Document:

Exhibit 10.5

 

EXECUTION COPY

 

 

 

 

EMPLOYEE MATTERS AGREEMENT

 

by and among

 

SOCIÉTÉ GÉNÉRALE,

 

SG AMERICAS, INC.

 

SG AMERICAS SECURITIES HOLDINGS, INC.,

 

COWEN AND COMPANY, LLC

 

and

 

COWEN GROUP, INC.

 

 

Dated as of July 12, 2006

 

 

 

 

EMPLOYEE MATTERS AGREEMENT

 

THIS
EMPLOYEE MATTERS AGREEMENT (the “Agreement”) is
made as of July July 12, 2006 by and among Société Générale (“SG”), SG
Americas, Inc., SG Americas Securities Holdings, Inc. (“SGASH”), Cowen
and Company, LLC (“Cowen LLC”) and Cowen Group, Inc. (“Cowen Inc.”).

 

BACKGROUND

 

The parties
have entered into a Separation Agreement dated as of July 11, 2006 (the “Separation
Agreement”) pursuant to which SG shall or shall cause its subsidiaries to
assign, transfer, convey and deliver to Cowen Inc. the Cowen Assets (as defined
in the Separation Agreement), which Cowen Assets shall include all of the
outstanding membership interests of Cowen LLC and all of the capital stock of
Cowen International Limited (each of which, immediately prior to the
transactions contemplated by the Separation Agreement, were owned in their
entirety by SGASH) and thereafter Cowen Inc., directly or indirectly, will
operate the Cowen Business (as defined in the Separation Agreement), own the
Cowen Assets (as defined in the Separation Agreement) and have responsibility
for the Cowen Liabilities (as defined in the Separation Agreement). The parties
have agreed to enter into this Agreement for the purpose of allocating between
SG and the SG Subsidiaries (as defined in the Separation Agreement) on the one
hand, and Cowen Inc., Cowen LLC and the Cowen Inc. Subsidiaries (each as
defined in the Separation Agreement) on the other hand, responsibilities and
liabilities for employees, employee compensation and benefit plans, programs,
policies and arrangements following the transactions contemplated by the
Separation Agreement.

 

AGREEMENT

 

ARTICLE I

DEFINITIONS

 

SECTION 1.1                 Certain
Defined Terms. The following capitalized terms as used in this Agreement
shall have the meaning set forth below unless otherwise specified herein. Capitalized
terms used herein that are not defined below or elsewhere in this Agreement
shall have the meaning set forth in the Separation Agreement.

 

“Award,”
when immediately preceded by “SG,” means SG Restricted Stock and SG Restricted
Stock Units and, when immediately preceded by “Cowen Inc.,” means Cowen Inc.
Restricted Stock and Restricted Stock Units.

 

“Benefit
Plan” shall mean, in the context where used, any employee benefit plan,
program, policy, contract or arrangement, including, but not limited to, any
employee benefit plan as defined in section 3(3) of ERISA.

 

“Benefit
Plan Bifurcation Date” means January 1, 2004.

 

 

“Business
Day”  means any day other than (i) a
Saturday or Sunday or (ii) a day on which banks are required or authorized to
close in New York, New York.

 

“Cowen
Benefit Plans” shall mean the Benefit Plans sponsored, maintained or
contributed to by any Cowen Entity immediately prior to the Separation Date and
each other Benefit Plan sponsored, maintained or contributed to by any Cowen
Entity at any time since the Benefit Plan Bifurcation Date.

 

“Cowen
Employee” means any individual who, immediately prior to the Separation
Date, is either actively employed by, or then on an approved leave of absence
from, any Cowen Entity.

 

“Cowen
Employee Ownership Plan” means the 2006 Equity and Incentive Plan adopted
by Cowen Inc. on July 11, 2006.

 

“Cowen
Entities” means, collectively, Cowen Inc., Cowen LLC and the Cowen
Subsidiaries.

 

“Cowen
Subsidiaries” means, collectively, the Cowen Inc. Subsidiaries and Cowen
LLC Subsidiaries.

 

“ERISA”
shall mean the Employee Retirement Income Security Act of 1974, as amended.

 

“Fidelity
Plan” means the SG-USA Fidelity Bonus Plan.

 

“Final
Determination” shall have the meaning ascribed to such term in Section
1313(a) of the Code or similar provision of state, local or foreign law, as
applicable, or any other event (including the execution of a Form 870-AD)
that finally and conclusively establishes the amount of any liability for Tax.

 

“Former
Cowen Employee” means any individual who is a former employee of any Cowen
Entity as of the Separation Date.

 

“Indemnification
Agreement” has the meaning give to such term in the Separation Agreement.

 

“IPO”
has the meaning given to such term in the Separation Agreement.

 

“IPO Date”
has the meaning given to such term in the Separation Agreement.

 

“Option”
when immediately preceded by “SG,” means an option (either nonqualified or
incentive) to purchase shares of SG Common Stock pursuant to a SG Long-Term
Incentive Plan. When immediately preceded by “Cowen Inc.,” Option means an
option (either nonqualified or incentive) to purchase shares of Cowen Inc.
Common Stock pursuant to the Cowen Employee Ownership Plan.

 

“Principal
Transaction Document”  has the
meaning give to such term in the Separation Agreement.

 

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“Registration
Statement” has the meaning given to such term in the Separation Agreement.

 

“SCIB
Partnership” means the Société Générale Corporate and Investment Banking
Partnership.

 

“Separation”
has the meaning given to such term in the Separation Agreement.

 

“SG Benefit
Plans” shall mean the Benefit Plans sponsored, maintained or contributed to
by SG or any SG Subsidiary; provided that the term “SG Benefit Plans” shall not
include any of the SG Executive Benefit Plans.

 

“SG Common
Stock” shall mean the common shares of SG.

 

“SG
Compensation Expense” has the meaning given to such term in Section 3.12(a)
below.

 

“SG Cowen
Ventures” means SG Cowen Ventures L.L.P., a Delaware limited partnership.

 

“SG
Deferred Compensation Plan” means the Société Générale Deferred
Compensation Plan for Executives, As Amended and Restated Effective January 1,
2003.

 

“SG
Entities” means, collectively, SG and the SG Subsidiaries.

 

“SG
Executive Benefit Plans” means the compensation and benefit plans,
programs, and other arrangements established, sponsored, maintained, or agreed
upon, by SG or its affiliates for the benefit of employees and former employees
of SG or its affiliates and/or the Cowen Employees and Former Cowen Employees
before the Separation Date, if the participants in such plan or arrangement
benefits are solely or primarily executive and other management employees. The
SG Executive Benefit Plans shall include, without limitation, deferred
compensation plans that are not qualified under Code section 401(a), including
the Fidelity Plan, the SG Deferred Compensation Plan and the SG Merchant
Banking Plan.

 

“SG Stock
Option Plan” means the Societe
Generale Stock Option Plan, as in
effect as of the time relevant to the applicable provisions of this Agreement.

 

“SG
Merchant Banking Plan” means the SG Merchant Banking Co-investment Plan.

 

“Tax”
has the meaning given to such term in the Separation Agreement.

 

“Vesting
Event” has the meaning given to such term in Section 3.12(b) below.

 

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ARTICLE II

GENERAL EMPLOYMENT AND COMPENSATION MATTERS

 

SECTION 2.1                 Employment
of Employees. As of the Separation Date, all Cowen Employees shall continue
to be employees of a Cowen Entity.

 

SECTION 2.2                 General
Allocation of Benefit Plan Liabilities.

 

(a)           As of the Separation
Date, except as expressly provided in this Agreement, the Separation Agreement
or any other Transaction Document (as defined in the Separation Agreement), SG
shall, and cause the SG Subsidiaries to, assume or retain, as applicable, and
SG hereby agrees to (or to cause an SG Subsidiary to) pay, perform, fulfill and
discharge, in due course in full (i) all Liabilities under all SG Benefit
Plans, (ii) all Liabilities under all SG Executive Benefit Plans (other than
Liabilities related to Cowen Employees and Former Cowen Employees under the
Fidelity Plan), and (iii) any other Liabilities expressly assigned to SG and/or
the SG Subsidiaries under this Agreement or the Separation Agreement.

 

(b)           From and after the
Separation Date, except as expressly provided in this Agreement, the Separation
Agreement or any other Transaction Document (as defined in the Separation
Agreement), Cowen Inc. and Cowen LLC shall, and shall cause the other Cowen
Entities to, assume or retain, as applicable, and Cowen Inc. and Cowen LLC
hereby agree to (or cause another Cowen Entity, as applicable, to) pay,
perform, fulfill and discharge, in due course in full (i) all Liabilities under
all Cowen Benefit Plans, (ii) all Liabilities related to Cowen Employees and
Former Cowen Employees under the Fidelity Plan and (iii) any other Liabilities
that are expressly assigned to the Cowen Entities under this Agreement or the
Separation Agreement.

 

SECTION 2.3                 Cowen
Participation in SG Plans. Except as expressly provided in this Agreement,
effective as of Separation Date, the Cowen Entities shall cease to be
participating companies in all SG Benefit Plans and SG Executive Benefit Plans,
and SG, Cowen Inc. and Cowen LLC shall take all necessary actions before the
Separation Date to effectuate such cessation.

 

SECTION 2.4                 Interpretation
of Cowen Obligations. Nothing in this Agreement shall be interpreted or
construed to restrict the ability or right of any Cowen Entity to modify or
change any employee’s or service provider’s terms and conditions of employment
or engagement (including compensation or Benefit Plans) with respect to
services performed for the Cowen Entities after the IPO Date, or to establish
the terms and conditions of employment for Cowen Employees with respect to
services performed after the IPO Date. Except as otherwise provided in any
Transaction Document, nothing in this Agreement shall be interpreted or
construed to require any Cowen Entity to offer any Benefit Plan to any person
or to restrict any Cowen Entity’s ability to amend, modify, change, terminate
or establish any Cowen Benefit Plan after the IPO Date.

 

SECTION 2.5                 Interpretation
of SG Obligations. Except as otherwise provided in any Transaction
Document, nothing in this Agreement shall be interpreted or construed to
require any SG Entity to offer any Benefit Plan to any person or to restrict
any SG Entity’s ability to amend, modify, change, terminate or establish any SG
Benefit Plan or any SG Executive Benefit Plans after the IPO Date.

 

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ARTICLE III

EXECUTIVE BENEFITS AND OTHER BENEFITS

 

SECTION 3.1                 Assumption
Of Obligations. Schedule 3.1(a) sets forth a complete list of SG
Benefit Plans and the SG Executive Benefit Plans other than the Fidelity Plan,
which it is agreed shall not be listed in Schedule 3.1(a). Schedule
3.1(b) sets forth a complete list of Cowen Benefit Plans, including the
Fidelity Plan. Except as otherwise provided in this Agreement or in any
Transaction Document, effective as of the Separation Date, Cowen Inc. shall
assume and be solely responsible for all Liabilities to or relating to the
Cowen Benefit Plans and for all Liabilities to or relating to Cowen Employees
and Former Cowen Employees under any Benefit Plan that is not set forth in Schedule
3.1(a). For the avoidance of doubt, it is agreed that, except to the extent
otherwise expressly provided in this Agreement, the foregoing provisions of
this Section 3.1 shall apply to all Liabilities payable or otherwise
distributable on or after the Separation Date, regardless of when such Liabilities
arose. If (i) the Separation, or any other transaction related to the
Separation, constitutes a change in control (as that term is defined in Code
section 280G); (ii) any Cowen Employee becomes subject to tax under Code
section 4999 in connection with such change in control; and (iii) the Cowen
Employee becomes eligible for any reimbursement for such taxes (or any other
additional taxes incurred as a consequence of such reimbursement described in
this clause (iii)), the Cowen Entities shall be solely responsible for payment
of such reimbursement.

