Document:

Exhibit 10.9

 

LEGG MASON, INC. 1996 EQUITY INCENTIVE PLAN

 

RESTRICTED STOCK UNIT AWARD AGREEMENT

 

Legg Mason, Inc. (the “Company”) hereby grants to you (the “Participant”), pursuant to the Legg Mason, Inc. 1996 Equity Incentive Plan, as amended (the “Plan”), an award (the “Award”) of restricted share units (“RSUs”), upon and subject to the restrictions, terms and conditions set forth below.  Each RSU will constitute a right to receive, upon and subject to vesting of such RSU, one share of Common Stock (the shares of Common Stock distributable upon the vesting of RSUs hereunder are referred to herein as “Shares”).  This document constitutes Participant’s “Award Notification”. By electronically accepting the Award, you are acknowledging your acceptance of the Award subject to the restrictions and upon the terms and conditions set forth in this Agreement and the Plan. The number of RSUs included in the Award shall be as set forth on the third party website pursuant to which this Award Notification is electronically delivered to Participant and in the books and records of the Company, which shall control, absent manifest error, in the event of a discrepancy.  The Grant Date for this Award shall for all purposes be               , 20    .

 

This Award is subject in all respects to the applicable provisions of the Plan.  Such provisions are incorporated herein by reference and made a part hereof.  Capitalized terms that are not defined in Section 5.7 below are defined in the Plan and shall have the meanings specified in the Plan.

 

In addition to the terms, conditions and restrictions set forth in the Plan, all terms, conditions and restrictions set forth in this Agreement are applicable to the Award granted hereby.

 

1.             RIGHTS AS A STOCKHOLDER.

 

Until the RSUs subject to this Award have vested under Section 3 and the underlying Shares have been distributed under Section 2, Participant shall have no ordinary rights as a stockholder with respect to the RSUs or such Shares other than the right to receive dividend or distribution equivalents on the RSUs as set out below.  Therefore, until the RSUs subject to this Award have vested and underlying Shares have been distributed, Participant shall have no rights to receive, vote, take possession of or transfer the Shares.  Commencing on the Grant Date, Participant shall have the right to receive dividend and other distribution equivalents with respect to the Shares underlying unvested RSUs that are the subject of this Award unless and until such RSUs are forfeited pursuant to Section 3 hereof; provided, however, that for any dividend or other distribution (including, without limitation, a stock dividend or stock split) on shares of Common Stock that is not a cash dividend or distribution, the dividend or distribution equivalent shall be delivered to the Company, shall be held by the Company in accordance with Section 2 below and shall be subject to the same vesting schedule and other restrictions as the RSUs with respect to which such dividend or other distribution equivalent relates.  In connection with the payment of such dividend or other distributions equivalents the Company may deduct any taxes or other amounts required by any governmental authority to be withheld and paid over to such authority for the account of Participant or may include such dividend or distribution equivalent in the payroll of Participant’s employer so that such dividend or distribution

 

 

equivalent is included within the compensation of Participant for withholding and other taxation purposes.  Participant shall be entitled to retain cash dividend and distribution equivalents received regardless of whether the RSUs with respect to which such dividend or distribution equivalents were made are subsequently forfeited pursuant to Section 3 hereof.  Notwithstanding anything to the contrary, RSUs shall at all times be subject to the restrictions on transferability contained in Section 4.1 hereof.

 

2.             CUSTODY AND DELIVERY OF RSUS AND UNDERLYING SHARES.

 

RSUs subject to this Award shall be held solely on the books and records of the Company and shall remain as such until the RSUs have vested under Section 3 hereof.  Participant may not receive or take possession of any Shares underlying unvested RSUs subject to this Award, either through physical share certificates or through book-entry accounts held by, or in the name of, Participant.  The Company shall not allow any transfers of RSUs subject to this Award.  Upon the vesting of any RSUs subject to this Award pursuant to Section 3, the Company will issue to Participant one share of Common Stock for each vested RSU, at which point each such vested RSU will terminate.  The Company shall deliver Shares underlying RSUs subject to this Award that have vested pursuant to Section 3 below to Participant through book entry transfer to an account in Participant’s name at a financial institution that is selected by the Company.  Share certificates representing distributed Shares shall not be issued by the Company until such Shares have been delivered to Participant’s account as specified above.  Participant hereby authorizes the Company, and any financial institution at which the Company or Participant establishes an account to which the Shares underlying RSUs subject to this Award will be distributed, to transfer any Shares underlying vested RSUs to Participant’s account as discussed above.  The Company shall pay all original issue or transfer taxes and all fees and expenses incident to the delivery of any Shares hereunder; provided that the Company shall not pay the expenses related to any sale of Shares received upon vesting of RSUs subject to this Award, regardless of whether such sale is made to satisfy expenses or withholding or other taxes

 

3.             VESTING AND FORFEITURE.

 

(a)           Except as otherwise provided in the Plan or in Section 3(b) of this Agreement, twenty-five percent (25%) of the RSUs subject to Participant’s Award shall vest and be distributed in shares of Common Stock pursuant to Section 2 (to “vest”) on each of April 30, 20    , April 30, 20    , April 30, 20     and April 30, 20     (each, a “Vesting Date”).

 

(b)           Participant’s right to vest in this Award is conditioned upon Participant’s continuous employment with the Firm, except to the limited extent to which vesting may continue following a termination of Participant’s employment as provided below.  If Participant’s continuous employment with the Firm terminates or is interrupted for any reason stated below, Participant’s rights with respect to the Award shall be affected as follows:

 

(1)           Resignation.  Except as otherwise provided below, if Participant resigns or otherwise terminates his or her employment with the Firm for any reason, Participant’s unvested Award shall be forfeited and Participant’s vested but undistributed Award (if any) shall be distributed to Participant in accordance with Section 2 hereof.

 

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(2)           Disability.  Upon termination of Participant’s employment with the Firm by reason of his or her Disability, on the date of such termination, Participant’s unvested Award shall be 100% vested and Shares underlying such vested RSUs shall be distributed to Participant in accordance with Section 2 hereof.

 

(3)           Death.  Upon termination of Participant’s employment with the Firm due to death, on the date of such termination, Participant’s unvested Award shall be 100% vested and Shares underlying such vested RSUs shall be distributed to Participant’s beneficiaries under Section 4.2 hereof in accordance with Section 2 hereof.

