Exhibit 10.9

 

LEGG MASON, INC. 1996 EQUITY INCENTIVE PLAN

 

RESTRICTED STOCK UNIT AWARD AGREEMENT

 

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

 

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

 

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

 

1.             RIGHTS AS A STOCKHOLDER.

 

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

 

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

 

2.             CUSTODY AND DELIVERY OF RSUS AND UNDERLYING SHARES.

 

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

 

3.             VESTING AND FORFEITURE.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

4.             ADDITIONAL TERMS AND CONDITIONS OF THE AWARD.

 

4.1.         NONTRANSFERABILITY OF RSUS.

 

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

 

4.2.         BENEFICIARIES.

 

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

 

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4.3.         RIGHT OF SET OFF.

 

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

 

4.4.         CONSENT TO ELECTRONIC DELIVERY.

 

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

 

4.5.         SECURITIES LAWS.

 

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

 

4.6.         ADJUSTMENT.

 

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

 

4.7.         COMPLIANCE WITH APPLICABLE LAW.

 

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

 

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

 

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

 

4.8.         WITHHOLDING; TAX MATTERS

 

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

 

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

 

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

 

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

 

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

 

4.10.       CLAWBACK PROVISIONS

 

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

 

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

 

5.             MISCELLANEOUS PROVISIONS.

 

5.1.         SUCCESSORS; ASSIGNMENTS AND TRANSFERS.

 

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

 

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5.2.                            NOTICES.

 

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

 

5.3.         CONSENT AND DISCLOSURE REGARDING USE OF PERSONAL INFORMATION.

 

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

 

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

 

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

 

5.4          MARKET FLUCTUATIONS.

 

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

 

5.5.         CONFLICT; GOVERNING LAW.

 

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

 

5.6          COUNTERPARTS.

 

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

 

5.7          DEFINITIONS.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

 

 

LEGG MASON, INC.

 

 

 

 

 

By:

 

 

Name:

Thomas C. Merchant

 

Title:

Secretary

 

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