 

SECTION 3.2                 SG
Cowen Ventures.

 

(a)           After the Separation
Date, SG shall (or shall cause the applicable SG Subsidiaries to) assume and be
responsible for all Liabilities relating to, arising out of or resulting from
the administration of SG Cowen Ventures as described in Section 2.02(b)(ii)
of the Separation Agreement, including Liabilities relating to, arising out of
or resulting from the administration of hypothetical investments in SG Cowen
Ventures made by Cowen Employees who are not “accredited investors” (within the
meaning of Rule 501(a) of Regulation D promulgated under the Securities Act of
1933). After the Separation Date, Cowen Inc. shall be responsible for all
Liabilities relating to, arising out of or resulting from investment decisions
or the management of portfolio companies relating to SG Cowen Ventures as described in Section 2.02(a)(ii)(D)
of the Separation Agreement.

 

(b)           No Cowen Employee shall
make additional contributions for any new actual or hypothetical investments in
SG Cowen Ventures after the Separation Date. Subject to Section 3.2(c),
SG Cowen Ventures, in the case of actual investments in SG Cowen Ventures, or
by SG (or the applicable SG Subsidiaries) in the case of hypothetical investments
in SG Cowen Ventures, shall be responsible for paying any and all distributions
that are payable to or with respect to Cowen Employees in accordance with the
terms of SG Cowen Ventures, including distributions to Cowen Employees whose
investments in SG Cowen Ventures are hypothetical and not actual; provided,
however, that with respect to distributions that are payable to or with
respect to any such Cowen Employee who received a leveraged investment in
connection with such Cowen Employee’s participation in SG Cowen Ventures and
pursuant to the terms of the SG Cowen Ventures employee investment program
(including as such program relates to

 

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hypothetical
investments by Cowen Employees who are not accredited investors), such
distributions shall first be applied toward such leverage obligation and any
remaining distributions shall be made to such Cowen Employee.

 

(c)           Notwithstanding
anything in this Section 3.2 to the contrary, Cowen Inc. shall act as a
paying agent with respect to amounts distributed in respect of SG Cowen
Ventures, it being understood that SG shall (or shall cause SG Cowen Ventures
or the applicable SG Subsidiaries to) pay such amounts to Cowen Inc. and Cowen
Inc. shall promptly pay such amounts to the applicable Cowen Employees. Cowen
Inc. shall, and shall cause its Subsidiaries to, cooperate reasonably and in
good faith with SG with respect to the determination of amounts payable in
respect of SG Cowen Ventures to Cowen Employees.

 

SECTION 3.3                 SG
Annual Bonus Plan. With respect to any annual bonus that Cowen Employees
may merit under the SG Annual Bonus Plan, for the period commencing January 1,
2006 and ending on the IPO Date, Cowen LLC shall accrue and record liabilities
to reflect such in accordance with the methodology used in the first quarter of
calendar year 2006, as reflected in the combined statements of financial
condition of Cowen Inc. contained in the Registration Statement, and Cowen LLC
shall be solely responsible for payment to Cowen Employees of any such annual
bonus; provided, however, that in the event that Cowen LLC
accrues or records an aggregate amount of such Liabilities in excess of the
aggregate amount of such bonuses that are actually paid, Cowen LLC shall pay to
SG, promptly, but in no event more than ten Business Days, after the bonus
payment date, an amount equal to such excess accrual or recording. At least ten
Business Days prior to Cowen LLC paying any such annual bonus to Cowen
Employees, Cowen LLC shall notify SGAI in writing of such payment and such
notice shall set forth in reasonable detail the calculation of such payment and
whether Cowen LLC is required to make any payment to SG pursuant to this Section
3.3. Neither Cowen LLC nor any other Cowen Entity shall accrue or record
any Liabilities for any other bonuses with respect to any period ending on or
prior to the IPO Date.

 

SECTION 3.4                 SG
Merchant Banking Plan.

 

(a)           On or prior to the
Separation Date, the actions described in Section 2.07(a) of the
Separation Agreement shall occur with respect to the SG Merchant Banking Plan. SG
will (or will cause the applicable SG Subsidiaries to) maintain the SG Merchant
Banking Plan after the Separation Date.

 

(b)           Other than hypothetical
investments in the SG Merchant Banking Plan made prior to the date hereof by
Cowen Employees, no Cowen Employee currently holds an investment in the SG
Merchant Banking Plan. No Cowen Employee shall make additional contributions
for any new hypothetical investments in respect of the SG Merchant Banking Plan
after the Separation Date; provided, however, that the leverage
component of any previous hypothetical investment of any Cowen Employee under
the plan shall continue to vest in accordance with its terms as though the
Separation had not occurred.

 

(c)           SG shall (or shall
cause the applicable SG Subsidiaries to) be responsible for those Liabilities
with respect to the SG Merchant Banking Plan that are described in Section
2.02(b)(iii) of the Separation Agreement and Cowen shall be responsible for
those Liabilities

 

6

 

with respect
to the SG Merchant Banking Plan that are described in Section 2.02(a)(ii)(E)
of the Separation Agreement. Subject to Section 3.4(d), SG (or the
applicable SG Subsidiaries) shall be responsible for paying any and all
distributions that, pursuant to the terms of the employee investment program
that related to hypothetical investments by Cowen Employees in the SG Merchant
Banking Plan, are payable to or with respect to Cowen Employees; provided,
however, that with respect to distributions that are payable to or with
respect to any such Cowen Employee who received a leveraged investment in
connection with such Cowen Employee’s hypothetical investment in the SG
Merchant Banking Plan (and pursuant to the terms of the employee investment
program that relates to hypothetical investments by Cowen Employees in the SG
Merchant Banking Plan), such distributions shall first be applied toward
repayment of such leverage obligation and any remaining distributions shall be
made directly to such Cowen Employee.

 

(d)           Notwithstanding
anything in this Section 3.4 to the contrary, Cowen Inc. shall act as a
paying agent with respect to amounts distributed in respect of the SG Merchant
Banking Plan, it being understood that SG shall (or shall cause the applicable
SG Subsidiaries to) pay such amounts to Cowen Inc. and Cowen Inc. shall
promptly pay such amounts to the applicable Cowen Employees. Cowen Inc. shall,
and shall cause its Subsidiaries to, cooperate reasonably and in good faith
with SG with respect to the determination of amounts payable in respect of the
SG Merchant Banking Plan to Cowen Employees.

 

SECTION 3.5                 Stock
Options. All SG Options
granted under the SG Stock Option Plan (collectively, the “SG Option Awards”)
that are held by Cowen Employees as of the IPO Date shall become nonforfeitable
as of such date. For purposes of the SG Option Awards, the occurrence of the
Separation or the IPO shall not result in any SG Option Awards being replaced
with awards based on Cowen Inc. stock, and the IPO Date shall constitute a
termination of employment for all Cowen Employees (who are not employed by an
SG entity immediately after the IPO Date) for purposes of any SG Option Award. The
right of either Cowen Inc. or SGAI to claim any federal, state, local or
foreign income Tax compensation deductions in respect of any Stock Award shall
be determined in accordance with Section 3.12 hereof.

 

SECTION 3.6                 Foreign
Grants/Awards. To the extent
that the SG Option Awards are granted to any non-U.S. Cowen Employee under any
domestic or foreign equity-based incentive program that, prior to the IPO Date,
was sponsored by a SG Entity, then, subject to the provisions of this Section
3.6, SG and Cowen LLC shall use their commercially reasonable efforts to
preserve, at and after the IPO Date, the value and tax treatment accorded to
such awards. The parties hereby delegate to the SG Executive Vice
President-Human Resources, for periods before the IPO Date, the authority to
determine an appropriate methodology for adjusting such grants or awards in a
manner that is, to the extent possible, consistent with the treatment of such
awards and grants for U.S. employees. The right of either Cowen Inc. or SGAI to
claim any federal, state, local or foreign income Tax compensation deductions
in respect of any Stock Award shall be determined in accordance with Section
3.12 hereof.

 

SECTION 3.7                 Miscellaneous
Option And Other Award Terms. After the IPO Date, Cowen Inc. Options and Cowen
Inc. Awards, regardless of by whom held, shall be settled by Cowen Inc.
pursuant to the terms of the Cowen Employee Ownership Plan.

 

7

 

SECTION 3.8                 Approval
of Cowen Employee Ownership Plan. Prior to the Separation Date, SGASH shall
cause Cowen Inc. to adopt the Cowen Employee Ownership Plan substantially in
the form attached as Exhibit C to the Separation Agreement, and SGASH
shall approve the plan, subject to Section 4.04(a) of the Separation
Agreement.

 

(a)           All awards granted
under the Cowen Employee Ownership Plan shall permit cancellation without cost
to Cowen Inc., SG, or any of their respective Subsidiaries or affiliates if
conditions established by SG and SGASH relating to the IPO or the Separation
are not satisfied.

 

(b)           A participant’s receipt
of awards under the Cowen Employee Ownership Plan shall be conditioned on such
participant’s execution and delivery of an Executive Award Agreement and a
release satisfactory to SG and Cowen Inc. and the occurrence of the IPO.

 

(c)           If the IPO is not
consummated for any reason or no reason, the Employee Ownership Plan and any
shares or options issued thereunder shall be null and void and of no force and
effect.

 

SECTION 3.9                 Fidelity
Plan and SG Deferred Compensation Plan.

 

(a)           The parties acknowledge
and agree that the IPO constitutes “Good Reason” as defined in the Fidelity
Plan and, thus, all unvested amounts held in the Fidelity Plan for the account
of Cowen Employees shall become fully vested upon the IPO. All vested amounts
in such Cowen Employees’ deferral accounts as of the IPO Date under the
Fidelity Plan, including those amounts that vest as described in the foregoing
sentence, will be distributed by Cowen LLC to such Cowen Employees as soon as
practicable, but in no event more than thirty (30) days, following the IPO
Date; provided, however, that if any Cowen Employee previously
elected to defer the payment of any amounts under the Fidelity Plan, then those
amounts will be distributed by Cowen LLC at the time set forth in, and
otherwise in accordance with, such Cowen Employee’s prior deferral election.

 

(b)           All amounts held in the
SG Deferred Compensation Plan as of the IPO Date for the account of Cowen
Employees who were Participants (as defined in the SG Deferred Compensation
Plan) in the SG Deferred Compensation Plan prior to January 1, 2001 will be
distributed by SG to such Cowen Employees (subject to Section 3.9(c)) as
soon as practicable, but in no event more than four (4) weeks, following the
IPO Date; provided, however, that if any such Cowen Employee
previously elected to defer the payment of any amounts under the SG Deferred
Compensation Plan, then those amounts will be distributed by SG at the time set
forth in, and otherwise in accordance with, such Cowen Employee’s prior
deferral election. All amounts related to Cowen Employees who became
Participants (as defined in the SG Deferred Compensation Plan) in the SG
Deferred Compensation Plan on or following January 1, 2001 will be distributed
by SG to such Cowen Employees as soon as practicable, but in no event more than
four (4) weeks, following the IPO Date.

