Exhibit 4.1


 


FIFTH AMENDED AND RESTATED
2000 STOCK BONUS PLAN


 


LPL INVESTMENT HOLDINGS INC.

(f/k/a “BD INVESTMENT HOLDINGS INC.”)

amended and restated
effective as of January 17, 2006


 


1.  Purpose.  The purpose of this 2000 Stock Bonus Plan
(the “Plan”) of LPL Investment Holdings Inc. (f/k/a “BD Investment Holdings
Inc.”) (the “Company”) is to reward the most successful and loyal independent
contracted agents (the “Registered Representatives”) of LPL Financial
Corporation (f/k/a “Linsco/Private Ledger Corp.”) (“LPL”), a wholly-owned
subsidiary of the Company, by providing the Registered Representatives with
shares of the Company’s Common Stock (as defined in Section 2 below)
following the sale of LPL Holdings Inc. (“LPL Holdings”).  The 2000 Stock Bonus Plan as originally
adopted by LPL Holdings (and prior to the Company’s assumption thereof)
provided for the issuance to Registered Representatives of shares of Common
Stock only in connection with an initial public offering of Common Stock to be
underwritten on a firm commitment basis by a nationally recognized investment
banking firm pursuant to a registration statement filed with, and declared
effective by, the United States Securities and Exchange Commission (“IPO”).  This Plan was amended and restated in 2005 to
provide for the issuance to Registered Representatives after the closing of the
sale of LPL Holdings (the “Triggering Company Sale”) of Bonus Credits (as
defined in Section 4 below) that are convertible into shares of Common
Stock.  This Plan was further amended and
restated to provide for technical conforming changes to the Plan in light of
the Company’s assumption of the Plan from LPL Holdings in connection with the
Triggering Company Sale in 2005.  This
Fifth Amendment and Restatement provides for additional technical changes to
the Plan in light of changes in tax laws since the original adoption of the
Plan.


 


2.  Type of Stock.  For purposes of the Plan, all references to “Common
Stock” shall mean the common stock, par value $0.001, of the Company.


 


3.  Administration.  The Board of Directors of the Company (the “Board”),
or any committee the Board may designate, shall have plenary authority to
administer the Plan, including without limitation, the determination of the
allocation of Bonus Credits.  All
decisions made by the Board or designated committee pursuant to the Plan shall
be final and conclusive.  The Board or
designated committee may correct any defect or supply any omission or reconcile
any inconsistency in the Plan or in any agreement related hereto in the manner
and to the extent it shall deem appropriate to carry the same into effect.  No director or person acting pursuant to
authority delegated by the Board shall be liable for any action or determination
under the Plan made in good faith.


 


4.  Eligibility.  Registered Representatives who held their
securities licenses with LPL on December 31, 2005 shall be eligible
Registered Representatives (“Eligible Registered Representatives”).  Eligible Registered Representatives whose
sales and service fees, in the aggregate, represent not less than the top 50%
of gross commissions and advisory services fees (as defined in LPL’s standard
Registered Representative Agreement as that agreement may be in effect from
time to time) generated by all Eligible Registered Representatives in the
aggregate during the Award Year (as defined in Section 5 below) are
eligible, at the discretion of the Board, to receive bonus credits (the “Bonus
Credits”) (expressed as rights to receive Common Stock) subject to the terms
and conditions of the Plan.  Unless
otherwise directed by the Board, the Company shall not issue to any Eligible
Registered Representative any certificate or other documentation representing
the Bonus Credits.  Notwithstanding the


 

















 


above, at the discretion of the Board, LPL branch office managers who
have entered into Branch Office Manager Agreements with LPL may be deemed to be
Registered Representatives and the Gross Revenues of the individuals in each
branch office (other than the Gross Revenues of any other Registered
Representative in such branch office who is a Qualifier (as defined in Section 6
below)) shall be aggregated for the account of the LPL branch office manager
for such office for purposes of the Plan.


