Document:

exv10w5

Exhibit 10.5

AGREEMENT

     THIS EXECUTIVE
EMPLOYMENT AGREEMENT (this “Agreement”) is entered
into this 23rd day of
July, 2010, by and between Robert J. Moore (the “Executive”), LPL Financial Corporation
(the “Company”), LPL Holdings, Inc. (“Holdings”) and LPL Investment Holdings Inc.
(“Investment Holdings”) (with respect to Section 4(c) only), to be effective upon the
Closing (as defined below).

     WHEREAS, Executive is currently employed by the Company; and

     WHEREAS, the Company and the Executive desire to enter into this Agreement to set forth the
terms of the Executive’s continued employment with the Company, effective as of the closing of the
2010 initial public offering of common stock by Investment Holdings (the “Closing”).

     NOW, THEREFORE, in consideration of the foregoing premises and the mutual promises, terms,
provisions and conditions set forth in this Agreement, the parties hereby agree:

     1. Employment. Subject to the terms and conditions set forth in this Agreement, the
Company hereby agrees to continue to employ the Executive, and the Executive hereby accepts the
terms of continued employment with the Company.

     2. Term. Subject to earlier termination as hereafter provided, the Executive’s
employment hereunder shall have an original term of three (3) years commencing on the date of the
Closing (the “Initial Term”) and shall automatically be renewed thereafter for successive
terms of one year each, unless the Company provides notice to the Executive at least ninety (90)
days prior to the expiration of the Initial Term or any renewal term that the Agreement is not to
be renewed, in which event this Agreement and the Executive’s employment hereunder shall terminate
at the expiration of the then-current term. The term of this Agreement, as from time to time
renewed, is hereafter referred to as “the term of this Agreement” or “the term hereof.” In the
event that the Closing does not occur, this Agreement shall be void ab initio and of no force or
effect.

     3. Capacity and Performance.

          a. During the term hereof, the Executive shall serve the Company as its Chief Financial
Officer, reporting to the Chief Executive Officer of the Company (the “CEO”).

          b. During the term hereof, the Executive shall be employed by the Company on a full-time basis
and shall have such duties, authority and responsibilities as are commensurate with his position
and such other duties, consistent with his position, as may be designated from time to time by the
Board of Directors of Investment Holdings (the “Investment Holdings Board”).

 

 

          c. During the term hereof, the Executive shall devote his full business time and his best
efforts to the discharge of his duties and responsibilities hereunder; provided,
however, that, subject to Section 10 hereof, the foregoing shall not be construed to
prevent the Executive from attending to personal investments and community and charitable service,
provided that such activities do not unreasonably interfere with the performance of Executive’s
duties to the Company. In addition, the Executive may serve on boards of directors and similar
governing bodies, and committees thereof, subject to the approval of the Investment Holdings Board,
which approval shall not be unreasonably withheld, and subject to Section 10 hereof.
Notwithstanding the foregoing, the Executive may continue to serve on those boards and committees
on which the Executive was serving at the time of the Closing, which boards and committees are
listed on Schedule 1(A) of this Agreement.

     4. Compensation and Benefits. As compensation for all services performed by the
Executive during the term hereof:

          a. Base Salary. During the term hereof, the Company shall pay the Executive a base
salary at the rate per annum as set forth on Schedule 1(B) of this Agreement, payable in
accordance with the regular payroll practices of the Company for its executives and subject to
increase from time to time by the Investment Holdings Board (or its compensation committee, the
“Investment Holdings Compensation Committee”). The Executive’s base salary may only be
decreased with the approval of the CEO of the Company and then only in an across-the-board salary
reduction in which all executives and other employees are subject to an equal percentage reduction.
The Executive’s base salary, as from time to time increased or decreased in accordance with
Agreement, is hereafter referred to as the “Base Salary.”

          b. Bonus Compensation.

               i. The Executive shall be eligible to receive a full bonus, without pro-ration, for calendar
year 2010, determined in accordance with the Company’s employee cash bonus plan as in effect
immediately prior to the Closing, as set forth in Schedule 1(C) hereto.

               ii. Each calendar year thereafter during the term hereof, the Executive shall be eligible to
participate in the cash bonus plan or other incentive compensation plan in effect for employees of
the Company generally, under which, consistent with the requirements for performance-based
compensation under Section 162(m) of the Internal Revenue Code of 1986, as amended (the
“Code”), the plan elements described in clauses (A) and (C) below shall be not be decreased
from those applicable to the Executive under the bonus plan in effect immediately prior to the
Closing, and the plan element described in clause (B) below shall be substantially consistent with
past practice: (A) the target bonus, (B) the level of performance required to reach target and (C)
the opportunity to earn bonus compensation in excess of target, with respect to clauses (A) and (C)
as set forth on Schedule 1(D) hereto. Neither the Executive’s target bonus nor the
opportunity to earn bonus compensation in excess of target may be subject to an adverse change and
the level of performance required to reach target may not be materially adversely changed except
with the approval of the CEO of the Company and then only in an across-the-board change which
affects equally all employees participating in the bonus plan. Such cash bonus shall be in
addition to the Base Salary. The Executive’s target bonus under the

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executive cash bonus plan is referred to hereafter as the “Target Bonus.” In
clarification of the foregoing, the actual bonus earned by the Executive for any given calendar
year, may be below, at or above the Target Bonus, based on actual performance. Subject to any
effective deferral election made available and elected by the Executive, each bonus earned by the
Executive hereunder shall be paid no later than March 15 of the calendar year following the end of
the calendar year for which the bonus was earned.

          c. Equity Compensation. The Executive shall be eligible to participate in all equity
compensation plans and programs applicable to senior executives of the Company and shall receive
such grants as may be provided from time to time by Investment Holdings in the discretion of the
Investment Holdings Board or the Investment Holdings Compensation Committee. Each grant will be
subject to the terms and conditions of the applicable Investment Holdings’ equity compensation plan
and grant agreements which shall provide in relevant part that: (i) upon the occurrence of a
Change in Control occurring after the effective date of this Agreement, all outstanding equity
compensation awards held by the Executive will become fully vested and/or exercisable, as the case
may be, as of the date of the Change in Control; (ii) upon a termination of the Executive’s
employment for any reason, the portion of any equity compensation award which has not vested shall
terminate; (iii) in the event the Executive’s employment terminates for any reason other than for
Cause, death or disability, the Executive may exercise any vested portion of any stock option or
stock appreciation right (collectively, “Stock Right”) held by him on the date of
termination provided that he does so prior to the earlier of (A) ninety (90) days following
termination of employment and (B) the expiration of the scheduled term of the Stock Right; (iv) in
the event the Executive’s employment is terminated due to death or disability (as defined in
Section 5(b)), then the Executive, or, as applicable in the event of death, his beneficiary or
estate, may exercise any vested portion of any Stock Right held by the Executive on the date
employment terminates for the shorter of (A) the period of twelve (12) months following the
termination date and (B) with respect to each Stock Right individually, the expiration of the
scheduled term of such Stock Right; and (v) upon a termination of the Executive’s employment by the
Company for Cause, all equity compensation awards shall be forfeited immediately.

