Exhibit 10.2
AGREEMENT
     THIS AMENDED AND RESTATED EXECUTIVE EMPLOYMENT AGREEMENT (this “Agreement”)
is entered into this 23rd day of July, 2010, by and between Esther M. Stearns
(the “Executive”), LPL Financial Corporation (the “Company”), LPL Holdings, Inc.
(“Holdings”) and LPL Investment Holdings Inc. (“Investment Holdings”) (with
respect to Section 4(c) only), to be effective upon the Closing (as defined
below).
     WHEREAS, Executive is currently employed by the Company, and previously
entered into an employment agreement with Holdings, dated as of December 28,
2005 and amended as of June 1, 2008; and
     WHEREAS, the Company and the Executive desire to enter into this Agreement
to set forth the amended and restated terms of the Executive’s continued
employment with the Company, effective as of the closing of the 2010 initial
public offering of common stock by Investment Holdings (the “Closing”).
     NOW, THEREFORE, in consideration of the foregoing premises and the mutual
promises, terms, provisions and conditions set forth in this Agreement, the
parties hereby agree:
     1. Employment. Subject to the terms and conditions set forth in this
Agreement, the Company hereby agrees to continue to employ the Executive, and
the Executive hereby accepts the terms of continued employment with the Company.
     2. Term. Subject to earlier termination as hereafter provided, the
Executive’s employment hereunder shall have an original term of three (3) years
commencing on the date of the Closing (the “Initial Term”) and shall
automatically be renewed thereafter for successive terms of one year each,
unless the Company provides notice to the Executive at least ninety (90) days
prior to the expiration of the Initial Term or any renewal term that the
Agreement is not to be renewed, in which event this Agreement and the
Executive’s employment hereunder shall terminate at the expiration of the
then-current term. The term of this Agreement, as from time to time renewed, is
hereafter referred to as “the term of this Agreement” or “the term hereof.” In
the event that the Closing does not occur, this amendment and restatement of the
Agreement shall be void ab initio and of no force or effect and the pre-existing
employment agreement shall remain in effect.
     3. Capacity and Performance.
          a. During the term hereof, the Executive shall serve the Company as
its President and Chief Operating Officer, reporting to the Chief Executive
Officer of the Company (the “CEO”).
          b. During the term hereof, the Executive shall be employed by the
Company on a full-time basis and shall have such duties, authority and
responsibilities as are

 

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commensurate with her position and such other duties, consistent with her
position, as may be designated from time to time by the Board of Directors of
Investment Holdings (the “Investment Holdings Board”).
          c. During the term hereof, the Executive shall devote her full
business time and her best efforts to the discharge of her duties and
responsibilities hereunder; provided, however, that, subject to Section 10
hereof, the foregoing shall not be construed to prevent the Executive from
attending to personal investments and community and charitable service, provided
that such activities do not unreasonably interfere with the performance of
Executive’s duties to the Company. In addition, the Executive may serve on
boards of directors and similar governing bodies, and committees thereof,
subject to the approval of the Investment Holdings Board, which approval shall
not be unreasonably withheld, and subject to Section 10 hereof. Notwithstanding
the foregoing, the Executive may continue to serve on those boards and
committees on which the Executive was serving at the time of the Closing, which
boards and committees are listed on Schedule 1(A) of this Agreement.
     4. Compensation and Benefits. As compensation for all services performed by
the Executive during the term hereof:
          a. Base Salary. During the term hereof, the Company shall pay the
Executive a base salary at the rate per annum as set forth on Schedule 1(B) of
this Agreement, payable in accordance with the regular payroll practices of the
Company for its executives and subject to increase from time to time by the
Investment Holdings Board (or its compensation committee, the “Investment
Holdings Compensation Committee”). The Executive’s base salary may only be
decreased with the approval of the CEO of the Company and then only in an
across-the-board salary reduction in which all executives and other employees
are subject to an equal percentage reduction. The Executive’s base salary, as
from time to time increased or decreased in accordance with Agreement, is
hereafter referred to as the “Base Salary.”
          b. Bonus Compensation.
               i. The Executive shall be eligible to receive a full bonus,
without pro-ration, for calendar year 2010, determined in accordance with the
Company’s employee cash bonus plan as in effect immediately prior to the
Closing, as set forth in Schedule 1(C) hereto.
               ii. Each calendar year thereafter during the term hereof, the
Executive shall be eligible to participate in the cash bonus plan or other
incentive compensation plan in effect for employees of the Company generally,
under which, consistent with the requirements for performance-based compensation
under Section 162(m) of the Internal Revenue Code of 1986, as amended (the
“Code”), the plan elements described in clauses (A) and (C) below shall be not
be decreased from those applicable to the Executive under the bonus plan in
effect immediately prior to the Closing, and the plan element described in
clause (B) below shall be substantially consistent with past practice: (A) the
target bonus, (B) the level of performance required to reach target and (C) the
opportunity to earn bonus compensation in excess of target, with respect to
clauses (A) and (C) as set forth on Schedule 1(D) hereto. Neither the
Executive’s target bonus nor the opportunity to earn bonus compensation in
excess of target may be subject to an adverse change and the level of
performance required to reach target may not be materially

