliate.
2.12 ERISA means the Employee Retirement Income Security Act of 1974, as amended.
2.13 Executive Management Committee means executive employees of the Company or its
affiliates who are designated by the Board as members of such committee.
2.14 Good Reason shall mean only the occurrence, without the Participants express written
consent (which may be withheld for any or no reason) of any of the events or conditions described
herein, provided that, the Participant gives written notice to the Company of the occurrence of
Good Reason within ninety (90) days following the date on which the Participant first knew or
reasonably should have known of such occurrence and the Company shall not have fully corrected the
situation within thirty (30) days following such notice. The following occurrences shall
constitute Good Reason for purposes of this Plan: (i) a material reduction in the Participants
Base Salary unless such reduction is consistent with reductions made in the applicable annual base
salaries of other similarly situated employees of the Company or (ii) a material adverse change in
the Participants title from managing director (but not changes in functional titles); provided
that Good Reason shall cease to exist for an event on the ninetieth (90th) day
following the date on which the Participant knew or reasonably should have known of such event and
failed to give notice as described above or the Participant fails to terminate employment within
fourteen (14) days following the expiration of the cure period.
2.15 Involuntary Termination means the termination of a Participants employment by the
Company for any reason other than death, Permanent Disability or Cause.
2.16 Participant means an Eligible Employee who has satisfied the conditions for
participation in Section 3 and thereby becomes eligible for Severance Benefits under the Plan.
2.17 Permanent Disability means a physical or mental incapacity or disability of a
Participant which is determined by a qualified third party medical expert to render the Participant
unable to substantially perform all of the usual duties of employment with the Company (with
reasonable accommodations that do not cause an undue hardship) (i) for one-hundred twenty (120)
days in any twelve (12) month period or (ii) for a period of ninety (90) successive days.
2.18 Plan means this LPL Financial Corporation Executive Severance Plan, as may be amended
from time to time.
2.19 Proprietary Information means trade secrets or proprietary or confidential information
of any of the Company or its affiliates, or of any third party which any one of the Company or its
affiliates is under an obligation to keep confidential (including, but not limited to, intellectual
property rights and information related to the business of any of the Company or its affiliates and
any of their clients or representatives that (a) confers or tends to confer a competitive advantage
on any of the Company or its affiliates or (b) that has commercial value for any of the Company or
its affiliates). This includes but is not limited to: contracts; marketing materials and business
strategies; legal information; regulatory information; product information;
3
mark-up guidelines; client lists (including the names, addresses, telephone numbers and
account numbers of clients, the trade history with each client, and all other information on client
lists); lists of client prospects, financial advisors, business partners, brokers and/or
representatives; software programs; software source documents, financial information and
projections; and all concepts, plans, proposals or information about current, future and proposed
business or sales.
2.20 Qualifying Termination means (i) an Involuntary Termination or (ii) a voluntary
termination of the Participants employment for Good Reason.
2.21 Release means a general release agreement which contains, among other provisions, a
general release of all claims of any kind whatsoever against the Company and its affiliates, their
officers, directors and employees, known or unknown, as of the Separation Date.
2.22 Separation Date means the Participants last active day of employment with the Company.
2.23 Severance Benefits means the payment of severance compensation as provided in Section
4.2 herein.
2.24 Severance Period and Restricted Period means one (1) year following the Separation
Date.
2.25 Voluntary Resignation means any retirement or voluntary resignation from employment
other than for Good Reason.
Article 3. Participation
3.1 Eligible Employees. Each Eligible Employee who incurs a Qualifying Termination and
satisfies the conditions of Section 3.2 shall be a Participant and shall receive the Severance
Benefits described in the Plan.
3.2 Release. As a condition of receiving benefits hereunder, a Participant shall be required
to provide the Company with a Release. The Release shall be in the form provided by the Company
and must be executed within the time period specified by the Company, which shall not exceed sixty
(60) days following the Separation Date. Provided that the Participant has complied in all
material respects with the terms and conditions of the Release, the Company shall provide the
Participant with the payments set forth in Section 4.2.
Article 4. Severance Benefits
4.1 Right to Severance Benefits. An Eligible Employee shall be entitled to receive from the
Company the Severance Benefits, as described in Section 4.2, if the Eligible Employees employment
with the Company ends on account of a Qualifying Termination, and the Eligible Employee executes,
and does not revoke, the Release. Eligible Employees shall not be entitled to receive Severance
Benefits if they are terminated for a reason that does not constitute a Qualifying Termination.
