<PAGE> COVER
As filed with the Securities and Exchange Commission on July 24, 1998
Registration No. 333-________
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
____________________
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
LEGG MASON, INC.
(Exact name of registrant as specified in its charter)
MARYLAND 52-1200960
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
100 Light Street, Baltimore, Maryland 21202
(Address of Principal Executive Offices) (Zip Code)
THE LEGG MASON WOOD WALKER, INCORPORATED
KEY EMPLOYEE PHANTOM STOCK AGREEMENTS
THE LEGG MASON WOOD WALKER, INCORPORATED
PROFESSIONAL BRANCH MANAGER PHANTOM STOCK AGREEMENTS
(Full Title of the Plans)
THEODORE S. KAPLAN, ESQUIRE
Senior Vice President and General Counsel
Legg Mason, Inc.
100 Light Street
Baltimore, Maryland 21202
(Name and address of agent for service)
(410) 539-0000
(Telephone number, including area code, of agent for service)
______________________
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
Proposed Proposed
Title of Amount Maximum Maximum Amount of
Securities to to be Offering Price Aggregate Registration
be Registered Registered (1) Per Share (2) Offering Price Fee
<S> <C> <C> <C> <C>
Common Stock 100,000 shs. $60.71875 $6,071,875 $1,791.20
($.10 Par Value)
</TABLE>
(1) Pursuant to Rule 416(a) under the Securities Act, this Registration
Statement also registers such indeterminate number of additional shares
as may be issuable under The Legg Mason Wood Walker, Incorporated Key
Employee Phantom Stock Agreements and The Legg Mason Wood Walker,
Incorporated Professional Branch Manager Phantom Stock Agreements in
connection with stock splits, stock dividends or similar transactions.
(2) Estimated solely for the purpose of determining the registration fee
pursuant to Rule 457(h). The proposed maximum offering price per share
is based upon the average of the high and low sale prices for Legg Mason,
Inc. common stock on the New York Stock Exchange on July 22, 1998.
<PAGE> 1
PART I. INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS
The information required by Part I is included in documents sent or
given to parties to The Legg Mason Wood Walker, Incorporated Key Employee
Phantom Stock Agreements and/or The Legg Mason Wood Walker, Incorporated
Professional Branch Manager Phantom Stock Agreements (collectively, the
"Agreements") pursuant to Rule 428(b)(1). Such documents are not being filed
with the Securities and Exchange Commission (the "Commission") either as part
of this Registration Statement or as prospectuses or prospectus supplements
pursuant to Rule 424.
PART II. INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference.
The following documents filed by Legg Mason, Inc. (the "Company")
with the Commission are incorporated herein by reference and made a part
hereof:
(a) The Company's Annual Report on Form 10-K for the fiscal year
ended March 31, 1998.
(b) The description of the Company's common stock, $.10 par value,
contained in Amendment No. 4 to the Company's Application for Registration
on Form 8-A, filed April 25, 1997.
In addition to the foregoing, all documents subsequently filed by
the Company pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), prior to the filing of
a post-effective amendment indicating that all of the securities offered
hereunder have been sold or deregistering all securities then remaining
unsold, shall be deemed to be incorporated by reference in this Registration
Statement and to be part hereof from the date of filing of such documents.
Any statement contained in a document incorporated or deemed to be
incorporated by reference in this Registration Statement shall be deemed to
be modified or superseded for purposes of this Registration Statement to the
extent that a statement contained herein or in any subsequently filed
document that also is or is deemed to be incorporated by reference herein
modifies or supersedes such statement. Any statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Registration Statement.
Experts
The consolidated financial statements and financial statement
schedules of the Company and its subsidiaries as of March 31, 1998
and 1997 and for each of the years in the three-year period ended
March 31, 1998, included in the Company's Annual Report on Form
10-K for the fiscal year ended March 31, 1998, have been incorporated by
reference in this Registration Statement in reliance upon the report of
PricewaterhouseCoopers LLP, independent certified public accountants,
incorporated by reference herein, and upon the authority of said firm
<PAGE> 2
as experts in accounting and auditing. To the extent that
PricewaterhouseCoopers LLP audits and reports on financial statements of
the Company issued at future dates, and consents to the use of their report
thereon, such financial statements also will be incorporated by reference
in this Registration Statement in reliance upon their report and said
authority.
Item 4. Description of Securities.
Not Applicable.
Item 5. Interests of Named Experts and Counsel.
The validity of the shares of the Company's common stock registered
hereby that will be newly issued by the Company have been passed upon for the
Company by Theodore S. Kaplan, Esq., the Company's General Counsel.
Mr. Kaplan beneficially owns, and has rights to acquire under an employee
benefit plan of the Company, an aggregate of less than one percent of the
common stock of the Company.
Item 6. Indemnification of Directors and Officers.
Section 2-418 of the Maryland General Corporation Law ("Section
2-418") establishes provisions whereby a Maryland corporation may indemnify
any director or officer made a party to an action or proceeding by reason of
service in that capacity, against judgments, penalties, fines, settlements
and reasonable expenses incurred in connection with such action or proceeding
unless it is proved that the director or officer (i) acted or failed to act
in bad faith or with active and deliberate dishonesty, (ii) actually received
an improper personal benefit in money, property or services or (iii) in the
case of a criminal proceeding, had reasonable cause to believe that his act
or omission was unlawful. However, if the proceeding is a derivative suit in
favor of the corporation, indemnification may not be made if the individual
is adjudged to be liable to the corporation. In no case may indemnification
be made until a determination has been reached that the director or officer
has met the applicable standard of conduct. Indemnification for reasonable
expenses is mandatory if the director or officer has been successful on the
merits or otherwise in the defense of any action or proceeding covered by
Section 2-418. Section 2-418 also provides for indemnification of directors
and officers by court order. The indemnification provided or authorized in
Section 2-418 does not preclude a corporation from extending other rights
(indemnification or otherwise) to directors and officers.
The Registrant's By-Laws provide for indemnification of any person
who is serving or has served as a director or officer of the Registrant,
against all liabilities and expenses incurred in connection with any action,
suit or proceeding arising out of such service to the full extent permitted
under Maryland law.
The Registrant's officers and directors are insured against certain
liabilities under certain policies maintained by the Registrant with
aggregate maximum coverage of $35,000,000.
<PAGE> 3
The foregoing summaries are subject to the complete text of the
statute, By-Laws and policies referred to above and are qualified in their
entirety by reference thereto.
Item 7. Exemption from Registration Claimed.
Not Applicable.
Item 8. Exhibits.
Description of
Exhibit Number Document
4.1 Form of Key Employee Phantom
Stock Agreement.
4.2 Form of Professional Branch Manager Phantom
Stock Agreement.
5 Opinion of Theodore S. Kaplan, Esq.,
Senior Vice President and
General Counsel of the Registrant.
23(a) Consent of PricewaterhouseCoopers LLP,
independent public accountants.
23(b) Consent of Theodore S. Kaplan, Esq.
(included in Exhibit 5).
24 Powers of Attorney of certain directors
of the Registrant (included on signature
pages hereto).
The Agreements are not intended to be qualified under Section
401 of the Internal Revenue Code of 1986, as amended.
Item 9. Undertakings.
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this Registration Statement:
<PAGE> 4
(i) To include any prospectus required by Section
10(a)(3) of the Securities Act of 1933, as amended (the "Securities Act");
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the Registration Statement (or the most
recent post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth in the
Registration Statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering range
may be reflected in the form of prospectus filed with the Commission pursuant
to Rule 424(b) if, in the aggregate, the changes in volume and price
represent no more than a 20 percent change in the maximum aggregate offering
price set forth in the "Calculation of Registration Fee" table in the
effective Registration Statement;
(iii) To include any material information with respect to
the plan of distribution not previously disclosed in the Registration
Statement or any material change to such information in the Registration
Statement;
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if
the information required to be included in a post-effective amendment by
those paragraphs is contained in periodic reports filed with or furnished to
the Commission by the Registrant pursuant to Section 13 or 15(d) of the
Exchange Act that are incorporated by reference in the Registration Statement.