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adversely changed except with the approval of the CEO of the Company and then
only in an across-the-board change which affects equally all employees
participating in the bonus plan. Such cash bonus shall be in addition to the
Base Salary. The Executive’s target bonus under the executive cash bonus plan is
referred to hereafter as the “Target Bonus.” In clarification of the foregoing,
the actual bonus earned by the Executive for any given calendar year, may be
below, at or above the Target Bonus, based on actual performance. Subject to any
effective deferral election made available and elected by the Executive, each
bonus earned by the Executive hereunder shall be paid no later than March 15 of
the calendar year following the end of the calendar year for which the bonus was
earned.
          c. Equity Compensation. The Executive shall be eligible to participate
in all equity compensation plans and programs applicable to senior executives of
the Company and shall receive such grants as may be provided from time to time
by Investment Holdings in the discretion of the Investment Holdings Board or the
Investment Holdings Compensation Committee. Each grant will be subject to the
terms and conditions of the applicable Investment Holdings’ equity compensation
plan and grant agreements which shall provide in relevant part that: (i) upon
the occurrence of a Change in Control occurring after the effective date of this
Agreement, all outstanding equity compensation awards held by the Executive will
become fully vested and/or exercisable, as the case may be, as of the date of
the Change in Control; (ii) upon a termination of the Executive’s employment for
any reason, the portion of any equity compensation award which has not vested
shall terminate; (iii) in the event the Executive’s employment terminates for
any reason other than for Cause, death or disability, the Executive may exercise
any vested portion of any stock option or stock appreciation right
(collectively, “Stock Right”) held by her on the date of termination provided
that he does so prior to the earlier of (A) ninety (90) days following
termination of employment and (B) the expiration of the scheduled term of the
Stock Right; (iv) in the event the Executive’s employment is terminated due to
death or disability (as defined in Section 5(b)), then the Executive, or, as
applicable in the event of death, her beneficiary or estate, may exercise any
vested portion of any Stock Right held by the Executive on the date employment
terminates for the shorter of (A) the period of twelve (12) months following the
termination date and (B) with respect to each Stock Right individually, the
expiration of the scheduled term of such Stock Right; and (v) upon a termination
of the Executive’s employment by the Company for Cause, all equity compensation
awards shall be forfeited immediately.
          d. Vacations. During the term hereof, the Executive shall be eligible
for the number of weeks of vacation per year set forth on Schedule 1(E) to this
Agreement, subject to the vacation policies of the Company generally applicable
to its executives, as in effect from time to time, provided that the Executive
shall not be barred from taking up to the maximum number of weeks of vacation in
any given year solely by reason of the Executive’s failure to work for a
specified period of time during such year prior to the time of such vacation.
          e. Other Benefits. During the term hereof, the Executive shall be
entitled to participate in any and all employee benefit plans from time to time
in effect for executives and/or employees of the Company generally, provided
that the Executive shall receive benefits pursuant to plans, programs and
policies (other than any equity-based compensation plan or program) that

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are comparable, and no less favorable in the aggregate, to those benefits
offered to her immediately prior to the Closing.
          f. Business Expenses. During the term hereof, the Company shall pay or
reimburse the Executive for all reasonable business expenses incurred or paid by
the Executive in the performance of her duties and responsibilities hereunder,
subject to such reasonable substantiation and documentation as the Company may
require and otherwise consistent with the Company’s policies generally
applicable to its executives, as in effect from time to time.
     5. Termination of Employment and Severance Benefits. Notwithstanding the
provisions of Section 2 hereof, the Executive’s employment hereunder shall
terminate prior to the expiration of the term hereof under the circumstances
specified below. Subject to the execution, delivery and nonrevocation by the
Executive, the Executive’s beneficiary, or the representative of the Executive’s
estate, as applicable, of a release of claims agreement (the “Release”) in the
form provided by the Company within the time period specified by the Company,
which shall not exceed 60 days following the date of termination, and provided
that the Executive has complied in all material respects with the terms and
conditions of the Release, the Company shall provide the Executive with the
payments and benefits set forth below:
          a. Termination due to Death. In the event of the Executive’s death
during the term hereof, the Executive’s employment hereunder shall immediately
and automatically terminate. In such event, the Company shall pay to the
Executive’s designated beneficiary or, if no beneficiary has been designated by
the Executive, to her estate, “Final Compensation” which shall include all of
the following: (i) the Base Salary earned but not paid through the date of
termination, (ii) pay for any vacation time earned but not used through the date
of termination, (iii) payment of any annual bonus earned but not paid for the
year preceding that in which the date of termination occurs, (iv) reimbursement
for any business expenses incurred by the Executive and reimbursable pursuant to
Section 4(f) hereof but un-reimbursed on the date of termination (clauses (i),
(ii), (iii) and (iv), collectively, the “Termination Entitlements”), (v) a bonus
for the year in which the date of termination occurs determined by multiplying
the Target Bonus for that year by a fraction, the numerator of which is the
number of days the Executive was employed during the year in which the date of
termination occurs, through the date of termination, and the denominator of
which is 365 (“Pro-Rated Portion of Target Bonus”), (vi) a single lump-sum
payment equal to the premium (including the additional amount (if any) charged
for administrative costs as permitted by the Federal law known as “COBRA”) of
continued health and dental plan participation under COBRA for the Executive (in
the event of a termination other than as a result of death) and for the
Executive’s qualified beneficiaries (as that term is defined under COBRA) for
the one (1) year period immediately following the date of termination (the
“Premium Payment”) and, the Company shall have no further obligation to the
Executive hereunder, other than (A) obligations due to the Executive as of the
date of termination but not yet satisfied, such as, by way of example but not
limitation, an uncorrected error in Base Salary or an outstanding claim under
one of the welfare plans or an uncorrected error in the Executive’s retirement
plan account, and (B) obligations which, whether or not due to the Executive as
of the date of termination, survive termination, such as, by way of example but
not limitation, rights to exercise vested stock options (all of the foregoing,
under clauses (A) and (B) hereof, the “Surviving Company Obligations”).