4
4.2 Severance Benefits. In the event that a Participant becomes entitled to receive
Severance Benefits, the Company shall pay to the Participant the following:
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(a) |
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the Accrued Compensation, payable in a lump sum at the Companys next regular
payday following the sixtieth (60th) day after the Separation Date or on such earlier
date as may be required or permitted under applicable law; |
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(b) |
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Base Salary during the Severance Period; |
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(c) |
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an amount equal to the bonus paid (or payable) to the Participant for the most
recently completed calendar year; and |
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(d) |
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an amount equal to 100% of the premium (including the additional amount, if
any, charged for administrative costs as permitted by COBRA) of continued health and
dental plan participation under COBRA for the Participant and for the Participants
qualified beneficiaries (as that term is defined under COBRA) for the one (1) year
period immediately following the Separation Date. Notwithstanding any provision herein
to the contrary, the premium payment shall be paid in a lump sum on the first business
day that is the earlier of (i) six (6) months following the Separation Date, or (ii) at
such time as otherwise permitted by law that would not result in additional taxation
and penalties under Code Section 409A. |
Except as otherwise provided in Article 9 or elsewhere herein, any payments due under this Section
shall be payable in twelve (12) monthly installments during the Severance Period in accordance with
the Companys normal payroll practices and shall begin at the Companys next regular payday
following the sixtieth (60th) day after the Separation Date provided that the Participant has
executed and not revoked the Release and is compliant in all material respects with the Release
terms and conditions. For the avoidance of doubt, if the Participant does not execute a Release or
if the Participant revokes an executed Release within the time period permitted by law, the
Participant shall not be entitled to the Severance Benefits, other than the Accrued Compensation,
set forth in this Section 4.2. Except as described in this Section 4.2, neither the Company nor
any of its affiliates shall have any further obligations to the Participant under the Plan.
4.3 Voluntary Resignation; Termination for Death or Permanent Disability. If an Eligible
Employees employment terminates on account of (a) Voluntary Resignation, (b) death, or (c)
Permanent Disability, then the Eligible Employee shall not be entitled to receive Severance
Benefits under this Plan and shall be entitled only to receive his or her Accrued Compensation.
Except as described in this Section 4.3, neither the Company nor any of its affiliates shall have
any further obligations to the Participant under the Plan.
4.4 Termination for Cause. If an Eligible Employees employment terminates on account of
termination by the Company for Cause, the Eligible Employee shall not be entitled to receive
Severance Benefits and the Company shall pay the Eligible Employee his or her Accrued Compensation.
Notwithstanding any other provision of the Plan to the contrary, if the
5
Committee determines, at any time, that a Participant has engaged in conduct prior to the
Participants Separation Date that constitutes Cause, any Severance Benefits payable or provided to
the Participant under the Plan shall immediately cease, and the Participant shall be required to
return any Severance Benefits paid or provided to the Participant prior to such determination.
Except as described in this Section 4.4, neither the Company nor any affiliate shall have any
further obligations to such Eligible Employee or Participant, as applicable, under the Plan.
4.5 Severance Benefits in the Event of Death. If a Participant dies while any amount would
still be payable to him or her hereunder had he or she continued to live, all such amounts, unless
otherwise provided herein, shall be paid to the Participants Beneficiary within sixty (60) days
from the date of the Participants death.
Article 5. Code Section 4999 Excise Tax.
Anything in this Plan to the contrary notwithstanding, in the event that it shall be
determined that any payment or benefit (including any accelerated vesting of options or other
equity awards) made or provided, or to be made or provided, by the Company (or any successor
thereto or affiliate thereof) to or for the benefit of a Participant, whether pursuant to the terms
of this Plan, any other agreement, plan, program or arrangement of or with the Company (or any
successor thereto or affiliate thereof) or otherwise (a Payment), will be subject to the excise
tax imposed by Code Section 4999 or any comparable tax imposed by any replacement or successor
provision of United States tax law, then the aggregate present value of the Payments shall be
reduced (but not below zero) to the Reduced Amount. The Reduced Amount shall be an amount
expressed in present value which maximizes the aggregate present value of the Payments without
causing any Payment to be subject to the deduction limitation under Code Section 280G or the
imposition of any excise tax under Code Section 4999. For this purpose, present value shall be
determined in accordance with Code Section 280G(d)(4). In the event that it is determined that the
amount of the Payments will be reduced in accordance with this Section, the Payments shall be
reduced on a nondiscretionary basis in such a way as to minimize the reduction in the economic
value deliverable to the Participant. In applying this principle, the reduction shall be made in a
manner consistent with the requirements of Code Section 409A, and where more than one payment has
the same value for this purpose and they are payable at different times, they will be reduced on a
pro-rata basis. All determinations to be made under this Section shall be made by the nationally
recognized independent public accounting firm used by the Company immediately prior to the change
in control (Accounting Firm), which Accounting Firm shall provide its determinations and any
supporting calculations to the Company and the Participant within ten
(10) days of the Separation Date.