(2) That, for the purpose of determining any liability under
the Securities Act, each post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
(b) The undersigned Registrant hereby undertakes that, for
purposes of determining any liability under the Securities Act, each filing
of the Registrant's annual report pursuant to Section 13(a) or 15(d) of the
Exchange Act (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Exchange Act) that is
incorporated by reference herein shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of
such securities at that time shall be deemed to be the initial bona fide
offering thereof.
(c) Insofar as indemnification for liabilities arising under
the Securities Act may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, or
otherwise, the Registrant has been advised that in the opinion of the
<PAGE> 5
Commission such indemnification is against public policy as expressed in
the Securities Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment
by the Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the Registrant
will, unless in the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as
expressed in the Securities Act and will be governed by the final
adjudication of such issue.
<PAGE> 6
SIGNATURES
The Registrant. Pursuant to the requirements of the Securities Act
of 1933, the Registrant certifies that it has reasonable grounds to believe
that it meets all of the requirements for filing on Form S-8 and has duly
caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Baltimore, State of
Maryland, on the 24th day of July, 1998.
LEGG MASON, INC.
By:/s/ Theodore S. Kaplan
Theodore S. Kaplan
Senior Vice President
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Raymond A. Mason, Richard J. Himelfarb
and Theodore S. Kaplan, and each of them, his true and lawful attorney-in-fact
and agent, with full power of substitution and resubstitution, for him and in
his name, place and stead, in any and all capacities, to sign any and all
amendments (including post-effective amendments) to this Registration
Statement, and to file the same, with all exhibits thereto, and other
documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents, and each of
them acting singly, full power and authority to do and perform each and every
act and thing necessary and requisite to be done, as fully and to all intents
and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents or any of them may
lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
Signature Title Date
/s/ Raymond A. Mason Chairman of the Board, July 24, 1998
Raymond A. Mason President and Chief
Executive Officer
(Principal Executive
Officer)
[SIGNATURES CONTINUED]
<PAGE> 7
/s/ F. Barry Bilson Vice President - July 24, 1998
F. Barry Bilson Finance
(Principal Financial
and Accounting Officer)
/s/ Harold L. Adams Director July 24, 1998
Harold L. Adams
/s/ Charles A. Bacigalupo Director July 24, 1998
Charles A. Bacigalupo
/s/ James W. Brinkley Director July 24, 1998
James W. Brinkley
/s/ Edmund J. Cashman, Jr. Director July 24, 1998
Edmund J. Cashman, Jr.
/s/ Harry M. Ford, Jr. Director July 24, 1998
Harry M. Ford, Jr.
/s/ Richard J. Himelfarb Director July 24, 1998
Richard J. Himelfarb
/s/ John E. Koerner, III Director July 24, 1998
John E. Koerner, III
[SIGNATURES CONTINUED]
<PAGE> 8
/s/ W. Curtis Livingston Director July 24, 1998
W. Curtis Livingston
/s/ Edward I. O'Brien Director July 24, 1998
Edward I. O'Brien
_____________________ Director ________ ___, 1998
Peter F. O'Malley
______________________ Director ________ ___, 1998
Nicholas J. St. George
/s/ Roger W. Schipke Director July 24, 1998
Roger W. Schipke
/s/ Margaret DeB. Tutwiler Director July 24, 1998
Margaret DeB. Tutwiler
______________________ Director ________ ___, 1998
James E. Ukrop
/s/ William Wirth Director July 24, 1998
William Wirth
<PAGE> 9
EXHIBIT INDEX
Description of
Exhibit Number Document
4.1 Form of Key Employee Phantom
Stock Agreement.
4.2 Form of Professional Branch Manager Phantom
Stock Agreement.
5 Opinion of Theodore S. Kaplan, Esq.,
Senior Vice President and
General Counsel of the Registrant.
23(a) Consent of PricewaterhouseCoopers,
independent public accountants.
23(b) Consent of Theodore S. Kaplan, Esq.
(included in Exhibit 5).
24 Powers of Attorney of certain directors
of the Registrant (included on signature
pages hereto).
<PAGE> COVER
KEY EMPLOYEE PHANTOM STOCK AGREEMENT
This Key Employee Phantom Stock Agreement (this "Agreement") is made
this __ day of _____________, 19___, by and between Legg Mason Wood Walker,
Incorporated ("Legg") and _______________________ ("Employee").
WHEREAS, Employee has accepted employment by Legg; and
WHEREAS, Legg and Employee believe it to be mutually
advantageous to provide for the payment of certain compensation to
Employee upon the terms and conditions hereafter set forth,
Now therefore, Legg and Employee agree as follows:
1. Certain Monetary Compensation
In consideration of Employee's employment with Legg, Legg
shall be obligated to pay Employee certain compensation in an
amount to be determined pursuant to the terms and conditions of
this Agreement.
2. Phantom Share Units
Legg and Employee agree that the certain compensation to be
paid by Legg to Employee shall not be paid currently but shall be
deferred, and as deferred, shall be deemed converted into units
that are economically equivalent to, but are not actual, shares of
Legg Mason, Inc. ("LMI") Common Stock. These "phantom" shares of
LMI Common Stock are referred to as "Share Units."
Exhibit 4.1
<PAGE> 2
3. Key Employee Phantom Stock Account
Legg will establish a Key Employee Phantom Stock Account
(the "Account") on its books and records for the benefit of
Employee wherein Legg will credit to such Account $___________
as certain deferred compensation (hereafter the "Compensation
Credit") to be converted into Share Units. The number of Share
Units into which such Compensation Credit shall be converted
(calculated to four decimal places) will be determined as of the
fifth trading day after the date the Compensation Credit is made
and will be equal to the amount of the Compensation Credit divided
by the fair market value of a share of LMI Common Stock,
determined as set forth below.
Fair market value of a share of LMI Common Stock will equal the
five day average of the closing prices on the principal exchange
on which LMI Common Stock is traded for the four trading days
immediately preceding the applicable valuation date and the
valuation date (where the valuation date is the fifth trading day
after the date in which the account is credited), or, if LMI
Common Stock is not then traded on an exchange, such amount as is
determined by Legg using any reasonable method of valuation ("Fair
Market Value").
4. Adjustment to Account Upon Dividend by LMI
If, prior to the date Employee receives a payment from
Legg pursuant to this Agreement (a "Payment Date"), LMI
pays any dividend (other than in LMI Common Stock) upon
its Common Stock, or makes any distribution (other than
in its Common Stock) with respect thereto, Employee's
Account will be credited with additional Share Units,
equivalent to that number of phantom shares of LMI
<PAGE> 3
Common Stock determined by dividing the amount of the dividend
or other distribution allocable to the Share Units already
credited to the Account as of the record date for the dividend
or distribution, by 95% of the Fair Market Value of a share of
LMI Common Stock on the fifth trading day after the payment
date for the dividend or distribution.
In the event that, prior to a Payment Date, the number of
outstanding shares of LMI Common Stock is changed by reason of
a stock split, stock dividend, combination of shares or
recapitalization, or LMI Common Stock is converted into or
exchanged for other shares as a result of a merger, consolidation,
sale of assets or other reorganization or recapitalization, the
number of Share Units then credited to Employee's Account will be
appropriately adjusted so as to reflect such change (based upon
the best estimate of Legg as to relative values).
Nothing contained in this Agreement shall confer or be
construed as conferring upon Employee any rights as a stockholder
of LMI or any right to have access to the books and records of LMI
or any subsidiary.
5. Vesting Schedule of Share Units
Employee shall vest in the Share Units credited to
Employee's Account pursuant to the following vesting schedule
as long as Employee is continuously employed in good standing
by Legg for the following elapsed periods:
<PAGE> 4
If Elapsed Period of Employment Then the Vested Portion of
from date of this Agreement is: Share Units in Account shall be:
12 months or less -0-
Greater than 12 months, but
24 months or less 1/5 of Share Units
Greater than 24 months, but
36 months or less 2/5 of Share Units
Greater than 36 months, but
48 months or less 3/5 of Share Units
Greater than 48 months, but
60 months or less 4/5 of Share Units
Greater than 60 months All Share Units
For purposes of determining Employee's Vested Portion of Share
Units, Employee shall not be entitled to receive any partial or
pro-rated credit for having been employed by Legg for any partial
twelve month period specified in the table above. If Employee's
employment with Legg terminates for any reason other than death,
whether involuntary or voluntary and for whatever cause or no
cause, Employee shall have no right or claim to any Share Units
which have not vested pursuant to the above Vesting Schedule. In
the event Employee's employment with Legg terminates as a result
of Employee's death, all Share Units shall be immediately vested
and payment shall be made as described in Paragraph 12.