          d. Vacations. During the term hereof, the Executive shall be eligible for the number
of weeks of vacation per year set forth on Schedule 1(E) to this Agreement, subject to the
vacation policies of the Company generally applicable to its executives, as in effect from time to
time, provided that the Executive shall not be barred from taking up to the maximum number of weeks
of vacation in any given year solely by reason of the Executive’s failure to work for a specified
period of time during such year prior to the time of such vacation.

          e. Other Benefits. During the term hereof, the Executive shall be entitled to
participate in any and all employee benefit plans from time to time in effect for executives and/or
employees of the Company generally, provided that the Executive shall receive benefits
pursuant to plans, programs and policies (other than any equity-based compensation plan or program)
that are comparable, and no less favorable in the aggregate, to those benefits offered to him
immediately prior to the Closing.

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          f. Business Expenses. During the term hereof, the Company shall pay or reimburse the
Executive for all reasonable business expenses incurred or paid by the Executive in the performance
of his duties and responsibilities hereunder, subject to such reasonable substantiation and
documentation as the Company may require and otherwise consistent with the Company’s policies
generally applicable to its executives, as in effect from time to time.

     5. Termination of Employment and Severance Benefits. Notwithstanding the provisions
of Section 2 hereof, the Executive’s employment hereunder shall terminate prior to the expiration
of the term hereof under the circumstances specified below. Subject to the execution, delivery and
nonrevocation by the Executive, the Executive’s beneficiary, or the representative of the
Executive’s estate, as applicable, of a release of claims agreement (the “Release”) in the
form provided by the Company within the time period specified by the Company, which shall not
exceed 60 days following the date of termination, and provided that the Executive has complied in
all material respects with the terms and conditions of the Release, the Company shall provide the
Executive with the payments and benefits set forth below:

          a. Termination due to Death. In the event of the Executive’s death during the term
hereof, the Executive’s employment hereunder shall immediately and automatically terminate. In such
event, the Company shall pay to the Executive’s designated beneficiary or, if no beneficiary has
been designated by the Executive, to his estate, “Final Compensation” which shall include
all of the following: (i) the Base Salary earned but not paid through the date of termination, (ii)
pay for any vacation time earned but not used through the date of termination, (iii) payment of any
annual bonus earned but not paid for the year preceding that in which the date of termination
occurs, (iv) reimbursement for any business expenses incurred by the Executive and reimbursable
pursuant to Section 4(f) hereof but un-reimbursed on the date of termination (clauses (i), (ii),
(iii) and (iv), collectively, the “Termination Entitlements”), (v) a bonus for the year in
which the date of termination occurs determined by multiplying the Target Bonus for that year by a
fraction, the numerator of which is the number of days the Executive was employed during the year
in which the date of termination occurs, through the date of termination, and the denominator of
which is 365 (“Pro-Rated Portion of Target Bonus”), (vi) a single lump-sum payment equal to
the premium (including the additional amount (if any) charged for administrative costs as permitted
by the Federal law known as “COBRA”) of continued health and dental plan participation under COBRA
for the Executive (in the event of a termination other than as a result of death) and for the
Executive’s qualified beneficiaries (as that term is defined under COBRA) for the one (1) year
period immediately following the date of termination (the “Premium Payment”) and, the
Company shall have no further obligation to the Executive hereunder, other than (A) obligations due
to the Executive as of the date of termination but not yet satisfied, such as, by way of example
but not limitation, an uncorrected error in Base Salary or an outstanding claim under one of the
welfare plans or an uncorrected error in the Executive’s retirement plan account, and (B)
obligations which, whether or not due to the Executive as of the date of termination, survive
termination, such as, by way of example but not limitation, rights to exercise vested stock options
(all of the foregoing, under clauses (A) and (B) hereof, the “Surviving Company
Obligations”).

          b. Termination due to Disability. The Company may terminate the Executive’s
employment hereunder, upon notice to the Executive, in the event that the Executive

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becomes disabled through any illness, injury, accident or condition of either a physical or
psychological nature and, as a result, is unable to perform substantially all of his duties and
responsibilities hereunder, notwithstanding the provision of any reasonable accommodation, for any
period of six (6) consecutive months. During any period in which the Executive is disabled but
prior to the Executive’s date of termination, the Executive shall continue to receive all
compensation and benefits under Section 4 hereof while his employment continues. If any question
shall arise as to whether during any period the Executive is disabled through any illness, injury,
accident or condition of either a physical or psychological nature so as to be unable to perform
substantially all of his duties and responsibilities hereunder, the Executive may, and at the
request of the Company shall, submit to a medical examination by a physician selected by the
Company to whom the Executive has no reasonable objection to determine whether the Executive is so
disabled and such determination shall for the purposes of this Agreement be conclusive of the
issue. In the event of termination by the Company due to the Executive’s disability, the Company
shall provide the Executive with the Final Compensation and the Company shall have no further
obligation to the Executive hereunder, other than the Surviving Company Obligations.
Notwithstanding any provision herein to the contrary, if the Executive is entitled to a Premium
Payment, the Premium Payment shall be paid in a lump sum on the first business day that is the
earlier of (i) six (6) months following the date of termination, or (ii) at such time as otherwise
permitted by law that would not result in such additional taxation and penalties under Section
409A.

          c. Retirement. The Executive may elect to retire voluntarily on thirty (30) days’
notice to the Company, provided that the Executive is then at least 65 years of age. In
such event, the Company shall pay to the Executive the Final Compensation (other than the benefits
under clause (v) of the definition thereof (the “Accrued Compensation”)) and the Company
shall have no further obligation to the Executive hereunder, other than the Surviving Company
Obligations. Notwithstanding any provision herein to the contrary, if the Executive is entitled to
a Premium Payment, the Premium Payment shall be paid in a lump sum on the first business day that
is the earlier of (i) six (6) months following the date of termination, or (ii) at such time as
otherwise permitted by law that would not result in such additional taxation and penalties under
Section 409A.

          d. Termination by the Company for Cause. The Company may terminate the Executive’s
employment at any time for “Cause,” which shall mean only (i) the intentional failure to
perform (excluding by reason of disability) or gross negligence or willful misconduct in the
performance of regular duties or other breach of fiduciary duty or material breach of this
Agreement which remains uncured after thirty (30) days’ notice specifying in reasonable detail the
nature of the failure, negligence, misconduct or breach and what is required of the Executive to
cure, (ii) conviction or plea of nolo contendere to a felony or (iii) fraud or embezzlement or
other dishonesty which has a material adverse effect on the Company. Before terminating the
Executive for Cause, (A) at least two-thirds (2/3) of the members of the Investment Holdings Board
(excluding the Executive, if a Board member) must conclude in good faith that, in their view, one
of the events described in subsection (i), (ii) or (iii) above has occurred and (B) such Board
determination must be made at a duly convened meeting of the Investment Holdings Board (X) of which
the Executive received written notice at least ten (10) days in advance, which notice shall have
set forth in reasonable detail the facts and circumstances claimed to

