Document:

Exhibit 10.9 -- 1996 Equity Incentive Plan

 Exhibit 10.9 
 LEGG MASON, INC. 
 1996 EQUITY INCENTIVE PLAN 
 (As Amended July 27, 1999, July 20, 2004 and March 28, 2006) 
 1. Purpose 
 The purpose of the Plan
is to provide motivation to Key Employees of the Company and its Subsidiaries to put forth maximum efforts toward the continued growth, profitability, and success of the Company and its Subsidiaries by providing incentives to such Key Employees
through the ownership and performance of the Common Stock or Common Stock derivatives of the Company. Toward this objective, the Committee may grant stock options, stock appreciation rights, Stock Awards, performance units, performance shares,
and/or other incentive awards to Key Employees of the Company and its Subsidiaries on the terms and subject to the conditions set forth in the Plan. 
 2. Definitions 
 2.1 “Award” means any form of stock option, stock appreciation
right, Stock Award, performance unit, performance shares or other incentive award granted under the Plan, whether individually, in combination, or in tandem, to a Participant by the Committee pursuant to such terms, conditions, restrictions, and/or
limitations, if any, as the Committee may establish by the Award Notice or otherwise. 
 2.2 “Award Notice” means a written
notice from the Company to a Participant that establishes the terms, conditions, restrictions, and/or limitations applicable to an Award in addition to those established by this Plan and by the Committee’s exercise of its administrative powers.

 2.3 “Board” means the Board of Directors of the Company. 
 2.4 “Code” means the Internal Revenue Code of 1986, as amended from time to time. 
 2.5 “Committee” means the Compensation Committee of the Board, or such other committee designated by the Board, authorized to administer
the Plan under paragraph 3 hereof. So long as required by law, the Committee shall consist of not less than two members, each of whom shall be a “disinterested person” within the meaning of Rule 16b-3 promulgated under Section 16 of
the Exchange Act and an “outside director” within the meaning of Section 162(m) of the Code and related Treasury regulations. The Committee shall from time to time designate the Key Employees who shall be eligible for Awards pursuant
to this Plan. 
 2.6 “Common Stock” means common stock, par value $.10 per share, of the Company. 
 2.7 “Company” means Legg Mason, Inc. 

 2.8 “Exchange Act” means the Securities Exchange Act of 1934, as amended. 
 2.9 “Key Employee” means officers of the Company or a Subsidiary and any other employee of the Company or a Subsidiary so designated by
the Committee. 
 2.10 “Participant” means any individual to whom an Award has been granted by the Committee under this
Plan. 
 2.11 “Plan” means the Legg Mason, Inc. 1996 Equity Incentive Plan. 
 2.12 “Stock Award” means an award granted pursuant to paragraph 10 hereof in the form of shares of Common Stock, Common Stock
derivatives, restricted shares of Common Stock, and/or Units of Common Stock. 
 2.13 “Subsidiary” means a corporation or
other business entity in which the Company directly or indirectly has an ownership interest of 50 percent or more. 
 2.14 “Unit”
means a bookkeeping entry used by the Company to record and account for the grant of the following Awards until such time as the Award is paid, cancelled, forfeited or terminated, as the case may be: Units of Common Stock, performance units, and
performance shares which are expressed in terms of Units of Common Stock. 
 3. Administration 
 The Plan shall be administered by the Committee. The Committee shall have the authority to (a) interpret the Plan and make factual determinations;
(b) establish or amend such rules and regulations as it deems necessary for the proper operation and administration of the Plan; (c) select Key Employees to receive Awards under the Plan; (d) determine the form of an Award, whether a
stock option, stock appreciation right, Stock Award, performance unit, performance share, or other incentive award established by the Committee in accordance with clause (h) below, the number of shares or Units subject to the Award, all the
terms, conditions, restrictions and/or limitations, if any, of an Award, including the time and conditions of exercise or vesting, and the terms of any Award Notice, which may include the waiver or amendment of prior terms and conditions or
acceleration or early vesting or payment of an Award under certain circumstances determined by the Committee; (e) determine whether Awards will be granted individually, in combination or in tandem; (f) grant waivers of Plan terms,
conditions, restrictions, and limitations; (g) accelerate the vesting, exercise, or payment of an Award or the performance period of an Award when such action or actions would be in the best interest of the Company; (h) establish such
other types of Awards, besides those specifically enumerated in paragraph 2.1 hereof, which the Committee determines are consistent with the Plan’s purpose; and (i) take any and all other action it deems necessary or advisable for the
proper operation or administration of the Plan. All determinations of the Committee shall be made by a majority of its members, and its determinations shall be final, binding and conclusive. All actions required of the Committee under the Plan shall
be made in the Committee’s sole discretion, not in a fiduciary capacity and need not be uniformly applied to other persons, including similarly 