 

(c)           Notwithstanding
anything in this Section 3.9 to the contrary, Cowen Inc. shall act as a
paying agent with respect to amounts distributed under the SG Deferred
Compensation Plan, it being understood that SG shall (or shall cause the
applicable SG Subsidiaries to) pay such amounts to Cowen Inc. and Cowen Inc.
shall promptly pay such amounts to the applicable

 

8

 

Cowen
Employees. Cowen Inc. shall, and shall cause its Subsidiaries to, cooperate
reasonably and in good faith with SG with respect to the determination of
amounts payable from the SG Deferred Compensation Plan to Cowen Employees.

 

SECTION 3.10               Employee
Stock Purchase Plan. After the IPO Date, SG stock obtained pursuant to
purchases made under the various Global Employee Share Ownership Offerings
under the Société Générale International Group Saving Plan shall not be subject
to the five-year holding period otherwise provided by that plan.

 

SECTION 3.11               SCIB
Partnership.

 

(a)           If,
immediately following the IPO, SGASH owns less than 33% of the outstanding
common stock of Cowen Inc., then as soon as practicable after the IPO Date SG
shall cause the SCIB Partnership to pay to each Cowen Employee listed on Schedule
A hereto the dollar amount set forth next to such Cowen Employee’s name on Schedule
A. Following the distribution of such amounts, none of the SCIB
Partnership, SG or the SG Subsidiaries shall have any further obligations to
any Cowen Employee (or Former Cowen Employees) under or with respect to the
SCIB Partnership.

 

(b)           If,
immediately following the IPO, SGASH owns 33% or more of the outstanding common
stock of Cowen Inc., then the payments contemplated by Schedule A shall
not be made and any awards granted
to Cowen Employees prior to the IPO Date under the SCIB Partnership shall
continue to vest and, as applicable, be paid in accordance with their terms as
though the Separation had not occurred.

 

SECTION 3.12               Income
Tax Deductions for Compensation Expense.

 

(a)           SGAI
shall be entitled to claim all federal, state, local and foreign income Tax
compensation deductions attributable to the payment of any amounts to Cowen
Employees for services performed by such Cowen Employees prior to the IPO Date
(an “SG Compensation Expense”). Such SG Compensation Expenses shall
include but not be limited to all payments to be made to Cowen Employees
pursuant to Sections 3.2, 3.4, 3.9 and 3.11 of this
Agreement and all Cowen Employee bonuses accrued during the period beginning on
January 1, 2006 and ending on the IPO Date, except to the extent such accrued
bonus amounts are returned to SGASH pursuant to Section 3.3 hereof. Unless
and until there has been a Final Determination to the contrary, neither Cowen
Inc. nor any of its Subsidiaries shall claim a federal, state, local or foreign
income Tax compensation deduction in respect of such payments. If Cowen Inc. or
any Subsidiary thereof is responsible for making payments in satisfaction of
the SG Compensation Expense, Cowen Inc. shall promptly notify SGAI in writing
of such payment when made.

 

(b)           Cowen
Inc. shall be entitled to claim all federal, state, local and foreign income
Tax compensation deductions permitted by applicable law in respect of any
amounts attributable to a vesting, exercise or other event giving rise to any
inclusion of compensation income (a “Vesting Event”) by any Cowen
Employee with respect to the stock of Cowen Inc. Unless and until there is a
Final Determination to the contrary, neither SGAI nor any of its

 

9

 

subsidiaries shall claim a federal, state or local income tax deduction
in respect of such amounts. If and to the extent any Cowen Employee in the U.S.
or otherwise has rights with respect to SG Option Awards, following a Vesting
Event, (i) SGAI or its Subsidiaries shall be entitled to claim all federal,
state, local and foreign income tax deductions permitted by applicable law in
respect of such vesting, exercise or other income inclusion arising in
connection with such SG Option Awards, (ii) Cowen Inc. shall promptly notify
SGAI in writing of such event (if such Vesting Event is within Cowen Inc.’s
knowledge) and (iii) unless and until there is a Final Determination to the
contrary, neither Cowen Inc. nor any of its Subsidiaries shall claim a federal,
state, local or foreign income Tax compensation deduction in respect of any
amounts in connection with any such amounts.

 

ARTICLE IV

EMPLOYEE BENEFIT PLAN ADMINISTRATION

 

SECTION 4.1                 Employee
Benefit Plan Matters. Except as otherwise provided in the Transition
Services Agreement or as otherwise expressly provided herein, neither SG nor
any SG Subsidiary shall have any responsibility for providing services to any
Cowen Entity with respect to employees or Benefit Plan matters after the
Separation Date.

 

ARTICLE V

GENERAL

 

SECTION 5.1                 Audit
and Information Rights; Indemnification.

 

(a)           Each of SG and Cowen
Inc., and their duly authorized representatives, shall have the right to
conduct reasonable audits with respect to all information required to be
provided to it by the other party under this Agreement. The party conducting
the audit (the “Auditing Party”) may adopt reasonable procedures and
guidelines for conducting audits and the selection of audit representatives
under this Section 5.1. The Auditing Party shall have the right to make
copies of any records at its expense, subject to any restrictions imposed by
applicable laws and to any confidentiality provisions set forth in the
Separation Agreement, which are incorporated by reference herein. The party
being audited shall provide the Auditing Party’s representatives with
reasonable access during normal business hours to its operations, computer
systems and paper and electronic files, and provide workspace to its
representatives. After any audit is completed, the party being audited shall
have the right to review a draft of the audit findings and to comment on those
findings in writing within ten Business Days after receiving such draft.

 

(b)           The Auditing Party’s
audit rights under this Section 5.1 shall include the right to audit, or
participate in an audit facilitated by the party being audited and to require
the other party to request any benefit providers and third parties with whom
the party being audited has a relationship, or agents of such party, to agree
to such an audit to the extent any such persons are affected by or addressed in
this Agreement (collectively, the “Non-Audit Parties”). The party being
audited shall, upon written request from the Auditing Party, provide an
individual (at the Auditing Party’s expense) to supervise any audit of a
Non-Audit Party. The Auditing Party shall be responsible for supplying, at the
Auditing Party’s expense, additional personnel sufficient to

 

10

 

complete the
audit in a reasonably timely manner. The responsibility of the party being
audited shall be limited to providing, at the Auditing Party’s expense, a
single individual at each audited site for purposes of facilitating the audit.

 

(c)           Upon the reasonable
request of SG, Cowen Inc. shall provide SG with documentary support that it has
complied with all employment withholding obligations in connection with
payments made to Cowen Employees pursuant to this Agreement.

 

(d)           Except as otherwise
specifically set forth in any provision of the Indemnification Agreement
(including but not limited to the penultimate paragraph of Section 3.01
of the Indemnification Agreement) or of any other Principal Transaction
Document, Cowen Inc. shall, to the fullest extent permitted by law, indemnify,
defend and hold harmless each of the SG Indemnitees from and against all
Liabilities to the extent such Liabilities relate to, arise out of or result
from (i) the failure of Cowen Inc. or any Cowen Subsidiary to comply with all
employment withholding obligations in connection with payments made by Cowen
Inc. or any Cowen Subsidiary to Cowen Employees pursuant to this Agreement or
(ii) Cowen Inc.’s failure to comply with its obligations as paying agent under Sections
3.2(c), 3.4(d) and 3.9(c) of this Agreement.

 

SECTION 5.2                 Notices.

 

(a)           Any
notices given pursuant to this Agreement shall be made in accordance with the
notice provisions of the Separation Agreement.

 

(b)           Cowen
Inc. shall provide prompt written notice to SG informing of any change in
circumstances with respect to a Cowen Employee or a Former Cowen Employee,
including but not limited to the termination of a Cowen Employee’s employment,
such that SG may continue to comply with its obligations under this Agreement. Such
written notice shall include to the extent reasonably available, a current or
forwarding address or similar contact information for such Cowen Employee or
Former Cowen Employee.

 

SECTION 5.3                 No
Third Party Beneficiaries. This Agreement is an agreement solely among
parties hereto. Nothing in this Agreement, whether express or implied, confers
upon any employee or former employee of any party, any participant or
beneficiary under any Benefit Plan or any other person, any rights or remedies,
including, but not limited to (i) any right to employment or recall; (ii) any
right to continued employment or continued service for any specified period; or
(iii) any right to claim any particular compensation, benefit or aggregation of
benefits, or any kind or nature.

 

SECTION 5.4                 Facsimile
Signatures. Each party acknowledges that it and the other parties may
execute this Agreement by facsimile, stamp or mechanical signature. Each party
expressly adopts and confirms each such facsimile, stamp or mechanical
signature made in its respective name as if it were a manual signature, agrees
that it shall not assert that any such signature is not adequate to bind such
party to the same extent as if it were signed manually and agrees that at the
reasonable request of the other party at any time it shall as promptly as
reasonably practicable cause this Agreement to be manually executed (any such
execution to be as of the date of the initial date thereof).

 

11

 

SECTION 5.5                 Further
Assurances and Consents. In addition to the actions specifically provided
elsewhere in this Agreement, each of the parties hereto will use reasonable
commercial efforts to (i) execute and deliver such further instruments and
documents and take such other actions as the other party may reasonably request
in order to effectuate the purposes of this Agreement and carry out the terms
hereof; and (ii) take or cause to be taken, all actions and do, or cause to be
done, all things, reasonably necessary, proper or advisable under applicable
laws, regulations and agreements or otherwise to consummate and make effective
the transactions contemplated by this Agreement, including, without limitation,
using its reasonable efforts to obtain any consent and approvals and to make
any filings and applications necessary or desirable in order to consummate the
transactions contemplated by this Agreement; provided that no party hereto
shall be obligated to pay any consideration therefor (except for filing fees
and other similar charges) to any third party from whom such consents,
approvals and amendments are required or to take any action or omit to take any
action if the taking or the omission to take action would be unreasonably
burdensome to the party or the business thereof.

 

SECTION 5.6                 Assignability.
This Agreement shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and permitted assigns; provided, however,
that no party hereto may assign its rights or delegate its obligations under
this Agreement without the express prior written consent of the other parties
hereto. Notwithstanding the foregoing, this Agreement shall be assignable in
whole in connection with a merger or consolidation or the sale of all or
substantially all of the Assets of a party so long as the resulting, surviving
or transferee Person assumes all the obligations of the relevant party thereto
by operation of law or pursuant to an agreement in form and substance
reasonably satisfactory to the other party.

 

SECTION 5.7                 Third
Party Consent. If the obligation of any party under this Agreement is
dependent on the consent of a third party consent and such consent is withheld,
the parties shall use reasonable commercial efforts to implement the applicable
provisions of this Agreement to the fullest extent practicable. If any
provision of this Agreement cannot be implemented due to the failure of a third
party to consent, the parties shall negotiate in good faith to implement the
provision in a mutually satisfactory manner, taking into account the original
purposes of the provision in light of the Separation and communications to
affected individuals.

 

SECTION 5.8                 Effect
if Separation Does Not Occur. If the Separation does not occur, then all
actions and events that are to be taken under this Agreement as of the
Separation Date or otherwise in connection with the Separation, shall not be
taken or occur except to the extent specifically provided by SG or an SG
Subsidiary.

