Exhibit 10.1


May 23, 2012


Kohlberg
Kravis Roberts & Co. L.P.

9 West 57th Street

New York, NY 10019


Amended and Restated Standstill Agreement


Ladies and
Gentlemen:


          Reference
is made to that certain letter agreement (the “Standstill Agreement”) dated
as of January 14, 2008 between Kohlberg Kravis Roberts & Co. L.P. (“KKR”)
and Legg Mason, Inc. (“LM”). In connection with the acquisition by
one or more affiliates of KKR (the “Transaction”) of warrants (the “Warrants”)
to purchase shares of LM’s common stock, par value $0.10 per share (“Common Stock”),
having the terms set forth in the warrant agreement dated as of May 23, 2012
(the “Warrant
Agreement”), and as a condition to LM’s execution of the Note
Exchange Agreement of even date herewith (the “Note Exchange Agreement”), LM
and KKR hereby enter into this letter agreement (this “Agreement”) amending and
restating the Standstill Agreement as follows.


          KKR
agrees, during the period (the “Standstill Period”) from the date hereof
until such time as neither KKR nor any of its affiliates beneficially owns or
Owns any Warrants or a number of shares of Common Stock issued upon the
exercise of any Warrants that exceeds 4.9% of the outstanding shares of Common
Stock, that it
and its Representatives will not, directly or indirectly, unless
consented to in advance by the Chief Executive Officer or the lead independent
director of LM: (a) effect or seek, offer or propose (whether publicly or
otherwise) to effect, or announce any intention to effect or cause or
participate in or in any way assist, facilitate or encourage any other Person
to effect or seek, offer or propose (whether publicly or otherwise) to effect
or participate in, (i) any acquisition of any securities (or beneficial
ownership thereof), or rights or options to acquire any securities (or
beneficial ownership thereof), or any assets, indebtedness or businesses of LM
or any of its affiliates, provided, however, that KKR and its
affiliates may acquire beneficial ownership or Ownership of (A) any or all of
the Warrants issuable by LM pursuant to the Note Exchange Agreement, (B) any
shares of Common Stock issued upon the exercise of Warrants pursuant to the
terms of the Warrant Agreement or upon the conversion of any 2.50% Convertible
Senior Notes due 2015 of LM (the “Convertible
Notes”) issued pursuant to the Indenture, dated as of January 31,
2008, between The Bank of New York, as trustee, and LM (the “Indenture”), (C) shares of Common Stock
that KKR or its affiliates acquire from LM in connection with any stock split
or subdivision of common shares of LM that are already held by them at the time
of such acquisition, (D) shares of capital stock of LM (other than Common
Stock), evidences of LM’s indebtedness or other assets or property or rights, or
warrants to acquire shares of capital stock of LM or other securities, in each
case, that KKR or its affiliates acquire from LM pursuant to the Warrant
Agreement or the Indenture in connection 





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with any
distribution thereof by LM to holders of the Common Stock and (E) any
securities of LM, or rights or options to acquire any securities of LM, to the
extent reasonably estimated to reduce or close out any short position or “put
equivalent position” (within the meaning of Rule 16a-1 under the Exchange Act
of 1934, as amended (the “Exchange Act”)) effected to monetize or
hedge any Warrants or Convertible Notes that are Owned or beneficially owned by
KKR or any of its affiliates, (ii) any tender or exchange offer, consolidation,
business combination, acquisition, merger, joint venture or other business
combination involving LM, any of its affiliates or any of the assets of LM or
its affiliates, (iii) any recapitalization, stock dividend, restructuring,
liquidation, dissolution or other extraordinary transaction with respect to LM
or any of its affiliates or (iv) any “solicitation” of “proxies” (as such terms
are used in the proxy rules of the Securities and Exchange Commission) to vote
any voting securities of LM or any of its affiliates or consents to any action
from any holder of any voting securities of LM or any of its affiliates or seek
to advise or influence any Person with respect to the voting of or the granting
of any consent with respect to any voting securities of LM; (b) form, join or
in any way participate in a “group” (as defined under the Exchange Act) in
connection with the voting securities of LM or otherwise act in concert with
any person in respect of any such securities; (c) otherwise act, alone or in
concert with others, to seek representation on or to control or influence the
management, board of directors or policies of LM or to obtain representation on
the board of directors of LM or any committee thereof; (d) enter into any
discussions or arrangements with any third party with respect to any of the
foregoing; (e) request that LM or any of its Representatives amend or waive any
provision of this Agreement, or make any public announcement with respect to
the restrictions of this Agreement, or take any action which would reasonably
be expected to require LM to make a public announcement regarding any potential
transaction; or (f) advise, assist or encourage, or direct any Person to
advise, assist or encourage any other Person or Persons, in connection with any
of the foregoing. 