Any such determination by the Accounting Firm shall be binding upon the Company and the
Participant. All of the fees and expenses of the Accounting Firm in performing the determinations
referred to in this Section shall be borne solely by the Company.
Article 6. Restrictive Covenants
As consideration for the Companys offer of coverage under this Plan to Eligible Employees and
for other good and valuable consideration, during his or her employment and upon termination of
employment for any reason, each Eligible Employee agrees to comply with the restrictive covenants
contained herein. In addition, receipt of Severance Benefits other than
6
Accrued Compensation is expressly conditioned upon such Participants continued compliance
with such restrictive covenants.
6.1 Non-Competition. During the Restricted Period, regardless of the reason for the
separation and to the extent enforceable under applicable law, an Eligible Employee may not
provide, directly or indirectly, alone or as principal, agent, employee, employer, consultant,
investor or partner of, or assist in the management of, or provide advisory, sales, marketing,
recruiting or any other services to a business or entity that competes in any respect with a
business in which the Company and its affiliates were engaged (including, specifically, services
related to financial advisors), or any material products and/or services that the Company or its
affiliates were actively developing or designing as of the date such Eligible Employees employment
with the Company terminated, provided that, prior to such termination, such Eligible Employee knew
of such other business or such material product or such service under active development or design.
6.2 Non-Solicitation.
(a) During the Restricted Period, regardless of the reason for the separation and to the
extent enforceable under applicable law, each Eligible Employee may not, directly or indirectly,
solicit, persuade or induce: (i) any financial advisor licensed with the Company or its affiliates
or any clients of such financial advisor; (ii) any financial advisor licensed with the Company or
its affiliates during the twelve (12) month period prior to such Eligible Employees Separation
Date or any clients of such financial advisors; (iii) any financial advisors who such Eligible
Employee, by virtue of his or her position, knew or should have known to be in discussions with the
Company or its affiliates regarding licensure with the Company or its affiliates; (iv) any
institution with a contract with the Company or its affiliates; (v) any institution with a contract
with the Company or its affiliates during the twelve (12) month period prior to such Eligible
Employees Separation Date; or (vi) any institution who such Eligible Employee, by virtue of his or
her position, knew or should have known to be in discussions with the Company or its affiliates
regarding business relations with the Company or its affiliates.
(b) During the Restricted Period, regardless of the reason for the separation and to the
extent enforceable under applicable law, each Eligible Employee may not, directly or indirectly,
solicit, seek to hire, or persuade or induce any employee or consultant of the Company or its
affiliates (or any person who was an employee or consultant of the Company or its affiliates during
the twelve (12) month period prior to such Eligible Employees Separation Date) to discontinue his
or her employment or other association with the Company or its affiliates.
6.3 Confidentiality. Each Eligible Employee agrees and covenants not to disclose or use for
his or her own benefit, or the benefit of any other person or entity, any Proprietary Information,
unless or until the Proprietary Information is or becomes known or available to the public other
than because of a breach of this agreement by such Eligible Employee, or such disclosure is or
becomes required by law or valid legal process or is necessary to carry out the duties of his or
her employment, each Eligible Employee shall not disclose or reveal to any unauthorized person any
Proprietary Information relating to one or more of the Company or its affiliates, and each Eligible
Employee confirms that the Proprietary Information constitutes the exclusive property of one or
more of the Company or its affiliates.
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6.4 Specific Remedy. Each Eligible Employee acknowledges and agrees that if he or she commits
a material breach of the restrictive covenants in Sections 6.1, 6.2 or 6.3, the Company shall have
the right to have the covenant specifically enforced through an injunction or otherwise, without
any obligation that the Company post a bond or prove actual damages, by any court having
appropriate jurisdiction on the grounds that any such breach will cause irreparable injury to the
Company, without prejudice to any other rights and remedies that Company may have for a breach of
this Plan, and that money damages will not provide an adequate remedy to the Company. Each
Eligible Employee further acknowledges and agrees that the restrictive covenants contained in
Section 6.1, 6.2 or 6.3 are intended to protect the Companys business interests and goodwill, are
fair, do not unreasonably restrict his or her future employment and business opportunities, and are
commensurate with the arrangements set out in this Plan and with the other terms and conditions of
the Eligible Employees employment.