 

SECTION 5.9                 Governing
Law. This Agreement shall be governed by and construed and interpreted in
accordance with the laws of the State of New York, irrespective of the choice
of laws principles of the State of New York, as to all matters, including
matters of validity, construction, effect, enforceability, performance and
remedies.

 

12

 

SECTION 5.10               Disputes.
Any disputes with respect to matters arising under this Agreement shall be
resolved in accordance with the dispute resolution procedures set forth in the
Separation Agreement.

 

SECTION 5.11               Amendments.
No provisions of this Agreement shall be deemed amended, supplemented or
modified unless such amendment, supplement or modification is in writing and
signed by an authorized representative of each of the parties.

 

SECTION 5.12               Severability.
If any provision of this Agreement or the application thereof to any Person or
circumstance is determined by a court of competent jurisdiction to be invalid,
void or unenforceable, the remaining provisions hereof, or the application of
such provision to Persons or circumstances or in jurisdictions other than those
as to which it has been held invalid or unenforceable, shall remain in full
force and effect and shall in no way be affected, impaired or invalidated
thereby, so long as the economic or legal substance of the transactions
contemplated hereby is not affected in any manner adverse to any party. Upon
such determination, the parties shall negotiate in good faith in an effort to
agree upon a suitable and equitable provision to effect the original intent of
the parties.

 

SECTION 5.13               Entire
Agreement. Except as otherwise provided herein by reference to the
Separation Agreement, this Agreement constitutes the entire agreement and
understanding between the parties relating to the matters addressed herein and
supersedes and takes the place of all other agreements and understandings,
written or oral, of the parties relating to such matters.

 

SECTION 5.14               Counterparts;
Headings; Interpretation. This Agreement may be executed in one or more
counterparts, each of which when executed shall be deemed to be an original but
all of which taken together shall constitute one and the same agreement. Delivery
of an executed counterpart of a signature page to this Agreement by facsimile
shall be as effective as delivery of an executed original of such counterpart
to this Agreement. The Section headings herein are inserted for convenience
only and are not to be construed as part of this Agreement. All provisions of
this Agreement shall be interpreted so as to give effect to the intent of the
parties hereto.

 

SECTION 5.15               Mutual
Drafting. This Agreement shall be deemed to be the joint work product of
the parties and any rule of construction that a document shall be interpreted
or construed against a drafter of such document shall not be applicable.

 

SECTION 5.16               Remedies.
In the event of a breach by a party of its obligations under this Agreement, each
other party, in addition to being entitled to exercise all rights granted by
law, including recovery of damages, will be entitled to specific performance of
its rights under this Agreement. Each party agrees that monetary damages would
not be adequate compensation for any loss incurred by reason of a breach by it
of any provision of this Agreement and hereby further agrees that, in the event
of any action for specific performance in respect of such breach, it will waive
the defense that a remedy at law would be adequate.

 

* * * * *

 

13

 

IN
WITNESS WHEREOF, the parties have caused this
Agreement to be signed by their authorized representatives.

 

 

	
   

  	
  SOCIÉTÉ GÉNÉRALE

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/ Jean-Philippe Coulier

  	
   

  
	
   

  	
   

  	
  Name:
  Jean-Philippe Coulier

  
	
   

  	
   

  	
  Title: Chief
  Operating Officer, Americas

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  SG AMERICAS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/ Jean-Philippe Coulier

  	
   

  
	
   

  	
   

  	
  Name:
  Jean-Philippe Coulier

  
	
   

  	
   

  	
  Title: Vice
  President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  SG AMERICAS SECURITIES HOLDINGS,

  INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/ Jean-Philippe Coulier

  	
   

  
	
   

  	
   

  	
  Name:
  Jean-Philippe Coulier

  
	
   

  	
   

  	
  Title:
  President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  COWEN AND COMPANY, LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/ Christopher A. White

  	
   

  
	
   

  	
   

  	
  Name:
  Christopher A. White

  
	
   

  	
   

  	
  Title: Chief
  Administrative Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  COWEN GROUP, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/ Christopher A. White

  	
   

  
	
   

  	
   

  	
  Name:
  Christopher A. White

  
	
   

  	
   

  	
  Title: Vice
  President

  
					

 

 

Employee Matters AgreementExhibit 10.6

 

EXECUTION
COPY

 

 

TRANSITION SERVICES AGREEMENT

 

by and among

 

SOCIÉTÉ GÉNÉRALE,

 

SG AMERICAS, INC.,

 

SG AMERICAS SECURITIES HOLDINGS, INC.,

 

COWEN AND COMPANY, LLC

 

 

and

 

 

COWEN GROUP, INC.

 

 

Dated as of July 12, 2006

 

 

TABLE OF CONTENTS

 

	
   

  	
  Page

  
	
   

  	
   

  
	
  ARTICLE
  I

  	
  DEFINITIONS

  	
  1

  
	
  SECTION 1.01.

  	
  Certain
  Defined Terms

  	
  1

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  II

  	
  SERVICES
  AND TERMS

  	
  4

  
	
  SECTION 2.01.

  	
  Initial
  Services

  	
  4

  
	
  SECTION 2.02.

  	
  Custom
  Modifications

  	
  4

  
	
  SECTION 2.03.

  	
  Provider
  Changes to Services

  	
  5

  
	
  SECTION 2.04.

  	
  Cooperation

  	
  5

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  III

  	
  PERFORMANCE
  AND RECEIPT OF SERVICES; STANDARDS

  	
  5

  
	
  SECTION 3.01.

  	
  Standard
  for Services

  	
  5

  
	
  SECTION 3.02.

  	
  Volume
  and Quantity of Services

  	
  5

  
	
  SECTION 3.03.

  	
  Compliance
  with Laws

  	
  6

  
	
  SECTION 3.04.

  	
  Transitional
  Nature of Services

  	
  6

  
	
  SECTION 3.05.

  	
  Use
  of Third Parties to Provide Services

  	
  6

  
	
  SECTION 3.06.

  	
  Designation
  of Services Managers

  	
  7

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  IV

  	
  BILLING;
  TAXES

  	
  7

  
	
  SECTION 4.01.

  	
  Service
  Charges and Other Costs; Payments

  	
  7

  
	
  SECTION 4.02.

  	
  Invoices;
  Payment

  	
  7

  
	
  SECTION 4.03.

  	
  Disputes

  	
  8

  
	
  SECTION 4.04.

  	
  Taxes

  	
  8

  
	
  SECTION 4.05.

  	
  No
  Right to Set-Off

  	
  8

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  V

  	
  PRIOR
  SERVICE LEVEL AGREEMENTS

  	
  8

  
	
  SECTION 5.01.

  	
  Service
  Level Agreements

  	
  8

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  VI

  	
  ADDITIONAL
  AGREEMENTS

  	
  9

  
	
  SECTION 6.01.

  	
  Consents

  	
  9

  
	
  SECTION 6.02.

  	
  Access

  	
  10

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  VII

  	
  INDEMNIFICATION;
  LIMITATION ON LIABILITY

  	
  10

  
	
  SECTION 7.01.

  	
  Limited
  Liability of a Provider

  	
  10

  
	
  SECTION 7.02.

  	
  Indemnification
  by Each Provider

  	
  10

  
	
  SECTION 7.03.

  	
  Indemnification
  by Each Recipient

  	
  11

  
	
  SECTION 7.04.

  	
  Indemnification
  Procedures

  	
  11

  
	
  SECTION 7.05.

  	
  Limitation
  on Liability

  	
  11

  
	
  SECTION 7.06.

  	
  Liability
  for Payment Obligations

  	
  11

  
				

 

i

 

	
   

  	
  Page

  
	
   

  	
   

  
	
  ARTICLE
  VIII

  	
  DISPUTE
  RESOLUTION

  	
  12

  
	
  SECTION 8.01.

  	
  Dispute
  Resolution

  	
  12

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  IX

  	
  TERMINATION

  	
  12

  
	
  SECTION 9.01.

  	
  Termination
  Rights; Post-Termination Transition

  	
  12

  
	
  SECTION 9.02.

  	
  Effect
  of Termination

  	
  13

  
	
  SECTION 9.03.

  	
  Survival

  	
  13

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  X

  	
  GENERAL
  PROVISIONS

  	
  13

  
	
  SECTION 10.01.

  	
  Independent
  Contractors

  	
  13

  
	
  SECTION 10.02.

  	
  Regulatory
  Approval and Compliance

  	
  13

  
	
  SECTION 10.03.

  	
  Confidential
  Information

  	
  14

  
	
  SECTION 10.04.

  	
  Counterparts;
  Entire Agreement; Corporate Power; Facsimile Signatures

  	
  14

  
	
  SECTION 10.05.

  	
  Governing
  Law

  	
  15

  
	
  SECTION 10.06.

  	
  Notices

  	
  15

  
	
  SECTION 10.07.

  	
  Severability

  	
  16

  
	
  SECTION 10.08.

  	
  Assignability;
  No Third-Party Beneficiaries

  	
  16

  
	
  SECTION 10.09.

  	
  Subsidiaries

  	
  16

  
	
  SECTION 10.10.

  	
  Waivers

  	
  17

  
	
  SECTION 10.11.

  	
  Amendments

  	
  17

  
	
  SECTION 10.12.

  	
  Interpretation

  	
  17

  
	
  SECTION 10.13.

  	
  Mutual
  Drafting

  	
  17

  
				

 

ii

 

SCHEDULES

 

	
  SCHEDULE
  A

  	
  SERVICES
  PROVIDED BY SG TO COWEN LLC

  
	
   

  	
   

  
	
  Schedule A-1

  	
  Business Continuity Management

  
	
  Schedule A-2

  	
  Facilities Management

  
	
  Schedule A-3

  	
  Access to SG Data Room and E-mail Archives

  
	
  Schedule A-4

  	
  Legal Services

  
	
   

  	
   

  
	
  SCHEDULE
  B

  	
  SERVICES
  PROVIDED BY COWEN LLC TO SG

  
	
   

  	
   

  
	
  Schedule B-1

  	
  Library

  
	
  Schedule B-2

  	
  Training of Analysts

  
	
  Schedule B-3

  	
  Merchant Banking Fund Management Services

  

 

iii

 

This
Transition Services Agreement, dated as of July 12, 2006, is made by and among
SOCIÉTÉ GÉNÉRALE, a French banking corporation (“SG”), SG AMERICAS,
INC., a Delaware corporation (“SGAI”), SG AMERICAS SECURITIES HOLDINGS,
INC., a Delaware corporation (“SGASH”), COWEN AND COMPANY, LLC, a
Delaware limited liability company formerly known as “SG Cowen & Co., LLC”
(“Cowen LLC”), and COWEN GROUP, INC., a Delaware corporation (“Cowen
Inc.”).