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provide a basis for the Company’s belief that one of the events described in subsection (i),
(ii) or (iii) above occurred and, in the case of an event under subsection (i), remains uncured at
the expiration of the notice period, and (Y) at which the Executive had a reasonable opportunity to
make a statement and answer the allegations against the Executive. In the event of the termination
of the Executive’s employment by the Company for Cause, the Company shall pay to the Executive the
Termination Entitlements and the Company shall have no further obligation to the Executive
hereunder, other than the Surviving Company Obligations. The parties acknowledge and agree that
this definition of “Cause” shall be applicable and controlling with respect to the grant agreements
executed by the Executive under any equity compensation plan or arrangement sponsored by Investment
Holdings or the Company.

          e. Termination by the Company other than for Cause. The Company may terminate the
Executive’s employment hereunder other than for Cause at any time upon ten (10) days notice to the
Executive. Termination by the Company on or following expiration of the term hereof (other than a
termination due to the Executive’s death or disability or under circumstances that would constitute
“Cause” if this Agreement were still in effect) will be treated as a termination other than for
Cause under this Section 5(e). In the event of termination under this Section 5(e), the Executive
shall be entitled to receive (i) the Accrued Compensation (other than the Premium Payment), (ii) a
bonus for the year in which the date of termination occurs based on actual performance determined
by multiplying the bonus that would have been earned by the Executive had the Executive remained in
service until the date required to earn a full bonus for that year by a fraction, the numerator of
which is the number of days the Executive was employed during the year in which the date of
termination occurs, through the date of termination, and the denominator of which is 365, provided
that if the bonus amount exceeds the Pro-Rated Portion of Target Bonus, such bonus amount shall be
limited to the Pro-Rated Portion of the Target Bonus and (iii) for two years following the date of
termination, continued participation of the Executive and his qualified beneficiaries, as
applicable, under the Company’s group life, health, dental and vision plans in which the Executive
was participating immediately prior to the date of termination, subject to any premium
contributions required of the Executive at the rate in effect on the date of termination of his
employment, provided that, in the event that such health coverage continuation would be
discriminatory for federal income tax purposes, the Executive shall be permitted to purchase,
through the Company at COBRA rates if possible, and be reimbursed by the Company on a quarterly
basis in arrears for, equivalent health benefit coverage for the Executive and his qualified
beneficiaries. In addition, subject to Executive’s continued compliance with the provisions of
Sections 8 and 9 and subject to Executive’s execution, delivery and non-revocation of a Release,
Executive shall be entitled to receive twenty-five percent (25%) of the Covenant Payment (as
defined in Section 7). For the avoidance of doubt, if the Executive does not execute a Release or
if the Executive revokes an executed Release within the time period permitted by law, the Executive
shall not be entitled to any payments and benefits, other than the Termination Entitlements, set
forth in this Section 5. Subject to the foregoing and the provisions of Section 7 to the extent
applicable, the Company shall have no further obligation to the Executive hereunder other than the
Surviving Company Obligations.

          f. Termination by the Executive for Good Reason. The Executive may terminate his
employment hereunder for Good Reason and, in that event, subject to Executive’s

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continued compliance with his obligations under Sections 8 and 9 hereof, shall be entitled to
all payments and benefits which the Executive would have been entitled to receive under Section
5(e) hereof as if termination had occurred thereunder. “Good Reason” shall mean only (A)
the occurrence, without the Executive’s express written consent (which may be withheld for any or
no reason) of any of the events or conditions described in the following subsections (i) through
(viii), provided that, except with respect to the event described in subsection (viii), the
Executive gives written notice to the Company of the occurrence of Good Reason within ninety (90)
days following the date on which the Executive first knew or reasonably should have known of such
occurrence and the Company shall not have fully corrected the situation within thirty (30) days
following such notice or (B) termination (for any or no reason) by written notice from the
Executive given within the thirty day period immediately following the twelve month anniversary of
a Change of Control occurring after the effective date of this Agreement. The following
occurrences shall constitute Good Reason for purposes of clause (A) of this Section 5(f): (i) a
reduction in the Executive’s Base Salary (other than as expressly permitted under Section 4(a)
hereof); (ii) an adverse change in the Executive’s bonus opportunity through reduction of the
Target Bonus or the maximum available bonus or a material adverse change in the goals or level of
performance required to achieve the Target Bonus (other than as expressly permitted under Section
4(b) hereof); (iii) a failure by the Company to pay or provide to the Executive any compensation or
benefits to which the Executive is entitled hereunder; (iv) (A) a material adverse change in the
Executive’s status, positions, titles, offices, duties and responsibilities, authorities or
reporting relationship from those in effect immediately before such change; (B) the assignment to
the Executive of any duties or responsibilities that are substantially inconsistent with the
Executive’s status, positions, titles, offices or responsibilities as in effect immediately before
such assignment; or (C) any removal of the Executive from or failure to reappoint or reelect the
Executive to any of such positions, titles or offices; provided that termination of the
Executive’s employment by the Company for Cause, by the Executive other than for Good Reason
pursuant to Section 5(g) hereof, or a termination as a result of the Executive’s death or
disability shall not be deemed to constitute or result in Good Reason under this subsection (iv);
(v) the Company’s changing the location of the San Diego, California headquarter offices to a
location more than twenty-five (25) miles from the location of such offices, or the Company’s
requiring the Executive to be based at a location other than the Company’s San Diego headquarter
offices; provided that in all such cases the Company may require the Executive to travel on Company
business including being temporarily based at other Company locations as long as such travel is
reasonable and is not materially greater or different than the Executive’s travel requirements
before the Closing; (vi) any material breach by Investment Holdings or the Company of this
Agreement, any agreement by Investment Holdings or the Company to indemnify the Executive or any
other material written agreement between Investment Holdings or the Company and the Executive;
(vii) the failure by the Company to obtain, before completion of a Change in Control, an agreement
in writing from any successor or assign to assume and fully perform under this Agreement; or (viii)
the provision of notice by the Company of non-renewa
l of this Agreement. Subject to the foregoing
and the provisions of Section 7 to the extent applicable, the Company shall have no further
obligation to the Executive hereunder other than the Surviving Company Obligations.

          g. By the Executive Other than for Good Reason. The Executive may terminate his
employment hereunder at any time upon thirty (30) days’ notice to the Company.