Article 7. Withholding of Taxes; Funding
7.1 Withholding of Taxes; Taxes. The Company shall be entitled to withhold from any amounts
payable under the Plan all taxes as legally shall be required (including, without limitation, any
United States federal taxes, and any other state, city, or local taxes). Each Participant shall be
solely responsible for the payment of all taxes that become due as a result of a payment to the
Participant under this Plan.
7.2 Funding. The Plan shall be funded out of the general assets of the Company as and when
severance benefits are payable under the Plan. All Participants shall be solely general creditors
of the Company.
Article 8. Successors and Assignment
8.1 Successors to the Company. The Company will require any successor (whether direct or
indirect, by purchase, merger, consolidation, or otherwise) of all or substantially all of the
business and/or assets of the Company or of any division or subsidiary thereof to expressly assume
and agree to perform the Companys obligations under the Plan in the same manner and to the same
extent that the Company would be required to perform them if no such succession had taken place.
8.2 Assignment by the Participant. Except in the event of death, a Participant does not have
the power to transfer, assign, anticipate, mortgage or otherwise encumber any rights or any amounts
payable under this Plan; nor will any such rights or amounts payable under this Plan be subject to
seizure, attachment, execution, garnishment or other legal or equitable process, or for the payment
of any debts, judgments, alimony, or separate maintenance, or be transferable by operation of law
in the event of bankruptcy, insolvency, or otherwise. In the event a Participant attempts to
assign, transfer or dispose of such right, or if an attempt is made to subject such right to such
process, such assignment, transfer or disposition will be null and void.
Article 9. Code Section 409A
Notwithstanding the other provisions hereof, this Plan is intended to comply with the
requirements of Code Section 409A, to the extent applicable, and this Plan shall be interpreted to
avoid any penalty sanctions under Code Section 409A. Accordingly, all provisions herein, or
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incorporated by reference, shall be construed and interpreted to comply with Code Section 409A
and, if necessary, any such provision shall be deemed amended to comply with Code Section 409A and
regulations thereunder. If any payment or benefit cannot be provided or made at the time specified
herein without incurring sanctions under Code Section 409A, then such benefit or payment shall be
provided in full at the earliest time thereafter when such sanctions will not be imposed. All
payments to be made upon a termination of employment under this Agreement may only be made upon a
separation from service under Code Section 409A to the extent required under Code Section 409A.
For purposes of Code Section 409A, each payment made under this Plan shall be treated as a separate
payment. In no event may a Participant, directly or indirectly, designate the calendar year of
payment.
Reimbursements provided under this Plan, if any, shall be made or provided in accordance with
the requirements of Code Section 409A including, where applicable, the requirement that (i) any
reimbursement is for expenses incurred during a limited period of time; (ii) the amount of expenses
eligible for reimbursement during a calendar year may not affect the expenses eligible for
reimbursement in any other calendar year; (iii) the reimbursement of an eligible expense will be
made no later than the last day of the calendar year following the year in which the expense is
incurred; and (iv) the right to reimbursement is not subject to liquidation or exchange for another
benefit.
To the maximum extent permitted under Code Section 409A, the severance benefits payable under
this Plan are intended to comply with the short-term deferral exception under Treas. Reg.
§1.409A-1(b)(4), and any remaining amount is intended to comply with the separation pay exception
under Treas. Reg. §1.409A-1(b)(9)(iii); provided, however, any portion of the severance benefits
that are payable under the Plan to a Participant during the six (6) month period following the
Participants Separation Date that does not qualify within either of the foregoing exceptions and
constitutes deferred compensation subject to the requirements of Code Section 409A, then such
amount shall hereinafter be referred to as the Excess Amount. If at the time of the
Participants separation from service, the Companys (or any entity required to be aggregated with
the Company under Code Section 409A) stock is publicly-traded on an established securities market
or otherwise and the Participant is a specified employee (as defined in Code Section 409A and
determined in the sole discretion of the Company (or any successor thereto) in accordance with the
Companys (or any successor thereto) specified employee determination policy), then the Company
shall postpone the commencement of the payment of the portion of the Excess Amount that is payable
within the six (6) month period following the Participants Separation Date with the Company (or
any successor thereto) for six (6) months following the Participants Separation Date with the
Company (or any successor thereto). The delayed Excess Amount shall be paid in a lump sum to the
Participant within ten (10) days following the date that is six (6) months following the
Participants Separation Date with the Company (or any successor thereto) and any remaining
installments shall continue to be paid to the Participant on their original schedule. If the
Participant dies during such six (6) month period and prior to the payment of the portion of the
Excess Amount that is required to be delayed on account of Code Section 409A, such Excess Amount
shall be paid to the personal representative of the Participants Beneficiary within sixty (60)
days after the Participants death.