6. Assignment of Benefits
No amount payable, or other right or benefit, under this
Agreement, will, except as otherwise specifically provided by
this Agreement or by applicable law, be subject to sale,
assignment, transfer, pledge, encumbrance, attachment,
<PAGE> 5
garnishment or levy prior to distribution to Employee. Since
this Agreement is intended to be a non-qualified, unfunded plan
not subject to the Employee Retirement Income Security Act of
1974, as amended, payments under this Agreement will not be
subject to the provisions of any qualified domestic relations
order (as defined under the Internal Revenue Code) applicable to
an Employee's deferred compensation benefit.
Notwithstanding any provision herein to the contrary,
Employee acknowledges and agrees that any distribution payable
under this Agreement may be used at the discretion of Legg to
offset any debt owed by Employee to Legg at the date such
distribution would otherwise be paid. Employee expressly
authorizes Legg to withhold distributions payable under this
Agreement to offset any debts or other liabilities owed by
Employee to Legg. If Legg is aware of any errors, loans
outstanding or liabilities of Employee, Legg may withhold
distributions under this Agreement until such time as the
liabilities are satisfied or Legg has determined that a
liability no longer exists.
7. Unfunded Nature of the Agreement
Legg will not be required to purchase, hold or dispose of any
investments with respect to the Compensation Credits or Share
Units. Employee has no interest in the Account or in any
investments Legg may purchase with such amounts, except as a
general, unsecured creditor of Legg.
8. Elective Transfer to Phantom Treasury Bills In the Event of a
Merger of LMI
In the event of a merger or other corporate transaction,
the result of which is that securities of another entity
that are listed on the New York Stock Exchange
<PAGE> 6
or the American Stock Exchange or quoted on NASDAQ ("Publicly
Traded") are substituted for LMI Common Stock, Employee may
elect to have his or her entire (and only the entire) Account
accrue income based on the "T-Bill Rate," which, for purposes of
this Agreement, shall be defined as the rate equal to the per
annum rate for 26 week U.S. Government Treasury Bills sold at a
discount from face value at the most recent U.S. Government
auction and to be determined as of the first business day of
each calendar year and as of the first business day of July and
to be applicable until the next such determination date. Such an
elective transfer (i) must be made by written notice to Legg
received not later than five business days after the Employee is
notified by Legg of the right to make the election, (ii) will be
effective as of the date of the stock conversion giving rise to
the election, (iii) will be based upon an Account value, to the
extent of the Share Units in the Account, determined as of the
effective date of the transfer, but based on the last Fair Market
Value of a share of LMI Common Stock immediately prior to the
conversion, (iv) will be irrevocable as of such effective date,
and (v) will apply to all subsequent amounts credited to the
Account.
9. Elective Transfer to Phantom Treasury Bills in the Event of a
Change in Control of LMI
In the event of a Change in Control (as defined below),
Employee may elect to have his or her entire (and only the
entire) Account accrue income based on the T-Bill Rate. Such
an elective transfer (i) must be made by written notice to
Legg received not later than five business days after Employee
is notified by Legg of the right to make the election,
(ii) will be effective as of the fifth business day
<PAGE> 7
after Legg's receipt of such written notice, (iii) will be
irrevocable as of such effective date, (iv) will be based
upon an Account value, to the extent of the Share Units in
the Account, determined as of the effective date of the transfer,
using the then Fair Market Value of LMI Common Stock, and (v)
will apply to any subsequent amounts credited to the Account.
A "Change in Control" will be deemed to occur upon the
happening of any of the following events (a "Change Event"):
(i) the approval by shareholders of LMI (i.e. LMI) of any
agreement to merge or consolidate LMI with or into another
corporation (with LMI not surviving), or to sell or otherwise
dispose of all or substantially all of the assets of LMI, (ii)
the approval by shareholders of Legg (i.e. LMI) of any agreement to
merge or consolidate Legg with or into another corporation (with
Legg not surviving), or to sell or otherwise dispose of all or
substantially all of the assets of Legg or (iii) a determination
by the Board of Directors of LMI that, in connection with any
proposed tender or exchange offer for voting securities of LMI,
any person has become the direct or indirect beneficial owner
of securities representing 40% or more of the combined voting
power of LMI's then outstanding securities; provided, however,
that: (A) a Change in Control will be deemed not to have
occurred if, not later than five business days after a Change
Event described in clause (i) or (ii), that Change Event is
designated by the affirmative vote of 75% or more of the
directors who were members of LMI or Legg's Board of Directors
immediately prior to the Change Event as not constituting a
Change in Control for purposes of this Agreement; and (B) if a
Change Event described in clause (i) or (ii) occurs with
<PAGE> 8
respect to a portion of LMI or Legg, the Change in Control, if
any, shall be deemed to have occurred only with respect to the
employees transferred in connection therewith.
10. Treasury Bill Credits
In the event that Employee elects to have his or her account
accrue income based on the T-Bill Rate pursuant to Paragraph 8 or
Paragraph 9 of this Agreement, any such accrued credits that are
based on the T-Bill Rate will be made to the account as of
June 30 and December 31 of each year and immediately prior to
distribution to Employee or his or her beneficiary.
11. Mode of Distributions
Legg will make all distributions under this Agreement in
shares of LMI Common Stock or in cash, or in a combination of
both, at Legg's option. Legg, in its sole discretion, will
decide whether to distribute stock or cash to Employee. There
is no limit on the total number of shares of LMI Common Stock that
may be distributed under this Agreement. If Legg elects in any
case to distribute LMI Common Stock under this Agreement, Employee
will receive (i) shares equal to the whole number of Share Units
in the Account (unless Legg elects to distribute cash for some or
all of the Share Units), and cash in lieu of any fractional share
based on 100% of the Fair Market Value of a share of LMI Common
Stock as of the day Employee is entitled to the distribution and
(ii) if any portion of the Account accrues credits based on the
T-Bill Rate and is to be settled in stock, whole shares equal to
the number (rounded down) determined by dividing the amount owed
with respect to such portion by 100% of the Fair Market Value of a
<PAGE> 9
share of LMI Common Stock as of the day Employee is entitled
to the distribution and cash equal to the balance (i.e., no
fractional shares will be issued).
Employee acknowledges that, because Fair Market Value will be
measured by taking into account stock prices over a five day
period, Employee will be subject to some market risk if Legg
elects to distribute stock and if the trading price of LMI Common
Stock declines during the five day period. After the date of
distribution, Employee must make his or her own decision as to
whether to sell or retain the shares received under this Agreement.
Any brokerage commissions or other charges incurred in the event
Employee decides to sell such shares will be the sole
responsibility of the Employee, not Legg.
12. Timing of Distributions
Simultaneously with the execution of this Agreement,
Employee must make an irrevocable election on a form prescribed
by Legg (hereafter the "Payment Option Election" and attached
as Exhibit A) to receive distributions under this Agreement
either (i) each time Employee's Share Units vest pursuant to
Paragraph 5; (ii) in three annual installments with the first
of such installments occurring when all Share Units are vested
pursuant to Paragraph 5; (iii) in a Lump Sum at the time
Employee's employment with Legg terminates; or (iv) in three
annual installments with the first of such installments occurring
when Employee's employment with Legg terminates. Employee
acknowledges that, regardless of whether Employee elects under
this Agreement to receive distributions as Share Units vest,
in annual installments or at the time Employee's employment
<PAGE> 10
terminates, Employee bears all economic risks and market risks
associated with LMI Common Stock.
Notwithstanding Employee's election to the contrary, if the
total amount to be distributed from Employee's Account is less
than $20,000.00, the distribution will be made as a lump sum.