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In the event of termination by the Executive pursuant to this Section 5(g), the Investment
Holdings Board may elect to waive the period of notice, or any portion thereof, and, if the
Investment Holdings Board so elects, the Company will pay the Executive his Base Salary for the
notice period (or for any remaining portion of the period). The Company shall also provide the
Employee the Accrued Compensation and the Company shall have no further obligation to the Executive
hereunder, other than the Surviving Company Obligations.

          h. Timing of Payments.

               i. Except as otherwise provided in the Agreement, any payments due under Section 5(e), Section
5(f), Section 7 and Section 10(b), as applicable, shall be payable in equal monthly installments
over the number of years and/or portions thereof equal to the applicable Multiplier (as defined in
Section 7) and shall begin at the Company’s next regular payday following the 60th day after the
effective date of termination provided that, if applicable, the Executive has executed and not
revoked the Release and is compliant in all material respects with the Release terms and
conditions. Notwithstanding the foregoing, the pro-rated annual bonus earned by the Executive for
the year in which the date of termination occurs as calculated in accordance with Section 5(e)
shall be paid in a lump sum no later than March 15 of the calendar year following the end of the
calendar year for which the bonus was earned.

               ii. In the event that at the time the Executive employment terminates the Company’s shares are
publicly traded (as defined in Section 409A of the Code) or the limitation on payments or provision
of benefits imposed by Section 409A(a)(2)(B) would otherwise be applicable, any amounts payable or
benefits provided under Section 5 that would have been payable during the six (6) months following
the date of termination of employment with the Company and would otherwise be considered deferred
compensation subject to the additional twenty percent (20%) tax imposed by Section 409A if paid
within such six (6) month period shall be paid, in a lump sum on the business day after the date
that is the earlier of (x) six (6) months following the date of termination, or (y) at such time as
otherwise permitted by law that would not result in such additional taxation and penalties under
Section 409A. In addition, the administration of the Release requirements described under this
Section 5 shall be implemented such that where the period for execution and non-revocation of a
release spans more than one calendar year, any payment contingent on the execution of the Release
shall not be made until the second calendar year, or later, as required by the applicable terms of
this Agreement and Section 409A. All reimbursements and in-kind benefits provided under this
Agreement shall be made or provided in accordance with the requirements of Section 409A including,
where applicable, the requirement that (i) any reimbursement is for expenses incurred during the
period of time specified in this Agreement, (ii) the amount of expenses eligible for reimbursement,
or in kind benefits provided, during a calendar year may not affect the expenses eligible for
reimbursement, or in kind benefits to be provided, in any other calendar year, (iii) the
reimbursement of an eligible expense will be made no later than the last day of the calendar year
following the year in which the expense is incurred, and (iv) the right to reimbursement or in kind
benefits is not subject to liquidation or exchange for another benefit. Notwithstanding the
foregoing, the Company shall have no obligation to grant the Executive a “gross-up” or other
“make-whole” compensation for any tax imposed under Section 409A.

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          i. No Duty to Mitigate. The Executive shall not be required to mitigate the amount
of any cash payment or the value of any benefit provided for in this Agreement by seeking other
employment, by seeking benefits from another employer or other source, or by pursuing any other
type of mitigation. No payment or benefit provided for in this Agreement shall be offset or
reduced by the amount of any cash compensation or the value of any benefit provided to the
Executive in any subsequent employment or from any other source. Notwithstanding the foregoing,
if the Executive begins to participate in the group health plan of another employer which provides
benefits substantially similar to those provided by the Company pursuant to this Section 5, then
the Executive shall promptly notify the Company and the Company may discontinue the health plan
participation being provided the Executive pursuant to this Section 5.

     6. Code Section 4999 Excise Tax.

          a. Anything in this Agreement to the contrary notwithstanding, in the event that it shall be
determined that any payment or benefit (including any accelerated vesting of options or other
equity awards) made or provided, or to be made or provided, by the Company (or any successor
thereto or affiliate thereof) to or for the benefit of Executive, whether pursuant to the terms of
this Agreement, any other agreement, plan, program or arrangement of or with Investment Holdings or
the Company (or any successor thereto or affiliate thereof) or otherwise (a “Payment”),
will be subject to the excise tax imposed by Section 4999 of the Code or any comparable tax imposed
by any replacement or successor provision of United States tax law, then the Company will apply a
limitation on the Payment amount as set forth in clause (i) below (a “Parachute Cap”),
unless the provisions of clause (ii) below apply.

               i. If clause (ii) does not apply, the aggregate present value of the Payments under Sections
5(e), (f) or (g) of this Agreement (“Agreement Payments”) shall be reduced (but not below
zero) to the Reduced Amount. The “Reduced Amount” shall be an amount expressed in present
value which maximizes the aggregate present value of Agreement Payments without causing any Payment
to be subject to the limitation of deduction under Section 280G of the Code or the imposition of
any excise tax under Section 4999 of the Code. For purposes of this clause (i), “present value”
shall be determined in accordance with Section 280G(d)(4) of the Code. In the event that it is
determined that the amount of the Agreement Payments will be reduced in accordance with this clause
(i), the Agreement Payments shall be reduced on a nondiscretionary basis in such a way as to
minimize the reduction in the economic value deliverable to the Executive. In applying this
principle, the reduction shall be made in a manner consistent with the requirements of Section 409A
of the Code, and where more than one payment has the same value for this purpose and they are
payable at different times, they will be reduced on a pro-rata basis.

               ii. It is the intention of the parties that the Parachute Cap apply only if application of the
Parachute Cap is beneficial to the Executive. Therefore, if the net amount that would be retained
by the Executive under this Agreement without the Parachute Cap, after payment of any excise tax
under Section 4999 of the Code, exceeds the net amount that would be retained by the Executive with
the Parachute Cap, then the Company shall not apply the Parachute Cap to the Executive’s payments.

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          b. All determinations to be made under this Section 6 shall be made by the nationally
recognized independent public accounting firm used by the Company immediately prior to the Change
in Control (“Accounting Firm”), which Accounting Firm shall provide its determinations and
any supporting calculations to the Company and the Executive within ten days of the termination
date. Any such determination by the Accounting Firm shall be binding upon the Company and the
Executive.

          c. All of the fees and expenses of the Accounting Firm in performing the determinations
referred to in this Section 6 shall be borne solely by the Company.

