EXHIBIT 10. (j)(2)
STIFEL FINANCIAL CORP. AND SUBSIDIARIES
Stock Unit Agreement with Ronald J. Kruszewski
STIFEL FINANCIAL CORP.
STOCK UNIT AGREEMENT
Stifel Financial Corp., a Delaware Corporation ("Company")
and Ronald J. Kruszewski ("Executive") hereby agree as follows:
WHEREAS, the Company established the Stifel Financial Corp.
1997 Incentive Stock Plan (the "Plan") pursuant to which options,
stock appreciation rights and restricted stock covering an
aggregate of 600,000 shares of the Stock of the Company may be
granted to key employees of the Company and its subsidiaries; and
WHEREAS, the Board of Directors of the Company has amended
the Plan to permit the grant of Stock Units; and
WHEREAS, Executive previously purchased 124,688 restricted
shares of Stock for a note to the Company, which the Board of
Directors of the Company agreed to forgive over a period of
approximately six years subject to the continued employment of
Executive; and
WHEREAS, Executive has agreed to surrender such 124,688
restricted shares of Stock in satisfaction of the remaining
balance due on such note, up to the fair market value of such
shares, contingent on the award of 124,688 Stock Units in
replacement of such restricted stock/note arrangement; and
WHEREAS, the Compensation Committee of the Board of
Directors of the Company, as Administrator of the Plan, wishes to
grant Executive 124,688 Stock Units to replace the shares of
Stock surrendered by Executive in partial satisfaction of such
note;
NOW, THEREFORE, in consideration of services rendered and
the mutual covenants herein contained, the parties agree as
follows:
Section 1. Definitions
As used in this Agreement, the following terms shall
have the following meanings:
A. "Award" means the award provided for in Section 2.
B. "Board of Directors" means the Board of Directors
of the Company.
C. "Change in Control" means:
(i) The acquisition by any individual, entity or
group, or a Person (within the meaning of Section 13(d)(3) or
14(d)(2) of the Exchange Act) of ownership of 15% or more of
either (a) the then outstanding shares of Stock of the Company
(the "Outstanding Company Stock") or (b) the combined voting
power of the then outstanding voting securities of the Company
entitled to vote generally in the election of directors (the
"Outstanding Company Voting Securities"); provided, however, such
an acquisition of ownership of 15% or more but less than 25% of
Outstanding Corporation Common Stock or Outstanding Corporation
Voting Securities with the prior approval of the Board of
Directors of the Company shall not result in a Change in Control
within the meaning of this subparagraph; or
(ii) Individuals who, as the date hereof,
constitute the Board (the "Incumbent Board") cease for any reason
to constitute at least a majority of the Board; provided,
however, that any individual becoming a director subsequent to
the date hereof 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 Incumbent Board
shall be considered as though such individual were a member of
the Incumbent Board, but excluding, as a member of the Incumbent
Board, any such individual whose initial assumption of office
occurs as a result of either an actual or threatened election
contest (as such terms are used in Rule l4a-11 of Regulation l4A
promulgated under the Exchange Act) or other actual or threatened
solicitation of proxies or consents by or on behalf of a Person
other than the Board; or
(iii) Approval by the stockholders of the Company
of a reorganization, merger or consolidation, in each case,
unless, following such reorganization, merger or consolidation,
(a) more than 50% of, respectively, the then outstanding shares
of Stock of the corporation resulting from such reorganization,
merger or consolidation and the combined voting power of the then
outstanding voting securities of such corporation entitled to
vote generally in the election of directors is then beneficially
owned, directly or indirectly, by all or substantially all of the
individuals and entities who were the beneficial owners,
respectively, of the Outstanding Company Stock and Outstanding
Company Voting Securities immediately prior to such
reorganization, merger or consolidation in substantially the same
proportions as their ownership, immediately prior to such
reorganization, merger or consolidation, of the Outstanding
Company Stock and Outstanding Company Voting Securities, as the
case may be, (b) no Person beneficially owns, directly or
indirectly, 15% or more of, respectively, the then outstanding
shares of Stock of the corporation resulting from such
reorganization, merger or consolidation or the combined voting
power of the then outstanding voting securities of such
corporation, entitled to vote generally in the election of
directors (provided, however, such 15% threshold may be increased
up to 25% by the Board of Directors of the Company prior to such