Furthermore, in the event that Employee's employment with Legg
has terminated for any reason and Employee's distributions under
this Agreement are to be paid in installments rather than in a
single lump sum, then (regardless of whether there has or has not
been a merger or Change in Control of LMI or Legg), Employee will
be deemed to have automatically made an elective transfer to
Phantom Treasury Bills pursuant to the terms described in
Paragraph 8, effective as of the fifth trading day after the date
Employee's employment is terminated. In the event that Employee's
employment with Legg terminates for any reason other than death,
then, as of the fifth trading day following termination of
employment, Employee will be entitled to receive any distributions
owing to Employee under this Agreement in accordance with the
Payment Option Election.
Employee may from time to time designate, on a form
prescribed by Legg, (hereafter the "Designation of
Beneficiary(ies)" and attached as Exhibit B), any person(s) to
receive any distributions as may be payable under this Agreement
upon Employee's death (a "Beneficiary"). If Employee does not
designate a Beneficiary, any distributions to be made under this
Agreement shall, upon Employee's death, be payable to Employee's
estate. In the event of the death of Employee, then, as of
the fifth business day after the date of death, Employee's
<PAGE> 11
Beneficiary or estate will be entitled to receive the balance of
Employee's Account in a single lump sum, or, if Employee has so
indicated in the Payment Option Election, in the same manner as
the Account would have been paid to Employee had he or she lived.
13. FICA or Payroll Tax
Any FICA or other payroll tax which may be imposed on Employee
with respect to the deferred compensation under this Agreement will
be, unless otherwise determined by Legg, deducted from other
non-deferred compensation of Employee.
14. Disputes Subject to Arbitration
Employee agrees that any controversy or dispute arising under
this Agreement or out of Employee's employment by Legg (including,
but not limited to, claims arising under the Civil Rights Act of
1964, the Civil Rights Act of 1991, the Age Discrimination in
Employment Act of 1967, and analogous state statutes) shall be
submitted for arbitration upon demand of either party in
accordance with the rules of the National Association of
Securities Dealers, Inc. or the New York Stock Exchange, Inc.,
provided, however, that in the event of termination of Employee's
employment, Legg shall be entitled to seek injunctive relief or
confess judgment against Employee pursuant to the terms of any
other applicable agreement and that Legg shall be entitled to
apply for and obtain from any state or federal court such relief
before or after the commencement of any arbitration proceeding,
such relief to be afforded to Legg pending the decision of the
arbitrators.
<PAGE> 12
15. Employment-At-Will
Employee and Legg agree and acknowledge that this Agreement
shall not be construed as a contract of employment. Legg
maintains an employment-at-will policy. As Employee is free to
end his or her employment with Legg at any time for any reason or
no reason, Legg is free to end the employment with Employee at any
time for any reason or no reason.
16. Governing Law
This Agreement shall be governed, construed, and enforced in
accordance with the laws of the State of Maryland.
17. Effectiveness of this Agreement
If any part of this Agreement shall be held invalid or
unenforceable, that part shall be deemed modified as necessary to
make it effective, and the remaining provisions of this Agreement
shall remain in effect.
18. Entire Understanding of Parties
This Agreement incorporates the entire understanding between
Employee and Legg on the subject matter herein and may be not
changed except by a writing signed by a duly authorized officer
of Legg and Employee.
19. Assistance of Counsel
Employee acknowledges that Employee was given the opportunity
to read this Agreement and to seek the assistance of counsel
before Employee decided to join Legg, accept the terms of this
Agreement or sign this Agreement.
<PAGE> 13
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed as of the date first hereinabove written.
EMPLOYEE:
______________________________
Signature
______________________________
Print Full Name
LEGG MASON WOOD WALKER, INCORPORATED
BY:___________________________
<PAGE> COVER
EXHIBIT A
KEY EMPLOYEE PHANTOM STOCK AGREEMENT
Payment Option Election
Part I. I hereby elect to receive the balance of my Account under the
Agreement in the following manner: (check one)
a. ____ as the Share Units vest.
b. ____ in three annual installments with the first of
such installments occurring when all Share Units
are vested.
c. ____ in a lump sum at the time my employment with Legg
terminates.
d. ____ in three annual installments with the first of such
installments occurring when my employment with Legg
terminates.
I understand that if I elect to receive distributions in installments,
each installment will be determined by dividing the then value of the amount
to be distributed by the number of installments remaining to be paid
(including the installment then due). If the total distribution is less
than $20,000.00, I understand installment option b and installment option d
will not be available and I will receive a single lump sum payment.
I further understand that in the event that my employment with Legg
has terminated for any reason and the distributions under this Agreement are
to be paid in installments rather than in a single lump sum, then (regardless
of whether there has or has not been a merger or Change in Control of LMI or
Legg) I will be deemed to have automatically made an elective transfer to
Phantom Treasury Bills.
<PAGE> 2
Key Employee Phantom Stock Agreement
Payment Option Election
Page Two
Part II. I hereby direct that, in the event of my death, any balance in my
Account shall be paid to the beneficiary(ies) designated by me in the
following manner: (check one)
a. ____ in a single lump sum distribution
b. ____ continuation of the manner of distribution elected by
me pursuant to Part I above.
Employee:
____________________________
Signature Date
____________________________
Print Full Name
Receipt Acknowledged:
LEGG MASON WOOD WALKER, INCORPORATED
By:___________________________________
Signature
<PAGE> COVER
EXHIBIT B
KEY EMPLOYEE PHANTOM STOCK AGREEMENT
Designation of Beneficiary(ies)
By virtue of my right under the Agreement to designate the beneficiary(ies)
of any death benefits payable under the Agreement, and subject to any future
exercise of said right by me, I hereby direct that any and all such death
benefits shall be paid, in accordance with the terms of the Agreement, to the
person(s) named below who are living at the time of each such payment, and,
unless otherwise expressly indicated, in equal shares among them if more
than one such person shall be living at the time of each such payment:
PRIMARY BENEFICIARY(IES)
________________________________________________________
Name/Relationship Address
________________________________________________________
Name/Relationship Address
________________________________________________________
Name/Relationship Address
In the event that no primary beneficiary shall be living at the time of any
death benefit payment, I hereby direct that such remaining payment(s) shall
be made to those person(s) named below who are living at the time of each
such remaining payment, and, unless otherwise expressly indicated, in equal
shares among them if more than one such person shall be living at the time of
each such remaining payment:
CONTINGENT BENEFICIARY(IES)
________________________________________________________
Name/Relationship Address
________________________________________________________
Name/Relationship Address
________________________________________________________
Name/Relationship Address
<PAGE> 2
Key Employee Phantom Stock Agreement
Designation of Beneficiary(ies)
Page Two
In the further event that none of the persons named above, either as primary
or contingent beneficiary(ies), shall be living at the time of any death
benefit payment, all remaining payment(s) shall be made to my estate pursuant
to the Agreement.
NOTE: If so specified in the above designations, "person" includes a
trust or corporation.
Employee: ______________________________
Signature Date
______________________________
Print Full Name
_______________________________
Witness
Receipt Acknowledged:
LEGG MASON WOOD WALKER, INCORPORATED
By:_________________________________
Date
<PAGE> COVER
PROFESSIONAL BRANCH MANAGER PHANTOM STOCK AGREEMENT
This Professional Branch Manager Phantom Stock Agreement (this
"Agreement") is made this ___ day of________________, 19___, by and between
Legg Mason Wood Walker, Incorporated ("Legg") and ________________________
("Employee").
WHEREAS, Employee has accepted employment by Legg as a Professional
Branch Manager; and
WHEREAS, Legg and Employee believe it to be mutually advantageous
to provide for the payment of certain compensation to Employee upon the terms
and conditions hereafter set forth,
Now, therefore, Legg and Employee agree as follows:
1. Certain Monetary Compensation
In consideration of Employee's employment with Legg, Legg
shall be obligated to pay Employee certain compensation which
Employee may elect to be deferred pursuant to the terms and
conditions of this Agreement.