  

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situated persons. The Committee, in its discretion, may delegate its authority and duties under the Plan to the Chief Executive Officer and/or to other
senior officers of the Company under such conditions and/or subject to such limitations as the Committee may establish; provided, however, that only the Committee may select and grant Awards to Participants who are subject to Section 16 of the
Exchange Act or to whom Section 162(m) of the Code applies. 
 4. Eligibility 
 Any Key Employee is eligible to become a Participant of the Plan. 
 5. Shares Available 
 The maximum number of shares of Common Stock, $0.10 par value per share, of the
Company which shall be available for grant of Awards under the Plan (including incentive stock options) during its term shall not exceed 16,000,000 (such amount shall be subject to adjustment as provided in paragraph 20 for events occurring after
July 27, 1999). Notwithstanding anything in the Plan to the contrary, the maximum aggregate number of shares of Common Stock that shall be granted under the Plan to any one individual during any calendar year shall be 250,000. (Such amount
shall be subject to adjustment as provided in paragraph 20.) Any shares of Common Stock related to Awards which terminate by expiration, forfeiture, cancellation or otherwise without the issuance of shares, are settled in cash in lieu of Common
Stock, or are exchanged in the Committee’s discretion for Awards not involving Common Stock, shall be available again for grant under the Plan. Further, any shares of Common Stock which are used by a Participant for the full or partial payment
to the Company of the purchase price of shares of Common Stock upon exercise of a stock option, or for any withholding taxes due as a result of such exercise, shall again be available for Awards under the Plan. Similarly, shares of Common Stock with
respect to which a stock appreciation right (“SAR”) has been exercised and paid in cash shall again be available for grant under the Plan. The shares of Common Stock available for issuance under the Plan may be authorized and unissued
shares or treasury shares. 
 6. Term 
 The Plan shall become effective as of April 18, 1996, subject to its approval by the Company’s shareholders at the 1996 Annual Meeting. No Awards shall be exercisable or payable before approval of the Plan
has been obtained from the Company’s shareholders. Awards shall not be granted pursuant to the Plan after April 20, 2014. 
 7.
Participation 
 The Committee shall select, from time to time, Participants from those Key Employees who, in the opinion of the
Committee, can further the Plan’s purposes. Once a Participant is so selected, the Committee shall determine the type or types of Awards to be made to the Participant and shall establish in the related Award Notices the terms, conditions,
restrictions and/or limitations, if any, applicable to the Awards in addition to those set forth in this Plan and the administrative rules and regulations issued by the Committee. 
  

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 8. Stock Options 
 (a) Grants. Awards may be granted in the form of stock options to purchase Common Stock or Common Stock derivatives. These stock options may be incentive stock options within the meaning of Section 422 of
the Code or non-qualified stock options (i.e., stock options which are not incentive stock options), or a combination of both. 
 (b)
Terms and Conditions of Options. An option shall be exercisable in whole or in such installments and at such times as may be determined by the Committee. The price at which Common Stock may be purchased upon exercise of a stock option shall
be established by the Committee, but such price shall not be less than 50 percent of the fair market value of the Common Stock, as determined by the Committee, on the date of the stock option’s grant. 
 (c) Restrictions Relating to Incentive Stock Options. Stock options issued in the form of incentive stock options shall, in addition to being
subject to all applicable terms, conditions, restrictions and/or limitations established by the Committee, comply with Section 422 of the Code. Accordingly, to the extent that the aggregate fair market value (determined at the time the option
was granted) of the Common Stock with respect to which incentive stock options are exercisable for the first time by a Participant during any calendar year (under this Plan or any other plan of the Company or any of its Subsidiaries) exceeds
$100,000 (or such other limit as may be required by the Code), then such option as to the excess shall be treated as a nonqualified stock option. Further, the per share option price of an incentive stock option shall not be less than 100 percent of
the fair market value of the Common Stock, as determined by the Committee, on the date of the grant. An incentive stock option shall not be granted to any Participant who is not an employee of the Company or any “subsidiary” (within the
meaning of section 424(f) of the Code). An incentive stock option shall not be granted to any employee who, at the time of grant, owns stock possessing more than 10 percent of the total combined voting power of all classes of stock of the Company or
any “parent” or “subsidiary” of the Company (within the meaning of section 424(f) of the Code), unless the purchase price per share is not less than 110% of the fair market value of Common Stock on the date of grant and the
option exercise period is not more than five years from the date of grant. Otherwise, each option shall expire not later than ten years from its date of grant. 
 (d) Additional Terms and Conditions. The Committee may, by way of the Award Notice or otherwise, establish such other terms, conditions, restrictions and/or limitations, if any, of any stock option Award,
provided they are not inconsistent with the Plan. 
 (e) Exercise. Upon exercise, the option price of a stock option may be paid
(i) in cash or by check, bank draft or money order payable to the order of the Company; (ii) in shares of Common Stock or shares of restricted Common Stock as to which restrictions have lapsed; (iii) a combination of the foregoing; or
(iv) such other consideration as the Committee may deem appropriate. Subject to the discretion of the Committee, any option granted under the Plan may be exercised by a broker-dealer acting on behalf of a Participant if (i) the
broker-dealer has received from the Participant or the Company a fully- and duly-endorsed agreement evidencing 
  