approval by the stockholders) and (c) at least a majority of the
members of the board of directors of the corporation resulting
from such reorganization, merger or consolidation were members of
the Incumbent Board at the time of the execution of the initial
agreement providing for such reorganization, merger or
consolidation; or
(iv) Approval by the stockholders of the Company
of (a) a complete liquidation or dissolution of the Company or
(b) the sale or other disposition of all or substantially all of
the assets of the Company, other than to a corporation, with
respect to which following such sale or other disposition,
(1) more than 50% of, respectively, the then outstanding shares
of Stock of such corporation and the combined voting power of the
then outstanding voting securities of such corporation entitled
to vote generally in the election of directors is then
beneficially owned, directly or indirectly, by all or
substantially all of the individuals and entities who were the
beneficial owners, respectively, of the Outstanding Company Stock
and Outstanding Company Voting Securities immediately prior to
such sale or other disposition in substantially the same
proportion as their ownership, immediately prior to such sale or
other disposition, of the Outstanding Company Stock and
Outstanding Company Voting Securities, as the case may be, (2) no
Person beneficially owns, directly or indirectly, 15% or more of,
respectively, the then outstanding shares of Stock of such
corporation and the combined voting power of the then outstanding
voting securities of such corporation entitled to vote generally
in the election of directors (provided, however, such 15%
threshold may be increased up to 25% by the Board of Directors of
the Company prior to such approval by the stockholders) and
(3) at least a majority of the members of the board of directors
of such corporation were members of the Incumbent Board at the
time of the execution of the initial agreement or action of the
Board providing for such sale or other disposition of assets of
the Company.
D. "Date of Award" means December 21, 1998.
E. "Permanent Disability" means total inability of
Executive, because of bodily injury or disease, to carry out his
duties as an employee of the Company's Subsidiary, Stifel,
Nicolaus & Company, Incorporated, for a period of at least six
consecutive months.
F. "Retirement" means termination of employment with
the Company and its Subsidiaries after attaining the age of 65.
G. "Stock" means the common stock of the Company, par
value fifteen cents ($0.15) per share.
H. "Subsidiary" means any corporation, other than the
Company, in an unbroken chain of corporations beginning with the
Company if, at the relevant date, each of the corporations, other
than the last corporation in the unbroken chain, owns stock
possessing fifty percent or more of the total combined voting
power of all classes of stock in one of the other corporations in
such chain.
Section 2. Award
Subject to the terms of this Agreement, the Company hereby
awards to Executive 124,688 Stock Units, effective as of the Date
of Award. Each Stock Unit represents the obligation of the
Company to transfer one share of Stock to Executive at the time
provided in Section 5 of this Agreement, provided such Stock Unit
is vested at such time.
Section 3. Bookkeeping Account
The Company shall record the number of Stock Units granted
hereunder to a bookkeeping account for Executive (the "Stock Unit
Account"). Executive's Stock Unit Account shall be debited by
the number of Stock Units, if any, forfeited in accordance with
Section 4 and by the number of shares of Stock transferred to
Executive in accordance with Section 5 with respect to such Stock
Units. Executive's Stock Unit Account also shall be adjusted
from time to time for stock dividends, stock splits and other
such transactions in accordance with Section 10.
Section 4. Vesting
Subject to the accelerated vesting provisions provided
below, if Executive remains employed by the Company through the
applicable date, the Stock Units shall vest at the times provided
in the following schedule:
Stock Units Becoming Aggregated Stock
Vesting Date Vested on such Date Units Vested
January 1, 1999 26,250 26,250
January 1, 2000 26,250 52,500
January 1, 2001 26,250 78,750
January 1, 2002 26,250 105,000
January 1, 2003 19,688 124,688
In the event Executive dies while employed, or terminates
employment on account of his Permanent Disability, before January
1, 2003, an additional number of Stock Units shall vest. The
additional number shall be the number of Stock Units that would
have vested had Executive remained employed by the Company as of
the January 1 next following the year in which such death or
disability occurred, multiplied by a fraction the numerator of
which is the number of days that have elapsed during the calendar
year in which such death or disability occurred and the
denominator of which is 365.