2. Phantom Share Units
Legg and Employee agree that the certain compensation to be
paid by Legg to Employee shall not be paid currently but shall be
deferred, and as deferred, shall be deemed converted into units
that are economically equivalent to, but are not actual, shares of
Legg Mason, Inc. ("LMI") Common Stock. These "phantom" shares of
LMI Common Stock are referred to as "Share Units."
Exhibit 4.2
<PAGE> 2
3. Compensation Deferral Elections
Simultaneously with the execution of this Agreement, Employee
must direct Legg on a form prescribed by Legg (hereafter the
"Compensation Deferral Election" and attached as Exhibit A) to
defer a portion not to exceed $12,000.00 of Employee's
compensation for the calendar year, on a before tax basis, from
Employee's annual bonus or from Employee's compensation, in any
whole percentage Employee chooses, from a minimum of 1% to a
maximum of 15% (not to exceed $12,000.00 in the aggregate); or from
Employee's compensation in any monthly whole dollar amount Employee
chooses, from a minimum of $250.00 to a maximum of $1,000.00.
When electing to make deferrals of compensation under this
Agreement, Employee must make an irrevocable election for an
entire calendar year. Once a calendar year has begun, a deferral
election may not be changed or revoked during the calendar year
(except with respect to deferrals in future calendar years).
Notwithstanding the foregoing, however, in the event of Employee's
financial hardship, the Employee may apply to Legg for permission
to reduce or suspend deferral contributions for the remainder
of the calendar year or any part thereof. Legg has the sole
discretion as to the extent (if at all) it shall grant the
Employee's request. "Financial hardship" is defined as
financial need arising as a result of a sudden and unexpected
illness or accident of the Employee or a dependent, loss of
the Employee's property due to casualty, or other similar
extraordinary and unforeseeable circumstances arising as a
result of events beyond the control of Employee, but only
where such financial need is not and may not be relieved (i)
<PAGE> 3
through reimbursement or compensation by insurance or otherwise
or (ii) by liquidation of the Employee's assets, to the extent
the liquidation of such assets would not itself cause severe
financial hardship.
Employee may make changes in his or her deferral election
(including a revocation of further deferrals), effective for any
calendar year after the year in which he or she initially entered
into this Agreement by filing prior to January 1 of the subsequent
year a completed compensation deferral amendment in the form
prescribed by Legg (hereafter the "Compensation Deferral Amendment"
and attached as Exhibit B). If Employee fails to file a completed
Compensation Deferral Amendment prior to the beginning of a calendar
year, Employee will be deemed to have elected to keep Employee's
prior election in force for the new calendar year.
4. Professional Branch Manager Phantom Stock Account
In lieu of paying the deferred portion of Employee's
compensation to the Employee as earned, Legg will establish
a Professional Branch Manager Phantom Stock Account (the
"Account") on its books and records for the benefit of
Employee wherein Legg will credit to such Account dollar
amounts equal to the compensation deferred by the Employee
under this Agreement (hereafter the "Compensation Credit") to
be converted into Share Units. Each Compensation Credit will
be made as of a date not later than ten (10) business days
after the last day of the month during which the Compensation
Credit was earned by Employee. The number of Share Units into
which such Compensation Credit shall be converted (calculated
to four decimal places) will be determined as of the
<PAGE> 4
fifth trading day after the date the Compensation Credit is
made and will be equal to the amount of the Compensation Credit
divided by the fair market value of a share of LMI Common Stock,
determined as set forth below. Additionally, Legg will "match"
the Compensation Credit on a monthly basis by contributing to
the Employee's Account a dollar amount equal to the Compensation
Credit (hereinafter the "Matched Credit") with the Matched
Credit converted into Share Units in the same manner as the
Compensation Credit (hereinafter the "Matched Share Units").
Fair market value of a share of LMI Common Stock will equal
the five day average of the closing prices on the principal
exchange on which LMI Common Stock is traded for the four trading
days immediately preceding the applicable valuation date and the
valuation date (where the valuation date is the fifth trading
day after the date on which the Account is credited), or, if LMI
Common Stock is not then traded on an exchange, such amount as
is determined by Legg using any reasonable method of valuation
("Fair Market Value").
5. Adjustment to Account Upon Dividend by LMI
If, prior to the date Employee receives a payment from
Legg pursuant to this Agreement (a "Payment Date"), LMI pays
any dividend (other than in LMI Common Stock) upon its Common
Stock, or makes any distribution (other than in LMI Common
Stock) with respect thereto, Employee's Account will be
credited with additional Share Units and Matched Share Units,
equivalent to that number of phantom shares of LMI Common Stock
determined by dividing the amount of the dividend or other
distribution allocable to the Share Units and Matched Share
<PAGE> 5
Units already credited to the Account as of the record date for
the dividend or distribution, by 95% of the Fair Market Value of
a share of LMI Common Stock on the fifth business day after the
payment date for the dividend or distribution.
In the event that, prior to a Payment Date, the number of
outstanding shares of LMI Common Stock is changed by reason of
a stock split, stock dividend, combination of shares or
recapitalization, or LMI Common Stock is converted into or
exchanged for other shares as a result of a merger, consolidation,
sale of assets or other reorganization or recapitalization, the
number of Share Units and Matched Share Units then credited to
Employee's Account will be appropriately adjusted so as to reflect
such change (based upon the best estimate of Legg as to relative
values).
Nothing contained in this Agreement shall confer or be
construed as conferring upon Employee any rights as a stockholder
of LMI or any right to have access to the books and records of
LMI or any subsidiary.
6. Vesting Schedule of Share Units
Employee shall be fully and immediately vested in all Share
Units attributable to or resulting from Employee's Compensation
Credit.
As long as Employee is continuously employed in good
standing by Legg for the following elapsed periods, Employee shall
vest in the Matched Share Units credited to Employee's Account
pursuant to the following vesting schedule (but such Matched Share
Units shall be subject to forfeiture as described in Paragraph 14
if Employee engages in competition):
<PAGE> 6
If After December 31 of the Year
of the Matched Credit, Employee
continues his Employment for a Then the Vested Portion of
Period which is: Matched Share Units shall be:
12 months or less -0-
Greater than 12 months, but 1/5 of Respective
24 months or less Matched Share Units
Greater than 24 months, but 2/5 of Respective
36 months or less Matched Share Units
Greater than 36 months, but 3/5 of Respective
48 months or less Matched Share Units
Greater than 48 months, but 4/5 of Respective
60 months or less Matched Share Units
Greater than 60 months All Respective
Matched Share Units
For purposes of determining Employee's vested portion of
Matched Share Units, Employee shall not be entitled to receive
any partial or pro-rated credit for having been employed by Legg
for any partial time period specified in the table above. If
Employee's employment with Legg terminates for any reason other
than death, disability or retirement (as such terms are defined
herein), whether involuntary or voluntary and for whatever cause
or no cause, Employee shall have no right or claim to any Matched
Share Units which have not vested to Employee pursuant to the
above Vesting Schedule and such non-vested Matched Share Units
shall belong exclusively to Legg.
In the event Employee's employment with Legg
terminates as a result of Employee's death, all Matched
Share Units shall be immediately deemed vested
<PAGE> 7
and belonging to Employee's estate or to Employee's beneficiary
if Employee has named a beneficiary as described in Paragraph 13.
In the event Employee's employment with Legg terminates as
a result of Employee's disability, all Matched Share Units shall
be immediately deemed vested and belonging to Employee. For
purposes of this Agreement, disability shall mean a medically
determinable physical or mental impairment which can be expected
to result in death or to last at least twelve months, and by
reason of which the Employee will be prevented from performing
his usual duties or any other similar duties available in Legg's
employ.
Unless distribution of benefits is forfeited pursuant to
Paragraph 14 due to Employee engaging in competition, vesting
pursuant to this Paragraph shall continue after Employee retires
from Legg provided that such retirement occurs (i) on or after
Employee is age 65; (ii) on or after Employee is age 55 if the
sum of Employee's age at retirement and his or her years of
service with Legg equals at least 75; or (iii) on or after
Employee is age 60 if the Employee has a minimum of ten years of
service with Legg.