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 such option and instructions signed by the Participant requesting the Company to deliver the shares of Common Stock
subject to such option to the broker-dealer on behalf of the Participant and specifying the account into which such shares should be deposited, (ii) adequate provision has been made with respect to the payment of any withholding taxes due upon
such exercise or, in the case of an incentive stock option, the disposition of such shares and (iii) the broker-dealer and the Participant have otherwise complied with Section 220.3(e)(4) of Regulation T, 12 CFR Part 220 and any successor
rules and regulations applicable to such exercise. The Committee shall establish appropriate methods for accepting Common Stock, whether restricted or unrestricted, and may impose such conditions as it deems appropriate on the use of such Common
Stock to exercise a stock option. 
 (f) Rule 16b-3 Restrictions. A Participant who is a director or officer subject to
Section 16 of the Exchange Act shall be required to exercise stock options in accordance with the requirements of Rule 16b-3 under the Exchange Act, as such Rule may be amended from time to time. 
 9. Stock Appreciation Rights 
 (a)
Grants. Awards may be granted in the form of stock appreciation rights (“SARs”). An SAR may be granted in tandem with all or a portion of a related stock option under the Plan (“Tandem SARs”), or may be granted separately
(“Freestanding SARs”). A Tandem SAR may be granted either at the time of the grant of the related stock option or at any time thereafter during the term of the stock option. SARs shall entitle the recipient to receive a payment equal to
the appreciation in market value of a stated number of shares of Common Stock from the exercise price to the market value on the date of exercise. In the case of SARs granted in tandem with stock options granted prior to the grant of such SARs, the
appreciation in value is from the option price of such related stock option to the market value on the date of exercise. No SAR may be exercised for cash by an officer or director of the Company who is subject to Section 16 of the Exchange Act,
except in accordance with Rule 16b-3 under the Exchange Act, as such Rule may be amended from time to time. 
 (b) Terms and Conditions of
Tandem SARS. A Tandem SAR shall be exercisable to the extent, and only to the extent, that the related stock option is exercisable, and the “exercise price” of such an SAR (the base from which the value of the SAR is measured at its
exercise) shall be the option price under the related stock option. However, at no time shall a Tandem SAR be issued if the option price of its related stock option is less than 50 percent of the fair market value of the Common Stock, as determined
by the Committee, on the date of the Tandem SAR’s grant. If a related stock option is exercised as to some or all of the shares covered by the Award, the related Tandem SAR, if any, shall be cancelled automatically to the extent of the number
of shares covered by the stock option exercise. Upon exercise of a Tandem SAR as to some or all of the shares covered by the Award, the related stock option shall be cancelled automatically to the extent of the number of shares covered by such
exercise, and such shares shall again be eligible for grant in accordance with paragraph 5 hereof, except to the extent any shares of Common Stock are issued to settle the SAR. 
  