     7. Covenant Payments. In the event of a termination of the Executive under Section
5(e) or Section 5(f), in consideration for the covenants contained in Sections 8, 9 and 10 and
provided that Executive is not otherwise in breach of Sections 8, 9 and 10 hereof, the Company
shall pay to Executive an amount equal to seventy-five percent (75%) of the Covenant Payment, as
hereinafter defined, at the time and in the form provided in Section 5(h). For purposes of this
Agreement, the “Covenant Payment” is an amount equal to the applicable Multiplier
multiplied by the sum of the Executive’s Base Salary and Target Bonus for the year in which the
date of termination occurs (or if no such Target Bonus has been established for the Executive for
the year in which the date of termination occurs, the Target Bonus for the year immediately
preceding the year in which the date of termination occurs) and the “Multiplier” shall be
(A) two (2) in the event of termination under Section 5(e) or Section 5(f) (other than due to Good
Reason resulting solely from notice of non-renewal of the term of this Agreement), in each case,
prior to the expiration of the Initial Term; (B) one and one half (1.5) in the event of a
termination under Section 5(e) or Section 5(f), in each case, on or following the expiration of the
Initial Term; and (C) one and one half (1.5) in the event of a termination at any time during the
term of this Agreement for Good Reason resulting solely from the provision by the Company of notice
of non-renewal of the term of this Agreement.

     8. Confidential Information.

          a. The Executive acknowledges that the Company continually develops Confidential Information
(as defined in Section 14); that the Executive may develop Confidential Information for the
Company; and that the Executive may learn of Confidential Information during the course of
employment. The Executive shall not disclose to any Person or use, other than as required by
applicable law or for the performance of his duties and responsibilities to the Company, any
Confidential Information obtained by the Executive incident to his employment with the Company.
The Executive understands that this restriction shall continue to apply after his employment
terminates, regardless of the reason for such termination.

          b. All documents, records, tapes and other media of every kind and description containing
Confidential Information, and all copies, (the “Documents”), whether or not prepared by the
Executive, shall be the sole and exclusive property of the Company. The Executive shall return to
the Company no later than the time his employment terminates all Documents then in the Executive’s
possession or control.

-10-

 

     9. Assignment of Rights to Intellectual Property.

          a. The Executive shall promptly and fully disclose all Intellectual Property (as defined in
Section 14) to the Company. The Executive hereby assigns and agrees to assign to the Company (or
as otherwise directed by the Company) the Executive’s full right, title and interest in and to all
Intellectual Property. The Executive agrees to execute any and all applications for domestic and
foreign patents, copyrights or other proprietary rights and to do such other acts (including
without limitation the execution and delivery of instruments of further assurance or confirmation)
requested by the Company to assign the Intellectual Property to the Company and to permit the
Company to enforce any patents, copyrights or other proprietary rights to the Intellectual
Property. All copyrightable works that the Executive creates in the performance of his duties
hereunder shall be considered “work made for hire.”

          b. Notwithstanding the foregoing, to the extent this Section 9 is subject to the provisions of
California Labor Code Sections 2870, 2871 and 2872, Executive’s obligation to assign Executive’s
right, title and interest throughout the world in and to all Intellectual Property does not apply
to any inventions, designs, developments, contributions to or improvements of any works of
authorship, inventions, intellectual property, materials, documents or other work product
(including, without limitation, research, reports, software, databases, systems, applications,
presentations, textual works, content or audiovisual materials) (“Works”) that Executive
developed entirely on his own time without using the Company’s equipment, supplies, facilities, or
Confidential Information except for those Works developed or created either alone or with third
parties, at any time during Executive’s employment by the Company and within the scope of such
employment and/or with the use of any the Company resources that either: (i) relate to either (A)
the business of Investment Holdings or the Company at the time of conception or reduction to
practice of the Work, or actual or demonstrably anticipated research or development of Investment
Holdings or the Company; or (ii) result from any Work performed by Executive for the Company.
Executive shall disclose all Works to the Company, even if Executive does not believe that
Executive is required under this Agreement, or pursuant to California Labor Code Section 2870, to
assign his interest in such Works to the Company.

     10. Restricted Activities.

          a. While the Executive is employed by the Company and, except as otherwise provided in Section
10(b) and Section 10(c) below, for the period of two (2) years following the termination of the
Executive’s employment in the event of a termination for which the Executive is entitled to a
Covenant Payment pursuant to Section 7 with a Multiplier of 2, and for a period of eighteen (18)
months following the termination of the Executive’s employment in the event of a termination for
which the Executive is entitled to a Covenant Payment pursuant to Section 7 with a Multiplier of
1.5, (as applicable, the “Restricted Period”), subject to the Company’s compliance with the
post-employment terms of this Agreement, the Executive will not engage or participate in, directly
or indirectly, alone or as principal, agent, employee, employer, consultant, investor or partner
of, or assist in the management of, or provide advisory or other services to, or own any stock or
any other ownership interest in, or make any financial investment in, any business or entity which
is Competitive with the Company (as defined below); provided, however, that it shall not be a
violation of the foregoing (i) for the Executive to own not more than two percent (2%) of the
outstanding securities of any class of securities listed on a national exchange or inter-dealer
quotation system or (ii) following termination of the

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Executive’s employment with the Company, for the Executive to provide services to any business
or entity that has a line of business, division, subsidiary or other affiliate that is Competitive
with the Company if the Executive is not employed in such line of business or division or by such
subsidiary or other affiliate and is not involved, directly or indirectly, in the management,
supervision or operations of such line of business, division, subsidiary or affiliate that is
Competitive with the Company. For purposes of this Agreement, a business or entity shall be
considered “Competitive with the Company” if such business or entity competes in any
respect with a business in which Investment Holdings and its subsidiaries were engaged (including,
specifically, services related to financial advisors), or any material products and/or services
that Investment Holdings or its subsidiaries were actively developing or designing as of the date
the Executive’s employment with the Company terminated, provided that, prior to such termination,
the Executive knew of such other business or such material product or such service under active
development or design. In addition, during the Restricted Period, the Executive will not (other
than when acting on behalf of the Company during the Executive’s employment) (i) solicit, or
attempt to solicit, any existing or prospective customers, targets, suppliers, financial advisors,
officers or employees of Investment Holdings or any of its subsidiaries to terminate their
relationship with Investment Holdings or any of its subsidiaries or (ii) divert, or attempt to
divert, from Investment Holdings or any of its subsidiaries any of its customers, prospective
customers, targets, suppliers, financial advisors, officers or employees or (iii) hire or engage or
otherwise contract with, or attempt to hire or engage or otherwise contract with, any officers,
employees or financial advisors of Investment Holdings or any of its subsidiaries, whether to be an
employee, officer, agent, consultant or independent contractor; provided, however, that nothing in
this Section 10(a) shall be deemed to prohibit the Executive from soliciting a customer,
prospective customer, target or supplier of Investment Holdings or any of its subsidiaries during
the Restricted Period if such action relates solely to a business which is not Competitive with the
Company. A customer, prospective customer, target, supplier, financial advisor, officer or
employee of Investment Holdings or any of its subsidiaries is any one who was such within the
preceding twelve months, excluding, however, any prospective customer or target which was solicited
solely by mass mailing or general advertisement during that period and any officer, employee or
financial advisor whose relationship with Investment Holdings or the Company was terminated by
Investment Holdings or the Company or any of their subsidiaries other than for circumstances that
would constitute “cause” (within the meaning of any such definition applicable to such officer,
employee or financial advisor, or, if no such definition is applicable, “cause” as defined in the
existing equity compensation plan maintained with respect to employees of the Company) and provided
further, with respect to Investment Holdings’ subsidiaries, that the Executive during his
employment with the Company was introduced to, or otherwise knew of or should have known of the
relationship of, such customer, prospective customer, target, supplier, financial advisor or
employee to the subsidiary.