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Article 10. Claims Procedures
Any request or claim for severance benefits under the Plan shall be deemed to be filed when a
written request is made by the claimant or the claimants authorized representative which is
reasonably calculated to bring the claim to the attention of the Committee.
The Committee, or its designee, shall advise the claimant or such claimants representative,
in writing or in electronic form, of its decision within ninety (90) days of receipt of the claim
for severance benefits under the Plan, unless special circumstances require an extension of such
ninety (90) day period for not more than an additional ninety (90) days. Where such extension is
necessary, the claimant shall be given written notice of the delay before the expiration of the
initial ninety (90) day period, which notice shall set forth the reasons for the delay and the date
the Committee expects to render its decision. If the extension is necessary because the claimant
has failed to submit the information necessary to decide the claim, the Committees period for
responding to such claim shall be tolled until the date the claimant responds to the request for
additional information. The response shall (i) be in writing or in electronic form; (ii) be
written in a manner calculated to be understood by the claimant; and (iii) in the case of an
adverse benefit determination: (a) set forth the specific reason(s) for the denial of benefits; (b)
contain specific references to Plan provisions on which the denial is based; (c) describe any
additional material and information, if any, necessary for the claim for benefits to be perfected,
and an explanation of why such material or information is necessary; and (d) describe the Plans
review procedures and the time limits applicable to such procedures, and include a statement of the
claimants right to bring a civil action under section 502(a) of ERISA following an adverse benefit
determination on review.
If the claimant fails to appeal the Committees adverse benefit determination, in writing,
within sixty (60) days after its receipt by the claimant, the Committees determination shall
become final and conclusive.
If the claimant appeals the Committees adverse benefit determination in a timely fashion, the
Committee shall reexamine all issues relevant to the original denial of benefits. Any such
claimant or his or her duly authorized representative may review any relevant documents and
records, free of charge, including documents and records that were relied upon in making the
benefit determination, documents submitted, considered or generated in the course of making the
benefit determination (even if such documents were not relied upon in making the benefit
determination), and documents that demonstrate compliance, in making the benefit determination,
with the Plans required administrative processes and safeguards. In addition, the claimant or his
duly authorized representative may submit, in writing, any documents, records, comments or other
information relating to such claim for benefits. In the course of the review, the Committee shall
take into account all comments, documents, records and other information submitted by the claimant
or his duly authorized representative relating to such claim, regardless of whether it was
submitted or considered as part of the initial benefit determination.
The Committee shall advise the claimant or such claimants representative, in writing or in
electronic form, of its decision within sixty (60) days of receipt of the written appeal, unless
special circumstances require an extension of such sixty (60) day period for not more than an
additional sixty (60) days. Where such extension is necessary, the claimant shall be given
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written notice of the delay before the expiration of the initial sixty (60) day period, which
notice shall set forth the reasons for the delay and the date the Committee expects to render its
decision. In the event of an adverse benefit determination on appeal, the Committee shall advise
the claimant, in a manner calculated to be understood by the claimant of: (i) the specific
reason(s) for the adverse benefit determination; (ii) the specific Plan provisions on which the
decision was based; (iii) the claimants right to receive, upon request and free of charge, and
reasonable access to, copies of all documents, records and other information relevant to such
claim; and (iv) a statement describing any voluntary appeals procedures offered by the Plan, the
claimants right to obtain information about such procedures, and a statement of the claimants
right to bring an action under section 502(a) of ERISA.
No person may bring an action for any alleged wrongful denial of Plan benefits in a court of
law unless the claims procedures set forth above are exhausted and a final determination is made by
the Committee. If a Participant or other interested person challenges a decision of the Committee,
a review by the court of law will be limited to the facts, evidence and issues presented to the
Committee during the claims procedure set forth above. Facts and evidence that become known to the
Participant or other interested person after having exhausted the claims procedure must be brought
to the attention of the Committee for reconsideration of the claims determination. Issues not
raised with the Committee will be deemed waived.
