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                    .


 


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


 


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


 


1.                                      RIGHTS AS A STOCKHOLDER.


 


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


 

















 


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


 


2.                                      CUSTODY AND DELIVERY OF RSUS AND
UNDERLYING SHARES.


 


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


 


3.                                      VESTING AND FORFEITURE.


 


(a)                                  Except as otherwise provided in the Plan
or in Section 3(b) of this Agreement, twenty-five percent (25%) of
the RSUs subject to Participant’s Award shall vest and be distributed in shares
of Common Stock pursuant to Section 2 (to “vest”) on each of April 30,
       , April 30,        ,
April 30,         and April 30,
        (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 when
Satisfying the “Rule of 15.” 
If Participant’s employment with the Firm terminates before the date on
which all RSUs subject to Participant’s Award have vested and (i) Participant,
at the time of such termination, has completed 15 years of service with the
Firm 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)                                  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
(8), 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.


 


(9)                                  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.


 


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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.


 


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.


 


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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, 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 


 


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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 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.


 


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 her duties or makes him or her
ineligible from being associated with the Company pursuant 


 


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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 40% 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,        ,
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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