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 (c) Terms and Conditions of Freestanding SARS. Freestanding SARs shall be exercisable in whole or
in such installments and at such times as may be determined by the Committee and designated in the Award Notice. The exercise price of a Freestanding SAR shall also be determined by the Committee; provided, however, that such price shall not be less
than 50 percent of the fair market value of the Common Stock, as determined by the Committee, on the date of the Freestanding SAR’s grant. 
 (d) Deemed Exercise. The Committee may provide that an SAR shall be deemed to be exercised at the close of business on the scheduled expiration date of such SAR, if at such time the SAR by its terms remains exercisable and, if
exercised, would result in a payment to the holder of such SAR. 
 (e) Additional Terms and Conditions. The Committee may, by way of
the Award Notice or otherwise, determine such other terms, conditions, restrictions and/or limitations, if any, of any SAR Award, provided they are not inconsistent with the Plan. 
 10. Stock Awards 
 (a) Grants.
Awards may be granted in the form of Stock Awards. Stock Awards may consist of grants of Common Stock or Common Stock derivatives, and may be granted either for consideration or for no consideration, as determined in the sole discretion of the
Committee. Stock Awards shall be awarded in such numbers and at such time during the term of the Plan as the Committee shall determine. 
 (b) Terms and Conditions of Awards. Stock Awards shall be subject to such terms, conditions, restrictions, and/or limitations, if any, as the Committee deems appropriate including, but not by way of limitation, restrictions on
transferability and continued employment. The Committee may modify or accelerate the delivery of a Stock Award under such circumstances as it deems appropriate, unless the Stock Award is subject to the provisions of paragraph 13. 
 (c) Rights as Shareholders. During the period in which any restricted shares of Common Stock are subject to the restrictions imposed under
paragraph 10(b), the Committee may, in its discretion, grant to the Participant to whom such restricted shares have been awarded all or any of the rights of a shareholder with respect to such shares, including, but not by way of limitation, the
right to vote such shares and to receive dividends. 
 (d) Evidence of Award. Any Stock Award granted under the Plan may be evidenced
in such manner as the Committee deems appropriate, including, without limitation, book-entry registration or issuance of a stock certificate or certificates. 
 11. Performance Units 
 (a) Grants. Awards may be granted in the form of performance units.
Performance units, as that term is used in this Plan, shall refer to Units valued by reference to designated criteria established by the Committee, other than Common Stock. 
  

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 (b) Performance Criteria. Performance units shall be contingent on the attainment during a
performance period of certain performance objectives. The length of the performance period, the performance objectives to be achieved during the performance period, and the measure of whether and to what degree such objectives have been attained
shall be conclusively determined by the Committee in the exercise of its absolute discretion. Subject to the requirements of paragraph 13, if applicable, performance objectives may be revised by the Committee, at such times as it deems appropriate
during the performance period, in order to take into consideration any unforeseen events or changes in circumstances. 
 (c) Additional
Terms and Conditions. The Committee may, by way of the Award Notice or otherwise, determine such other terms, conditions, restrictions, and/or limitations, if any, of any Award of performance units, provided they are not inconsistent with the
Plan. 
 12. Performance Shares 
 (a) Grants. Awards may be granted in the form of performance shares. Performance shares, as that term is used in this Plan, shall refer to shares of Common Stock or Units which are expressed in terms of Common Stock. 
 (b) Performance Criteria. Performance shares shall be contingent upon the attainment during a performance period of certain performance
objectives. The length of the performance period, the performance objectives to be achieved during the performance period, and the measure of whether and to what degree such objectives have been attained shall be conclusively determined by the
Committee in the exercise of its absolute discretion. Subject to the requirements of paragraph 13, if applicable, performance objectives may be revised by the Committee, at such times as it deems appropriate during the performance period, in order
to take into consideration any unforeseen events or changes in circumstances. 
 (c) Additional Terms and Conditions. The Committee
may, by way of the Award Notice or otherwise, determine such other terms, conditions, restrictions and/or limitations, if any, of any Award of performance shares, provided they are not inconsistent with the Plan. 
 13. Provisions Applicable to Section 162(m) Participants 
 (a) Designation of Participants and Goals. Within 90 days after the start of each fiscal year (or by such other time as may be required or permitted by Section 162(m) of the Code), the Committee shall, in
writing: (i) designate the Participants for whom the grant of Stock Awards, performance units, or performance shares (and the entitlement to dividends or dividend equivalents with respect to such Awards, if any), or the forgiveness of any loan
pursuant to paragraph 14, shall be subject to this paragraph 13; (ii) select the performance goal or goals applicable to the fiscal year or years included within any performance period; (iii) establish the 
  