 

RECITALS

 

WHEREAS, SG and Cowen LLC are parties to Service Level Agreements (as defined
herein) under which they have agreed to provide certain services to each other
in connection with the operation of their respective businesses;

 

WHEREAS, SG, SGAI and SGASH have determined that it is appropriate and
advisable to separate the Cowen Business (as defined herein) from the SG
Business (as defined herein) (the “Separation”);

 

WHEREAS, SG, SGAI, SGASH, Cowen LLC and Cowen Inc. have entered into a
Separation Agreement, dated as of July 11, 2006 (the “Separation Agreement”),
which sets forth certain terms and conditions relating to the Separation,
including the terms and conditions applicable to an initial public offering by
Cowen Inc. (the “Cowen IPO”); and

 

WHEREAS, in order to ensure an orderly transition under the Separation
Agreement, (a) prior to the Cowen IPO, SG and Cowen LLC will continue to
provide, or cause to be provided, certain services to each other, in accordance
with the terms and subject to the conditions set forth in the Service Level
Agreements, and (b) following the Cowen IPO, SG, Cowen Inc. and Cowen LLC will
continue to provide, or cause to be provided, certain services to each other in
accordance with the terms and subject to the conditions set forth herein;

 

NOW, THEREFORE, in consideration of the mutual agreements,
provisions and covenants contained in this Agreement and for other good and
valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the Parties hereby agree as follows:

 

ARTICLE I

DEFINITIONS

 

SECTION
1.01.  Certain Defined Terms.  Unless otherwise defined herein, all
capitalized terms used herein shall have the same meaning as in the Separation
Agreement.

 

The
following capitalized terms used in this Agreement shall have the meanings set
forth below:

 

“Agreement”
means this Transition Services Agreement, together with each of the schedules
hereto.

 

“Breaching
Party” has the meaning given to such term in Section 9.01(a).

 

 

“Business
Day” has the meaning given to such term in the Separation Agreement.

 

“Consents”
has the meaning given to such term in Section 6.01(a).

 

“Cowen
Acquired Business” has the meaning given to such term in Section 10.08.

 

“Cowen
Business” has the meaning given to such term in the Separation Agreement.

 

“Cowen
Divested Business” has the meaning given to such term in Section 10.08.

 

“Cowen
Group” means, collectively, Cowen Inc. and the Cowen Inc. Subsidiaries.

 

“Cowen
Inc.” has the meaning given to such term in the Preamble to this Agreement.

 

“Cowen
IPO” has the meaning given to such term in the Recitals to this Agreement.

 

“Cowen
Services” has the meaning given to such term in Section 2.01(b).

 

“Cowen
Services Manager” has the meaning given to such term in Section 3.06(b).

 

“Cowen
Subsidiary” has the meaning given to such term in the Separation Agreement.

 

“Information”
has the meaning given to such term in the Separation Agreement.

 

“Information
Systems” means computing, telecommunications or other electronic operating
or processing systems or environments, including, without limitation, computer
programs, data, databases, computers, computer libraries, communications
equipment, networks and systems.  When
referenced in connection with Services, Information Systems shall mean the
Information Systems accessed and/or used in connection with the Services.

 

“Liabilities”
has the meaning given to such term in the Separation Agreement.

 

“Merchant
Banking Fund” means SG Merchant Banking Fund L.P., a Delaware limited
partnership.

 

“Non-breaching
Party” has the meaning set forth in Section 9.01(a).

 

“Other
Costs”  has the meaning set forth in Section
4.01(a).

 

“Parties”
means the parties to this Agreement.

 

“Person”
has the meaning given to such term in the Separation Agreement.

 

“Principal
Transaction Documents” has the meaning given to such term in the Separation
Agreement.

 

“Provider”
means the Party providing a Service under this Agreement.

 

“Provider
Indemnified Party” has the meaning set forth in Section 7.01.

 

2

 

“Recipient”
means the Party to whom a Service under this Agreement is being provided.

 

“Recipient
Indemnified Party” has the meaning set forth in Section 7.02.

 

“Representative(s)”
of a Person means any director, officer, employee, agent, consultant,
accountant, auditor, financing source, attorney, investment banker or other
representative of such Person.

 

“Separation
Agreement” has the meaning set forth in the Recitals of this Agreement.

 

“Separation
Date” has the meaning set forth in the Separation Agreement.

 

“Service(s)”
means, individually and collectively, the SG Services, the Cowen Services and
the Undertakings.

 

“Service
Charges” has the meaning set forth in Section 4.01(a).

 

“Service
Level Agreements” means each of the following Service Agreements between SG
or an SG Subsidiary and Cowen and/or one or more Cowen Subsidiaries:

 

(i)  Master Services Agreement, dated as of January
1, 2004, as amended by a First Amendment dated as of January 1, 2005 and by a
Second Amendment dated as of January 1, 2006, between SG, acting through its
New York Branch and/or any of its other offices, subsidiaries and affiliates,
and Cowen LLC (each of which, including, in each case, the Service Level
Agreements attached as appendices to the foregoing agreements and amendments
and incorporated by reference therein, shall be terminated on the date of the
Cowen IPO); and

 

(ii)  the Service Level Agreement, dated as of
January 1, 2006, among SG, Cowen LLC and SG Capital Partners L.L.C. for
management of the Merchant Banking Fund from January 1, 2006 until the
effective date of the sale and transfer of certain assets of the Merchant
Banking Fund to the MBF Purchasers.

 

“Service
Termination Date” in respect of any Service shall mean the date specified
for such Service in the relevant Schedules, or such earlier date as provided in
this Agreement.

 

“SG
Acquired Business” has the meaning given to such term in Section 10.8.

 

“SG
Business” has the meaning given to such term in the Separation Agreement.

 

“SG
Divested Business” has the meaning given to such term in Section 10.8.

 

“SG
Services” has the meaning given to such term in Section 2.01(a).

 

“SG
Services Manager” has the meaning given to such term in Section 3.06(a).

 

“SG
Subsidiary” has the meaning given to such term in the Separation Agreement.

 

“Standard
for Services” has the meaning given to such term in Section 3.01.

 

3

 

“Subsidiary”
has the meaning given to such term in the Separation Agreement.

 

“Taxes”
has the meaning given to such term in the Separation Agreement.

 

“Third
Party” means any Person other than the Parties, the SG Subsidiaries and the
Cowen Inc. Subsidiaries.

 

“Transaction
Documents” has the meaning given to such term in the Separation Agreement.

 

“Undertakings”
means, collectively, the obligations of SG and its Subsidiaries and Cowen Inc.
and its Subsidiaries set forth in Articles II, III and V
of this Agreement.

 

ARTICLE II

SERVICES AND TERMS

 

SECTION 2.01. 
Initial Services.  (a)  During the period commencing on the date of
the Cowen IPO and ending on the applicable Service Termination Date, subject to
the terms and conditions set forth in this Agreement, SG shall provide or cause
to be provided to Cowen Group each of the services listed in Schedules A-1
through A-4 (collectively, the “SG Services”).  Except as provided in Section 10.08,
nothing in this Agreement shall require that any SG Service be provided other
than for use in, or in connection with, the Cowen Business.

 

(b)                                 During the period commencing on the date of
the Cowen IPO and ending on the applicable Service Termination Date, subject to
the terms and conditions set forth in this Agreement, Cowen Group shall provide
or cause to be provided to SG each of the services listed in Schedules B-1
through B-3 (collectively, the “Cowen Services”).  Except as provided in Section 10.08,
nothing in this Agreement shall require that any Cowen Service be provided
other than for use in, or in connection with, the SG Business.

 

(c)                                  For the avoidance of doubt, clearing services
are expected to be provided pursuant to the terms and subject to the conditions
of a Clearing Agreement between Cowen LLC and SG Americas Securities, LLC that
is expected to go into effect prior to the closing of the Cowen IPO, and shall
not be considered SG Services hereunder or be otherwise subject to in any way
the terms of this Agreement.

 

SECTION
2.02.  Custom Modifications.

 

(a)                                  The SG Services shall include, and the
Service Charges reflect charges for, such maintenance, support, error
correction, training, updates and enhancements normally and customarily
provided by SG to its Subsidiaries that receive such services.  If Cowen Inc. requests that SG provide a
custom modification in connection with any SG Service, SG may, but shall not be
obligated to, provide such custom modification. 
Cowen Inc. shall be responsible for the cost of any such custom
modification.

 

4

 

(b)                                 The Cowen Services shall include, and the
Service Charges reflect charges for, such maintenance, support, error
correction, training, updates and enhancements normally and customarily
provided by Cowen Inc. to its Subsidiaries that receive such services.  If SG requests that Cowen Inc. provide a
custom modification in connection with any Cowen Service, Cowen Inc. may, but
shall not be obligated, to provide such custom modification.  SG shall be responsible for the cost of any
such custom modification.

 

SECTION 2.03. 
Provider Changes to Services. 
Each Provider may make changes from time to time in the manner of
performing the Services if (i) such Provider is making similar changes in
performing analogous services for itself, (ii) such Provider furnishes to the
applicable Recipient substantially the same notice (in content and timing) as
such Provider shall furnish to its own organization respecting such changes and
(iii) such changes do not result in a material degradation in the quality or
sufficiency of the services received.  No
such change shall affect the Service Charges for the applicable Service unless
the Parties otherwise agree.

 

SECTION 2.04. 
Cooperation.  If (i) there
is nonperformance of any Service as a result of an event described in Section
9.03(b) or (ii) the provision of a Service would violate applicable law,
the Parties agree to work together in good faith to arrange for an alternative
means by which the applicable Recipient may obtain, at the Recipient’s sole
cost, the Services so affected.

 

ARTICLE III

PERFORMANCE AND RECEIPT OF SERVICES; STANDARDS

 

SECTION 3.01. 
Standard for Services.

 

(a)                          Except as otherwise provided in this Agreement (including in any
Schedule hereto), from the date of the Cowen IPO until the applicable
Service Termination Date, the Provider agrees to perform all Services in a
manner such that the nature, quality, standard of care, timeliness and service
levels of or at which such Services are performed are substantially similar to
the nature, quality, standard of care, timeliness and service levels of or at
which such Services were performed by or on behalf of the Provider prior to the
date of the Cowen IPO in the ordinary course of business under the Service
Level Agreements (the “Standard for Services”).

 

(b)                                 Each Provider shall, and shall cause its
Subsidiaries to, perform its duties and responsibilities hereunder in good
faith and based on its past practices.

 

(c)                                  Each Provider and Recipient shall exercise
reasonable care in providing and receiving the Services to (i) prevent access
to the Services or Information Systems by unauthorized Persons and (ii) not
damage, disrupt or interrupt the Services or Information Systems.

 

SECTION 3.02. 
Volume and Quantity of Services. 
No Provider shall be obligated to perform or to cause to be performed
any Service in a volume or quantity which materially exceeds the volumes or
quantities of analogous services performed for the applicable Recipient in 2005
under the Service Level Agreements.  A
Recipient may request a materially higher volume or quantity of such historical
volumes or quantities of a Service, which request the

 

5

 

applicable Provider may
accept or reject in its reasonable discretion. 
If the Provider agrees to such a request, the Parties shall cooperate
and act in good faith to make any modifications to the relevant Schedules for
such Service.

 

SECTION 3.03.Compliance with Laws.  Nothing in this Agreement shall require a Provider
to perform or cause to be performed any Service or a Recipient to receive any
Service in a manner that would constitute a violation of applicable laws.