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          b. Termination due to Disability. The Company may terminate the
Executive’s employment hereunder, upon notice to the Executive, in the event
that the Executive becomes disabled through any illness, injury, accident or
condition of either a physical or psychological nature and, as a result, is
unable to perform substantially all of her duties and responsibilities
hereunder, notwithstanding the provision of any reasonable accommodation, for
any period of six (6) consecutive months. During any period in which the
Executive is disabled but prior to the Executive’s date of termination, the
Executive shall continue to receive all compensation and benefits under
Section 4 hereof while her employment continues. If any question shall arise as
to whether during any period the Executive is disabled through any illness,
injury, accident or condition of either a physical or psychological nature so as
to be unable to perform substantially all of her duties and responsibilities
hereunder, the Executive may, and at the request of the Company shall, submit to
a medical examination by a physician selected by the Company to whom the
Executive has no reasonable objection to determine whether the Executive is so
disabled and such determination shall for the purposes of this Agreement be
conclusive of the issue. In the event of termination by the Company due to the
Executive’s disability, the Company shall provide the Executive with the Final
Compensation and the Company shall have no further obligation to the Executive
hereunder, other than the Surviving Company Obligations. Notwithstanding any
provision herein to the contrary, if the Executive is entitled to a Premium
Payment, the Premium Payment shall be paid in a lump sum on the first business
day that is the earlier of (i) six (6) months following the date of termination,
or (ii) at such time as otherwise permitted by law that would not result in such
additional taxation and penalties under Section 409A.
          c. Retirement. The Executive may elect to retire voluntarily on thirty
(30) days’ notice to the Company, provided that the Executive is then at least
65 years of age. In such event, the Company shall pay to the Executive the Final
Compensation (other than the benefits under clause (v) of the definition thereof
(the “Accrued Compensation”)) and the Company shall have no further obligation
to the Executive hereunder, other than the Surviving Company Obligations.
Notwithstanding any provision herein to the contrary, if the Executive is
entitled to a Premium Payment, the Premium Payment shall be paid in a lump sum
on the first business day that is the earlier of (i) six (6) months following
the date of termination, or (ii) at such time as otherwise permitted by law that
would not result in such additional taxation and penalties under Section 409A.
          d. Termination by the Company for Cause. The Company may terminate the
Executive’s employment at any time for “Cause,” which shall mean only (i) the
intentional failure to perform (excluding by reason of disability) or gross
negligence or willful misconduct in the performance of regular duties or other
breach of fiduciary duty or material breach of this Agreement which remains
uncured after thirty (30) days’ notice specifying in reasonable detail the
nature of the failure, negligence, misconduct or breach and what is required of
the Executive to cure, (ii) conviction or plea of nolo contendere to a felony or
(iii) fraud or embezzlement or other dishonesty which has a material adverse
effect on the Company. Before terminating the Executive for Cause, (A) at least
two-thirds (2/3) of the members of the Investment Holdings Board (excluding the
Executive, if a Board member) must conclude in good faith that, in their view,
one of the events described in subsection (i), (ii) or (iii) above has occurred
and (B) such Board determination must be made at a duly convened meeting of the
Investment Holdings

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Board (X) of which the Executive received written notice at least ten (10) days
in advance, which notice shall have set forth in reasonable detail the facts and
circumstances claimed to provide a basis for the Company’s belief that one of
the events described in subsection (i), (ii) or (iii) above occurred and, in the
case of an event under subsection (i), remains uncured at the expiration of the
notice period, and (Y) at which the Executive had a reasonable opportunity to
make a statement and answer the allegations against the Executive. In the event
of the termination of the Executive’s employment by the Company for Cause, the
Company shall pay to the Executive the Termination Entitlements and the Company
shall have no further obligation to the Executive hereunder, other than the
Surviving Company Obligations. The parties acknowledge and agree that this
definition of “Cause” shall be applicable and controlling with respect to the
grant agreements executed by the Executive under any equity compensation plan or
arrangement sponsored by Investment Holdings or the Company.
          e. Termination by the Company other than for Cause. The Company may
terminate the Executive’s employment hereunder other than for Cause at any time
upon ten (10) days notice to the Executive. Termination by the Company on or
following expiration of the term hereof (other than a termination due to the
Executive’s death or disability or under circumstances that would constitute
“Cause” if this Agreement were still in effect) will be treated as a termination
other than for Cause under this Section 5(e). In the event of termination under
this Section 5(e), the Executive shall be entitled to receive (i) the Accrued
Compensation (other than the Premium Payment), (ii) a bonus for the year in
which the date of termination occurs based on actual performance determined by
multiplying the bonus that would have been earned by the Executive had the
Executive remained in service until the date required to earn a full bonus for
that year by a fraction, the numerator of which is the number of days the
Executive was employed during the year in which the date of termination occurs,
through the date of termination, and the denominator of which is 365, provided
that if the bonus amount exceeds the Pro-Rated Portion of Target Bonus, such
bonus amount shall be limited to the Pro-Rated Portion of the Target Bonus and
(iii) for two years following the date of termination, continued participation
of the Executive and her qualified beneficiaries, as applicable, under the
Company’s group life, health, dental and vision plans in which the Executive was
participating immediately prior to the date of termination, subject to any
premium contributions required of the Executive at the rate in effect on the
date of termination of her employment, provided that, in the event that such
health coverage continuation would be discriminatory for federal income tax
purposes, the Executive shall be permitted to purchase, through the Company at
COBRA rates if possible, and be reimbursed by the Company on a quarterly basis
in arrears for, equivalent health benefit coverage for the Executive and her
qualified beneficiaries. In addition, subject to Executive’s continued
compliance with the provisions of Sections 8 and 9 and subject to Executive’s
execution, delivery and non-revocation of a Release, Executive shall be entitled
to receive twenty-five percent (25%) of the Covenant Payment (as defined in
Section 7). For the avoidance of doubt, if the Executive does not execute a
Release or if the Executive revokes an executed Release within the time period
permitted by law, the Executive shall not be entitled to any payments and
benefits, other than the Termination Entitlements, set forth in this Section 5.
Subject to the foregoing and the provisions of Section 7 to the extent
applicable, the Company shall have no further obligation to the Executive
hereunder other than the Surviving Company Obligations.