 

(4)           Termination for Cause.  Upon termination of Participant’s employment by the Firm for Cause, Participant’s unvested Award shall be immediately forfeited.

 

(5)           Change of Control.  In the event that a Change of Control occurs and within 12 months of such Change of Control (i) the Participant’s employment with the Firm is terminated by the Firm without Cause or (ii) the Participant terminates his or her employment with the Firm for Good Reason, then, as of the date of such termination, Participant’s unvested Award shall be 100% vested and Shares underlying such vested RSUs shall be distributed to Participant in accordance with Section 2 hereof.

 

(6)           Termination without Cause.  Except as otherwise specified in this Section 3(b), upon a termination of Participant’s employment by the Firm without Cause, Participant’s unvested Award shall be immediately forfeited.

 

(7)         Termination of Employment Due to Retirement.  If Participant’s employment with the Firm terminates before the date on which all RSUs subject to Participant’s Award have vested and (i) the reason for such termination is Participant’s retirement pursuant to Section 7.1 (or any successor retirement provision) of the Legg Mason Profit Sharing Plan and (ii) such termination of employment is without Cause, then the unvested portion of Participant’s Award shall continue to vest in accordance with Section 3(a) as long as Participant does not engage in Competitive Activity.  If Participant engages in Competitive Activity, then the portion of Participant’s Award that is unvested at the time Participant engages in such activity shall be immediately forfeited.  In the event of Participant’s death during the period in which unvested Awards are continuing to vest under this clause (7), then, as of the date the Company becomes aware of such death, Participant’s unvested Award shall be 100% vested and Shares underlying such vested RSUs shall be distributed to Participant in accordance with Section 2 hereof.

 

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(8)           Reduction in Workforce.  If Participant’s employment with the Firm terminates before the date on which all RSUs subject to Participant’s Award have vested and (i) such termination is due to the elimination of Participant’s in connection with a reduction in workforce by the Firm and (ii) such termination of employment is without Cause, then, as of the date of such termination, Participant’s unvested Award shall be 100% vested and Shares underlying such vested RSUs shall be distributed to Participant in accordance with Section 2 hereof.

 

To the extent that Section 409A of the Code applies to the vesting or distribution of any RSUS or underlying Shares hereunder, then any vesting or distribution made in connection with or following the Participant’s separation from service (within the meaning of Section 409A(a)(2)(A)(i) of the Code and the regulations issued thereunder) shall not be made earlier than the first business day of the seventh month following the Participant’s separation from service, or if earlier the date of death of the Participant.  Any vesting or distribution that is delayed in accordance with the foregoing sentence shall be made on the first business day  following the expiration of such six (6) month period.

 

4.             ADDITIONAL TERMS AND CONDITIONS OF THE AWARD.

 

4.1.         NONTRANSFERABILITY OF RSUS.

 

RSUs may not be sold, transferred, assigned, pledged, hypothecated, encumbered or otherwise disposed of (whether by operation of law or otherwise) or be subject to execution, attachment or similar process.  Any such attempted sale, transfer, assignment, pledge, hypothecation or encumbrance, or other disposition of any such RSUs shall be null and void.

 

4.2.         BENEFICIARIES.

 

Participant may designate in writing, on a form to be prescribed by and filed with the Committee, a beneficiary to receive all or part of the Shares to be distributed under the Plan in the event of Participant’s death.  A designation of a beneficiary may be replaced by a new designation or may be revoked by Participant at any time and in accordance with such rules and procedures established by the Committee on a form prescribed by and filed with the Committee.  In the event of Participant’s death, Shares due under the Plan in respect of RSUs with respect to which a designation of a beneficiary has been made (to the extent it is valid and enforceable under applicable law) shall be distributed in accordance with the Plan to the designated beneficiary.  Distributions due under the Plan and not subject to a beneficiary designation shall be distributed to Participant’s estate.  If there is any question as to the legal right of any beneficiary to receive any distribution under the Plan, the distribution in question may be made in the sole discretion of the Committee to the estate of Participant, in which event the Firm shall have no further liability to anyone with respect to such distribution.  Distribution to the executors or administrators of the estate of Participant may be conditioned on the delivery to the Committee of such tax waivers, letters testamentary and other documents as the Committee may reasonably request.

 

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4.3.         RIGHT OF SET OFF.

 

Notwithstanding any provisions of this Agreement to the contrary, the Committee, the Firm and the Company may offset any amounts that Participant may owe to the Firm against the shares subject to a Participant’s Award and any distributions that would have otherwise been made to Participant under the Plan.

 

4.4.         CONSENT TO ELECTRONIC DELIVERY.

 

In lieu of receiving documents in paper format, Participant hereby agrees, to the fullest extent permitted by law, to accept electronic delivery of any documents that the Firm elects to or is required to deliver (including, but not limited to, the Prospectus related to Participant’s Award, any supplements to that Prospectus, award notifications and agreements, account statements, monthly or annual reports, and all other forms or communications) in connection with Participant’s Award.  Electronic delivery of a document to Participant may be via a Firm e-mail system or by reference to a location on a Firm intranet site or a third-party’s Internet site to which Participant has access.

 

4.5.         SECURITIES LAWS.

 

Participant hereby represents and covenants that if in the future Participant decides to offer or dispose of any Shares distributed with respect to vested RSUs subject to this Award or interest therein, Participant shall do so only in compliance with this Agreement, the Securities Act of 1933, as amended, and all applicable state and local national securities laws as appropriate.  As a condition precedent to the delivery to Participant of any Shares underlying vested RSUs subject to this Award, Participant shall comply with all regulations and requirements of any regulatory authority having control of or supervision over the issuance of the Shares and, in connection therewith, shall execute any documents and make any representation and warranty to the Company which the Committee shall in its sole discretion deem necessary or advisable.

 

4.6.         ADJUSTMENT.

 

In the event that there occurs (a) any change in the number of outstanding shares of Common Stock through the declaration of dividends, stock splits or the like or through any change in the capital account of the Company or any other transaction referred to in Section 424(a) of the Code or (b) any other change in the capital structure of the Company or in the Common Stock, then, if applicable, the number of RSUs subject to this award, and, if applicable, number and class of underlying Shares, shall be adjusted as provided in the Plan.  Any decision of the Committee regarding the amount and timing of any adjustment shall be final and conclusive.