          The
restrictions set forth herein will not apply as to KKR and its affiliates if
any of the following occurs:


                    (i)
a third party who is not an affiliate of KKR (a “Third Party”) acquires
beneficial ownership of 50% of the outstanding Voting Stock; or


                    (ii)
LM enters into an agreement pursuant to which a Third Party would acquire all
or substantially all of the stock or assets of LM or LM would be merged or
consolidated with another Person, unless immediately following the consummation
of such transaction the stockholders of LM immediately prior to the
consummation of such transaction would continue to hold (in substantially the
same proportion as their ownership of LM’s voting stock immediately prior to
the transaction) more than 50% of all of the outstanding common stock or other
securities entitled to vote for the election of directors of the surviving or
resulting entity in such transaction or any direct or indirect parent thereof; provided
that this clause shall not be applicable after such agreement is terminated.


          As
used in this Agreement, the term “Person” shall be broadly interpreted to
include, without limitation, the media and any individual, corporation,
company, partnership, limited liability company, or other entity or group. As
used in this Agreement, the term “affiliate” shall mean any other Person that
directly, or indirectly through one or more intermediates, directly or
indirectly, controls, is controlled by, or is under common control with, such Person;
the term 





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“Representatives”
shall mean, collectively, a party’s directors, officers, affiliates, employees
or consultants, to the extent they are acting on such party’s behalf; the term
“beneficial
ownership” or variations thereof, when used with respect to
securities, means such term as used in any of Section 13(d) or Section 16 of
the Exchange Act and the rules and regulations promulgated thereunder; and the
terms “Ownership”
and “Own”,
when used with respect to securities, shall mean bearing all or substantially
all economic risk of loss or appreciation (less no more than a fixed or
floating interest rate return) in the value of, and any profit (less no more
than a fixed or floating interest rate return) derived from a transaction in,
such securities. 


          Notwithstanding
anything herein to the contrary, except as provided in this paragraph, this
Agreement shall not apply to affiliates of KKR that are Non-Investor
Affiliates. “Non-Investor Affiliates” are affiliates of KKR (x) whose business
is distinct from private equity and (y) whose investments, investment strategy
and related activity (including any investments, investment strategy or related
activity with respect to the Common Stock) are not executed, developed,
directed or undertaken by KKR or its affiliates or their respective
Representatives (other than Non-Investor Affiliates or their Representatives).
If non-public, proprietary information with respect to LM is made available to
a Non-Investor Affiliate or its Representative (other than to compliance
personnel for compliance purposes only) by KKR or its affiliates (other than
Non-Investor Affiliates) (such a situation, a “Wall Cross”), then this
Agreement shall apply to such Non-Investor Affiliate without regard to the
first sentence of this paragraph. At all times during the Standstill Period,
for so long as a Wall Cross has not occurred with respect to a Non-Investor
Affiliate:


                    (i)
Such Non-Investor Affiliate shall be permitted to acquire shares of Common Stock
and securities exchangeable or exercisable for, or convertible into, shares of
Common Stock (collectively, “Common Equity”) only (A) in an amount
(together with the Common Equity Owned or beneficially owned (determined
without aggregation with any affiliate of KKR that is not a Non-Investor
Affiliate) by all other Non-Investor Affiliates) up to 4.9% of the then
outstanding shares of Common Stock (including, with respect to an acquisition
of exchangeable, exercisable or convertible securities, the shares of Common
Stock issuable upon exchange, exercise or conversion thereof), and (B) if such
Non-Investor Affiliate is able to make the passive investor certification
specified in clause (i) of the proviso of Rule 13d-1(b)(1) under the Exchange
Act with respect to the acquisition of such Common Equity.


                    (ii)
If such Non-Investor Affiliate is unable to make such passive investor
certification, then such Non-Investor Affiliate shall not (A) acquire any
Common Equity or (B) initiate any proposal for a transaction or action that
would be prohibited pursuant to clause (a)(ii), (a)(iii) or (a)(iv) of the
second paragraph of this Agreement if such transaction were effected, or such
action were taken, by KKR.