 

SECTION 3.04. 
Transitional Nature of Services. 
The Parties acknowledge the transitional nature of the Services and
agree to cooperate in good faith and to use commercially reasonable efforts to
effectuate a smooth transition of the Services from the Provider to the
Recipient. Notwithstanding the foregoing, the Parties agree that (i) it is the
current intention of the Parties that the Services described in Schedules
A-1, B-1 and B-2 shall be provided during the period
commencing on the date of the Cowen IPO and ending on December 31, 2006, and
the Parties agree to enter into negotiations following the Cowen IPO for the
purpose of executing one or more mutually acceptable agreements for the
continued provision of such Services on a stand-alone basis after December 31,
2006; it being understood that none of the Parties shall be obligated to use or
provide Services to any other Parties on a stand-alone basis after December 31,
2006 (except as may otherwise expressly be provided in this Agreement); and
(ii) the Services described in Schedule A-2 shall be provided during the
period commencing on the date of the Cowen IPO and ending on the earlier of (x)
December 31, 2007 and (y) the date, if any, as of which Cowen LLC vacates the
premises at 1221 Avenue of the Americas, New York, New York 10020 (except for Section
6.1 of Schedule A-2, which Services shall not be terminable except
in connection with entry into a definitive long-term agreement).

 

SECTION 3.05. 
Use of Third Parties to Provide Services.  Each Provider may perform its obligations
through its Subsidiaries or, if such Provider is obtaining analogous services
for itself from agents, subcontractors or independent contractors, the Provider
may perform its obligations hereunder through the use of such agents,
subcontractors or independent contractors, if such Provider furnishes to the
applicable Recipient substantially the same notice (in content and timing) as
such Provider shall furnish to its own organization respecting such use of
Third Parties.  If the Provider is not
obtaining analogous services for itself from Third Parties, the Provider may
perform its obligations hereunder through the use of agents, subcontractors or
independent contractors only upon obtaining the prior written consent of the
Recipient.  Notwithstanding the
foregoing, the Provider shall not be relieved of its obligations under this
Agreement by use of such Subsidiaries, agents, subcontractors or
contractors.  Delegation of performance
of any Service by a Provider in accordance with this Section 3.05 shall
not affect the Service Charges for the applicable Service.

 

6

 

SECTION
3.06.  Designation of Services
Managers.

 

(a)                                  SG Services Manager.  SG
will designate a dedicated services manager (the “SG Services Manager”)
who will be directly responsible for coordinating and managing the delivery of
the SG Services and will have authority to act on SG’s behalf with respect to
the Services.  The SG Services Manager
will work with the Cowen Services Manager to address Cowen Group’s issues and
the Parties’ relationship under this Agreement.

 

(b)                                 Cowen Services Manager. 
Cowen Inc. will designate a dedicated services account manager (the “Cowen
Services Manager”) who will be directly responsible for coordinating and
managing the delivery of the Services by Cowen Group and will have authority to
act on Cowen Group’s behalf with respect to the Services.  The Cowen Services Manager will work with the
SG Services Manager to address SG’s issues and the Parties’ relationship under
this Agreement.

 

ARTICLE IV

BILLING; TAXES

 

SECTION 4.01. 
Service Charges and Other Costs; Payments.  (a) 
The Recipient of each Service provided hereunder shall pay the Provider
thereof (or its designee) an amount with respect to each such Service
(individually, a “Service Charge,” and collectively, the “Service
Charges”) determined as set forth in the relevant Schedules.

 

(b)                                 In addition, in connection with performance
of the Services and in connection with the Undertakings, the Provider may incur
certain out-of-pocket costs consistent in nature and magnitude with past practice
(the “Other Costs”), which shall either be paid directly by the
Recipient or reimbursed to the Provider by the Recipient; provided that
any Other Costs shall only be payable by Cowen Group or SG, as the case may be,
in accordance with this Section 4.01 if the Recipient receives from the
Provider reasonably detailed data and other documentation sufficient to support
the calculation of amounts due to the Provider for such Other Costs; provided
further that any Other Costs already included in the Service Charges shall not
otherwise be paid or reimbursed by the Recipient pursuant to this paragraph.

 

(c)                                  Notwithstanding anything to the contrary in
this Agreement, including the Schedules, in the event that the level of any
Service is decreased or increased as a result of an event described in Section
10.08(b) or (c), then the Service Charge and Other Costs associated
therewith shall be reduced or increased to reflect pro rata the decrease or
increase in Services provided.

 

SECTION 4.02. 
Invoices; Payment.  From
and after the date of the Cowen IPO, the Provider shall deliver an invoice to
the Recipient on a monthly basis (or at such other frequency as is consistent
with the basis on which the Service Charges are determined and, if applicable,
charged to Subsidiaries of the Provider) in arrears for the Service Charges and
any Other Costs due to the Provider under this Agreement.  The Recipient shall pay the amount of such
invoice to the Provider in U.S. dollars within thirty (30) days of the date
Recipient received such invoice,

 

7

 

provided that, to the extent consistent with past
practice with respect to Services rendered outside the United States, payments
may be made in local currency.

 

SECTION
4.03.  Disputes.

 

(a)                                  The Recipient shall have the right to dispute
any Service Charges and Other Costs by delivering written notice of such
dispute, setting forth in reasonable detail the basis therefore, to the
Provider no later than, thirty (30) days after Recipient’s receipt of the
applicable invoice therefore.  As soon as
practicable after receipt by the Provider of any such notice, the Provider
shall provide the Recipient with reasonably detailed data and documentation
sufficient to support the calculation of any Service Charges and Other Costs
that are the subject of the dispute. If the Provider’s furnishing of such
information does not promptly resolve such dispute, the dispute shall be
resolved pursuant to Section 8.01 of this Agreement.

 

(b)                                  If the Recipient fails to pay any Service
Charges or Other Costs within thirty (30) days of the date Recipient received
such invoice (excluding any amount contested in good faith pursuant to Section
4.03(a)), the Recipient shall be obligated to pay to the Provider, in
addition to the amount due, interest on such amount at the lesser of (i) SG’s
prime rate, plus two percent or (ii) the maximum rate of interest allowed by
applicable law, from the date the payment was due through the date of payment.

 

SECTION 4.04. 
Taxes.  (a)  Each Recipient shall pay any and all Taxes
(other than taxes imposed on or measured by the Provider’s overall net income
(however denominated), and franchise taxes imposed on the Provider (in lieu of
net income taxes)) imposed or otherwise incurred in connection with the
applicable Provider’s provision of Services, including all sales, use, excise,
value-added, services, consumption, and similar Taxes.

 

(b)                                 Each of the Parties agrees that if reasonably
requested by another Party, it will cooperate with such other Party to enable
the accurate determination of such other Party’s Liability for Taxes and assist
such other Party in minimizing its Liability for Taxes to the extent
commercially reasonable and legally permissible, in each case, in respect of
Taxes, including all sales, use, excise, value-added, services, consumption and
similar Taxes, imposed or otherwise incurred in connection with the applicable
Provider’s provision of Services.

 

SECTION 4.05. 
No Right to Set-Off.  The
Recipient shall pay the full amount of Service Charges and Other Costs incurred
by the Provider under this Agreement, and shall not set-off or otherwise
withhold any such amount owed to the Provider on account of any obligation owed
by the Provider to the Recipient.

 

ARTICLE V

PRIOR SERVICE LEVEL AGREEMENTS

 

SECTION 5.01. 
Service Level Agreements. 
(a)  As of the date of this
Agreement, SG and Cowen LLC are parties to the Service Level Agreements.  Until the closing of the Cowen IPO, SG and
Cowen LLC will continue to provide, or cause to be provided, services to each
other and their respective Subsidiaries, in accordance with the terms and
subject to the conditions set forth in the Service Level Agreements.  Nothing in this Agreement, the Separation

 

8

 

Agreement or any other
Transaction Documents shall affect in any way any Liabilities arising under the
Service Level Agreements and relating to the periods prior to the IPO, which
Liabilities shall be discharged in accordance with the terms and conditions of
the Service Level Agreements.  Except as
expressly provided in this Agreement, in the event and to the extent that there
is a conflict between the provisions of this Agreement and the provisions of any
Service Level Agreement, the provisions of this Agreement shall control.

 

(b)                                 Upon the closing of the Cowen IPO, SG, Cowen
Inc. and Cowen LLC shall cause all Service Level Agreements to be terminated
and will provide, or cause to be provided, Services to each other in accordance
with the terms and subject to the conditions set forth in this Agreement; provided,
however, that such termination of the Service Level Agreements shall be
without prejudice to any Liabilities under such Service Level Agreements that
have incurred or accrued thereunder prior to the date of such termination.  Except as expressly set forth in this
Agreement, the Parties shall be under no obligation following the Cowen IPO to
(a) provide any services previously provided under the Service Level Agreements
that do not constitute “Services” as defined in this Agreement and (b)
otherwise comply with the terms of the Service Level Agreements; provided
that if upon the closing of the Cowen IPO the Cowen Group is reasonably unable
to provide for themselves or obtain from Third Parties any services previously
provided by SG under the Service Level Agreements despite their commercially
reasonable efforts to do so, SG shall use commercially reasonable efforts to
continue to provide such services to the Cowen Group at the Cowen Group’s sole
cost, and such service shall be deemed an SG Service hereunder until such time
as the Parties can effect a smooth transition of such Service to the Cowen
Group.  To the extent the terms and
conditions set forth in this Agreement contradict the terms and conditions
under which services were rendered pursuant to the Service Level Agreements,
the terms of this Agreement shall govern the rendering of such services.

 

ARTICLE VI

ADDITIONAL AGREEMENTS

 

SECTION 6.01. 
Consents.  (a)  The Parties acknowledge and agree that
certain software and other licenses, consents, approvals, notices,
registrations, recordings, filings and other actions (collectively, “Consents”)
may need to be obtained in connection with the Separation and the provision of
Services under this Agreement.  Except as
otherwise expressly set forth in this Agreement or the Separation Agreement,
prior to, during, and after the Separation Date, the Provider shall, and shall
cause each of its Subsidiaries to, reasonably cooperate with the Recipient to
obtain all Consents necessary to provide the Services under this
Agreement.  The Provider will be
responsible for paying any out-of-pocket costs (including payments to Third
Parties) incurred to obtain, perform or otherwise satisfy any such Consents,
and the Recipient shall reimburse the Provider for one hundred percent (100%)
of such costs.  The Provider and the
Recipient shall reasonably cooperate with each other in seeking to minimize the
costs of any such Consents.

 

(b)                                 Prior to receiving any reimbursement for its
actual out-of-pocket costs pursuant to Section 6.01(a) above, the
Provider shall provide the applicable Recipient with an invoice accompanied by
reasonably detailed data and documentation sufficient to evidence the
out-of-pocket expenses for which the Provider is seeking reimbursement.  Upon receipt of such invoice

 

9

 

and data and documentation,
the Recipient shall, except as otherwise provided in Section 6.01(a),
pay the amount of such invoice to the Provider within 30 days of the date of
receipt of such invoice.  If Recipient in
good faith disputes the invoiced amount, then the Parties shall work together
in good faith to resolve such dispute. 
If the Parties are unable to resolve such dispute, the dispute shall be
resolved pursuant to Section 8.01.

 

SECTION 6.02.  Access.  (a) 
Cowen Inc. will, and will cause its Subsidiaries to, allow SG and its
Representatives reasonable access to the facilities of Cowen Group necessary
for the performance of the SG Services for SG to fulfill its obligations under
this Agreement.

 

(b)                                 SG will, and will cause its Subsidiaries to,
allow Cowen Group and its Representatives reasonable access to the facilities
of SG and its Subsidiaries necessary for the performance of the Cowen Services
for Cowen Group to fulfill its obligations under this Agreement.