 

4.7.         COMPLIANCE WITH APPLICABLE LAW.

 

This Award is subject to the condition that if the listing, registration or qualification of the Shares distributed with respect to RSUs subject to this Award upon any securities exchange or under any law, or the consent or approval of any governmental body, or the taking of any other action is necessary or desirable as a condition of, or in connection with,

 

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the vesting of RSUs or delivery of underlying Shares hereunder, the RSUs or underlying Shares may not be delivered, in whole or in part, unless such listing, registration, qualification, consent or approval shall have been effected or obtained.  The Company agrees to make every reasonable effort to effect or obtain any such listing, registration, qualification, consent or approval.

 

By signing the Award Notification, however, the Participant acknowledges and agrees that he or she is and remains responsible for any local compliance requirements or regulations in relation to the receipt, ownership and possible subsequent sale of the Company’s Common Stock.  The Participant also agrees that he or she is responsible for any local compliance requirements or regulations in relation to the opening and use of a U.S. brokerage account.

 

4.8.         WITHHOLDING; TAX MATTERS

 

(a)           The Company may, and the Participant hereby authorizes the Company to, deduct an amount sufficient to satisfy all federal, state and local withholding tax requirements arising in connection with this Award, from payments of any kind by the Company or its subsidiaries to which the Participant would otherwise be entitled, including without limitation, salary, bonus and other compensation.  Alternatively the Participant may elect to remit to the Company by check an amount sufficient to satisfy any federal, state or local withholding tax requirements, prior to the delivery of Shares pursuant to Section 2 hereof.  As another alternative, the Participant may, with respect to withholding taxes that are due upon vesting of RSUs or delivery of Shares, elect, prior to the vesting of any RSUs subject to this Award, to irrevocably instruct the financial institution to which the underlying Shares will be delivered upon vesting, prior to vesting (x) to sell on behalf of Participant immediately on vesting a sufficient number of Shares to produce funds to satisfy any federal, state or local withholding tax requirements and (y) to pay such funds over to the Company to satisfy such taxes and provide the Company, prior to the applicable vesting date, with notice of such election (including a copy of such instructions).  Notwithstanding the foregoing, if Participant fails to either provide the check described in the prior sentence or, if applicable, provide the irrevocable sale instructions described in the preceding sentence, in each case by the date any withholding tax with respect to any RSUs or underlying Shares is due, the Company shall, and Participant hereby authorizes the Company to, either (i) withhold delivery of underlying Shares or deduct amounts required to be withheld from payments of any kind by the Company or its subsidiaries to which Participant would otherwise be entitled, including without limitation salary, bonus and other compensation or (ii) to irrevocably instruct the financial institution to which the Shares will be delivered upon the related RSUs vesting (x) to sell on behalf of Participant immediately on the RSUs vesting a sufficient number of Shares to produce funds to satisfy any federal, state or local withholding tax requirements and (y) to pay such funds over to the Company to satisfy such taxes.  Participant acknowledges that in the event the preceding sentence applies, the Company shall elect either option contained therein in its sole discretion without any liability to the Participant resulting from the option the Company selects or the timing under which the Company makes and carries out the election.

 

(b)           The Company reserves the right to make whatever further arrangements it deems appropriate for the withholding of taxes in connection with any transaction contemplated by this Agreement or the Plan, including, without limitation, providing for payments of withholding taxes by deducting amounts required to be withheld, plus interest thereon, from

 

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payments of any kind by the Company or any of its subsidiaries to which Participant would otherwise be entitled.

 

4.9.         AWARD CONFERS NO RIGHTS TO CONTINUED EMPLOYMENT OR FUTURE AWARDS.

 

Nothing in the Plan or in this Agreement shall confer upon Participant any right to continue in the employ of the Company or any subsidiary of the Company for a specified period of time or interfere with the right of the Company and its subsidiaries to terminate such employment at any time.  In addition, neither the Plan nor this Agreement confers any right upon the Participant to receive future awards under the Plan.  All future awards, if any, are completely at the discretion of the Company.  Moreover, any awards granted under the Plan are not part of the Participant’s ordinary compensation, employment agreement, if any, or working relationship with the Company or any of its affiliates and will therefore not be considered as part of such compensation, agreement or relationship in the event of severance, redundancy or resignation, unless otherwise required by applicable law.

 

4.10.       CLAWBACK PROVISIONS

 

Notwithstanding anything to the contrary in this Agreement, this Award is expressly made subject to the terms of the clawback provisions set forth below.  As a result, Participant may be required to return to the Company the RSUs received in this Award, or the underlying Shares (or the value thereof), in the situations described below.  Participant agrees that the Company may enforce the forfeiture by all legal means available, including, without limitation, by withholding the forfeited amount from other sums owed to Participant by the Firm.

 

In the event of a restatement of the Company’s financial results to correct a material error, then, if the Legg Mason, Inc. Board of Directors reasonably determines that Participant’s fraud or willful misconduct were a significant contributing factor to the need to issue such restatement and that all or any portion of Participant’s RSUs, if the Award was made prior to the restatement, would not have been awarded based upon the restated financial results, then Participant agrees to forfeit and return to the Company, to the extent permitted by applicable law, the portion (which may be all) of the RSUs or the underlying Shares or value thereof (regardless of whether vesting has occurred and underlying Shares distributed to Participant) that the Board of Directors, in its discretion, determines to be appropriate.

 

5.             MISCELLANEOUS PROVISIONS.

 

5.1.         SUCCESSORS; ASSIGNMENTS AND TRANSFERS.

 

This Agreement shall be binding upon and inure to the benefit of any successor or successors of the Company and any person or persons who shall, upon the death of Participant, acquire any rights hereunder.  The rights and interests of Participant under this Agreement may not be sold, assigned, encumbered or otherwise transferred except in the event of death of Participant, by will or by the laws of descent and distribution.  This Agreement may be assigned by the Company without Participant’s consent.

 

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5.2.                            NOTICES.