          b. Notwithstanding anything herein to the contrary and to the extent that the Investment
Holdings Compensation Committee, in its sole discretion, does not waive the obligation under this
Section 10(b), in the event that the Executive terminates his employment hereunder without Good
Reason, the Executive shall, at the Company’s election, which election shall be provided to the
Executive prior to the date of termination, (1) be subject to a Restricted Period which shall
continue for a period of no less than 1 month to no more than 12 months following the date of
termination of the Executive’s employment, as designated by Investment

-12-

 

Holdings, and shall receive the Covenant Payment described in Section 7 with a Multiplier
equal to a fraction, the numerator of which shall equal the number of months in the Restricted
Period (up to 12 months) and the denominator of which shall be 12, or (2) receive no Covenant
Payment and be subject to no Restricted Period.

          c. The Executive may seek a waiver from the Company of his obligations pursuant to this
Section 10, which waiver shall not be unreasonably withheld or delayed. As of the date of the
grant of such waiver by the Company, all payments and benefits under the applicable provision of
Section 5 shall cease other than the payment of Final Compensation, excluding the payments and
benefits under clause (v) of the definition thereof which shall cease or be reimbursed by the
Executive on a pro-rata basis for the waived time period of the Restricted Period, as applicable)
or Accrued Compensation, as applicable).

     11. Reasonableness; Enforcement. The Company and the Executive acknowledge that the
time, scope, geographic area and other provisions of Sections 8, 9 and 10 (the “Restrictive
Covenants”) have been specifically negotiated by sophisticated parties and agree that all such
provisions are reasonable under the circumstances of the activities contemplated by this Agreement.
The Executive acknowledges and agrees that the terms of the Restrictive Covenants: (i) are
reasonable in light of all of the circumstances, (ii) are sufficiently limited to protect the
legitimate interests of the Company, (iii) impose no undue hardship, (iv) are not injurious to the
public, and (v) are essential to protect the business and goodwill of the Company and its
affiliates and are a material term of this Agreement which has induced the Company to agree to
provide for the payments and benefits described in this Agreement. The Executive further
acknowledges and agrees that the Executive’s breach of the Restrictive Covenants will cause the
Company and Investment Holdings irreparable harm, which cannot be adequately compensated by money
damages. The Executive and the Company agree that, in the event of an actual or threatened breach
of Section 10, the Company shall be entitled, to the extent enforceable under applicable law, to
injunctive relief for any actual or threatened violation of any of the Restrictive Covenants in
addition to any other remedies it may have at law or equity, including money damages.

     12. Survival. Provisions of this Agreement shall survive any termination if so
provided herein or if necessary or desirable to accomplish the purposes of other surviving
provisions, including without limitation the obligations of the Executive under Sections 8, 9, 10
and 11 hereof and the obligations of the Company pursuant to Sections 5, 7 and 10(b) hereof.

     13. Conflicting Agreements. The Executive hereby represents and warrants that the
execution of this Agreement and the performance of his obligations hereunder will not breach or be
in conflict with any other agreement to which the Executive is a party or is bound and that the
Executive is not now subject to any covenants against competition or similar covenants or any court
order or other legal obligation that would affect the performance of his obligations hereunder.
The Executive will not disclose to or use on behalf of the Company any proprietary information of a
third party without such party’s consent.

-13-

 

     14. Definitions. Words or phrases which are initially capitalized or are within
quotation marks shall have the meanings provided in this Section and as provided elsewhere herein.
For purposes of this Agreement, the following definitions apply:

          a. “Change in Control” means the consummation, after the date of Closing, of (i) any
transaction or series of related transactions, whether or not Investment Holdings is a party
thereto, after giving effect to which in excess of fifty percent (50%) of Investment Holdings’
voting power is owned directly, or indirectly through one or more entities, by any person and its
“affiliates” or “associates” (as such terms are defined in the Exchange Act Rules) or any “group”
(as defined in the Exchange Act Rules) other than, in each case, Investment Holdings or
an affiliate of Investment Holdings immediately following the Closing, or (ii) a sale or other
disposition of all or substantially all of the consolidated assets of Investment Holdings (each of
the foregoing, a “Business Combination”), provided that, notwithstanding the foregoing, a
Change in Control shall not be deemed to occur as a result of a Business Combination following
which the individuals or entities who were beneficial owners of the outstanding securities entitled
to vote generally in the election of directors of Investment Holdings immediately prior to such
Business Combination beneficially own, directly or indirectly, 50% or more of the outstanding
securities entitled to vote generally in the election of directors of the resulting, surviving or
acquiring corporation in such transaction.

          b. “Confidential Information” means any confidential proprietary information relating
to the business of Investment Holdings, the Company or their affiliates or their respective
customers or clients which has an economic value to Investment Holdings, the Company or their
affiliates. Confidential Information does not include any information that enters the public
domain other than through a breach by the Executive of his duties to Investment Holdings or the
Company hereunder or which is obtained by the Executive from a third party which has no obligation
of confidentiality to Investment Holdings or the Company.

          c. “Intellectual Property” means any invention, formula, process, discovery,
development, design, innovation or improvement (whether or not patentable or registrable under
copyright statutes) made, conceived, or first actually reduced to practice by the Executive solely
or jointly with others, during his employment by the Company; provided, however, that, as used in
this Agreement, the term “Intellectual Property” shall not apply to any invention that the
Executive develops on his own time, without using the equipment, supplies, facilities or trade
secret information of Investment Holdings or the Company, unless such invention relates at the time
of conception or reduction to practice of the invention (a) to the business of Investment Holdings
or the Company, (b) to the actual or demonstrably anticipated research or development of Investment
Holdings or the Company or (c) results from any work performed by the Executive for Investment
Holdings or the Company.

          d. “Person” means an individual, a corporation, a limited liability company, an
association, a partnership, an estate, a trust and any other entity or organization, other than the
Company or any of its subsidiaries.

-14-

 

     15. Withholding. All payments or other benefits, to the extent required by law, made
by the Company under this Agreement shall be reduced by any tax or other amounts required to be
withheld by the Company under applicable law.