 

ARTICLE VII

INDEMNIFICATION; LIMITATION ON LIABILITY

 

SECTION 7.01. 
Limited Liability of a Provider. 
Notwithstanding the provisions of Section 3.01, and except as
otherwise provided in this Article VII, no Provider or its Subsidiaries
or any of their respective directors, officers or employees, or any of the
heirs, executors, successors or assigns of any of the foregoing (each, a “Provider
Indemnified Party”), shall have any liability in contract, tort or
otherwise to the Recipient or its Subsidiaries or Representatives for or in
connection with (i) any Services rendered or to be rendered by any Provider
Indemnified Party pursuant to this Agreement, (ii) the transactions
contemplated by this Agreement, (iii) any Provider Indemnified Party’s actions
or inactions in connection with any such Services or transactions, or (iv) any
error of judgment or any mistake of fact or law or for anything that the
Provider or any of its Subsidiaries does or refrains from doing in good faith
hereunder; provided, however, that such limitation on liability
shall not extend to or otherwise limit any Liabilities that have resulted from
(a) such Provider Indemnified Party’s gross negligence or willful misconduct,
(b) a Provider’s breach of this Agreement or (c) the improper use or disclosure
of Information in connection with the transactions contemplated by this
Agreement or such Provider’s provision of the Services.

 

SECTION 7.02. 
Indemnification by Each Provider. 
Each Provider shall indemnify, defend and hold harmless each relevant
Recipient and each of its Subsidiaries and each of their respective directors,
officers and employees, and each of the heirs, executors, successors and assigns
of any of the foregoing (each a “Recipient Indemnified Party”), from and
against any and all Liabilities of the Recipient Indemnified Parties relating
to, arising out of, or resulting from (a) the gross negligence or willful
misconduct of a Provider in connection with the transactions contemplated by
this Agreement or such Provider’s provision of the Services, (b) a Provider’s
breach of this Agreement, or (c) Provider’s breach of Section 5.06 of
the Separation Agreement or the improper use of Information, in each case in
connection with the transactions contemplated by this Agreement or such
Provider’s provision of the Services; provided, that there shall be no
amount payable by a Provider pursuant to its indemnification obligations
hereunder unless and until the cumulative amount of all Liabilities determined
to have been

 

10

 

incurred by the Recipient
Indemnified Party that otherwise would be indemnifiable pursuant to this Section
7.02 exceeds $150,000, following which only any amount of such Liabilities
in excess of $150,000 shall become due and payable.

 

SECTION 7.03. 
Indemnification by Each Recipient.  Each Recipient shall indemnify, defend and
hold harmless each relevant Provider Indemnified Party from and against any and
all Liabilities of the Provider Indemnified Parties relating to, arising out
of, or resulting from (a) the gross negligence or willful misconduct of a
Recipient in connection with the transactions contemplated by this Agreement or
such Recipient’s use of the Services, (b) a Recipient’s breach of this
Agreement, or (c) Recipient’s breach of Sections 5.06 or 5.07 of
the Separation Agreement or the improper use or disclosure of Information, in
each case in connection with the transactions contemplated by this Agreement or
such Recipient’s receipt of the Services; provided, that there shall be
no amount payable by a Recipient pursuant to its indemnification obligations
hereunder unless and until the cumulative amount of all Liabilities determined
to have been incurred by the Provider Indemnified Party that otherwise would be
indemnifiable pursuant to this Section 7.03 exceeds $150,000, following
which only any amount of such Liabilities in excess of $150,000 shall become
due and payable.

 

SECTION 7.04. 
Indemnification Procedures. 
The matters set forth in Sections 3.04, 3.05 and 4.01
of the Indemnification Agreement shall be deemed incorporated into, and made a
part of, this Article VII.

 

SECTION 7.05. 
Limitation on Liability. 
Notwithstanding any other provision contained in this Agreement, neither
SG on the one hand, nor Cowen Group, on the other hand, shall be liable to the
other for any exemplary or punitive losses, damages or expenses of the other
arising from any claim relating to breach of this Agreement or otherwise
relating to any of the Services or Undertakings provided hereunder.  For clarification purposes only, the Parties
hereto agree that the limitation on liability contained in this Section 7.05
shall not apply to (a) damages awarded to a Third Party pursuant to a Third
Party claim for which a Provider is required to indemnify, defend and hold
harmless any Recipient Indemnified Party under Section 7.02 and (b)
damages awarded to a Third Party pursuant to a Third Party claim for which a
Recipient is required to indemnify, defend and hold harmless any Provider
Indemnified Party under Section 7.03.

 

SECTION 7.06. 
Liability for Payment Obligations.  Nothing in this Article VII shall be
deemed to eliminate or limit, in any respect, SG or Cowen Group’s express
obligation in this Agreement to pay or reimburse, as applicable, for (i)
Service Charges, (ii) Other Costs, (iii) amounts with respect to any custom
modification provided pursuant to Sections 2.02, (iv) amounts payable or
reimbursable pursuant to Section 4.04 (Taxes), (v) amounts payable or
reimbursable pursuant to Section 10.02 (Regulatory Approval and
Compliance) and (vii) amounts payable or reimbursable pursuant to Section
10.08 (Assignment; No Third Party Beneficiaries), nor to eliminate or
limit, in any respect, SG or Cowen Group’s express obligations to pay or
reimburse amounts pursuant to the Separation Agreement.

 

11

 

ARTICLE VIII

DISPUTE RESOLUTION

 

SECTION 8.01. 
Dispute Resolution.  The
Parties shall cooperate with each other in good faith to resolve all disputes,
controversies or claims between them arising out of, or relating to, this
Agreement.  Any dispute, controversy or
claim that cannot be resolved by the contact parties specified on the relevant
Schedule shall be referred to the Cowen Services Manager and the SG Services
Manager for review. If the Cowen Services Manager and the SG Services Manager
cannot resolve the dispute, then the dispute shall be referred to the SG
Americas Chief Executive Officer and Cowen Chief Executive Officer. Any
dispute, controversy or claim arising out of, or relating to, this Agreement
that can not be resolved through discussions between the SG Americas Chief
Executive Officer and Cowen Chief Executive Officer shall be resolved in
accordance with the requirements of Article VI of the Separation
Agreement.

 

ARTICLE IX

TERMINATION

 

SECTION 9.01. 
Termination Rights; Post-Termination Transition.  (a) 
The term of this Agreement shall commence on the date hereof and expire
on the first date on which neither SG or its Subsidiaries nor Cowen Group has
any further obligations to provide a Service or perform an Undertaking.  This Agreement shall terminate with respect
to each Service and Undertaking on the applicable Service Termination Date or
other termination date specified in this Agreement or the Schedules
hereto.  In addition:  (i) a Recipient may from time to time terminate
any Service, in whole and not in part, upon giving at least forty-five (45)
days’ (or such shorter period of time as is mutually agreed upon in writing by
the Parties) prior written notice to the Provider specifying which Service is
being so terminated and (ii) any Party (the “Non-Breaching Party”) may
terminate this Agreement with respect to any Service, in whole but not in part,
at any time upon prior written notice by the Non-Breaching Party to the other
Party (the “Breaching Party”) if the Breaching Party has failed to
perform any of its material obligations under this Agreement relating to such
Service, and such failure shall have continued without cure for a period of
fifteen (15) days after receipt by the Breaching Party of a written notice of
such failure from the Non-Breaching Party seeking to terminate such Service.

 

(b)                                 In addition to and not in limitation of the
rights and obligations set forth in Articles II, III and V,
upon the request of the Recipient of a Service, the Provider of such Service
will, during the term of this Agreement during which such Provider is providing
such Service to the Recipient, cooperate with the Recipient and use its good
faith, commercially reasonable efforts to assist the transition of such Service
to the Recipient (or Subsidiary of the Recipient or vendor designated by the
Recipient) by the Service Termination Date for such Service, except where, in
the case of the Services described on Schedules A-1, B-1, and B-2,
the Parties have reached a mutually acceptable agreement for the continued
provision of such Services on a stand-alone basis after December 31, 2006.

 

SECTION 9.02. 
Effect of Termination. 
Upon termination or expiration of any Service or Undertaking pursuant to
this Agreement, the relevant Provider will have no further obligation

 

12

 

to provide the terminated
Service or expired Undertaking, and the relevant Recipient will have no
obligation to pay any future Service Charges or Other Costs relating to any
such Service or Undertaking (other than for or in respect of Services or Undertakings
provided in accordance with the terms of this Agreement and received by such
Recipient prior to such termination).

 

SECTION 9.03. 
Survival.  (a) Article
IV (Billing; Taxes), Section 6.01 (Consents), Section 6.02
(Access), Article VII (Indemnification; Limitation on Liability), Article
VIII (Dispute Resolution), Section 9.02 (Effect of Termination), Section
9.03 (Survival), and Article X (General Provisions) shall survive
the expiration or other termination of this Agreement and remain in full force
and effect.

 

(b)                                 Force Majeure.  No
Party hereto shall be deemed in default of this Agreement to the extent that
any delay or failure in the performance of its obligations (other than a
payment obligation) under this Agreement results from any cause beyond its
reasonable control and without its fault or negligence, such as acts of God,
acts of Governmental Authority,
embargoes, epidemics, war, riots, insurrections, acts of terrorism, fires,
explosions, earthquakes, floods, unusually severe weather conditions, labor
problems or unavailability of parts, or, in the case of computer systems, any
failure in electrical or air conditioning equipment.  Each Party, upon learning of the occurrence
of any such force majeure event that would reasonably be expected to result in
a delay or failure in the performance of its obligations (other than a payment
obligation) under this Agreement, will promptly notify the other Party or
Parties hereto to which such obligations are owed, either in writing or orally;
provided that any such oral notification shall be confirmed in writing
as soon as practicable after being delivered. 
In the event of any such excused delay, the time for performance shall
be extended for a period equal to the time lost by reason of the delay.  If (x) Services are suspended as a result of
such excused delay, (y) the suspension has a material and negative impact on
Recipient’s business operations and (z) Provider cannot readily reinstate the
relevant Services, Provider will use commercially reasonable efforts to assist
Recipient in securing alternative services to minimize such negative impact on
Recipient.

 

ARTICLE X

GENERAL PROVISIONS

 

SECTION 10.01. 
Independent Contractors. 
In providing Services hereunder, the Provider shall act solely as independent
contractor and nothing in this Agreement shall constitute or be construed to be
or create a partnership, joint venture, or principal/agent relationship between
the Provider, on the one hand, and the Recipient, on the other.  All Persons employed by the Provider in the
performance of its obligations under this Agreement shall be the sole
responsibility of the Provider.

 

SECTION 10.02. 
Regulatory Approval and Compliance.  Each of the Parties shall be responsible for
its own compliance with any and all Laws applicable to its performance under
this Agreement; provided, however, that each of SG and Cowen Inc.
shall, subject to reimbursement of out-of-pocket expenses by the requesting
Party, cooperate and provide one another with all reasonably requested assistance
(including, without limitation, the execution of documents and the provision of
relevant information) required by the requesting Party to ensure

 

13

 

compliance with all
applicable laws in connection with any regulatory action, requirement, inquiry
or examination related to this Agreement or the Services.