All of the Stock Units granted pursuant to Section 2 shall
be fully vested immediately upon a Change in Control.
In addition, all of the Stock Units granted pursuant to
Section 2 shall be fully vested (a) in the event of termination
of Executive's employment by the Company for a reason other than
a Good Cause Event (as defined below), or (b) Executive's
resignation for Good Reason (as defined below).
The term "Good Cause Event" shall mean (a) a good faith
determination by the Board of Directors, after notice to
Executive and opportunity by Executive to be heard, that
Executive committed a fraud, misappropriation, embezzlement or
theft against or from the Company or any of its subsidiaries, (b)
conviction of Executive of a felony or (c) a good faith
determination by the Board of Directors, after a ninety day
warning and the opportunity to cure and to be heard by the Board
of Directors, on substantial evidence that Executive was grossly
negligent in carrying out, or unreasonably refused to serve or
carry out, the duties and responsibilities of Executive's
employment with the Company.
The term "Good Reason" shall mean the occurrence of any of
the following without the Executive's consent: (a) the assignment
to the Executive of any duties inconsistent in any material
respect with his positions as President and Chief Executive
Officer of the Company (including status, offices, titles and
reporting requirements), authority, duties or responsibilities as
of the commencement of Executive's employment with the Company,
or any action by the Company that results in material diminution
in such positions, authority, duties or responsibilities,
excluding, for this purpose, any isolated, insubstantial and
inadvertent action not taken in bad faith and that is remedied by
the Company promptly after receipt of written notice thereof
given by the Executive; or (b) any failure by the Company to
provide the compensation and benefits to which the Executive is
entitled under any agreement with the Company or any compensation
or benefit plan or practice generally applicable to senior
executives of the Company, other than any isolated, insubstantial
and inadvertent failure not occurring in bad faith and that is
remedied by the Company promptly after receipt of written notice
given by the Executive; or (c) the Company requiring Executive to
be based at a location that is more than fifty miles for St.
Louis, MO.
In the event of the termination of employment of the
Executive with the Company for any other reason, all Stock Units
that are not vested at the time of such termination of employment
shall be forfeited.
Section 5. Distribution of Shares
Subject to the provisions below, so long as Executive shall
remain employed by the Company, the Company shall transfer shares
of Stock to Executive in annual installments over a period of
seven years beginning January 1, 2007. The number of shares of
Stock in each installment shall be determined under the declining
balance accounting method, based on the number of Stock Units
credited to Executive's Stock Unit Account as of the beginning of
each year in the installment payment period. For example, shares
of Stock equal to 1/7 of the Stock Units credited to Executive's
Stock Unit Account as of January 1, 2007 shall be transferred to
Executive as soon as administratively practical in 2007; 1/6 of
the Stock Units credited to Executive's Stock Unit Account as of
January 1, 2008 shall be transferred to Executive as soon as
administratively practical in 2008; and so on, with the balance
distributed in the seventh year of the payout period.
Executive may elect to defer the date of transfer of Stock
to a specified later date while Executive is still employed.
Such an election shall be delivered in writing to the Company at
least six months before the date of transfer specified above, and
shall be irrevocable after such election deadline.
In the event of the termination of the employment of
Executive with the Company before the payment dates as scheduled
above, the Company shall transfer, as soon as practical after
such a termination of employment, shares of Stock to Executive
equal in number to the Stock Units credited to Executive's Stock
Unit Account at the time of such termination of employment
(regardless of any election to defer the transfer).
Notwithstanding any other provision of this Agreement to the
contrary, no shares of Stock shall be transferred to Executive
prior to the earliest date on which the Company's federal income
tax deduction for such payment is not precluded by Section 162(m)
of the Internal Revenue Code. In the event any payment is
delayed solely as a result of the preceding restriction, such
payment shall be made as soon as administratively feasible
following the first date as of which Section 162(m) of the
Internal Revenue Code no longer precludes the deduction by the
Company of such payment.