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 number or amount of Stock Awards, performance units and performance shares which may be earned or the amount of any loan
which may be forgiven, for such year or such years within a performance period by each such Participant; (iv) specify the relationship between performance goals and the amount or number of Stock Awards, performance units or performance shares
to be earned by each such Participant, or the amount of the forgiveness of any loan made under paragraph 14, for such year or period and (v) the method for computing the amount or number of Stock Awards, performance units or performance shares
payable, or the amount of any loan which may be forgiven, if the performance goals are attained. 
 The Committee may specify that the amount
or number of Stock Awards, performance units and performance shares (and the entitlement to dividends or dividend equivalents with respect to such Awards, if any) will be earned, or that the amount of any loan will be forgiven, if the applicable
target is achieved for one goal or for any one of a number of goals for a fiscal year or years within a performance period. The Committee may also provide that the amount or number of Stock Awards, performance units and performance shares to be
earned, or the amount of any loan forgiven, for a given fiscal year or years within a performance period will vary based upon different levels of achievement of the applicable performance targets. 
 (b) Performance Criteria. For purposes of this paragraph 13, performance goals shall be limited to one or more of the following: (i) future
economic value per share of Common Stock, (ii) earnings per shares, (iii) return on average common equity, (iv) pre-tax income, (v) pre-tax operating income, (vi) net revenue, (vii) net income, (viii) profits
before taxes, (ix) book value per share, (x) stock price and (xi) earnings available to common stockholders. 
 (c) Annual
Payment. Following the completion of each fiscal year or completion of a performance period, the Committee shall certify in writing whether the applicable performance goals have been achieved for such year or performance period and the amount or
number of Stock Awards, performance shares or performance units, if any, payable to a Participant or the amount of any loan forgiven with respect to a Participant for such fiscal year or performance period. The amounts due to a Participant to whom
this paragraph 13 applies will be paid following the end of the applicable fiscal year or performance period after such certification by the Committee. In determining the amount due to a Participant, or the amount of any loan forgiven on with
respect to a Participant, to whom this paragraph applies for a given fiscal year or performance period, the Committee shall have the right to reduce (but not to increase) the amount payable or forgiven at a given level of performance to take into
account additional factors that the Committee may deem relevant to the assessment of individual or corporate performance for the year. 
 (d)
Restrictions. Anything in this paragraph 13 to the contrary notwithstanding, the maximum annual amount that may be paid to a Participant or the maximum amount of any loan that may be forgiven under the Plan for (i) the fiscal year in
which the Plan is approved by the Stockholders of the Company shall equal no more than $2,000,000 and (ii) each subsequent fiscal year shall equal 110% of such maximum amount for the preceding fiscal year; provided that the maximum annual
amount determined under this paragraph 13 shall be determined without regard to the value of any stock options granted to a Participant under the Plan. 
  

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 (e) Adjustment for Non-Recurring Items, Etc. Notwithstanding anything herein to the contrary, if
the Company’s financial performance is affected by any event that is of a non-recurring nature, the Committee in its sole discretion may make such adjustments in the financial criteria as it shall determine to be equitable and appropriate in
order to make the calculations of Awards, as nearly as may be practicable, equivalent to the calculation that would have been made without regard to such event. In the event of a significant change of the business or assets of the Company under
circumstances involving an acquisition or a merger, consolidation or similar transaction, the Committee shall, in good faith, recommend to the Board for approval such revisions to the financial criteria and the other terms and conditions used in
calculating Awards for the then current Plan Year as it reasonably deems appropriate in light of any such change. 
 (f) Repeal of
Section 162(m). Without further action by the Board, the provisions of this paragraph 13 shall cease to apply on the effective date of the repeal of Section 162(m) of the Code (and any successor provision thereto). 
 14. Loans 
 The Committee may
authorize the making of loans or cash payments to Participants in connection with any Award under the Plan, the exercise of a stock option or the payment of consideration in connection with a Stock Award, which loan may be secured by any security,
including Common Stock or Common Stock derivatives, underlying or related to such Award or payment (provided that such loan shall not exceed the fair market value of the security subject to such Award or so purchased), and which may be forgiven upon
such terms and conditions as the Committee may establish at the time of such loans or at any time thereafter, including the attainment of a performance goal or goals pursuant to paragraph 13. 
 15. Payment of Awards 
 At the
discretion of the Committee, payment of Awards may be made in cash, Common Stock, Common Stock derivatives, a combination of any of the foregoing, or any other form of property as the Committee shall determine; provided that, unless otherwise
expressly stated in the Award Notice for a specific Award and other than payments for partial shares of Common Stock, all Awards that are stock options, stock settled SARs, Stock Awards (including restricted shares of Common Stock) and performance
units or performance shares payable in shares of Common Stock shall be paid in shares of Common Stock or Common Stock derivatives and not cash or any other form of property. In addition, payment of Awards may include such terms, conditions,
restrictions, and/or limitations, if any, as the Committee deems appropriate, including, in the case of Awards paid in the form of Common Stock, restrictions on transfer and forfeiture provisions. Further, payment of Awards may be made in the form
of a lump sum or installments, as determined by the Committee. 
  