 


5.  Award Year.  The “Award Year” shall be the approximately
52 week period (as represented by 24 commission cycles) immediately prior to,
and ending on, September 30, 2005.


 


6.  Qualification Requirements
For Participation in the Plan.  In
order for an Eligible Registered Representative to qualify to receive Bonus
Credits, the gross commission plus total advisory fees,12b-l fees paid on
mutual funds and trailing fees paid on other financial products (“Gross
Revenues”) of the Eligible Registered Representative produced during the Award
Year must rank within the top 50% of LPL’s Gross Revenues produced during the
Award Year when every Eligible Registered Representative’s Gross Revenues are
listed in descending order of productivity by amount.  If deemed necessary and appropriate by the
Board, the Company shall estimate trailing fees and any such estimate, to the
extent relied upon by the Board, shall be binding for purposes of the Plan and
the determinations hereunder.  Starting
with the top producer, the Company shall add each Eligible Registered
Representative’s Gross Revenues going down the list until the sum represents at
least 50% of total Gross Revenues during the Award Year.  Each Eligible Registered Representative whose
Gross Revenues are counted to arrive at the 50% total (a “Qualifier”) shall be
eligible to receive Bonus Credits and participate in the Plan.  Gross Revenues to be counted toward
qualifying for receipt of Bonus Credits shall be those which were processed by
LPL’s commission accounting system during the Award Year.


 


7.  Allocation of Bonus
Credits.  The total number of
available Bonus Credits shall be divided into three buckets, with each bucket
having a different allocation formula for the Registered Representatives who
are Qualifiers.  Tabulation of Gross
Revenues and Recurring Fees (as defined in Section 7(b) below) is
subject to the characterization of revenues provided to LPL’s commission
accounting department by the product sponsors during the Award Year.  The three buckets, which shall comprise 100%
of the Bonus Credits, are as follows:


 


(a)  The Gross Revenue Bucket shall account for
50% of the total Bonus Credits and be allocated on the basis of each Qualifier’s
Gross Revenues.  Each Qualifier’s
allocation of the Gross Revenue Bucket shall be determined by the following
allocation formula:  the number of Bonus
Credits in the Gross Revenue Bucket multiplied by an amount equal to the
quotient of the Qualifier’s Gross Revenues divided by the total Grass Revenues
of all Qualifiers.


 


(b)  The Recurring Fees Bucket shall account for
25% of the total Bonus Credits and be allocated on the basis of each Qualifier’s
total advisory fees, 12b-1 fees paid on mutual funds and trailing fees paid on
other financial products (“Recurring Fees”). 
Each Qualifies allocation of the Recurring Fees Bucket shall be
determined by the following allocation formula: 
the number of Bonus Credits in the Recurring Fees Bucket multiplied by
an amount equal to the quotient of Qualifier’s Recurring Fees divided by the
Total Recurring Fees of all Qualifiers.


 


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(c)  The Tenure Bucket shall account for 25% of
the total Bonus Credits and be allocated only to Qualifiers who have been
registered with LPL for at least five years as of September 30, 2005 (the “Tenured
Qualifiers”).  Each Tenured Qualifier’s
allocation of the Tenure Bucket shall be determined by the following allocation
formula:  the number of Bonus Credits in
the Tenure Bucket multiplied by an amount equal to the quotient of the Tenured
Qualifier’s Gross Revenues divided by the total Gross Revenues of all Tenured
Qualifiers.


 


8.  Form of Agreement.  Each Qualifier who elects to participate in
the Plan shall be required to sign a stock bonus agreement (as amended,
modified, supplemented hereby, the “Stock Bonus Agreement”), in such form as
may be approved by the Board, incorporating among other things the terms of Section 13
below (with such modifications and changes as the Board may from time to time
approve).  Each Stock Bonus Agreement
shall become effective upon execution by the Company and the Qualifier.  To the extent any Stock Bonus Agreement
conflicts with the terms of this Plan (as amended, modified or supplemented
from time to time), such Stock Bonus Agreement shall be deemed amended and
restated to conform to the terms of this Plan.