 

All notices, requests or other communications provided for in this Agreement shall be made in writing either (a) by actual delivery to the party entitled thereto, or (b) by mailing in the mails of the United States or, for Participants who reside in another country, of the other country to the address of the party entitled thereto as set forth below, via certified or registered mail, return receipt requested.  The notice shall be deemed to be received in case of delivery, on the date of its actual receipt by the party entitled thereto, and in case of mailing, five days following the date of such mailing.  Any notice mailed to the Company shall be addressed to the Restricted Stock Administrator of the Company at 100 International Drive, Baltimore, Maryland 21202.  Any notice mailed to Participant shall be addressed to Participant at Participant’s address as reflected in the personnel records of the Company.  Either party hereto may designate a different address for notices than the one provided herein by notice to the other.

 

5.3.         CONSENT AND DISCLOSURE REGARDING USE OF PERSONAL INFORMATION.

 

In connection with the grant of the Award, and any other award under the Plan, and the implementation and administration of the Plan, including, without limitation, Participant’s actual participation, or consideration by the Committee for potential future participation in the Plan at any time, it is or may become necessary for the Firm to collect, transfer, use, and hold certain personal information regarding Participant in and/or outside of Participant’s home country.  By accepting the Award, Participant explicitly consents (i) to the use of such information for the purpose of being considered for participation in future awards under the Plan (to the extent he/she is eligible under the Plan, and without any guarantee that any award shall be made); and (ii) to the use, transfer, processing and storage, electronically or otherwise, of his/her personal information, as such use has occurred to date, and as such use may occur in the future, in connection with this Award or any other award under the Plan, as further described below.

 

Use, transfer, storage and processing of personal information, electronically or otherwise, may be in connection with the Company’s internal administration of the Plan, or in connection with tax or other governmental and regulatory compliance activities directly or indirectly related to the Award or any other award under the Plan.  For such purposes only, personal information may be used by third parties retained by the Company to assist with the administration and compliance activities of the Plan, and may be transferred by the company that employs (or any company that has employed) Participant from Participant’s home country to other members of the Company and third parties located in the United States and in other countries.  Specifically, those parties that may have access to Participant’s information for the purposes described herein include, but are not limited to, (i) human resources personnel responsible for administering the Plan; (ii) Participant’s U.S., regional and local employing entity and business unit management, including Participant’s supervisor and his/her superiors; (iii) the Committee or its designee, which is responsible for administering the Plan; (iv) the Company’s technology systems support team (but only to the extent necessary to maintain the proper operation of electronic information systems that support the Plan); and (v) internal and external legal, tax and accounting advisors (but only to the extent necessary for them to advise the Company on compliance and other issues affecting the awards under the Plan in their respective fields of expertise).

 

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At all times, Company personnel and third parties shall be obligated to maintain the confidentiality of Participant’s personal information except to the extent the Company is required to provide such information to governmental agencies or other parties.  Such action shall always be undertaken only in accordance with applicable law.  The personal information that the Company may collect, process, store and transfer for the purposes outlined above may include Participant’s name, nationality, citizenship, work authorization, date of birth, age, government/tax identification number, passport number, brokerage account information, or other internal identifying information, home address, work address, job and location history, compensation, business unit, employing entity, and Participant’s beneficiaries and contact information.  Participant may obtain more details regarding the access and use of his/her personal information, and may correct or update such information, by contacting his/her human resources representative.

 

5.4          MARKET FLUCTUATIONS.

 

The Company is not responsible for any foreign exchange fluctuations between the Participant’s local currency, if the Participant is not located in the U.S., and the U.S. dollar nor is the Company responsible or liable for any decrease in the value of the Company’s Common Stock at any time, all of which shall be solely the risk and responsibility of the Participant.

 

5.5.         CONFLICT; GOVERNING LAW.

 

In the event of a conflict between this Agreement and the Plan, the Plan shall control.  This Agreement shall be governed by, and interpreted in accordance with, the internal laws of the State of New York  (without regard to conflicts of laws rules thereof).

 

5.6          COUNTERPARTS.

 

This Agreement may be executed in two or more counterparts each of which shall be deemed an original and all of which together shall constitute one and the same instrument.

 

5.7          DEFINITIONS.

 

Unless otherwise defined herein, the following terms have the meanings set forth below.

 

“Cause” means any one or more of the following types of behavior by Participant which the Firm in its sole discretion finds to be sufficient reason to terminate the Participant’s employment with the Firm:  (i) any conduct (a) that constitutes Competitive Activity, (b) that breaches any obligation to the Firm or Participant’s duty of loyalty to the Firm, or (c) that is materially injurious to the Firm, monetarily or otherwise; (ii) material violation of, or an act taken by the failure to act which causes the Firm to be in violation of any government statue or regulation, or of the constitution, by-laws, rules or regulations of any securities or commodities exchange or a self-regulatory organization, or of the policies of the Firm; (iii) the entering of an order or decree or the taking of any similar action with respect to Participant which substantially impairs such Participant from performing his or

 

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her duties or makes him or her ineligible from being associated with the Company pursuant to Section 9 of the Investment Company Act of 1940, as amended, or Section 203(f) of the Investment Advisors Act of 1940, as amended; (iv) malfeasance, disloyalty or dishonesty in any material respect; (v) any conviction for a felony: (vi) any failure to devote all professional time to assigned duties and to the business of the Firm; (vii) failure to satisfactorily perform duties, as determined by the Firm’s management in its sole discretion, or gross misconduct or gross negligence in the performance of duties; or (viii) failure to remain licensed to perform duties or other act, conduct or circumstance which renders the Participant ineligible for employment with the Firm.

 

“Change of Control” means any of the following events: (i) any person, including a “person” as such term is used in Section 14(d)(2) of the Securities Exchange Act of 1934, as amended, acquires, directly or indirectly, beneficial ownership of securities representing 50.1% or more of the combined voting power of the outstanding equity securities of the Company; (ii) the closing of any merger, consolidation or other reorganization involving the Company with respect to which the stockholders of the Company immediately prior to such reorganization do not hold, directly or indirectly, more than 50% of the combined voting power of the outstanding equity securities of such successor entity immediately following such transaction; (iii) the closing of any transaction involving a sale of assets of the Company that have a total gross fair market value equal to or more than 90% of the total gross fair market value of all of the assets of the Company; (iv) the adoption of any plan or proposal for the liquidation or dissolution of the Company; or (v) within any 12-month period, individuals who, as of May 15, 20    , constitute the board of directors of the Company (the “Incumbent Board”) cease for any reason to constitute at least a majority of such board; provided, however, that any individual becoming a director subsequent to such date whose election, or nomination for election by the Company’s stockholders, was approved by a vote of at least a majority of the directors then comprising the Company’s board of directors shall be considered as though such individual were a member of the Incumbent Board.