7. Assignment of Benefits
No amount payable, or other right or benefit, under
this Agreement, will, except as otherwise specifically
provided by this Agreement or by applicable law, be subject
to sale, assignment, transfer, pledge, encumbrance,
attachment, garnishment or levy prior to distribution to
Employee. Since this Agreement is intended to be a non-qualified,
unfunded plan not subject to the Employment Retirement Income
Security Act of 1974, as amended, payments under this
<PAGE> 8
Agreement will not be subject to the provisions of any qualified
domestic relations order (as defined under the Internal Revenue
Code) applicable to an Employee's deferred compensation benefit.
Notwithstanding any provision herein to the contrary,
Employee acknowledges and agrees that any distribution payable
under this Agreement may be used at the discretion of Legg to
offset any debt owed by Employee to Legg at the date such
distribution would otherwise be paid. Employee expressly
authorizes Legg to withhold distributions payable under this
Agreement to offset any debts or other liabilities owed by
Employee to Legg. If Legg is aware of any errors, loans
outstanding or liabilities of Employee, Legg may withhold
distributions under this Agreement until such time as the
liabilities are satisfied or Legg has determined that a
liability no longer exists.
8. Unfunded Nature of the Agreement
Legg will not be required to purchase, hold or dispose of any
investments with respect to the Compensation Credits or Share Units.
Employee has no interest in the Account or in any investments Legg
may purchase with such amounts, except as a general, unsecured
creditor of Legg.
9. Elective Transfer to Phantom Treasury Bills in the Event of a
Merger of LMI
In the event of a merger or other corporate transaction,
the result of which is that securities of another entity
that are listed on the New York Stock Exchange or the
American Stock Exchange or quoted on NASDAQ ("Publicly
Traded") are substituted for LMI Common Stock, Employee
may elect to have his or her entire (and only the entire)
Account accrue income based on the "T-Bill Rate," which,
<PAGE> 9
for purposes of this Agreement, shall be defined as the rate equal
to the per annum rate for 26 week U.S. Government Treasury Bills
sold at a discount from face value at the most recent U.S.
Government auction and to be determined as of the first business
day of each calendar year and as of the first business day of
July and to be applicable until the next such determination date.
Such an elective transfer (i) must be made by written notice to
Legg received not later than five business days after the
Employee is notified by Legg of the right to make the election,
(ii) will be effective as of the date of the stock conversion
giving rise to the election, (iii) will be based upon an Account
value, to the extent of the Share Units and Matched Share Units
in the Account, determined as of the effective date of the
transfer, but based on the last Fair Market Value of a share of
LMI Common Stock immediately prior to the conversion, (iv) will be
irrevocable as of such effective date, and (v) will apply to all
subsequent amounts credited to the Account.
10. Elective Transfer to Phantom Treasury Bills in the Event of a
Change in Control of LMI
In the event of a Change in Control (as defined below),
Employee may elect to have his or her entire (and only the
entire) Account accrue income based on the T-Bill Rate. Such
an elective transfer (i) must be made by written notice to
Legg received not later than five business days after Employee
is notified by Legg of the right to make the election, (ii)
will be effective as of the fifth business day after Legg's
receipt of such written notice, (iii) will be irrevocable as
of such effective date, (iv) will be based upon an Account
value, to the extent of the Share Units and Matched Share
Units in the Account, determined as of the effective date
<PAGE> 10
of the transfer, using the then Fair Market Value of LMI Common
Stock, and (v) will apply to any subsequent amounts credited to
the Account.
A "Change in Control" will be deemed to occur upon the
happening of any of the following events (a "Change Event"): (i)
the approval by shareholders of LMI of any agreement to merge or
consolidate LMI with or into another corporation (with LMI not
surviving), or to sell or otherwise dispose of all or substantially
all of the assets of LMI, (ii) the approval by the shareholder of
Legg (i.e. LMI) of any agreement to merge or consolidate Legg with
or into another corporation (with Legg not surviving), or to
sell or otherwise dispose of all or substantially all of the
assets of Legg or (iii) a determination by the Board of Directors
of Legg that, in connection with any proposed tender or exchange
offer for voting securities of LMI, any person has become the
direct or indirect beneficial owner of securities representing
40% or more of the combined voting power of LMI's then outstanding
securities; provided, however, that: (A) a Change in Control will
be deemed not to have occurred if, not later than five business
days after a Change Event described in clause (i) or (ii), that
Change Event is designated by the affirmative vote of 75% or more
of the directors who were members of LMI or Legg's Board of
Directors immediately prior to the Change Event as not constituting
a Change in Control for purposes of this Agreement; and (B) if a
Change Event described in clause (i) or (ii) occurs with respect
to a portion of LMI or Legg, the Change in Control, if any, shall
be deemed to have occurred only with respect to the employees
transferred in connection therewith.
<PAGE> 11
11. Treasury Bill Credits
In the event that Employee elects to have his or her Account
accrue income based on the T-Bill Rate pursuant to Paragraph 9 or
Paragraph 10 of this Agreement, any such accrued credits
(hereinafter "Treasury Bill Credits") that are based on the T-Bill
Rate will be made to the Account as of June 30 and December 31 of
each year and immediately prior to distribution to Employee or his
or her beneficiary.
12. Mode of Distribution
Legg will make all distributions under this Agreement in shares
of LMI Common Stock or in cash, or in a combination of both, at
Legg's option. Legg, in its sole discretion, will decide whether to
distribute stock or cash to Employee. There is no limit on the
total number of shares of LMI Common Stock that may be distributed
under this Agreement. If Legg elects in any case to distribute LMI
Common Stock under this Agreement, Employee will receive (i) shares
equal to the whole number of Share Units and vested Matched Share
Units in the Account (unless Legg elects to distribute cash for some
or all of the Share Units or vested Matched Share Units), and cash
in lieu of any fractional share based on 100% of the Fair Market
Value of a share of LMI Common Stock as of the day Employee is
entitled to the distribution and (ii) if any portion of the
Account accrues credits based on the T-Bill Rate and is to be
settled in LMI Common Stock, whole shares equal to the number
(rounded down) determined by dividing the amount owed with respect
to such portion by 100% of the Fair Market Value of a share of LMI
<PAGE> 12
Common Stock as of the day Employee is entitled to the
distribution and cash equal to the balance (i.e., no fractional
shares will be issued).
Employee acknowledges that, because Fair Market Value will be
measured by taking into account stock prices over a five day period
preceding the date a distribution is due, if Legg elects to
distribute stock, Employee will be subject to some market risk if
the trading price of LMI Common Stock declines during the five day
period. After the date of distribution, Employee must make his or
her own decision as to whether to sell or retain the shares
received under this Agreement. Any brokerage commissions or other
charges incurred in the event Employee decides to sell such shares
will be the sole responsibility of the Employee, not Legg.
13. Timing of Distribution
Simultaneously with the execution of this Agreement, Employee
must make an election on a form prescribed by Legg (hereafter the
"Payment Option Election" and attached as Exhibit C) to receive the
benefits attributable to Share Units and corresponding Matched
Share Units payable under this Agreement either:
(i) in a lump sum one year after the respective Matched
Share Units have fully vested pursuant to Paragraph 6; or
(ii) in three annual installments with the first of such
installments occurring one year after the respective
Matched Share Units have fully vested pursuant to
Paragraph 6; or
<PAGE> 13
(iii) in a lump sum upon Employee's termination of
employment from Legg, but in no event earlier than one
year after the respective Matched Share Units have fully
vested pursuant to Paragraph 6; or
(iv) in three annual installments, with the first of
such installments occurring upon Employee's termination
of employment from Legg, but in no event earlier than one
year after the respective Matched Share Units have fully
vested pursuant to Paragraph 6.
Notwithstanding Employee's election to the contrary, if the
total amount to be distributed from the Employee's account is less
than $20,000.00, the distribution will be made as a lump sum.
Furthermore, in the event that Employee's employment with Legg
has terminated for any reason and Employee's benefits under this
Agreement are to be paid in installments rather than in a single
lump sum, then (regardless of whether there has or has not been
a merger or Change in Control of LMI or Legg), Employee will be
deemed to have automatically made an elective transfer to Phantom
Treasury Bills pursuant to the terms described in Paragraph 9,
effective as of the fifth trading day after the date Employee's
employment is terminated.