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          f. Termination by the Executive for Good Reason. The Executive may
terminate her employment hereunder for Good Reason and, in that event, subject
to Executive’s continued compliance with her obligations under Sections 8 and 9
hereof, shall be entitled to all payments and benefits which the Executive would
have been entitled to receive under Section 5(e) hereof as if termination had
occurred thereunder. “Good Reason” shall mean only (A) the occurrence, without
the Executive’s express written consent (which may be withheld for any or no
reason) of any of the events or conditions described in the following
subsections (i) through (viii), provided that, except with respect to the event
described in subsection (viii), the Executive gives written notice to the
Company of the occurrence of Good Reason within ninety (90) days following the
date on which the Executive first knew or reasonably should have known of such
occurrence and the Company shall not have fully corrected the situation within
thirty (30) days following such notice or (B) termination (for any or no reason)
by written notice from the Executive given within the thirty day period
immediately following the twelve month anniversary of a Change of Control
occurring after the effective date of this Agreement. The following occurrences
shall constitute Good Reason for purposes of clause (A) of this Section 5(f):
(i) a reduction in the Executive’s Base Salary (other than as expressly
permitted under Section 4(a) hereof); (ii) an adverse change in the Executive’s
bonus opportunity through reduction of the Target Bonus or the maximum available
bonus or a material adverse change in the goals or level of performance required
to achieve the Target Bonus (other than as expressly permitted under Section
4(b) hereof); (iii) a failure by the Company to pay or provide to the Executive
any compensation or benefits to which the Executive is entitled hereunder; (iv)
(A) a material adverse change in the Executive’s status, positions, titles,
offices, duties and responsibilities, authorities or reporting relationship from
those in effect immediately before such change; (B) the assignment to the
Executive of any duties or responsibilities that are substantially inconsistent
with the Executive’s status, positions, titles, offices or responsibilities as
in effect immediately before such assignment; or (C) any removal of the
Executive from or failure to reappoint or reelect the Executive to any of such
positions, titles or offices; provided that termination of the Executive’s
employment by the Company for Cause, by the Executive other than for Good Reason
pursuant to Section 5(g) hereof, or a termination as a result of the Executive’s
death or disability shall not be deemed to constitute or result in Good Reason
under this subsection (iv); (v) the Company’s changing the location of the San
Diego, California headquarter offices to a location more than twenty-five (25)
miles from the location of such offices, or the Company’s requiring the
Executive to be based at a location other than the Company’s San Diego
headquarter offices; provided that in all such cases the Company may require the
Executive to travel on Company business including being temporarily based at
other Company locations as long as such travel is reasonable and is not
materially greater or different than the Executive’s travel requirements before
the Closing; (vi) any material breach by Investment Holdings or the Company of
this Agreement, any agreement by Investment Holdings or the Company to indemnify
the Executive or any other material written agreement between Investment
Holdings or the Company and the Executive; (vii) the failure by the Company to
obtain, before completion of a Change in Control, an agreement in writing from
any successor or assign to assume and fully perform under this Agreement; or
(viii) the provision of notice by the Company of non-renewal of this Agreement.
Subject to the foregoing and the provisions of Section 7 to the extent
applicable, the Company shall have no further obligation to the Executive
hereunder other than the Surviving Company Obligations.

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          g. By the Executive Other than for Good Reason. The Executive may
terminate her employment hereunder at any time upon thirty (30) days’ notice to
the Company. In the event of termination by the Executive pursuant to this
Section 5(g), the Investment Holdings Board may elect to waive the period of
notice, or any portion thereof, and, if the Investment Holdings Board so elects,
the Company will pay the Executive her Base Salary for the notice period (or for
any remaining portion of the period). The Company shall also provide the
Employee the Accrued Compensation and the Company shall have no further
obligation to the Executive hereunder, other than the Surviving Company
Obligations.
          h. Timing of Payments.
               i. Except as otherwise provided in the Agreement, any payments
due under Section 5(e), Section 5(f), Section 7 and Section 10(b), as
applicable, shall be payable in equal monthly installments over the number of
years and/or portions thereof equal to the applicable Multiplier (as defined in
Section 7) and shall begin at the Company’s next regular payday following the
60th day after the effective date of termination provided that, if applicable,
the Executive has executed and not revoked the Release and is compliant in all
material respects with the Release terms and conditions. Notwithstanding the
foregoing, the pro-rated annual bonus earned by the Executive for the year in
which the date of termination occurs as calculated in accordance with Section
5(e) shall be paid in a lump sum no later than March 15 of the calendar year
following the end of the calendar year for which the bonus was earned.
               ii. In the event that at the time the Executive employment
terminates the Company’s shares are publicly traded (as defined in Section 409A
of the Code) or the limitation on payments or provision of benefits imposed by
Section 409A(a)(2)(B) would otherwise be applicable, any amounts payable or
benefits provided under Section 5 that would have been payable during the six
(6) months following the date of termination of employment with the Company and
would otherwise be considered deferred compensation subject to the additional
twenty percent (20%) tax imposed by Section 409A if paid within such six
(6) month period shall be paid, in a lump sum on the business day after the date
that is the earlier of (x) six (6) months following the date of termination, or
(y) at such time as otherwise permitted by law that would not result in such
additional taxation and penalties under Section 409A. In addition, the
administration of the Release requirements described under this Section 5 shall
be implemented such that where the period for execution and non-revocation of a
release spans more than one calendar year, any payment contingent on the
execution of the Release shall not be made until the second calendar year, or
later, as required by the applicable terms of this Agreement and Section 409A.
All reimbursements and in-kind benefits provided under this Agreement shall be
made or provided in accordance with the requirements of Section 409A including,
where applicable, the requirement that (i) any reimbursement is for expenses
incurred during the period of time specified in this Agreement, (ii) the amount
of expenses eligible for reimbursement, or in kind benefits provided, during a
calendar year may not affect the expenses eligible for reimbursement, or in kind
benefits to be provided, in any other calendar year, (iii) the reimbursement of
an eligible expense will be made no later than the last day of the calendar year
following the year in which the expense is incurred, and (iv) the right to
reimbursement or in kind benefits is not subject to liquidation or exchange for
another benefit. Notwithstanding the