Section 6. Shareholder Rights
Executive shall not have any of the rights of a shareholder
of the Company with respect to Stock Units, such as the right to
vote.
Section 7. Dividend Equivalents
The Company shall pay Executive as soon as practical after
the Company pays a cash dividend to shareholders of Stock an
amount in cash equal to the amount per share of such cash
dividend multiplied by the number of Stock Units credited to the
Stock Unit Account of Executive as of the record date of such
dividend. The Company may withhold from such payment any
applicable federal, state or local income or payroll tax.
Section 8. Death Benefits
In the event of the death of Executive, as soon as
practical after the death of Executive, the Company shall
transfer shares equal in number to the vested Stock Units, if
any, credited to Executive's Stock Unit Account to Executive's
Beneficiary or Beneficiaries.
Executive may designate a Beneficiary or Beneficiaries
(contingently, consecutively, or successively) of such death
benefit and, from time to time, may change his or her designated
Beneficiary. A Beneficiary may be a trust. A beneficiary
designation shall be made in writing in a form prescribed by the
Company and delivered to the Company while the Participant is
alive. If there is no designated Beneficiary surviving at the
death of a Participant, payment of any death benefit of the
Participant shall be made to the persons and in the proportions
which any death benefit under the Stifle Financial Corp. Employee
Stock Ownership Plan is or would be payable.
Section 9. Units Non-Transferable
Stock Units awarded hereunder shall not be transferable by
Executive. Except as may be required by the federal income tax
withholding provisions of the Code or by the tax laws of any
State, the interests of Executive and his Beneficiaries under
this Agreement are not subject to the claims of their creditors
and may not be voluntarily or involuntarily sold, transferred,
alienated, assigned, pledged, anticipated, or encumbered. Any
attempt by Executive or a Beneficiary to sell, transfer,
alienate, assign, pledge, anticipate, encumber, charge or
otherwise dispose of any right to benefits payable hereunder
shall be void.
Section 10. Adjustment in Certain Events
If there is any change in the Stock by reason of stock
dividends, split-ups, mergers, consolidations, reorganizations,
combinations or exchanges of shares or the like, the number of
Stock Units credited to Executive's Stock Unit Account shall be
adjusted appropriately so that the number of Stock Units
credited to Executive's Stock Unit Account after such an event
shall equal the number of shares of Stock a shareholder would
own after such an event if the shareholder, at the time such an
event occurred, had owned shares of Stock equal to the number of
Stock Units credited to Executive's Stock Unit Account
immediately before such an event.
Section 11. Tax Withholding
The Company shall not be obligated to transfer any shares
of Stock until Executive pays to the Company or a Subsidiary in
cash, or any other form of property, including Stock, acceptable
to the Company, the amount required to be withheld from the
wages of Executive with respect to such shares. Executive may
elect to have such withholding satisfied by a reduction of the
number of shares otherwise transferable under this Agreement at
such time, such reduction to be calculated based on the closing
market price of the Stock on the day Executive gives written
notice of such election to the Company.
Section 12. Source of Payment
Shares of Stock transferable to Executive, or his
Beneficiary, under this Agreement may be either Treasury shares,
authorized but unissued shares, or any combination of such stock.
The Company shall have no duties to segregate or set aside any
assets to secure Executive's right to receive shares of Stock
under this Agreement. Executive shall not have any rights with
respect to transfer of shares of Stock under this Agreement other
than the unsecured right to receive shares of Stock from the
Company.
Section 13. Amendment
This Agreement may be amended by mutual consent of the
parties hereto by written agreement.
Section 14. Governing Law
This Agreement shall be construed and administered in
accordance with the laws of the State of Missouri.
IN WITNESS WHEREOF, the Company and Executive have caused
this Agreement to be executed on this 21st day of
December 1998.
STIFEL FINANCIAL CORP.
By: /s/ Charles R. Hartman
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Title: Secretary
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By: /s/ Ronald J. Kruszewski
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Ronald J. Kruszewski
Executive