 

“Code” means the Internal Revenue Code of 1986, as amended.

 

“Committee” means the Compensation Committee of the Company’s Board of Directors or such committee or persons designated by that Compensation Committee to act on its behalf.

 

“Common Stock” means Legg Mason, Inc. common stock, par value $.10 per share.

 

“Competitive Activity” means Participant’s engagement in any activity that competes with any of the Firm’s business operations, as determined by the Committee, in its sole discretion, and shall include, without limitation, representing in any capacity, other than as an outside director, a company that competes with the Company and its subsidiaries.

 

“Disability” means a medically determinable physical or mental impairment which qualifies the Participant for total disability benefits under the Social Security Act; or which, in the opinion of the Committee (based upon such evidence as it deems satisfactory):  (i) can be expected to result in death or to last at least 12 months and (ii) will prevent the

 

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Participant from performing his usual duties or any other similar duties available in the Firm’s employ.

 

“Firm” means, except as otherwise provided under Section 409A of the Code and the regulations promulgated thereunder, the employing entity of any individual determined by the Committee to be a participant in the Plan and, if the employing entity of any Participant should change to another affiliate of the Company, such other affiliate.

 

“Good Reason” means (i) a material adverse change in the responsibilities of the Participant from those in effect prior to the Change of Control and (ii) the Participant’s principal place of employment is moved more than 50 miles from the location immediately prior to the Change of Control, (iii) the Participant’s base salary is significantly reduced or (iv) Participant’s incentive compensation for a fiscal year is materially reduced from his or her incentive compensation for the prior fiscal year, and such reduction is not related to a reduction in the responsibilities of the Participant or either individual or corporate performance.

 

“Grant Date” means the “Grant Date” set forth in the Participant’s Award Notification.

 

“Legg Mason Profit Sharing Plan” means the Legg Mason & Co., LLC Profit Sharing and 401(k) Plan and Trust, as such plan may be amended from time to time.

 

 

	
 
    	
LEGG   MASON, INC.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:   
    	
Thomas   C. Merchant
    
	
 
    	
Title:   
    	
Secretary
    

 

11ex10-1.htm

 

 

"**"Denotes certain parts that have not been disclosed and have been filed separately with the Secretary, Securities and Exchange Commission, and is subject to a confidential treatment request pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

 

May 18th, 2011

Mr. James Briscoe

Chairman, President, Chief Executive Officer and Chief Financial Officer

Liberty Star Uranium and Metals Corp.

5610 E Sutler Lane

Tucson, AZ     85712

	
Re:

	
Engagement Letter for Exclusive Financial Advisory Services

Dear Mr. Briscoe:

McNicoll, `Lewis & Vlak LLC, is pleased to provide this Engagement Letter (the “Letter”) to Liberty Star Uranium Metals Corp (“Company” or “Liberty Star” or “you”).

The purpose of this Letter is to set forth the terms and conditions under which MLV will provide certain exclusive and other non-exclusive financial advisory services to the Company as described herein.  Upon the Company’s acceptance of this Letter, MLV will commence the activities and services as outlined herein.

	
1.

	
Engagement.  The Company engages McNicoll, Lewis & Vlak LLC (“Financial Advisor” or “we” or “us”) to act as your exclusive financial advisor, with such activities to include general corporate advisory and possible merger/acquisition work involving the Company or core Company assets including Big Chunk in Alaska, and Tombstone (and related opportunities) and North Pipes in Arizona (together, the “Properties”).  The Engagement may also include, as directed by the Company and on a non-exclusive basis, arranging, placing and/or underwriting debt or equity securities of the Company (the “Securities”) in the public or private markets.  Any placement of securities (the “Placement”) shall be on a “best efforts” basis.

	
  

	
During the term of our Engagement, we will as appropriate:

 

	
  

	
a)

	
Review information related to the business, operations and financial performance of Liberty Star which MLV considers to be relevant, including asset valuations, corporate valuations, feasibility studies, historical and management prepared projected exploration, development and operating statements and capital expenditure requirements;

 

	
  

	
b)

	
Review such financial, market and industry information and conduct such other analyses as it considers relevant and appropriate in the circumstances;

 

	
  

	
c)

	
Provide the Company with an estimate of value for Big Chunk;

 

	
  

	
d)

	
Assist the Company in evaluating its strategic options related to Big Chunk;

 

	
  

	
e)

	
Provide the Company with an estimate of value of its Arizona Properties;

	
 

 

	
  

	
f)

	
Assist the Company in evaluating strategic options regarding its Arizona Properties including a review of Nord Resources as a potential party for amalgamation, sale or acquisition;

 

  

  

  

Liberty Star Uranium and Metals Corp.

May 18th, 2011

	
  

	
g)

	
Assist the Company in assessing the best corporate structure for financing and developing the Company’s Properties for maximizing shareholder value;

 

	
  

	
h)

	
Further to 1(d) and 1(f), identify potential merger partners or acquisition targets for the Company; and, with the concurrence of the Company, approach potential merger partners or acquisition targets to investigate their interest in entering into a transaction with the Company;

 

	
  

	
i)

	
Further to 1 (d) and 1(f), provide the Company structuring, pricing and negotiation advice for the sale of, acquisition by, merger or joint venture of the Company’s Properties;

 

	
  

	
j)

	
Arrange, place and/or underwrite, as directed by the Company, any corporate equity or debt financing;

 

	
  

	
k)

	
Other tasks to be mutually agreed upon between the Company and MLV.

 

	
  

	
The term of the Financial Advisor Engagement hereunder shall extend for twelve months (plus any Tail as applicable) commencing with the signing of the Letter unless terminated by either party on thirty days' written notice and may be extended if the parties mutually agree.  The Company may terminate the engagement after four months subject to paragraph 6 below.

You acknowledge and agree that our Engagement pursuant to this Letter is not an agreement by us or any of our affiliates to underwrite or purchase any Securities or otherwise provide neither any financing, nor an agreement by you to issue and sell any Securities. You may in your discretion postpone, modify, abandon or terminate any transaction prior to closing. We may decline to participate in any Placement if we reasonably determine that the offering has become impractical, undesirable, or for any other reason that we determine may be detrimental to us.  We may retain other brokers or dealers to act as sub-agents on our behalf in connection with the Placement, in which case we will share the fees charged with them.