Article 11. Administration
The Committee will be the plan administrator of the Plan and the named fiduciary of the Plan
for purposes of ERISA. The Committee may, however, delegate to any person, committee or entity any
of its power or duties under the Plan. The Committee will be the sole judge of the application and
interpretation of the Plan, and will have the discretionary authority to construe the provisions of
the Plan and to resolve disputed issues of fact. The Committee will have the sole authority to
make determinations regarding eligibility for benefits. The decisions of the Committee in all
matters relating to the Plan that are within the scope of its authority (including, but not limited
to, eligibility for benefits, Plan interpretations, and disputed issues of fact) will be final and
binding on all parties.
Article 12. Miscellaneous
12.1 Notice of Termination. Any termination for Cause covered by this Plan shall be
communicated by a Notice of Termination. For purposes of the Plan, a Notice of Termination shall
mean a written notice which shall indicate the specific termination provision in the Plan relied
upon, and shall set forth in reasonable detail the facts and circumstances claimed to provide a
basis for termination of the Participants employment under the provision so indicated.
12.2 Employment Status. Except as may be provided under any other agreement between a
Participant and the Company, the employment of the Participant by the Company is at will, and may
be terminated by either the Participant or the Company at any time, subject to applicable law.
Nothing contained herein shall constitute an employment contract or guarantee of employment or
confer any other rights except as set forth herein.
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12.3 Other Payments. Except as otherwise provided in this Plan, no Participant shall be
entitled to any cash payments or other severance benefits under any of the Companys or any
affiliates then current severance pay policies for a termination that is covered by this Plan for
the Participant.
12.4 No Mitigation. Participants shall not be required to mitigate the amount of any Severance
Benefit provided for in this Plan by seeking other employment or otherwise, nor shall the amount of
any Severance Benefit provided for herein be reduced by any compensation earned by other employment
or otherwise, except if the Participant is re-employed by the Company or an affiliate, in which
case Severance Benefits shall cease.
12.5 Gender and Number. Except where otherwise indicated by the context, any masculine term
used herein also shall include the feminine; the plural shall include the singular, and the
singular shall include the plural.
12.6 Amendment or Termination. The Board and the Committee may, in their sole discretion,
amend or terminate the Plan, in whole or in part, at any time and for any reason or no reason
without the consent of Participants. An amendment to the Plan may not discontinue or change any
payments to a Participant who commenced receiving severance benefits under the Plan prior to the
effective date of the amendment or termination of the Plan. If the Plan is terminated, no further
severance benefits will be payable under the Plan to any Participant who has not commenced
receiving severance benefits under the Plan prior to the effective date of such termination.
12.7 Governing Law. To the extent not preempted by the laws of the United States, this Plan
shall be construed and enforced under and be governed in all respects by the laws of the
Commonwealth of Massachusetts, without regard to the conflict of laws principles thereof.
12.8 Liability. No member of the Committee and no officer, director or employee of the Company
or any affiliate shall be liable for any inaction with respect to his or her functions under the
Plan unless such action or inaction is adjudged to be due to gross negligence, willful misconduct
or fraud. Further, no member of the Committee shall be personally liable merely by virtue of any
instrument executed by him or her or on his or her behalf as a member of the Committee.
12.9 Indemnification. The Company shall indemnify, to the fullest extent permitted by law and
its Certificate of Incorporation and By-laws (but only to the extent not covered by insurance) its
officers and directors (and any employee involved in carrying out the functions of the Company
under the Plan) and each member of the Committee against any expenses, including amounts paid in
settlement of a liability, which are reasonably incurred in connection with any legal action to
which such person is a party by reason of his or her duties or responsibilities with respect to the
Plan, except with regard to matters as to which he or she shall be adjudged in such action to be
liable for gross negligence, willful misconduct or fraud in the performance of his or her duties.
12.10 Headings. The headings of the Plan are inserted for convenience of reference only and
shall have no effect upon the meaning of provisions hereof.
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12.11 Incompetency. In the event that the Committee finds that a Participant is unable to care
for his or her affairs because of illness or accident, then benefits payable hereunder, unless
claim has been made therefor by a duly appointed guardian, committee, or other legal
representative, may be paid in such manner as the Committee shall determine, and the application
thereof shall be a complete discharge of all liability for any payments or benefits to which such
Participant was or would have been otherwise entitled under the Plan.
IN
WITNESS WHEREOF, the Company has caused this instrument to be executed this day of , 2010.
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LPL FINANCIAL CORPORATION
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