 

SECTION 10.03. 
Confidential Information. 
Cowen Inc. agrees to maintain and safeguard all Information concerning
SG (or its business) and the SG Subsidiaries (or their respective businesses)
pursuant to Sections 5.06 and 5.07 of the Separation Agreement
and SG agrees to maintain and safeguard all Information concerning Cowen Inc.
(or its business) and the Cowen Inc. Subsidiaries (or their respective
businesses) pursuant to Sections 5.06 and 5.07 of the Separation
Agreement.  Each Party agrees that Sections
5.06 and 5.07 of the Separation Agreement are hereby incorporated by
reference into, and a made a part of, this Agreement.

 

SECTION 10.04. 
Counterparts; Entire Agreement; Corporate Power; Facsimile Signatures.

 

(a)                                  Counterparts.  This
Agreement may be executed in two or more counterparts, each of which when
executed shall be deemed to be an original but all of which taken together
shall constitute one and the same agreement.

 

(b)                                 Entire Agreement.  This
Agreement, the Separation Agreement, the other Transaction Documents and the
exhibits, schedules and annexes hereto and thereto contain the entire agreement
between the Parties with respect to the subject matter hereof and supersede all
previous agreements, negotiations, discussions, writings, understandings,
commitments and conversations with respect to such subject matter, and there
are no agreements or understandings between the Parties other than those set
forth or referred to herein or therein. 
Except as expressly provided in this Agreement, in the event and to the
extent that there is a conflict between the provisions of this Agreement and
the provisions of the Separation Agreement or any other Transaction Document,
the provisions of this Agreement shall control.

 

(c)                                  Corporate Power.  SG
represents on behalf of itself and, to the extent applicable, each SG
Subsidiary, and Cowen Inc. represents on behalf of itself and, to the extent
applicable, each Cowen Inc. Subsidiary, as follows:

 

(i)                                     each such Person has the requisite corporate
or other power and authority and has taken all corporate or other action
necessary in order to execute, deliver and perform this Agreement and to
consummate the transactions contemplated hereby; and

 

(ii)                                  this Agreement has been duly executed and
delivered by it and constitutes a valid and binding agreement of it enforceable
in accordance with the terms thereof.

 

(d)                                 Facsimile Signatures.  Each
Party acknowledges that it and the other Parties may execute this Agreement by
facsimile, stamp or mechanical signature. 
Each Party expressly adopts and confirms each such facsimile, stamp or
mechanical signature made in its respective name as if it were a manual
signature and agrees that it shall not assert that any such signature is not
adequate to bind such Party to the same extent as if it were signed manually.

 

SECTION 10.05. 
Governing Law.  This
Agreement shall be governed by and construed and interpreted in accordance with
the laws of the State of New York irrespective of the choice

 

14

 

of laws principles of the
State of New York, as to all matters, including matters of validity,
construction, effect, enforceability, performance and remedies.

 

SECTION 10.06. 
Notices.  All notices or
other communications under this Agreement or any Transaction Document (except
as otherwise provided therein) must be in writing and shall be deemed to be
duly given: (a) when delivered in person; (b) upon transmission via confirmed
facsimile transmission, provided that such transmission is followed by delivery
of a physical copy thereof in person, via U.S. first class mail, or via a
private express mail courier; or (c) two days after deposit with a private
express mail courier, in any such case addressed as follows:

 

If to SG:

 

Société
Générale

1221
Avenue of the Americas

New York, New York 10020

Attn:  General Counsel, SG Americas

Facsimile:
 (212) 278-7432

 

With
a copy to:

 

Mayer,
Brown, Rowe & Maw LLP

1675 Broadway

New York, New York  10019

Attn:  James B. Carlson

Facsimile:  (212) 262-1910

 

If
to Cowen Group:

 

Cowen
Group, Inc.

1221 Avenue of the Americas

New York, New York 10020

Attn:  General Counsel

Facsimile:  (646) 562-1861

 

With
a copy to:

 

Skadden, Arps, Slate, Meagher & Flom LLP

Four Times Square

New York, NY  10036

Attn:                Lou
R. Kling

Thomas W. Greenberg

Facsimile: 
(212) 735-2000

 

Any
Party may, by notice to the other Parties, change the address to which such
notices are to be given.

 

15

 

SECTION 10.07. 
Severability.  If any
provision of this Agreement or any Transaction Document or the application
thereof to any Person or circumstance is determined by a court of competent
jurisdiction to be invalid, void or unenforceable, the remaining provisions
hereof, or the application of such provision to Persons or circumstances or in
jurisdictions other than those as to which it has been held invalid or
unenforceable, shall remain in full force and effect and shall in no way be
affected, impaired or invalidated thereby, so long as the economic or legal
substance of the transactions contemplated hereby or thereby, as the case may
be, is not affected in any manner adverse to any Party.  Upon such determination, the Parties shall
negotiate in good faith in an effort to agree upon a suitable and equitable
provision to effect the original intent of the Parties.

 

SECTION
10.08.  Assignability; No Third-Party
Beneficiaries.

 

(a)                                  Subject to the other provisions of this Section
10.08, this Agreement shall not be assigned by any Party without the prior
written consent of the other Parties.

 

(b)                                 In the event Cowen Group sells a Cowen
Subsidiary or all or part of the Cowen Business (in each case, a “Cowen
Divested Unit”) to a Third Party, SG shall not remain obligated to continue
to provide SG Services to such Cowen Divested Unit (or such Third Party
acquirer) pursuant to the terms of this Agreement, unless otherwise agreed upon
by the Parties.  In the event SG sells a
SG Subsidiary or all or part of the SG Business (in each case, a “SG
Divested Unit”) to a Third Party, Cowen Group shall not remain obligated to
continue to provide Cowen Services to such SG Divested Unit (or such Third
Party acquirer) pursuant to the terms of this Agreement, unless otherwise
agreed upon by the Parties.

 

(c)                                  In the event Cowen Group acquires a business
or portion thereof by merger, stock purchase, asset purchase or other means (a
“Cowen Acquired Business”), then SG and the SG Subsidiaries shall not be
obligated to provide the SG Services to such Cowen Acquired Business pursuant
to the terms of this Agreement, unless otherwise agreed upon by the
Parties.  In the event SG or any SG
Subsidiary acquires a business or portion thereof by merger, stock purchase,
asset purchase or other means (an “SG Acquired Business”), then Cowen
Inc. and the Cowen Inc. Subsidiaries shall not be obligated to provide the
Cowen Services to such SG Acquired Business pursuant to the terms of this
Agreement, unless otherwise agreed upon by the Parties.

 

(d)                                 Except as provided in Article VII with
respect to Provider Indemnified Parties and Recipient Indemnified Parties, this
Agreement is for the sole benefit of the Parties to this Agreement and their
permitted successors and assigns and nothing in this Agreement, express or
implied, is intended to or shall confer upon any other Person any legal or
equitable right, benefit or remedy of any nature whatsoever under or by reason
of this Agreement.

 

SECTION 10.09. 
Subsidiaries.  SG shall
cause to be performed, and hereby guarantees the performance of, all actions,
agreements and obligations set forth herein to be performed by any SG
Subsidiary and Cowen Inc. shall cause to be performed, and hereby guarantees
the performance of, all actions, agreements and obligations set forth herein to
be performed by any Cowen Inc. Subsidiary.

 

16

 

SECTION 10.10. 
Waivers.  The observance of
any term of this Agreement may be waived (either generally or in a particular
instance and either retroactively or prospectively) by the Party entitled to
enforce such term, but such waiver shall be effective only if it is in writing
and signed by the Party against whom the existence of such waiver is asserted.  Unless otherwise expressly provided in this
Agreement, no delay or omission on the part of any Party in exercising any
right or privilege under this Agreement shall operate as a waiver thereof, nor
shall any waiver on the part of any Party of any right or privilege under this
Agreement operate as a waiver of any other right or privilege under this
Agreement nor shall any single or partial exercise of any right or privilege
preclude any other or further exercise thereof or the exercise of any other right
or privilege under this Agreement.  No
failure by any Party to take any action or assert any right or privilege
hereunder shall be deemed to be a waiver of such right or privilege in the
event of the continuation or repetition of the circumstances giving rise to
such right unless expressly waived in writing by the Party against whom the
existence of such waiver is asserted.

 

SECTION 10.11. 
Amendments.  No provisions
of this Agreement shall be deemed amended, supplemented or modified unless such
amendment, supplement or modification is in writing and signed by an authorized
representative of each of the Parties hereto.

 

SECTION 10.12. 
Interpretation.  Words in
the singular in this Agreement shall be deemed to include the plural and vice
versa and words of one gender shall be deemed to include the other genders as
the context requires.  The terms
“hereof,” “herein,” and “herewith” and words of similar import shall, unless
otherwise stated, be construed to refer to this Agreement as a whole (including
all of the Schedules and Exhibits hereto) and not to any particular provision
of this Agreement.  Article, Section,
Exhibit and Schedule references are to the Articles, Sections, Exhibits, and
Schedules to this Agreement unless otherwise specified.  Unless otherwise stated, all references to
any agreement shall be deemed to include the exhibits, schedules and annexes to
such agreement.  The word “including” and
words of similar import when used in this Agreement shall mean “including,
without limitation,” unless the context otherwise requires or unless otherwise
specified.  The word “or” shall not be
exclusive.  Unless otherwise specified in
a particular case, the word “days” refers to calendar days.  References herein to this Agreement or any
Transaction Document shall be deemed to refer to this Agreement or such
Transaction Document as of the date it is executed and as it may be amended
thereafter, unless otherwise specified. 
References to the performance, discharge or fulfillment of any Liability
in accordance with its terms shall have meaning only to the extent such
Liability has terms; if the Liability does not have terms, the reference shall
mean performance, discharge or fulfillment of such Liability.

 

SECTION 10.13. 
Mutual Drafting.  This
Agreement shall be deemed to be the joint work product of the Parties and any
rule of construction that a document shall be interpreted or construed against
a drafter of such document shall not be applicable.

 

 

* * * * *

 

17

 

IN
WITNESS WHEREOF, the Parties have caused this Agreement to be executed by their
respective duly authorized officers as of the date first written above.

 

 

	
   

  	
  SOCIÉTÉ GÉNÉRALE

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/ Jean-Philippe Coulier

  	
   

  
	
   

  	
   

  	
  Name: Jean-Philippe Coulier

  
	
   

  	
   

  	
  Title:   Chief Operating
  Officer, Americas

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  SG AMERICAS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/ Jean-Philippe Coulier

  	
   

  
	
   

  	
   

  	
  Name: Jean-Philippe Coulier

  
	
   

  	
   

  	
  Title:   Vice President

  
	
   

  	
   

  
	
   

  	
  SG AMERICAS SECURITIES HOLDINGS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/ Jean-Philippe Coulier

  	
   

  
	
   

  	
   

  	
  Name: Jean-Philippe Coulier

  
	
   

  	
   

  	
  Title:   President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  COWEN AND COMPANY, LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/ Christopher A. White

  	
   

  
	
   

  	
   

  	
  Name: Christopher A. White

  
	
   

  	
   

  	
  Title:   Chief Administrative
  Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  COWEN GROUP, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/ Christopher A. White

  	
   

  
	
   

  	
   

  	
  Name: Christopher A. White

  
	
   

  	
   

  	
  Title:   Vice President

  

 

 

Transition Services Agreement

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