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foregoing, the Company shall have no obligation to grant the Executive a
“gross-up” or other “make-whole” compensation for any tax imposed under
Section 409A.
          i. No Duty to Mitigate. The Executive shall not be required to
mitigate the amount of any cash payment or the value of any benefit provided for
in this Agreement by seeking other employment, by seeking benefits from another
employer or other source, or by pursuing any other type of mitigation. No
payment or benefit provided for in this Agreement shall be offset or reduced by
the amount of any cash compensation or the value of any benefit provided to the
Executive in any subsequent employment or from any other source. Notwithstanding
the foregoing, if the Executive begins to participate in the group health plan
of another employer which provides benefits substantially similar to those
provided by the Company pursuant to this Section 5, then the Executive shall
promptly notify the Company and the Company may discontinue the health plan
participation being provided the Executive pursuant to this Section 5.
     6. Code Section 4999 Excise Tax.
          a. Anything in this Agreement to the contrary notwithstanding, in the
event that it shall be determined that any payment or benefit (including any
accelerated vesting of options or other equity awards) made or provided, or to
be made or provided, by the Company (or any successor thereto or affiliate
thereof) to or for the benefit of Executive, whether pursuant to the terms of
this Agreement, any other agreement, plan, program or arrangement of or with
Investment Holdings or the Company (or any successor thereto or affiliate
thereof) or otherwise (a “Payment”), will be subject to the excise tax imposed
by Section 4999 of the Code or any comparable tax imposed by any replacement or
successor provision of United States tax law, then the Company will apply a
limitation on the Payment amount as set forth in clause (i) below (a “Parachute
Cap”), unless the provisions of clause (ii) below apply.
                    i. If clause (ii) does not apply, the aggregate present
value of the Payments under Sections 5(e), (f) or (g) of this Agreement
(“Agreement Payments”) shall be reduced (but not below zero) to the Reduced
Amount. The “Reduced Amount” shall be an amount expressed in present value which
maximizes the aggregate present value of Agreement Payments without causing any
Payment to be subject to the limitation of deduction under Section 280G of the
Code or the imposition of any excise tax under Section 4999 of the Code. For
purposes of this clause (i), “present value” shall be determined in accordance
with Section 280G(d)(4) of the Code. In the event that it is determined that the
amount of the Agreement Payments will be reduced in accordance with this clause
(i), the Agreement Payments shall be reduced on a nondiscretionary basis in such
a way as to minimize the reduction in the economic value deliverable to the
Executive. In applying this principle, the reduction shall be made in a manner
consistent with the requirements of Section 409A of the Code, and where more
than one payment has the same value for this purpose and they are payable at
different times, they will be reduced on a pro-rata basis.
                    ii. It is the intention of the parties that the Parachute
Cap apply only if application of the Parachute Cap is beneficial to the
Executive. Therefore, if the net amount that would be retained by the Executive
under this Agreement without the Parachute Cap, after

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payment of any excise tax under Section 4999 of the Code, exceeds the net amount
that would be retained by the Executive with the Parachute Cap, then the Company
shall not apply the Parachute Cap to the Executive’s payments.
          b. All determinations to be made under this Section 6 shall be made by
the nationally recognized independent public accounting firm used by the Company
immediately prior to the Change in Control (“Accounting Firm”), which Accounting
Firm shall provide its determinations and any supporting calculations to the
Company and the Executive within ten days of the termination date. Any such
determination by the Accounting Firm shall be binding upon the Company and the
Executive.
          c. All of the fees and expenses of the Accounting Firm in performing
the determinations referred to in this Section 6 shall be borne solely by the
Company.
     7. Covenant Payments. In the event of a termination of the Executive under
Section 5(e) or Section 5(f), in consideration for the covenants contained in
Sections 8, 9 and 10 and provided that Executive is not otherwise in breach of
Sections 8, 9 and 10 hereof, the Company shall pay to Executive an amount equal
to seventy-five percent (75%) of the Covenant Payment, as hereinafter defined,
at the time and in the form provided in Section 5(h). For purposes of this
Agreement, the “Covenant Payment” is an amount equal to the applicable
Multiplier multiplied by the sum of the Executive’s Base Salary and Target Bonus
for the year in which the date of termination occurs (or if no such Target Bonus
has been established for the Executive for the year in which the date of
termination occurs, the Target Bonus for the year immediately preceding the year
in which the date of termination occurs) and the “Multiplier” shall be (A) two
(2) in the event of termination under Section 5(e) or Section 5(f) (other than
due to Good Reason resulting solely from notice of non-renewal of the term of
this Agreement), in each case, prior to the expiration of the Initial Term;
(B) one and one half (1.5) in the event of a termination under Section 5(e) or
Section 5(f), in each case, on or following the expiration of the Initial Term;
and (C) one and one half (1.5) in the event of a termination at any time during
the term of this Agreement for Good Reason resulting solely from the provision
by the Company of notice of non-renewal of the term of this Agreement.
     8. Confidential Information.
          a. The Executive acknowledges that the Company continually develops
Confidential Information (as defined in Section 14); that the Executive may
develop Confidential Information for the Company; and that the Executive may
learn of Confidential Information during the course of employment. The Executive
shall not disclose to any Person or use, other than as required by applicable
law or for the performance of her duties and responsibilities to the Company,
any Confidential Information obtained by the Executive incident to her
employment with the Company. The Executive understands that this restriction
shall continue to apply after her employment terminates, regardless of the
reason for such termination.
          b. All documents, records, tapes and other media of every kind and
description containing Confidential Information, and all copies, (the
“Documents”), whether or not prepared by the Executive, shall be the sole and
exclusive property of the Company. The