	
2.

	
Fees.  For our services, you agree to pay us:

 

	
  

	
a)

	
A retainer fee of $20,000 per month (the “Retainer”) commencing at the start of the Engagement and payable for a minimum of four months provided we have not been terminated for cause. “Cause” includes illegal activity, fundamental breach of contract, other acts of gross negligence and willful misconduct, or the inability or unwillingness of Roman Friedrich to personally carry out MLV’s obligations under this Agreement. The Retainer may be in the form of cash or common shares of Liberty Star, however the minimum cash payment shall be $10,000 per month and common shares shall be paid in accordance with paragraph 2(e) of this Letter.  Fifty percent of the retainer shall be offset against any success fees payable under (b) and (c) below;

 

	
  

	
b)

	
With regard to any merger, acquisition, joint venture, sale, asset sale, asset purchase, strategic investment from a company or companies engaged in the metals and mining industry, vend-in or strategic partnership (a “Strategic Event”), a success fee equal to the product of the Transaction Value times the success fee percentage as described below (“Success Fee”):

 

	
Transaction Value

	
Success Fee Percentage

	
$0 - $10,000,000

	
5%

	
$10 - $25,000,000

	
3%

	
>$25,000,000

	
2%

 

For purposes of this Letter, “Transaction Value” shall include any consideration paid for the shares or assets of Liberty Star or consideration paid by Liberty Star in the acquisition of the shares or assets of another company, including but not limited to cash, securities, options or rights, property, joint venture interests and the net present value of future receipts or benefits received, or obligations assumed or forgiven. Any non-cash consideration will be assessed at its estimated fair market value at the time of closing.

 

For clarification, if the Transaction Value was determined to be $27,000,000 then the Success Fee would be ($10,000,000 x 5%) plus ($15,000,000 x 3%) plus ($2,000,000 x 2%) for a total Success Fee of $990,000.  Up to 30% of the Success Fee in this subsection (b) may be paid in the form of Company shares at the Company’s discretion.  All Success Fees are payable at financial closing;

 

However, if a Strategic Event involves a Company Candidate (please see Annex B, “Company Candidate List”, then MLV shall be entitled to fifty percent (50%) of the Success Fee as described in this paragraph 2(b).

 

	
  

	
c)

	
With regard to any equity or debt offering by Liberty Star of which MLV introduced the investor or at the request of Liberty Star had an active role in closing, an underwriting or placement fee (as the case may be) equal to 7% of the gross proceeds of such offering, of which 5% shall be in the form of a cash payment and 2% shall be in the form of Company common shares, payable at financial closing;

 

	
  

	
d)

	
All share issuances may be to MLV, an affiliate and/or our assigns, and are subject to regulatory approval where applicable, and must be made full compliance with all securities laws, regulations policies and rules. , Securities will be subject to such hold periods as are required by  securities regulatory authorities. The number of common shares to be issued by Liberty Star under any of the provisions of this Letter shall be calculated by dividing the dollar amount to be paid in common shares of the Company by the  Market Price (being the five day closing average price) on the date prior to the due date of those shares, less a 25% discount . Shares issued under 2(a) shall be issued quarterly within five business days of the due date for the shares at the end of each calendar quarter. Shares issued under 2(b) and 2(c) shall be issued within five business days of the due date of the shares. Liberty Star shall use its best efforts to obtain regulatory approval as required. However, if after 60 days from the respective due date Liberty Star has not received regulatory approval, MLV shall have the option to elect to receive the equivalent amount in cash in lieu of shares, unless such failure is a result of the act or omission of MLV.

 

	
  

	
e)

	
You will also pay us the same selling commission on any Placement by you or any affiliate or Success Fee on any Strategic Event that is closed within twelve months from the date of the termination of this engagement (the “Tail”); provided, however, that (i) with respect to a Strategic Event, MLV shall be entitled to the Success Fee if the Company closes a transaction with a party that has been identified  by MLV under Section 1 or identified and contacted by the Company as a potential party interested in a Strategic Event during the Term; and (ii) with respect to a Placement, this shall only apply to Securities sold to investors participating in a Placement during the Term of this agreement or have been introduced to the Company during the Term by the Financial Advisor

 

 

  

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Liberty Star Uranium and Metals Corp.

May 18th, 2011

	
  

	
f)

	
You agree to reimburse us for our reasonable expenses incurred in preparing to market and marketing the Securities, including, but not limited to, legal, travel, fees and disbursements, and printing and distribution of Offering Materials, whether or not a closing occurs. MLV will seek pre-approval from the Company for any expense item greater than $2500.

	
3.

	
Indemnification and Contribution.  Annex A is hereby incorporated into this agreement by reference and made a part of this agreement.

	
4.

	
Representations, Warranties and agreements of the Company.  You represent and warrant to, and agree with us, that:

	
  

	
(a)

	
the Securities will be offered and sold by you in compliance with the requirements for exemptions from registration or qualification of, and otherwise in accordance with, all federal and state securities laws and regulations;

	
  

	
(b)

	
you will have responsibility for the accuracy and completeness of any Offering Materials.  You agree to notify us promptly of any material adverse changes, or development that may lead to any material adverse change, in your business, properties, operations, financial condition or prospects that concern any statement contained in the Offering Materials, or in any other information provided to us in connection with the Offering Materials, which is inaccurate, incomplete or misleading in any material respect;

	
  

	
(c)

	
you will make available to us such documents and other information which we reasonably deem appropriate in connection with preparing the Offering Materials or conducting the Placement and will provide us with reasonable access to your officers, directors, employees, accountants, counsel and other representatives in connection therewith; it being understood that we will rely solely upon such information supplied by you and your representatives without assuming any responsibility for independent investigation or verification thereof; and

	
  

	
(d)

	
at each closing, you will permit us to rely on the representations and warranties of the Company.

For purposes of clarification, the representation contained in Section 4(a) above is intended solely to cover the Company and its officers, directors and employees, and will not be interpreted as a representation as to the Financial Advisor or any of its employees’ or agents’ compliance with applicable laws and regulations in connection with the Placement.