 


9.  Conversion of Bonus
Credits; Performance Vesting of Bonus Shares.


 


(a)  An outstanding Bonus Credit shall
automatically convert (the “Conversion”) into a like number of shares of Common
Stock (“Bonus Shares”) on the terms and conditions set forth in this Section 9
upon the earlier of (x) immediately following the satisfaction of the
Time-Vesting Condition (as defined below) in respect of such Bonus Credit and (y) December 31,
2008.


 


(i)  Upon the Conversion, the Company
shall record on the books and records of the Company the issuance of the Bonus
Shares to each Qualifier and shall issue certificates evidencing issuance and
ownership of the Bonus Shares to such Qualifier (or take such other action
permitted by applicable law to accomplish same).


 


(ii)  Except as provided in Section 9(b),
each Qualifier shall be prohibited from selling, assigning, transferring,
pledging, hypothecating or otherwise encumbering or disposing of (collectively,
“Transferring”) the Bonus Shares (or any interest therein), except that Bonus
Shares shall, upon death of the Qualifier, become property of such Qualifier’s
estate; provided, however, that such Bonus Shares shall remain subject to the
terms hereof.


 


(iii)  Except as provided in Section 9(b),
no Qualifier shall be entitled to receive dividends or non-cash distributions
with respect to such Qualifier’s Bonus Shares.


 


(iv)  In order to assist in the
enforcement of the Transfer restrictions hereunder, unless otherwise determined
by the Company, the certificates (if any) evidencing the Bonus Shares shall not
be delivered to the Qualifier and shall instead physically be held by the
Company as custodian until either:


 


(A) the occurrence of a
Performance-Vesting Event (as defined below), at which time the certificates
shall be delivered, as soon as reasonably practicable, to the Qualifier, or


 


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(B) the occurrence of a Forfeiture
Event (as defined below), in which case the certificate shall be immediately
cancelled without further action on behalf of the Company.


 


Notwithstanding the foregoing, for so long as the
Qualifier holds the Bonus Shares, the Qualifier shall be the legal and
beneficial owner of the Bonus Shares and shall have full voting rights with
respect to the Bonus Shares on the same basis as other holders of Common
Stock.  Each such certificate shall
contain a legend until the occurrence of a Performance-Vesting Event setting
forth the limitations and restrictions contained in this Section 9.


 


(v)  In light of the uncertain
valuation of the Bonus Shares, each Qualifier shall refrain from making an
election under Section 83(b) with respect to such Qualifier’s Bonus
Shares.  If a Qualifier makes such an
election, then all of such Qualifier’s Bonus Shares shall be immediately
cancelled and extinguished without further action on behalf of the Company.


 


(b)  All Bonus Shares that have satisfied the
Time-Vesting Condition shall become fully vested shares of Common Stock (such
Bonus Shares, the “Shares”) only at such time, if ever, as there shall have
occurred (i) a sale of all or substantially all of the business or assets
of LPL Holdings or the Company that occurs after December 31, 2005 that
also constitutes a change in control event under Section 409A of the
Internal Revenue Code of 1986, as amended, or the regulations thereunder (a “Sale”),
or (ii) an IPO (either such event, a “Performance-Vesting Event”);
provided that if the Company or LPL Holdings (or any of their respective material
subsidiaries) experiences a Bankruptcy Event prior to the occurrence of a
Performance-Vesting Event, then all Bonus Shares shall be immediately cancelled
and extinguished without further action on behalf of the Company (a “Performance-Forfeiture
Event”).  Bonus Shares that have not
satisfied the Time-Vesting Condition as of a Performance-Vesting Event shall
become fully vested “Shares” only upon satisfaction of the Time-Vesting
Condition.  The term “Bankruptcy Event”
means, in respect of any person, the commencement of any case, proceeding or
other action (A) under any existing or future law of any jurisdiction,
domestic or foreign, relating to bankruptcy, insolvency, reorganization or
relief of debtors, seeking to have an order for relief entered with respect to
such person, or seeking to adjudicate such person as bankrupt or insolvent, or
seeking reorganization, arrangement, adjustment, winding-up, liquidation,
dissolution, composition or other relief with respect to such person debts or (B) seeking
appointment of a receiver, trustee, custodian or other similar official for
such person or for all or any substantial part of such person’s assets, or such
person shall make a general assignment for the benefit of such person’s
creditors.