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 16. Dividends and Dividend Equivalents 
 If an Award is granted in the form of a Stock Award, stock option, or performance share, or in the form of any other stock-based grant, the Committee may
choose, at the time of the grant of the Award or any time thereafter up to the time of the Award’s payment, to include as part of such Award an entitlement to receive dividends or dividend equivalents, subject to such terms, conditions,
restrictions, and/or limitations, if any, as the Committee may establish. Dividends and dividend equivalents shall be paid in such form and manner (i.e., lump sum or installments), and at such time as the Committee shall determine. All dividends or
dividend equivalents which are not paid currently may, at the Committee’s discretion, accrue interest, be reinvested into additional shares of Common Stock or, in the case of dividends or dividend equivalents credited in connection with
performance shares, be credited as additional performance shares and paid to the Participant if and when, and to the extent that, payment is made pursuant to such Award. 
 17. Deferral of Awards 
 At the discretion of the Committee, payment of a Stock Award, performance
share, performance unit, dividend, dividend equivalent, or any portion thereof may be deferred by a Participant until such time as the Committee may establish. All such deferrals shall be accomplished by the delivery of a written, irrevocable
election by the Participant at least six months (and in the calendar year) prior to such time payment would otherwise be made, on a form provided by the Company. Further, all deferrals shall be made in accordance with administrative guidelines
established by the Committee to ensure that such deferrals comply with all applicable requirements of the Code and its regulations. Deferred payments shall be paid in a lump sum or installments, as determined by the Committee. The Committee may also
credit interest, at such rates to be determined by the Committee, on cash payments that are deferred and credit dividends or dividend equivalents on deferred payments denominated in the form of Common Stock. 
 18. Termination of Employment 
 If a
Participant’s employment with the Company or a Subsidiary terminates for a reason other than death, disability, retirement, or any approved reason, all unexercised, unearned, and/or unpaid Awards, including, but not by way of limitation, Awards
earned, but not yet paid, all unpaid dividends and dividend equivalents, and all interest accrued on the foregoing shall be cancelled or forfeited, as the case may be, unless the Participant’s Award Notice provides otherwise. The Committee
shall have the authority to promulgate rules and regulations to (i) determine what events constitute disability, retirement, or termination for an approved reason for purposes of the Plan, and (ii) determine the treatment of a Participant
under the Plan in the event of his death, disability, retirement, or termination for an approved reason. Notwithstanding the foregoing, and to the extent that an incentive stock option is not treated as a nonqualified stock option by the Committee
or under the terms of the Plan, an incentive stock option may not be exercisable more than 90 days after the date the Participant terminates employment for any reason; provided, however, that if the Participant terminates employment because of a
disability, the incentive stock option may not be exercised more than one year after the date of such termination. 
  

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 19. Nonassignability 
 Unless the Committee determines otherwise, no stock options, SARs, performance shares or other derivative securities (as defined in the rules and regulations promulgated under Section 16 of the Exchange Act)
awarded under the Plan shall be subject in any manner to alienation, anticipation, sale, transfer, assignment, pledge, or encumbrance, except for transfers by will or the laws of descent and distribution; provided, however, that the Committee may,
subject to such terms and conditions as the Committee shall specify, permit the transfer of an Award to a Participant’s family members or to one or more trusts established in whole or in part for the benefit of one or more of such family
members; provided, further, that the restrictions in this sentence shall not apply to the shares of Common Stock received in connection with an Award after the date that the restrictions on transferability of such shares set forth in the applicable
Award Notice have lapsed. During the lifetime of the Participant, an Option, SAR, or similar-type other award shall be exercisable only by him or by the family member or trust to whom such Option, SAR, or other Award has been transferred in
accordance with the previous sentence. 
 20. Adjustment of Shares Available 
 If there is any change in the number of outstanding shares of Common Stock through the declaration of stock dividends, stock splits or the like, the
number of shares available for Awards, the shares subject to any Award and the option prices or exercise prices of Awards shall be automatically adjusted. If there is any change in the number of outstanding shares of Common Stock through any change
in the capital account of the Company, or through any other transaction referred to in Section 424(a) of the Code, the Committee shall make appropriate adjustments in the maximum number of shares of Common Stock which may be issued under the
Plan and any adjustments and/or modifications to outstanding Awards as it deems appropriate. In the event of any other change in the capital structure or in the Common Stock of the Company, the Committee shall also be authorized to make such
appropriate adjustments in the maximum number of shares of Common Stock available for issuance under the Plan and any adjustments and/or modifications to outstanding Awards as it deems appropriate. 
 21. Withholding Taxes 
 The Company
shall be entitled to deduct from any payment under the Plan, regardless of the form of such payment, the amount of all applicable income and employment taxes required by law to be withheld with respect to such payment or may require the Participant
to pay to it such tax prior to and as a condition of the making of such payment. In accordance with any applicable administrative guidelines it establishes, the Committee may allow a Participant to pay the amount of taxes required by law to be
withheld from an Award by withholding from any payment of Common Stock due as a result of such Award, or by permitting the Participant to deliver to the Company, shares of Common Stock, having a fair market value, as determined by the Committee,
equal to the amount of such required withholding taxes; provided that if the Participant is a director or officer who is subject to Section 16 of the Exchange Act, the withholding of shares of Common Stock must be made in compliance with Rule
16b-3 under the Exchange Act. 
  