Representations, Warranties and agreements of the Financial Advisor.  We represent and warrant to, and agree with you that we will conduct ourselves completely in compliance with all applicable laws, rules and regulations and we will hold any confidential information of Liberty Star in the strictest confidence and we will not trade in the securities of Liberty Star while in possession of material information that has not been publicly disclosed by Liberty Star.

  

3

  

Liberty Star Uranium and Metals Corp.

May 18th, 2011

5.           Other Matters Relating to Our Engagement.  You acknowledge that you have retained us solely to provide the services set forth in this agreement.  In rendering such services, we will act as an independent contractor, and we owe our duties arising out of this Engagement solely to the Company.  You acknowledge that nothing in this agreement is intended to create duties to you or your creditors or security holders beyond those expressly provided for in this agreement, and we and you specifically disclaim the creation of any fiduciary relationship between, or the imposition of any fiduciary duties on, either party.

You agree that upon completion of a Strategic Event and/or Placement for which we have earned a fee, we may, at our option and expense and in full compliance with securities laws, place an announcement in such print and electronic news media as we may choose, stating that we have acted as financial advisor to the Company and/or placement agent in the Placement.  We will provide a draft of such announcement to you for your review prior to distribution of it.

	
  

	
You acknowledge that we are a securities firm engaged in securities trading and brokerage activities and providing investment banking and financial advisory services.  In the ordinary course of business, we and our affiliates may at any time hold long or short positions, and may trade or otherwise effect transactions, for our own account or the accounts of customers, in your debt or equity securities, or the debt or equity securities of your affiliates or other entities that may be involved in the transactions contemplated by this agreement.

	
  

	
In addition, we and our affiliates may from time to time perform various investment banking, commercial banking and financial advisory services for other clients and customers who may have conflicting interests with respect to you or the Placement.  You also acknowledge that we and our affiliates have no obligation to use in connection with this Engagement or to furnish you confidential information obtained from other companies.

	
  

	
Furthermore, you acknowledge we may have fiduciary or other relationships whereby we or our affiliates may exercise voting power over securities of various persons, which securities may from time to time include securities of the Company or of potential investors or others with interests in respect of the Placement.  You acknowledge that we or such affiliates may exercise such powers and otherwise perform our functions in connection with such fiduciary or other relationships without regard to our relationship with you hereunder.

	
  

	
You acknowledge that we are not an advisor as to legal, tax, accounting or regulatory matters in any jurisdiction.  You should consult with your own advisors concerning such matters and are responsible for making your own independent investigation and appraisal of the transactions contemplated by this agreement, and we have no responsibility or liability to you with respect to such matters.

	
6.

	
Termination.  You or we may terminate our Engagement under this agreement, with or without cause, upon thirty days’ written notice to the other party; provided, however, no such notice may be given by you with effective termination prior to four months from the date of this agreement.  You or we may terminate immediately at any time for Cause, as defined above.-  The Success Fee earned during the Term or the Tail (subject to the provision in paragraph 2(e)), expense reimbursement, indemnity, contribution and exculpation, your representations, warranties and agreements, and miscellaneous provisions of this agreement (including Annex A) will survive any termination of our Engagement under this agreement.

  

4

  

Liberty Star Uranium and Metals Corp.

May 18th, 2011

	
  

	
 

	
7.

	
Miscellaneous. This agreement will be governed by and construed in accordance with the laws of New York, without regard to its conflict of law principles.  You and we hereby waive all right to trial by jury in any action, proceeding, or counterclaim (whether based upon contract, tort or otherwise) in connection with any dispute arising out of this agreement or any matters contemplated by this agreement.  This agreement embodies the entire agreement and understanding between you and us and supersedes all prior agreements and understandings relating to the subject matter of this agreement.  This agreement may be executed in any number of counterparts.  The invalidity or unenforceability of any provision of this agreement will not affect the validity or enforceability of any other provisions of this agreement, which will remain in full force and effect.  This agreement is solely for the benefit of you and us, and no other person (other than the Indemnified Persons set forth in Annex A hereto) will acquire or have any rights by virtue of this agreement.

	
9.

	
Notices.   Any notice provided for or permitted under this Letter will be treated   as having been given (a) when delivered personally, on the next business day after the day on which it is sent, (b) when sent by commercial overnight courier with written verification of receipt, on the next business day after its delivery to the courier during normal business hours, or (c) when mailed postage prepaid by certified or registered mail, return receipt requested, on the fifth (5) business day after its date of posting.  Notices shall be sent to the addresses set forth below, or at such other place of which the other party has been notified in accordance with the provisions of this Section:

If to MLV:                                              MLV LLC

1251 Avenue of the Americas, 41st Floor

New York, NY  10020

(O) – (212) 542-5870

Attention: General Counsel

dcolucci@mlvco.com

If to Company:                                      Liberty Star Uranium and Metals Corp.

5610 E Sutler Lane

Tucson, AZ     85712

Attn:  Mr. James Briscoe

Chairman, President, CEO and CFO

(O) – (520) 731-8786

jbriscoe@libertystaruranium.com

Please confirm that the foregoing correctly and completely sets forth our understanding by signing and returning to us the enclosed duplicate of this Engagement agreement.

	
  

	
 

  

5

  

Liberty Star Uranium and Metals Corp.

May 18th, 2011

Sincerely,

McNicoll, Lewis & Vlak LLC

 

By     /s/ Brent Lewis

Brent Lewis

Title:  Principal

	
  

	
Agreed and accepted as of the date first above written.

Liberty Star Uranium and Metals Corp.

By    /s/ James Briscoe

	
  

	
James Bricoe

	
  

	
Title:  Chairman, President, Chief Executive Officer and Chief Financial Officer

  

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Liberty Star Uranium and Metals Corp.