 


(i)  If the Performance-Vesting Event
is an IPO, then the Shares shall become Transferable (A) on the date that
is 180 days following an IPO or (B) if earlier, on March 15 of the
calendar year immediately following the calendar year in which the IPO
occurred.


 


(ii)  If the Performance-Vesting Event
is a Sale, then the Shares shall become Transferable immediately prior to, and
conditioned on, such Sale.


 


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(iii)  Following both the
Performance-Vesting Event and satisfaction of the Time-Vesting Condition, a
Qualifier shall be entitled to receive dividends or other distributions with
respect to such Qualifier’s Shares.


 


10.  Stock Subject to the Plan.  A total of 7,716,930 shares of Common Stock
are reserved and available for grants under the Plan.  The Board, in its sole discretion, may make
such substitution or adjustments in the aggregate number and kind of shares
reserved for issuance under the Plan.


 


11.  Adjustments.  The Board shall make or provide for a fair
and proportionate adjustment in the number, price and kind of Common Stock
underlying the Bonus Credits and Bonus Shares in order to maintain the
proportional interests of the Qualifiers and preserve the value of the Bonus
Credits and Bonus Shares granted hereunder in the event of any merger,
reorganization, stock split or stock dividend following the date of this
amendment and restatement.  Neither
fractional shares nor cash in lieu thereof shall be issued on account of any
such adjustments.


 


12.  Transferability.  The Bonus Credits and Bonus Shares shall not
be assignable or otherwise transferable by the Qualifier without the prior
written consent of the Board, which may be granted or withheld at the sole
discretion of the Board.  Bonus Credits
and Bonus Shares shall be subject to the restrictions set forth herein and in
the Stock Bonus Agreement and any restrictions imposed under federal or state
securities law.


 


13.  Termination and
Forfeiture of Bonus Credits.  If at
any time after the allocation of Bonus Credits to a Qualifier and before the
third annual anniversary of the Triggering Company Sale, either LPL or the
Qualifier terminates the Representative Agreement, then, except as otherwise
provided below or in an applicable Stock Bonus Agreement approved by the Board,
any Bonus Credits held by the Qualifier for which the Time-Vesting Condition
shall not have been satisfied shall be immediately forfeited to the Company (a “Time-Forfeiture
Event and, together with the Performance-Forfeiture Events, the “Forfeiture Events”).  One third of the aggregate number of Bonus
Credits of each Qualifier shall be deemed to satisfied the Time-Vesting
Condition on each of the first, second and third annual anniversary of the
closing of the Triggering Company Sale (this vesting condition, together with
the vesting condition set forth in Section 14, shall be referred to herein
as the “Time-Vesting Condition”).


 


(a)  Termination by Death of
Qualifier.  If a Qualifier
dies at any time on or before the third annual anniversary of the Triggering
Company Sale, all Bonus Credits held by the Qualifier for which the
Time-Vesting Condition shall not have been satisfied immediately prior to his
or her death shall nonetheless be deemed to have satisfied the Time-Vesting
Condition and shall become property of such Qualifier’s estate, notwithstanding
the terms of the first paragraph of this Section 13; provided, however,
that such Bonus Credits shall remain subject to the Stock Bonus Agreement.


 


(b)  Termination by LPL.  LPL may terminate a Representative Agreement
for any reason specified in the Representative Agreement.