     16. Legal Fees. The Company shall at its election either pay directly the joint legal
expenses incurred by the Executive and the other executives of the Company with whom the Company is
entering into employment agreements effective as of the Closing in the negotiation and preparation
of their employment agreements or reimburse the Executive for his portion of such joint legal
expenses. In addition, all reasonable costs and expenses that are reasonably documented (including
court and arbitration costs and reasonable legal fees and expenses that reflect common practice
with respect to the matters involved) incurred by the Executive as a result of any claim, action or
proceeding arising out of this Agreement or the contesting, disputing or enforcing of any
provision, right or obligation under this Agreement shall be paid, or reimbursed to the Executive,
if, in the final resolution of the dispute, the Executive either recovers material monetary damages
(in cash or in kind, such as benefits) or is the prevailing party on a material non-monetary claim
(such as a dispute regarding a restrictive covenant).

     17. Dispute Resolution.

          a. Except as provided in Section 11, any dispute, controversy or claim between the parties
arising out of this Agreement or the Executive’s employment with the Company or termination of
employment shall be settled by arbitration conducted in the city in which the Executive is located
administered by the American Arbitration Association under its Employment Dispute Resolution Rules
then in effect (except as modified by b. below).

          b. In the event that a party requests arbitration (the “Requesting Party”), it shall
serve upon the other party (the “Non-Requesting Party”), within one hundred and eighty
(180) days of the date the Requesting Party knew, or reasonably should have known, of the facts on
which the controversy, dispute or claim is based, a written demand for arbitration stating the
substance of the controversy, dispute or claim, the contention of the party requesting arbitration
and the name and address of the arbitrator appointed by it. The Non-Requesting Party, within sixty
(60) days of such demand, shall accept the arbitrator or appoint a second arbitrator and notify the
other party of the name and address of this second arbitrator so selected, in which case the two
arbitrators shall appoint a third who shall be the sole arbitrator to hear the case. In the event
that the two arbitrators fail in any instance to appoint a third arbitrator within thirty (30) days
of the appointment of the second arbitrator, either arbitrator or any party to the arbitration may
apply to the American Arbitration Association for appointment of the third arbitrator in accordance
with the Rules, which arbitrator shall be the sole arbitrator to hear the case. Should the
Non-Requesting Party (upon whom a demand for arbitration has been served) fail or refuse to accept
the arbitrator appointed by the other party or to appoint an arbitrator within sixty (60) days, the
single arbitrator shall have the right to decide alone, and such arbitrator’s decision or award
shall be final and binding upon the parties.

          c. The decision of the arbitrator shall be in writing; shall set forth the basis for the
decision; and shall be rendered within thirty (30) days following the hearing. The decision of the
arbitrator shall be final and binding upon the parties and may be enforced and executed

-15-

 

upon in any court having jurisdiction over the party against whom enforcement of such award is
sought.

     18. No Withholding of Undisputed Payments. During the pendency of any dispute or
controversy, the Company shall not withhold any payments or benefits due to the Executive, whether
under this Agreement or otherwise, except for the specific portion of any payment or benefit that
is the subject of a bona fide dispute between the parties.

     19. Assignment. Neither the Company nor the Executive may make any assignment of this
Agreement or any interest herein, by operation of law or otherwise, without the prior written
consent of the other. This Agreement shall inure to the benefit of and be binding upon the Company
and the Executive, their respective successors, executors, administrators, heirs and permitted
assigns.

     20. Severability. If any portion or provision of this Agreement shall to any extent
be declared illegal or unenforceable by a court of competent jurisdiction, then the remainder of
this Agreement, or the application of such portion or provision in circumstances other than those
as to which it is so declared illegal or unenforceable, shall not be affected thereby, and each
portion and provision of this Agreement shall be valid and enforceable to the fullest extent
permitted by law.

     21. Waiver. No waiver of any provision hereof shall be effective unless made in
writing and signed by the waiving party. The failure of either party to require the performance of
any term or obligation of this Agreement, or the waiver by either party of any breach of this
Agreement, shall not prevent any subsequent enforcement of such term or obligation or be deemed a
waiver of any subsequent breach.

     22. Notices. Any and all notices, requests, demands and other communications provided
for by this Agreement shall be in writing and shall be effective when delivered in person or the
next business day following consignment for overnight delivery to a reputable national overnight
courier service or five business days following deposit in the United States mail, postage prepaid,
registered or certified, and addressed to the Executive at his last known address on the books of
the Company or, in the case of the Company, at its principal place of business, attention of the
Chairman of the Investment Holdings Board, or to such other address as a party may specify by
notice to the other actually received. Copies of any notices, requests, demands and other
communication to the Company by the Executive shall be sent by the to the investors at the
following address: c/o Texas Pacific Group, 301 Commerce Street, Suite 3300, Fort Worth, TX 76102,
Attn: Richard Schifter (Fax: 415-743-1501) and c/o Hellman & Friedman LLC, One Maritime Plaza,
12th Floor, San Francisco, CA 94111, Attn: Allen Thorpe (Fax: 415-835-5408).

     23. Entire Agreement. This Agreement constitutes the entire agreement between the
parties and supersedes all prior communications, agreements and understandings, written or oral,
with respect to the terms and conditions of the Executive’s employment including, without
limitation, the applicable Executive Summary of Proposed Terms.

-16-

 

     24. Amendment. This Agreement may be amended or modified only by a written instrument
signed by the Executive and by an authorized representative of the Company subject to prior
approval by the Investment Holdings Board.

     25. Headings. The headings and captions in this Agreement are for convenience only
and in no way define or describe the scope or content of any provision of this Agreement.

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

     27. Governing Law. This is a Massachusetts contract and shall be construed and
enforced under and be governed in all respects by the laws of the Commonwealth of Massachusetts,
without regard to the conflict of laws principles thereof.

[Remainder of page intentionally left blank]

-17-

 

     IN WITNESS WHEREOF, this Agreement has been executed as a sealed instrument by the Company, by
its duly authorized representative, and by the Executive, as of the date first above written.

	 	 	 	 	 	 	 

	THE EXECUTIVE	 	THE COMPANY
	 
	 	 	 	 	 	 
	By:

	 	 /s/ Robert J. Moore	 	By:	 	 /s/ Stephanie L. Brown
	 

	 	 
	 	 	 	 
	 

	 	Name: Robert J. Moore
	 	 	 	Name: Stephanie L. Brown
	 

	 	 	 	 	 	Title: Secretary
	 
	 	 	 	 	 	 
	 	 	 	 	HOLDINGS
	 
	 

	 	 	 	By:	 	 /s/ Stephanie L. Brown
	 

	 	 	 	 	 	 
	 

	 	 	 	 	 	Name: Stephanie L. Brown
	 

	 	 	 	 	 	Title: Secretary
	 
	 	 	 	 	 	 
	 	 	 	 	INVESTMENT HOLDINGS (with respect to

Section 4(c) only)
	 
	 	 	 	 	 	 
	 

	 	 	 	By:	 	 /s/ Mark S. Casady
	 

	 	 	 	 	 	 
	 

	 	 	 	 	 	Name: Mark S. Casady
	 

	 	 	 	 	 	Title: Chief Executive Officer

 

 

Schedule 1

	(A)	 	Boards and Committees
	 
	 	 	Invest in Others Foundation

Chicago History Museum

Legal & General Investment Management America (this is a wholly owned subsidiary of Legal & General plc)

Global Capital Insights, LLC

Meadows Traverse City, LLC
	 
	(B)	 	Base Salary
	 
	 	 	$600,000
	 
	(C)	 	2010 Target Bonus
	 
	 	 	$495,000
	 
	(D)	 	Target Bonus
	 
	 	 	$495,000
	 
	 	 	Opportunity to Earn Bonus Compensation in Excess of Target Bonus: The amount of the
Executive’s bonus opportunity above Target Bonus (the “Outperformance Bonus”), and the
performance necessary to earn the Outperformance Bonus, shall be determined by the
Investment Holdings Compensation Committee on an annual basis after consultation with, and
with good faith consideration of the views of, the CEO of the Company.
	 