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Executive shall return to the Company no later than the time her employment
terminates all Documents then in the Executive’s possession or control.
     9. Assignment of Rights to Intellectual Property.
          a. The Executive shall promptly and fully disclose all Intellectual
Property (as defined in Section 14) to the Company. The Executive hereby assigns
and agrees to assign to the Company (or as otherwise directed by the Company)
the Executive’s full right, title and interest in and to all Intellectual
Property. The Executive agrees to execute any and all applications for domestic
and foreign patents, copyrights or other proprietary rights and to do such other
acts (including without limitation the execution and delivery of instruments of
further assurance or confirmation) requested by the Company to assign the
Intellectual Property to the Company and to permit the Company to enforce any
patents, copyrights or other proprietary rights to the Intellectual Property.
All copyrightable works that the Executive creates in the performance of her
duties hereunder shall be considered “work made for hire.”
          b. Notwithstanding the foregoing, to the extent this Section 9 is
subject to the provisions of California Labor Code Sections 2870, 2871 and 2872,
Executive’s obligation to assign Executive’s right, title and interest
throughout the world in and to all Intellectual Property does not apply to any
inventions, designs, developments, contributions to or improvements of any works
of authorship, inventions, intellectual property, materials, documents or other
work product (including, without limitation, research, reports, software,
databases, systems, applications, presentations, textual works, content or
audiovisual materials) (“Works”) that Executive developed entirely on her own
time without using the Company’s equipment, supplies, facilities, or
Confidential Information except for those Works developed or created either
alone or with third parties, at any time during Executive’s employment by the
Company and within the scope of such employment and/or with the use of any the
Company resources that either: (i) relate to either (A) the business of
Investment Holdings or the Company at the time of conception or reduction to
practice of the Work, or actual or demonstrably anticipated research or
development of Investment Holdings or the Company; or (ii) result from any Work
performed by Executive for the Company. Executive shall disclose all Works to
the Company, even if Executive does not believe that Executive is required under
this Agreement, or pursuant to California Labor Code Section 2870, to assign her
interest in such Works to the Company.
     10. Restricted Activities.
          a. While the Executive is employed by the Company and, except as
otherwise provided in Section 10(b) and Section 10(c) below, for the period of
two (2) years following the termination of the Executive’s employment in the
event of a termination for which the Executive is entitled to a Covenant Payment
pursuant to Section 7 with a Multiplier of 2, and for a period of eighteen (18)
months following the termination of the Executive’s employment in the event of a
termination for which the Executive is entitled to a Covenant Payment pursuant
to Section 7 with a Multiplier of 1.5, (as applicable, the “Restricted Period”),
subject to the Company’s compliance with the post-employment terms of this
Agreement, the Executive will not engage or participate in, directly or
indirectly, alone or as principal, agent, employee, employer, consultant,
investor or partner of, or assist in the management of, or provide advisory

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or other services to, or own any stock or any other ownership interest in, or
make any financial investment in, any business or entity which is Competitive
with the Company (as defined below); provided, however, that it shall not be a
violation of the foregoing (i) for the Executive to own not more than two
percent (2%) of the outstanding securities of any class of securities listed on
a national exchange or inter-dealer quotation system or (ii) following
termination of the Executive’s employment with the Company, for the Executive to
provide services to any business or entity that has a line of business,
division, subsidiary or other affiliate that is Competitive with the Company if
the Executive is not employed in such line of business or division or by such
subsidiary or other affiliate and is not involved, directly or indirectly, in
the management, supervision or operations of such line of business, division,
subsidiary or affiliate that is Competitive with the Company. For purposes of
this Agreement, a business or entity shall be considered “Competitive with the
Company” if such business or entity competes in any respect with a business in
which Investment Holdings and its subsidiaries were engaged (including,
specifically, services related to financial advisors), or any material products
and/or services that Investment Holdings or its subsidiaries were actively
developing or designing as of the date the Executive’s employment with the
Company terminated, provided that, prior to such termination, the Executive knew
of such other business or such material product or such service under active
development or design. In addition, during the Restricted Period, the Executive
will not (other than when acting on behalf of the Company during the Executive’s
employment) (i) solicit, or attempt to solicit, any existing or prospective
customers, targets, suppliers, financial advisors, officers or employees of
Investment Holdings or any of its subsidiaries to terminate their relationship
with Investment Holdings or any of its subsidiaries or (ii) divert, or attempt
to divert, from Investment Holdings or any of its subsidiaries any of its
customers, prospective customers, targets, suppliers, financial advisors,
officers or employees or (iii) hire or engage or otherwise contract with, or
attempt to hire or engage or otherwise contract with, any officers, employees or
financial advisors of Investment Holdings or any of its subsidiaries, whether to
be an employee, officer, agent, consultant or independent contractor; provided,
however, that nothing in this Section 10(a) shall be deemed to prohibit the
Executive from soliciting a customer, prospective customer, target or supplier
of Investment Holdings or any of its subsidiaries during the Restricted Period
if such action relates solely to a business which is not Competitive with the
Company. A customer, prospective customer, target, supplier, financial advisor,
officer or employee of Investment Holdings or any of its subsidiaries is any one
who was such within the preceding twelve months, excluding, however, any
prospective customer or target which was solicited solely by mass mailing or
general advertisement during that period and any officer, employee or financial
advisor whose relationship with Investment Holdings or the Company was
terminated by Investment Holdings or the Company or any of their subsidiaries
other than for circumstances that would constitute “cause” (within the meaning
of any such definition applicable to such officer, employee or financial
advisor, or, if no such definition is applicable, “cause” as defined in the
existing equity compensation plan maintained with respect to employees of the
Company) and provided further, with respect to Investment Holdings’
subsidiaries, that the Executive during her employment with the Company was
introduced to, or otherwise knew of or should have known of the relationship of,
such customer, prospective customer, target, supplier, financial advisor or
employee to the subsidiary.
          b. Notwithstanding anything herein to the contrary and to the extent
that the Investment Holdings Compensation Committee, in its sole discretion,
does not waive the