 


14.  Reallocation of Forfeited
Bonus Credits or Bonus Shares.  In January of
each year beginning in January 2007 and ending in January 2010, the
Company may allocate to Registered Representatives a number of Bonus Credits or
Bonus Shares, as applicable, equal 


 


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to the number of Bonus Credits or Bonus Shares, if any, that are
forfeited in accordance with the Plan in the previous calendar year.  Any Registered Representative with Gross
Revenues for the one-year period ending on the previous September 30 that
equal or exceed the Gross Revenues of any Qualifier for the one-year period
ended September 30, 2005 shall be eligible to receive Bonus Credits or
Bonus Shares under this Section 14. 
The Board will determine the number of Bonus Credits or Bonus Shares, if
any, to be allocated to each Registered Representative eligible under this Section 14
and may base such allocation on any methodology deemed reasonable by the Board
in its discretion.  All such Bonus
Credits and Bonus Shares shall be subject to the provisions of the Plan.  Subject to Section 9, one-third of any
such Bonus Credits or Bonus Shares so allocated shall be deemed to satisfy the
Time-Vesting Condition on each of the first, second and third annual
anniversary of the date of grant.


 


15.  Term.  The Plan shall automatically terminate upon
the first to occur of (a) the tenth anniversary of the effective date of
the Plan or (b) termination by the Board pursuant to Section 16
below.


 


16.  Amendment, Alteration, or
Termination.  The Board may amend,
alter or terminate the Plan in its sole discretion.  Reasons for amendments or alterations may
include, but are not limited to, changes in accounting rules, tax laws or
securities regulations which govern the Plan or impact its economics.  If the Plan is amended, altered or
terminated, any Stock Bonus Agreement that conflicts with the terms of this
Plan shall be deemed amended to conform to the terms of this Plan, but neither
Bonus Credits nor Bonus Shares outstanding as of the date of such amendment,
alteration or termination shall be materially and adversely affected or
impaired.  The Board shall have the sole
authority to accelerate the vesting of any Bonus Shares or Bonus Credits by
declaring the satisfaction of a Time-Vesting Condition or the occurrence of a
Performance-Vesting Event.


 


17.  Effective Date of Plan.  The Plan, as amended and restated, shall be
effective as of January 17, 2006.


 


18.  Investment
Representations.  The Board may
require any person to whom Bonus Credits or Bonus Shares are issued to give
written assurances in substance and form satisfactory to the Board to the
effect that such person is acquiring the same for such person’s own account for
investment and not with any present intention of selling or otherwise
distributing the same, and to such other effects as the Company deems
necessary, appropriate or desirable in order to comply with federal and
applicable state securities laws, or with covenants or representations made by
the Company in connection with any public offering of its capital stock.


 


19.  No Employment Status.  Nothing contained in the Plan or in the Stock
Bonus Agreement or other agreement or instrument executed pursuant to the
provisions of the Plan shall confer upon any Registered Representative the
status as an employee of LPL or the Company or interfere in any way with the
right of LPL at any time to terminate the Representative.


 


20.  No Special Registered
Representative Status.  Nothing
contained in the Plan or in the Stock Bonus Agreement or other agreement or
instrument executed, pursuant to the provisions of the Plan shall confer upon
any Registered Representative the status as registered representative licensed
with LPL or the Company.


 


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21.  No Rights as Shareholder.  Unless and until Bonus Shares are issued to a
Qualifier, the Qualifier shall have no rights as a shareholder with respect to
any shares to be issued under the Plan (including, without limitation, any
voting rights, the right to inspect or receive the Company’s balance sheets or
financial statements or any rights to receive dividends or non-cash
distributions with respect to such shares).


 


22.  General Provisions.


 


(a)  Nothing contained in the Plan shall prevent
LPL or the Company from adopting other or additional compensation arrangements
for LPL’s Registered Representatives, and LPL’s and the Company’s employees,
officers and directors.


 


(b)  The Plan and all actions taken hereunder
shall be governed by and construed in accordance with the laws of the
Commonwealth of Massachusetts, without reference to principles of conflict of
laws.


 


LPL Investment Holdings Inc.


 


Approved by the Board of Directors effective as of January 17,
2006.


 


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