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 22. Noncompetition Provision 
 Unless the Award Notice specifies otherwise, a Participant shall forfeit all unexercised, unearned, and/or unpaid Awards, including, but not by way of
limitation, Awards earned but not yet paid, all unpaid dividends and dividend equivalents, and all interest, if any, accrued on the foregoing if, (i) in the opinion of the Committee, the Participant, without the written consent of the Company,
engages directly or indirectly in any manner or capacity as principal, agent, partner, officer, director, employee, or otherwise, in any business or activity competitive with the business conducted by the Company or any Subsidiary; or (ii) the
Participant performs any act or engages in any activity which in the opinion of the Chief Executive Officer of the Company is inimical to the best interests of the Company. In addition, the Committee may, in its discretion, condition the grant,
exercise, payment or deferral of any Award, dividend, or dividend equivalent made under the Plan on a Participant’s compliance with the terms of this paragraph 22 and any other terms specified by the Committee in the Award Notice, and cause
such a Participant to forfeit any payment which is deferred or to grant to the Company the right to obtain equitable relief if the Participant fails to comply with the terms hereof. 
 23. Amendments to Awards 
 Subject to
the requirements of paragraph 13, the Committee may at any time unilaterally amend any unexercised, unearned, or unpaid Award, including, but not by way of limitation, Awards earned but not yet paid, to the extent it deems appropriate; provided,
however, that any such amendment which, in the opinion of the Committee, is adverse to the Participant shall require the Participant’s consent. 
 24. Compliance with Law 
 Notwithstanding anything contained in this Plan to the contrary, the Company
shall have no obligation to issue or deliver certificates of Common Stock evidencing Stock Awards or any other Award resulting in the payment of Common Stock prior to (a) the obtaining of any approval from, or satisfaction of any waiting period
or other condition imposed by, any governmental agency which the Company shall, in its sole discretion, determine to be necessary or advisable, (b) the admission of such shares to listing on the stock exchange on which the Common Stock may be
listed, and (c) the completion of any registration or other qualification of said shares under any state or federal law or ruling of any governmental body which the Company shall, in its sole discretion, determine to be necessary or advisable.
With respect to persons subject to Section 16 of the Exchange Act, it is the intent of the Company that the Plan and all transactions under the Plan comply with all applicable provisions of Rule 16b-3, as the Rule may be amended or replaced,
under the Exchange Act. 
  

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 25. No Right to Continued Employment or Grants 
 Participation in the Plan shall not give any Key Employee any right to remain in the employ of the Company or any Subsidiary. The Company or, in the case
of employment with a Subsidiary, the Subsidiary, reserves the right to terminate any Key Employee at any time. Further, the adoption of this Plan shall not be deemed to give any Key Employee or any other individual any right to be selected as a
Participant or to be granted an Award. 
 26. Amendment 
 The Committee may suspend or terminate the Plan at any time. In addition, the Committee may, from time to time, amend the Plan in any manner, but may not without Board and shareholder approval adopt any amendment
which would (a) materially increase the benefits accruing to Participants under the Plan, (b) materially increase the number of shares of Common Stock which may be issued under the Plan (except as specified in paragraph 19), or
(c) materially modify the requirements as to eligibility for participation in the Plan; and provided further that the Committee shall not amend the Plan without the approval of the Board or the shareholders if such approval is required by Rule
16b-3 of the Exchange Act or Section 162(m) of the Code, in each case as such provisions may be amended from time to time. 
 27.
Governing Law 
 The Plan shall be governed by and construed in accordance with the laws of the State of Maryland except as superseded
by applicable Federal Law. 
  