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obligation under this Section 10(b), in the event that the Executive terminates
his employment hereunder without Good Reason, the Executive shall, at the
Company’s election, which election shall be provided to the Executive prior to
the date of termination, (1) be subject to a Restricted Period which shall
continue for a period of no less than 1 month to no more than 12 months
following the date of termination of the Executive’s employment, as designated
by Investment Holdings, and shall receive the Covenant Payment described in
Section 7 with a Multiplier equal to a fraction, the numerator of which shall
equal the number of months in the Restricted Period (up to 12 months) and the
denominator of which shall be 12, or (2) receive no Covenant Payment and be
subject to no Restricted Period.
          c. The Executive may seek a waiver from the Company of her obligations
pursuant to this Section 10, which waiver shall not be unreasonably withheld or
delayed. As of the date of the grant of such waiver by the Company, all payments
and benefits under the applicable provision of Section 5 shall cease other than
the payment of Final Compensation, excluding the payments and benefits under
clause (v) of the definition thereof which shall cease or be reimbursed by the
Executive on a pro-rata basis for the waived time period of the Restricted
Period, as applicable) or Accrued Compensation, as applicable).
     11. Reasonableness; Enforcement. The Company and the Executive acknowledge
that the time, scope, geographic area and other provisions of Sections 8, 9 and
10 (the “Restrictive Covenants”) have been specifically negotiated by
sophisticated parties and agree that all such provisions are reasonable under
the circumstances of the activities contemplated by this Agreement. The
Executive acknowledges and agrees that the terms of the Restrictive Covenants:
(i) are reasonable in light of all of the circumstances, (ii) are sufficiently
limited to protect the legitimate interests of the Company, (iii) impose no
undue hardship, (iv) are not injurious to the public, and (v) are essential to
protect the business and goodwill of the Company and its affiliates and are a
material term of this Agreement which has induced the Company to agree to
provide for the payments and benefits described in this Agreement. The Executive
further acknowledges and agrees that the Executive’s breach of the Restrictive
Covenants will cause the Company and Investment Holdings irreparable harm, which
cannot be adequately compensated by money damages. The Executive and the Company
agree that, in the event of an actual or threatened breach of Section 10, the
Company shall be entitled, to the extent enforceable under applicable law, to
injunctive relief for any actual or threatened violation of any of the
Restrictive Covenants in addition to any other remedies it may have at law or
equity, including money damages.
     12. Survival. Provisions of this Agreement shall survive any termination if
so provided herein or if necessary or desirable to accomplish the purposes of
other surviving provisions, including without limitation the obligations of the
Executive under Sections 8, 9, 10 and 11 hereof and the obligations of the
Company pursuant to Sections 5, 7 and 10(b) hereof.
     13. Conflicting Agreements. The Executive hereby represents and warrants
that the execution of this Agreement and the performance of her obligations
hereunder will not breach or be in conflict with any other agreement to which
the Executive is a party or is bound and that the Executive is not now subject
to any covenants against competition or similar covenants or any court order or
other legal obligation that would affect the performance of her obligations

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hereunder. The Executive will not disclose to or use on behalf of the Company
any proprietary information of a third party without such party’s consent.
     14. Definitions. Words or phrases which are initially capitalized or are
within quotation marks shall have the meanings provided in this Section and as
provided elsewhere herein. For purposes of this Agreement, the following
definitions apply:
          a. “Change in Control” means the consummation, after the date of
Closing, of (i) any transaction or series of related transactions, whether or
not Investment Holdings is a party thereto, after giving effect to which in
excess of fifty percent (50%) of Investment Holdings’ voting power is owned
directly, or indirectly through one or more entities, by any person and its
“affiliates” or “associates” (as such terms are defined in the Exchange Act
Rules) or any “group” (as defined in the Exchange Act Rules) other than, in each
case, Investment Holdings or an affiliate of Investment Holdings immediately
following the Closing, or (ii) a sale or other disposition of all or
substantially all of the consolidated assets of Investment Holdings (each of the
foregoing, a “Business Combination”), provided that, notwithstanding the
foregoing, a Change in Control shall not be deemed to occur as a result of a
Business Combination following which the individuals or entities who were
beneficial owners of the outstanding securities entitled to vote generally in
the election of directors of Investment Holdings immediately prior to such
Business Combination beneficially own, directly or indirectly, 50% or more of
the outstanding securities entitled to vote generally in the election of
directors of the resulting, surviving or acquiring corporation in such
transaction.
          b. “Confidential Information” means any confidential proprietary
information relating to the business of Investment Holdings, the Company or
their affiliates or their respective customers or clients which has an economic
value to Investment Holdings, the Company or their affiliates. Confidential
Information does not include any information that enters the public domain other
than through a breach by the Executive of her duties to Investment Holdings or
the Company hereunder or which is obtained by the Executive from a third party
which has no obligation of confidentiality to Investment Holdings or the
Company.
          c. “Intellectual Property” means any invention, formula, process,
discovery, development, design, innovation or improvement (whether or not
patentable or registrable under copyright statutes) made, conceived, or first
actually reduced to practice by the Executive solely or jointly with others,
during her employment by the Company; provided, however, that, as used in this
Agreement, the term “Intellectual Property” shall not apply to any invention
that the Executive develops on her own time, without using the equipment,
supplies, facilities or trade secret information of Investment Holdings or the
Company, unless such invention relates at the time of conception or reduction to
practice of the invention (a) to the business of Investment Holdings or the
Company, (b) to the actual or demonstrably anticipated research or development
of Investment Holdings or the Company or (c) results from any work performed by
the Executive for Investment Holdings or the Company.
          d. “Person” means an individual, a corporation, a limited liability
company, an association, a partnership, an estate, a trust and any other entity
or organization, other than the Company or any of its subsidiaries.

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     15. Withholding. All payments or other benefits, to the extent required by
law, made by the Company under this Agreement shall be reduced by any tax or
other amounts required to be withheld by the Company under applicable law.
     16. Legal Fees. The Company shall at its election either pay directly the
joint legal expenses incurred by the Executive and the other executives of the
Company with whom the Company is entering into employment agreements effective
as of the Closing in the negotiation and preparation of their employment
agreements or reimburse the Executive for her portion of such joint legal
expenses. In addition, all reasonable costs and expenses that are reasonably
documented (including court and arbitration costs and reasonable legal fees and
expenses that reflect common practice with respect to the matters involved)
incurred by the Executive as a result of any claim, action or proceeding arising
out of this Agreement or the contesting, disputing or enforcing of any
provision, right or obligation under this Agreement shall be paid, or reimbursed
to the Executive, if, in the final resolution of the dispute, the Executive
either recovers material monetary damages (in cash or in kind, such as benefits)
or is the prevailing party on a material non-monetary claim (such as a dispute
regarding a restrictive covenant).
     17. Dispute Resolution.
          a. Except as provided in Section 11, any dispute, controversy or claim
between the parties arising out of this Agreement or the Executive’s employment
with the Company or termination of employment shall be settled by arbitration
conducted in the city in which the Executive is located administered by the
American Arbitration Association under its Employment Dispute Resolution Rules
then in effect (except as modified by b. below).
          b. In the event that a party requests arbitration (the “Requesting
Party”), it shall serve upon the other party (the “Non-Requesting Party”),
within one hundred and eighty (180) days of the date the Requesting Party knew,
or reasonably should have known, of the facts on which the controversy, dispute
or claim is based, a written demand for arbitration stating the substance of the
controversy, dispute or claim, the contention of the party requesting
arbitration and the name and address of the arbitrator appointed by it. The
Non-Requesting Party, within sixty (60) days of such demand, shall accept the
arbitrator or appoint a second arbitrator and notify the other party of the name
and address of this second arbitrator so selected, in which case the two
arbitrators shall appoint a third who shall be the sole arbitrator to hear the
case. In the event that the two arbitrators fail in any instance to appoint a
third arbitrator within thirty (30) days of the appointment of the second
arbitrator, either arbitrator or any party to the arbitration may apply to the
American Arbitration Association for appointment of the third arbitrator in
accordance with the Rules, which arbitrator shall be the sole arbitrator to hear
the case. Should the Non-Requesting Party (upon whom a demand for arbitration
has been served) fail or refuse to accept the arbitrator appointed by the other
party or to appoint an arbitrator within sixty (60) days, the single arbitrator
shall have the right to decide alone, and such arbitrator’s decision or award
shall be final and binding upon the parties.
          c. The decision of the arbitrator shall be in writing; shall set forth
the basis for the decision; and shall be rendered within thirty (30) days
following the hearing. The decision of the arbitrator shall be final and binding
upon the parties and may be enforced and executed