In the event that Employee's employment with Legg terminates
for any reason other than death, then as of the fifth business day
following termination of employment (but if the Employee has so
elected in the Payment Option Election, no earlier than the first
day of the calendar year following termination), Employee will be
entitled to receive one or more distributions under this Agreement
in accordance with the Payment Option Election.
<PAGE> 14
Employee from time to time may designate, on a form prescribed
by Legg, (hereafter the "Designation of Beneficiary(ies)" and
attached as Exhibit D) any person(s) to receive such distributions
as may be payable under this Agreement upon the Employee's death
(a "Beneficiary"). In the event of the death of Employee who has
an undistributed balance in his or her Account, then as of the
fifth business day after the date of death, the Employee's
Beneficiary will be entitled to receive the balance of the Account
in a single lump sum, or if Employee has so indicated in the
Employee's Payment Option Election, in the same manner as the
Account would have been distributed to the Employee had he or she
lived.
The amount of any distribution with respect to an Account will
be determined on the date Employee or his or her Beneficiary is
entitled to receive a distribution and, to the extent an Account
includes Share Units or vested Matched Share Units, will be based
on the Fair Market Value of LMI Common Stock as of the date
Employee or his or her Beneficiary is entitled to receive a
distribution.
14. Non-Compete Requirement
If Employee "engages in competition" with Legg prior to one
year after the Matched Share Units have fully vested pursuant to
Paragraph 6, Employee's claim to such respective Matched Share
Units, both vested and non-vested and including interest earned
thereon or any respective Treasury Bill Credits, shall be forfeited
in its entirety. Forfeited amounts shall revert to Legg.
(a) For purposes of this Agreement, Employee shall be deemed
to have "engaged in competition" with Legg if he or she:
<PAGE> 15
(i) discloses the names of or otherwise identifies any
of Legg's customers to any person, firm, corporation, association,
or other entity for any reason or purpose whatsoever;
(ii) discloses to any person, firm, corporation,
association, or other entity any information regarding Legg's
general business practices or procedures, methods of sale, list of
products, personnel information or any other information concerning
Legg's business;
(iii) owns, manages, operates, controls, is employed by,
acts as an agent for, participates in or is connected in any manner
with the ownership, management, operation or control of any firm,
corporation, association or other entity which is engaged in
businesses which are or may be competitive to the business of Legg;
provided further that this restrictive covenant shall encompass the
State of Maryland and any other states where Legg is engaged in
business, and every city, county, and other political subdivision
of such states; or
(iv) solicits or calls, either by himself or at his or
her direction has any other person or firm solicit or call, any of
the customers of Legg on whom Employee called, with whom Employee
became acquainted, or of whom Employee learned during his
employment by Legg.
(b) It is the intention of Legg that this Paragraph
be given the broadest protection allowed by law with regard
to the restrictions herein contained. Each restriction
set forth in this Paragraph shall be construed as a
condition separate and apart from any other restriction
or condition. To the extent that any restriction contained
in the Paragraph is determined by any court of competent
<PAGE> 16
jurisdiction to be unenforceable by reason of it being extended
for too great a period of time, or as encompassing too large a
geographic area, or over too great a range of activity, or any
combination of these elements, then such restriction shall be
interpreted to extend only over the maximum period of time,
geographic area, and range of activities which the court deems
reasonable and enforceable.
15. FICA or Payroll Tax
Any FICA or other payroll tax which may be imposed on
Employee with respect to the deferred compensation under this
Agreement will be, unless otherwise determined by Legg, deducted
from the non-deferred remainder of compensation of Employee.
16. Disputes Subject to Arbitration
Employee agrees that any controversy or dispute arising
under this Agreement or out of Employee's employment by Legg
(including, but not limited to, claims arising under the Civil
Rights Act of 1964, the Civil Rights Act of 1991, the Age
Discrimination in Employment Act of 1967, and analogous state
statutes) shall be submitted for arbitration upon demand of
either party in accordance with the rules of the National
Association of Securities Dealers, Inc. or the New York Stock
Exchange, Inc., provided, however, that in the event of
termination of Employee's employment, Legg shall be entitled to
seek injunctive relief or confess judgment against Employee
pursuant to the terms of any other applicable agreement and that
Legg shall be entitled to apply for and obtain from any state or
federal court such relief before or after the commencement of any
<PAGE> 17
arbitration proceeding, such relief to be afforded to Legg
pending the decision of the arbitrators.
17. Employment-At-Will
Employee and Legg agree and acknowledge that this Agreement
shall not be construed as a contract of employment. Legg maintains
an employment-at-will policy. As Employee is free to end his or
her employment with Legg at any time for any reason or no reason,
Legg is free to end the employment with Employee at any time for
any reason or no reason.
Furthermore, Legg may end at any time Employee's employment as
a Professional Branch Manager. In the event Employee is no longer
employed as a Professional Branch Manager, Employee will no longer
be entitled to defer compensation pursuant to this Agreement.
However, as long as Employee continues to be employed in good
standing by Legg, Employee shall continue to be entitled to the
benefits due Employee under this Agreement.
18. Governing Law
This Agreement shall be governed, construed, and enforced
in accordance with the laws of the State of Maryland.
19. Effectiveness of this Agreement
If any part of this Agreement shall be held invalid or
unenforceable, that part shall be deemed modified as necessary to
make it effective, and the remaining provisions of this Agreement
shall remain in effect.
<PAGE> 18
20. Entire Understanding of Parties
This Agreement incorporates the entire understanding between
Employee and Legg on the subject matter herein and may be not
changed except by a writing signed by a duly authorized officer of
Legg and Employee.
21. Assistance of Counsel
Employee acknowledges that Employee was given the opportunity
to read this Agreement and to seek the assistance of counsel
before Employee decided to accept the terms of this Agreement or
sign this Agreement.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed as of the date first hereinabove written.
EMPLOYEE:
_____________________________
Signature
_____________________________
Print Full Name
LEGG MASON WOOD WALKER,
INCORPORATED
BY:__________________________
<PAGE> COVER
EXHIBIT A
PROFESSIONAL BRANCH MANAGER PHANTOM STOCK AGREEMENT
Compensation Deferral Election
Pursuant to the Agreement, I agree to the following deferral of amounts
that would otherwise be payable to me as current compensation (pick a., b.
or c.):
(a) Annual Bonus Whole
Dollar Deferral $_______ (not to exceed $12,000.00)
(b) Percentage of
Compensation Deferral: _______% of compensation (1% to 15%
and not to exceed $12,000.00
in the aggregate in
combination with the above
deferral)
or
(c) Monthly Whole Dollar Deferral $_______ ($250.00 to $1,000.00)
Having read and understood the Agreement and prospectus provided to me
by Legg, I understand and agree that:
1. My deferrals will be made from compensation payable to me in the
calendar year and all subsequent calendar years until I submit to
Legg a Compensation Deferral Amendment in accordance with the terms
of the Agreement and which is received by Legg prior to the first
day of the calendar year for which it is to be effective.
2. Elections may not be changed or revoked except at the end of a
calendar year (except in the event of severe financial hardship,
in which case, I may apply to Legg for its consent to a suspension
of deferrals).
3. Any deferral is subject to all of the terms and conditions of the
Agreement, including particularly that: (i) deferrals are
irrevocable until one year after vesting of Matched Share Units,
retirement, termination, disability, or death, whichever occurs
earliest, (ii) compensation which I defer is not invested directly
in common stock (therefore, I have no rights as a stockholder by
virtue of this Agreement), (iii) phantom stock may not be converted
to an alternative fixed income investment mode except as written in
the Agreement, and (iv) my only claim in the event of financial
<PAGE> 2
Professional Branch Manager Phantom Stock Agreement
Compensation Deferral Election
Page Two
difficulty of Legg is as an unsecured general creditor for the
benefits due to me under the Agreement.