 13Exhibit 10.17 -- Amendment to the Financial Advisor Retention Program

 Exhibit 10.17 
 AMENDMENT TO THE 
 FINANCIAL ADVISOR RETENTION PROGRAM 
 UNDER THE LEGG MASON, INC. 1996 EQUITY INCENTIVE PLAN 
 WHEREAS, the Compensation Committee of Legg Mason, Inc. (the “Compensation Committee”) previously adopted the Financial Advisor Retention Program (the “Program”) under the Legg Mason,
Inc. 1996 Equity Incentive Plan, as amended from time to time; and 
 WHEREAS, in connection with the transactions contemplated by the
Transaction Agreement, dated as of June 23, 2005, (the “Transaction Agreement”) by and between Citigroup Inc. and Legg Mason, Inc, (“Legg Mason”), the Compensation Committee desires to amend the Program, in
accordance with Section 20 thereof, contingent upon the consummation of the transactions contemplated by the Transaction Agreement, to (i) provide for the accelerated vesting of that portion of the retention award credited to the account
of each financial advisor who is a PC/CM Continuing Business Employee (as defined in the Transaction Agreement), that is scheduled to vest on or before December 31, 2006, (ii) provide that, for purposes of the Program, the employment of
each financial advisor who is a PC/CM Continuing Business Employee will terminate as of the Closing Date (as defined in the Transaction Agreement), and (iii) provide that, effective as of the Closing Date, the Program shall terminate and all
vested accounts thereunder shall be paid out as soon as practicable. 
 NOW, THEREFORE, effective as of the Closing Date, the Program is here
amended as follows: 
 1. Section 1 of the Program is hereby amended by adding the following at the end thereof: 
 In connection with the transactions contemplated by the Transaction Agreement, the Compensation Committee of the Company has approved
certain amendments to the Program, effective as of the Closing Date and contingent upon the consummation of the transactions contemplated by the Transaction Agreement, to (i) provide for the accelerated vesting of that portion of the Retention
Award credited to the Account of each Financial Advisor who is a PC/CM Continuing Business Employee that is scheduled to vest on or before December 31, 2006 and (ii) provide that, for purposes of the Program, the employment of each
Financial Advisors who is a PC/CM Continuing Business Employee shall terminate as of the Closing Date. 
 2. The following definition is
hereby added to Section 2 of the Program: 
 “Closing Date” has the meaning set forth in the Transaction Agreement.

 3. The following definition is hereby added to Section 2 of the Program: 
 “PC/CM Continuing Business Employee” has the meaning set forth in the Transaction Agreement. 
  

 1 

 4. The following definition is hereby added to Section 2 of the Program: 
 “Transaction Agreement” means the Transaction Agreement, dated as of June 23, 2005, by and between Legg Mason and
Citigroup Inc. 
 5. Section 7(a) of the Program is hereby amended by adding the following paragraph at the end thereof: 
 Contingent upon the consummation of the transactions contemplated by the Transaction Agreement, for purposes of determining the amount of
any distribution payable to any Financial Advisor who is a PC/CM Continuing Business Employee, the amount of the Financial Advisor’s Retention Awards credited to the Financial Advisor’s Account that is scheduled to vest on or before
December 31, 2006, shall be fully vested as of the Closing Date. Such Financial Advisor’s Account shall be distributed in accordance with the terms and conditions of the Program. As a result of, and subject to, the consummation of the
transactions contemplated by the Transaction Agreement, for purposes of the Program, the employment of each Financial Advisors who is a PC/CM Continuing Business Employee shall terminate as of the Closing Date. Accordingly, contingent upon the
consummation of the transactions contemplated by the Transaction Agreement, with respect to any portion of such Financial Advisor’s Retention Awards credited to such Financial Advisor’s Account that is scheduled to vest on or after
January 1, 2007, the unvested portion of such Financial Advisor Account shall be forfeited in its entirety without any payment therefor. 
 6. Section 8 of the Program is hereby amended by adding the following subsection (e) at the end thereof: 
 (a) Notwithstanding the foregoing, with respect to any amounts payable pursuant to the last paragraph of Section 7(a), payments shall be made as soon as practicable. 
 7. Section 20 of the Program is hereby amended by adding the following sentence at the end thereof: 
 Effective as of the Closing Date, the Plan shall be terminated and all vested Accounts shall be paid out as soon as practicable.

  

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