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upon in any court having jurisdiction over the party against whom enforcement of
such award is sought.
     18. No Withholding of Undisputed Payments. During the pendency of any
dispute or controversy, the Company shall not withhold any payments or benefits
due to the Executive, whether under this Agreement or otherwise, except for the
specific portion of any payment or benefit that is the subject of a bona fide
dispute between the parties.
     19. Assignment. Neither the Company nor the Executive may make any
assignment of this Agreement or any interest herein, by operation of law or
otherwise, without the prior written consent of the other. This Agreement shall
inure to the benefit of and be binding upon the Company and the Executive, their
respective successors, executors, administrators, heirs and permitted assigns.
     20. Severability. If any portion or provision of this Agreement shall to
any extent be declared illegal or unenforceable by a court of competent
jurisdiction, then the remainder of this Agreement, or the application of such
portion or provision in circumstances other than those as to which it is so
declared illegal or unenforceable, shall not be affected thereby, and each
portion and provision of this Agreement shall be valid and enforceable to the
fullest extent permitted by law.
     21. Waiver. No waiver of any provision hereof shall be effective unless
made in writing and signed by the waiving party. The failure of either party to
require the performance of any term or obligation of this Agreement, or the
waiver by either party of any breach of this Agreement, shall not prevent any
subsequent enforcement of such term or obligation or be deemed a waiver of any
subsequent breach.
     22. Notices. Any and all notices, requests, demands and other
communications provided for by this Agreement shall be in writing and shall be
effective when delivered in person or the next business day following
consignment for overnight delivery to a reputable national overnight courier
service or five business days following deposit in the United States mail,
postage prepaid, registered or certified, and addressed to the Executive at her
last known address on the books of the Company or, in the case of the Company,
at its principal place of business, attention of the Chairman of the Investment
Holdings Board, or to such other address as a party may specify by notice to the
other actually received. Copies of any notices, requests, demands and other
communication to the Company by the Executive shall be sent by the to the
investors at the following address: c/o Texas Pacific Group, 301 Commerce
Street, Suite 3300, Fort Worth, TX 76102, Attn: Richard Schifter (Fax:
415-743-1501) and c/o Hellman & Friedman LLC, One Maritime Plaza, 12th Floor,
San Francisco, CA 94111, Attn: Allen Thorpe (Fax: 415-835-5408).
     23. Entire Agreement. This Agreement constitutes the entire agreement
between the parties and supersedes all prior communications, agreements and
understandings, written or oral, with respect to the terms and conditions of the
Executive’s employment including, without limitation, the applicable Executive
Summary of Proposed Terms.

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     24. Amendment. This Agreement may be amended or modified only by a written
instrument signed by the Executive and by an authorized representative of the
Company subject to prior approval by the Investment Holdings Board.
     25. Headings. The headings and captions in this Agreement are for
convenience only and in no way define or describe the scope or content of any
provision of this Agreement.
     26. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be an original and all of which together shall
constitute one and the same instrument.
     27. Governing Law. This is a Massachusetts contract and shall be construed
and enforced under and be governed in all respects by the laws of the
Commonwealth of Massachusetts, without regard to the conflict of laws principles
thereof.
[Remainder of page intentionally left blank]

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     IN WITNESS WHEREOF, this Agreement has been executed as a sealed instrument
by the Company, by its duly authorized representative, and by the Executive, as
of the date first above written.

                      THE EXECUTIVE       THE COMPANY    
 
                   
By:
   /s/ Esther M. Stearns       By:    /s/ Stephanie L. Brown    
 
 
 
Name: Esther M. Stearns          
 
Name: Stephanie L. Brown    
 
              Title: Secretary    
 
                                HOLDINGS      
 
          By:    /s/ Stephanie L. Brown    
 
             
 
Name: Stephanie L. Brown    
 
              Title: Secretary    
 
                                INVESTMENT HOLDINGS (with respect to
Section 4(c) only)    
 
                   
 
          By:    /s/ Mark S. Casady    
 
             
 
Name: Mark S. Casady    
 
              Title: Chief Executive Officer    

 

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Schedule 1

(A)   Boards and Committees       SIFMA Independent Firms Committee
The Childrens School La Jolla   (B)   Base Salary       $625,000   (C)   2010
Target Bonus       $601,563   (D)   Target Bonus       $601,563      
Opportunity to Earn Bonus Compensation in Excess of Target Bonus: The amount of
the Executive’s bonus opportunity above Target Bonus (the “Outperformance
Bonus”), and the performance necessary to earn the Outperformance Bonus, shall
be determined by the Investment Holdings Compensation Committee on an annual
basis after consultation with, and with good faith consideration of the views
of, the CEO of the Company.   (E)   Annual Vacation       4 weeks.