Employee:
_____________________________
Signature Date
_____________________________
Print Full Name
Receipt Acknowledged:
LEGG MASON WOOD WALKER, INCORPORATED
By:_________________________________
Signature
<PAGE> COVER
EXHIBIT B
PROFESSIONAL BRANCH MANAGER PHANTOM STOCK AGREEMENT
Compensation Deferral Amendment
The purpose of this form is to change a previously-filed election. I
understand that:
1. The election made in this Compensation Deferral
Amendment applies only to the portion of my Account under
the Agreement attributable to contributions credited after the
first day of the calendar year following receipt of this form by
Legg.
2. The election made in this Compensation Deferral
Amendment will remain in effect for all future calendar years
unless I file a new Compensation Deferral Amendment with
Legg prior to the first day of the calendar year for which it
is to be effective.
ELECTION CHANGE: (Check as applicable)
I elect to cease further deferrals of my compensation.
Having previously suspended deferrals of my compensation, I elect to
resume such deferrals, at the percentage set forth below.
I elect that further deferrals of my compensation shall be equal to:
(a) $_________ of my annual bonus (not to exceed $12,000.00);
(b) _________% of compensation (1% to 15% and not to exceed
$12,000.00 in combination with the above deferral); or
(c) $_________ per month ($250.00 to $1,000.00).
Employee:
____________________________
Signature Date
____________________________
Print Full Name
Receipt Acknowledged:
LEGG MASON WOOD WALKER, INCORPORATED
By:__________________________________
Signature
<PAGE> COVER
EXHIBIT C
PROFESSIONAL BRANCH MANAGER PHANTOM STOCK AGREEMENT
Payment Option Election
Part I. I hereby elect to receive the benefits attributable to the Share
Units and corresponding Matched Share Units of my Account under the Agreement
in the following manner: (check one)
a. ____ in a lump sum one year after the respective
Matched Share Units have fully vested;
b. ____ in three annual installments with the first of such install-
ments occurring one year after the respective Matched
Share Units have fully vested;
c. ____ in a lump sum upon my termination of employment from
Legg (but in no event earlier than one year after the
respective Matched Share Units have fully vested); or
d. ____ in three annual installments with the first of such
installments occurring upon my termination of employment
from Legg (but in no event earlier than one year after the
respective Matched Share Units have fully vested).
I understand that if I elect to receive distributions in installments,
each installment will be determined by dividing the then value of the amount
to be distributed by the number of installments remaining to be paid
(including the installment then due). If the total distribution is less than
$20,000.00, I understand installment option b and installment option d will
not be available and I will receive a single lump sum payment.
<PAGE> 2
Professional Branch Manager Phantom Stock Agreement
Payment Option Election
Page Two
I further understand that in the event that my employment with Legg
has terminated for any reason and the benefits under this Agreement are to be
paid in installments rather than in a single lump sum, then (regardless of
whether there has or has not been a merger or Change in Control of LMI or
Legg), I will be deemed to have automatically made an elective transfer to
Phantom Treasury Bills.
Part II. I hereby direct that, in the event of my death, any balance in my
Account shall be paid to the beneficiary(ies) designated by me in the
following manner: (check one)
a. ____ in a single lump sum distribution
b. ____ continuation of the manner of distribution elected by me
pursuant to Part I above.
Employee:
____________________________
Signature Date
____________________________
Print Full Name
Receipt Acknowledged:
LEGG MASON WOOD WALKER, INCORPORATED
By:_________________________________________
Signature
<PAGE> COVER
EXHIBIT D
PROFESSIONAL BRANCH MANAGER PHANTOM STOCK AGREEMENT
Designation of Beneficiary(ies)
By virtue of my right under the Agreement to designate the beneficiary(ies)
of any death benefits payable under the Agreement, and subject to any future
exercise of said right by me, I hereby direct that any and all such death
benefits shall be paid, in accordance with the terms of the Agreement, to the
person(s) named below who are living at the time of each such payment, and,
unless otherwise expressly indicated, in equal shares among them if more than
one such person shall be living at the time of each such payment:
PRIMARY BENEFICIARY(IES)
________________________________________________________
Name/Relationship Address
________________________________________________________
Name/Relationship Address
________________________________________________________
Name/Relationship Address
In the event that no primary beneficiary shall be living at the time of any
death benefit payment, I hereby direct that such remaining payment(s) shall
be made to those person(s) named below who are living at the time of each
such remaining payment, and, unless otherwise expressly indicated, in equal
shares among them if more than one such person shall be living at the time
of each such remaining payment:
CONTINGENT BENEFICIARY(IES)
________________________________________________________
Name/Relationship Address
________________________________________________________
Name/Relationship Address
________________________________________________________
Name/Relationship Address
<PAGE> 2
Professional Branch Manager Phantom Stock Agreement
Designation of Beneficiary(ies)
Page Two
In the further event that none of the persons named above, either as primary
or contingent beneficiary(ies), shall be living at the time of any death
benefit payment, all remaining payment(s) shall be made to my estate pursuant
to the Agreement.
NOTE: If so specified in the above designations, "person" includes a
trust or corporation.
Employee: ______________________________
Signature Date
______________________________
Print Full Name
______________________________
Witness
Receipt Acknowledged:
LEGG MASON WOOD WALKER, INCORPORATED
By:__________________________________
Date
<PAGE> 1
[LEGG MASON, INC. LETTERHEAD]
July 24, 1998
Board of Directors
Legg Mason, Inc.
100 Light Street
Baltimore, Maryland 21202
Re: The Legg Mason Wood Walker, Incorporated
Key Employee Phantom Stock Agreements and
Professional Branch Manager Phantom Stock Agreements
Registration Statement on Form S-8
Ladies and Gentlemen:
This opinion is being furnished in connection with the registration
of 100,000 shares (the "Shares") of common stock, par value $.10 per share,
of Legg Mason, Inc. (the "Company") with the Securities and Exchange
Commission on Form S-8.
Please be advised that I have examined the corporate records of the
Company (including the Articles of Incorporation, as amended, By-Laws, as
amended, and minutes) and such other documents as I considered necessary to
give the opinion set forth below. In connection with my examination, I have
assumed the genuineness of all signatures, the authenticity of all documents
submitted to me as originals, and the conformity to the original document of
all documents submitted to me as copies.
Based upon and subject to the foregoing, it is my opinion that the
Shares covered by the Registration Statement will, upon issuance of such
Shares pursuant to either The Legg Mason Wood Walker, Incorporated Key
Employee Phantom Stock Agreements or The Legg Mason Wood Walker, Incorporated
Professional Branch Manager Phantom Stock Agreements (collectively, the
"Agreements") by the Company (assuming such issuances are made in accordance
with the terms of the Agreements, as such respective forms of Agreements are
filed as Exhibits to the Registration Statement), constitute legally issued,
fully paid and non-assessable shares of common stock of the Company.
Exhibits 5 and 23(b)
<PAGE> 2
July 24, 1998
Page 2
I hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the use of my name therein and in the
Prospectus. In giving this consent, I do not admit that I am within the
category of persons whose consent is required by Section 7 of the Securities
Act of 1933.
Very truly yours,
/s/ Theodore S. Kaplan
Theodore S. Kaplan
General Counsel
TSK:pc
<PAGE> 1
CONSENT OF INDEPENDENT ACCOUNTANTS
___________________
We consent to the incorporation by reference in the registration
statement of Legg Mason, Inc. on Form S-8 (which registers 100,000 shares of
Legg Mason, Inc. Common Stock under The Legg Mason Wood Walker, Incorporated
Key Employee Phantom Stock Agreements and The Legg Mason Wood Walker,
Incorporated Professional Branch Manager Phantom Stock Agreements) of our
reports dated May 4, 1998, on our audits of the consolidated financial
statements and financial statement schedules of Legg Mason, Inc. and
Subsidiaries as of March 31, 1998 and 1997, and for each of the three years
in the period ended March 31, 1998, which reports are included in Legg Mason,
Inc.'s 1998 Annual Report on Form 10-K. We also consent to the reference to
our firm under the caption "Experts".
/s/ PricewaterhouseCoopers LLP
PRICEWATERHOUSECOOPERS LLP
Baltimore, Maryland
July 24, 1998
Exhibit 23(a)