May 18th, 2011

Annex A to Engagement Letter

You (the “Indemnifier”) agree to (i) indemnify and hold harmless us, our affiliates (within the meaning of the Securities Act of 1933), and each of our respective partners, directors, officers, agents, consultants, employees and controlling persons (within the meaning of the Securities Act of 1933) (Financial Advisor) and such other person or entity is hereinafter referred to as an “Indemnified Person”), from and against any losses, claims, damages, liabilities and expenses, joint or several, and all actions, inquiries, proceedings and investigations in respect thereof, to which any Indemnified Person may become subject arising out of or in connection with our Engagement or any matter referred to in the agreement to which this Annex A is attached and of which this Annex A forms a part (the “agreement”), regardless of whether any of such Indemnified Persons is a party thereto, and (ii) periodically reimburse an Indemnified Person for such person’s legal and other expenses as may be incurred in connection with investigating, preparing, defending, paying, settling or compromising any such action, inquiry, proceeding or investigation; provided, however, the indemnity provided in this Annex A shall not apply in connection with any losses, claims, damages, liabilities, expenses, actions, inquiries, proceedings, and investigations brought against an Indemnified Person by the Indemnifier, or in the name of or on behalf of the Indemnifier.  The Indemnifier is not responsible under the foregoing sentence for any losses, claims, damages, liabilities or expenses to the extent that such loss, claim, damage, liability or expense has been finally judicially determined to have resulted from actions taken or omitted to be taken by such Indemnified Person due to such person’s negligence or willful misconduct.  To the extent that any prior payment you made to an Indemnified Person is determined to have been improper by reason of such Indemnified Person’s negligence or willful misconduct, such Indemnified Person shall promptly pay you such amount.

 

If the indemnity or reimbursement referred to above is, for any reason whatsoever, unenforceable, unavailable or otherwise insufficient to hold each Indemnified Person harmless to the extent provided for under the preceding paragraph, you agree to pay to or on behalf of each Indemnified Person contributions for losses, claims, damages, liabilities or expenses so that each Indemnified Person ultimately bears only a portion of such losses, claims, damages, liabilities or expenses as is appropriate (i) to reflect the relative benefits received by each such Indemnified Person, respectively, on the one hand and you and your stockholders on the other hand in connection with the Placement or Sale, or (ii) if the allocation on that basis is not permitted by applicable law, to reflect not only the relative benefits referred to in clause (i) above, but also the relative fault of each such Indemnified Person, respectively, and the Indemifier as well as any other relevant equitable considerations; provided, however, that in no event will the aggregate contribution of all Indemnified Persons to all losses, claims, expenses, damages, liabilities or expenses in connection with any Placement or Sale exceed the amount of the fee actually received by the Financial Advisor pursuant to this agreement.  The respective relative benefits received by us and you in connection with any Placement or Sale will be deemed to be in the same proportion as the aggregate fee paid to the Financial Advisor in connection with the Placement or Sale bears to the aggregate consideration paid to you in the Placement or Sale.

 

Promptly after its receipt of notice of the commencement of any action or proceeding, any Indemnified Person will, if a claim in respect thereof is to be made against you pursuant to this letter, notify the Indemnifier in writing of the commencement thereof; but omission so to notify the Indemnifier will not relieve the Indemnifier from any liability which the Indemnifier may have to any Indemnified Person, except your obligation to provide reimbursement of expenses or liabilities which were incurred prior to such notice or the Indemnifier’s obligation to indemnify for losses, claims, damages, liabilities or expenses to the extent that the Indemnifier suffers actual

  

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Liberty Star Uranium and Metals Corp.

May 18th, 2011

prejudice as a result of such failure.  If the Indemnifier so elects, it may assume the defense of such action or proceeding in a timely manner, including the employment of counsel (reasonably satisfactory to the Indemnified Party) and payment of expenses, provided the Indemnifier permits an Indemnified Person and counsel retained by an Indemnified Person at its own expense to participate in such defense.  Notwithstanding the foregoing, in the event (i) the Indemnifier fails promptly to assume the defense and employ counsel reasonably satisfactory to the Indemnified Party, or (ii) the Indemnified Person has been advised by counsel that there exist actual or potential conflict of interests between the Indemnifier or its counsel and such Indemnified Person, an Indemnified Person may employ separate counsel (in addition to any local counsel) to represent or defend such Indemnified Person in such action or proceeding, and the Indemnifier agrees to pay the reasonable fees and disbursements of such separate counsel as incurred; provided however, that the Indemnifier will not, in connection with any one such action or proceeding, or separate but substantially similar actions or proceedings arising out of the same general allegations, be liable for fees and expenses of more than one separate firm of attorneys (in addition to any local counsel).

The Indemnifier will not, without the Indemnified Party’s prior written consent, which will not be unreasonably withheld, delayed or conditioned, settle or compromise or consent to the entry of any judgment in any pending or threatened claim, action, suit or proceeding in respect of which indemnification or contribution may be sought under this agreement, unless such settlement, compromise or consent includes an express, complete and unconditional release of each Indemnified Person from all liability and obligations arising therefrom. Without the Indemnifier’s prior written consent, which will not be unreasonably withheld, delayed or conditioned, no Indemnified Person will settle or compromise or consent to the entry of any judgment in any pending or threatened claim, action, suit or proceeding for which indemnification or contribution may be sought hereunder.  Notwithstanding the foregoing sentence, if at any time an Indemnified Person requests that the Indemnifier reimburse the Indemnified Person for fees and expenses as provided in this agreement, the Indemnifier agrees that it will be liable for any settlement of any proceeding effected without its prior written consent if (i) such settlement is entered into more than 60 days after receipt by the Indemnifier of the request for reimbursement, and (ii) the Indemnifier will not have reimbursed the Indemnified Person in accordance with such request prior to the date of such settlement.

You also agree that no Indemnified Person will have any liability to you or your affiliates, directors, officers, employees, agents, creditors or stockholders, directly or indirectly, related to or arising out of the agreement or the services performed thereunder, except losses, claims, damages, liabilities and expenses you incur which have been finally judicially determined to have resulted from actions taken or omitted to be taken by such Indemnified Person due to such person’s negligence or willful misconduct.  In no event, regardless of the legal theory advanced, will any Indemnified Person be liable for any consequential, indirect, incidental or special damages of any nature.  Your indemnification, reimbursement, exculpation and contribution obligations in this Annex A will be in addition to any rights that any Indemnified Person may have at common law or otherwise.

The Indemnifier understands that in the event that it reimburses an Indemnified Party pursuant to this Annex A for the fees and expenses of its counsel, such reimbursement will be made on the basis of counsel's generally applicable rates, provided, however, that such reimbursement will be limited to our reasonable attorney’s fees and expenses.

Capitalized terms used, but not defined in this Annex A, have the meanings assigned to such terms in the agreement.

 

  

8

  

Liberty Star Uranium and Metals Corp.

May 18th, 2011

Annex B to Engagement Letter

 

Company Candidate List

 

**

 

  

9

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