          The
terms of this Agreement may be modified or waived only by a separate writing
signed by LM and KKR that expressly modifies or waives any such term.


          It
is understood and agreed that no failure or delay by LM in exercising any
right, power or privilege under this Agreement shall operate as a waiver
thereof, nor shall any single or partial exercise thereof preclude any other or
further exercise thereof or the exercise of any right, power or privilege under
this Agreement.





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          This
Agreement shall be governed by and construed in accordance with the laws of the
State of New York.


          Subject
to applicable law, each party hereby irrevocably and unconditionally (i)
submits to the exclusive jurisdiction of the courts of the State of New York
and of the United States of America, in each case located in the County of New
York in the State of New York, for any action, suit or proceeding arising out
of or relating to this Agreement and the transactions contemplated hereby and
(ii) agrees not to commence any action, suit or proceeding relating thereto
except in such courts. Subject to applicable law, each party hereby irrevocably
and unconditionally (i) waives any objection to the laying of venue of any
action, suit or proceeding arising out of this Agreement or the Transaction, in
the courts of the State of New York and of the United States of America, in
each case located in the County of New York in the State of New York, and (ii)
waives and agrees not to plead or claim that any such action, suit or
proceeding brought in any such court has been brought in an inconvenient forum.


          KKR
acknowledges that LM would be irreparably injured by a breach of this Agreement
by KKR, that monetary remedies would be inadequate to protect LM against any
actual or threatened breach or continuation of any breach of this Agreement,
and, without prejudice to any other rights and remedies otherwise available to
LM, KKR agrees to the granting of equitable relief, including injunctive relief
and specific performance, in LM’s favor without proof of actual damages in the
event of KKR’s actual or threatened breach of this Agreement.


          In
the event of an ambiguity or question of intent or interpretation arises, this
Agreement shall be construed as if drafted jointly by LM and KKR and no
presumption or burden of proof shall arise favoring or disfavoring any party by
virtue of the authorship of any provisions of this Agreement. Further, if any
term or provision of this Agreement, or any application thereof to any
particular set of facts or circumstances, shall, to any extent and for any
reason, be held to be invalid or unenforceable, the remainder of this
Agreement, or the application of such term or provision to facts or
circumstances other than those to which it is held invalid or unenforceable,
shall not be affected thereby and shall be construed as if such invalid or
unenforceable provision had to such extent never been contained herein and each
term and provision of this Agreement shall be valid and enforceable to the
fullest extent permitted by law.


          This
Agreement may be signed in one or more counterparts which, when taken together,
shall constitute one and the same instrument.









	
  

 	
  

 	
  

 
	
  

 	
 Very truly
 yours,

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 
	
  

 	
 LEGG MASON,
 INC.

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 
	
  

 	
 By:

 	
      /s/
 Jeff Nattans

 
	
  

 	
  

 	

 


 
	
  

 	
 Name: Jeff
 Nattans

 
	
  

 	
 Title: EVP

 



Confirmed and
agreed to as of

the date first written above:


	
  

 	
  

 
	
 KOHLBERG
 KRAVIS ROBERTS & CO. L.P.

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 
	
 By:

 	
  

 	
  

 
	
  

 	

 


 	
  

 
	
 Name:
 

 
	
 Title: 

 



[SIGNATURE PAGE—AMENDED AND RESTATED STANDSTILL AGREEMENT] 







	
  

 	
  

 	
  

 
	
  

 	
 Very truly
 yours,

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 
	
  

 	
 LEGG MASON,
 INC.

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 
	
  

 	
 By:

 	
      

 
	
  

 	
  

 	

 


 
	
  

 	
 Name:

 
	
  

 	
 Title: 

 



Confirmed and
agreed to as of

the date first written above:


	
  

 	
  

 
	
 KOHLBERG
 KRAVIS ROBERTS & CO. L.P.

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 
	
 By:

 	
 /s/ William
 J. Janetschek

 	
  

 
	
  

 	

 


 	
  

 
	
 Name:
 William J. Janetschek

 
	
 Title: Chief
 Financial Officer

 






[SIGNATURE PAGE—AMENDED AND RESTATED STANDSTILL AGREEMENT]