	(E)	 	Annual Vacation
	 
	 	 	4 weeks.exv10w6

Exhibit 10.6

LPL FINANCIAL CORPORATION

EXECUTIVE SEVERANCE PLAN

Introduction

     The purpose of Plan is to enable the Company and its subsidiaries to offer a form of
protection to members of the Executive Management Committee in the event their employment with the
Company or a subsidiary terminates.

     Accordingly, the Board has adopted the Plan effective on the Effective Date as herein defined,
for selected members of the Executive Management Committee in an effort to assist in replacing the
loss of income caused by a termination of employment under the circumstances described herein.

     The Plan supersedes any severance plans, policies and/or practices of the Company and any
subsidiary in effect for employees who participate in the Plan. The Severance Benefits payable
under this Plan apply to Qualifying Terminations on and after the Effective Date.

     The Plan is intended to alleviate some of the financial hardship that Eligible Employees may
experience when their employment is terminated for a reason covered by the Plan. In essence, the
Severance Benefits are intended to be supplemental unemployment benefits. The Severance Benefits
are not intended as deferred compensation and no individual shall have a vested right in such
benefits.

     The Company, as the Plan sponsor, has the sole discretion to determine whether an employee may
be considered eligible for Severance Benefits under the Plan. All actions taken by the Company
shall be in its role as the sponsor of the Plan, and not as a fiduciary. Nothing in the Plan will
be construed to give any employee the right to receive severance payments, except as set forth
herein, or to continue in the employment of the Company or any of its subsidiaries. The Plan is
unfunded, has no trustee, and is administered by the Compensation Committee of the Board (or such
other committee appointed by the Board for purposes of administering the Plan). The Plan is
intended to be an “employee welfare benefit plan” within the meaning of section 3(1) of ERISA and
it shall be administered as a top hat plan that is exempt from the substantive requirements of
ERISA.

     All capitalized terms in this Introduction shall have the meaning ascribed to them in Article
2 below.

Article 1. Establishment, Term and Purpose

     1.1 Establishment of the Plan. The Company hereby establishes an executive severance plan to
be known as the “LPL Financial Corporation Executive Severance Plan.”

     1.2 Term of the Plan. The Plan, as set forth herein, will commence on the Effective Date and
will continue until terminated or amended by action of the Board or the Committee in accordance
with Section 12.6.

1

 

     1.3 Purpose of the Plan. The purpose of the Plan is to provide Eligible Employees Severance
Benefits in the event of a Qualifying Termination.

Article 2. Definitions

     Whenever used in the Plan, the following terms shall have the meanings set forth below and,
when the meaning is intended, the initial letter of the word is capitalized:

     2.1 “Accrued Compensation” means (i) the Participant’s Base Salary paid through the
Participant’s Separation Date; (ii) reimbursement for reasonable business expenses incurred in the
ordinary course of the Participant’s duties prior to the Participant’s Separation Date and in
accordance with Company policies; provided claims for such reimbursement are submitted to the
Company within 60 days following the Participant’s Separation Date; and (iii) such employee
benefits, if any, as to which the Participant may be entitled under the Company’s employee benefit
plans.

     2.2 “Base Salary” means the Participant’s annual base salary in effect on the Separation Date.

     2.3 “Beneficiary” means the Participant’s estate.

     2.4 “Board” means the Board of Directors of LPL Investment Holdings Inc.

     2.5 “Cause” means an Eligible Employee’s: (i) failure to substantially perform his usual
duties of employment with the Company (other than as a result of an illness or injury) for a period
of 10 days following notice by the Company to the Eligible Employee of such failure; (ii) fraud,
embezzlement, dishonesty or theft related to employment; (iii) an act or acts constituting a
felony, a violation of any federal or state securities or banking laws or a misdemeanor involving
moral turpitude; (iv) willful malfeasance, willful misconduct or gross negligence in connection
with the Eligible Employee’s employment duties or any act or omission that is injurious to the
financial condition or business reputation of the Company and its affiliates; or (v) breach of the
restrictive covenants in Sections 6.1, 6.2 or 6.3.

     2.6 “COBRA” means the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended.

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

     2.8 “Committee” means the Compensation Committee of the Board, or any other committee
appointed by the Board to perform the functions of the Compensation Committee.

     2.9 “Company” means LPL Financial Corporation or any successor thereto.

     2.10 “Effective Date” means the closing of the 2010 initial public offering of common stock of
LPL Investment Holdings Inc.

2

 

     2.11 “Eligible Employee” means each member of the Executive Management Committee who has not
entered into an employment or severance contract (other than the Plan) with the Company or an
affiliate.

     2.12 “ERISA” means the Employee Retirement Income Security Act of 1974, as amended.

     2.13 “Executive Management Committee” means executive employees of the Company or its
affiliates who are designated by the Board as members of such committee.

     2.14 “Good Reason” shall mean only the occurrence, without the Participant’s express written
consent (which may be withheld for any or no reason) of any of the events or conditions described
herein, provided that, the Participant gives written notice to the Company of the occurrence of
Good Reason within ninety (90) days following the date on which the Participant first knew or
reasonably should have known of such occurrence and the Company shall not have fully corrected the
situation within thirty (30) days following such notice. The following occurrences shall
constitute Good Reason for purposes of this Plan: (i) a material reduction in the Participant’s
Base Salary unless such reduction is consistent with reductions made in the applicable annual base
salaries of other similarly situated employees of the Company or (ii) a material adverse change in
the Participant’s title from managing director (but not changes in functional titles); provided
that “Good Reason” shall cease to exist for an event on the ninetieth (90th) day
following the date on which the Participant knew or reasonably should have known of such event and
failed to give notice as described above or the Participant fails to terminate employment within
fourteen (14) days following the expiration of the cure period.

     2.15 “Involuntary Termination” means the termination of a Participant’s employment by the
Company for any reason other than death, Permanent Disability or Cause.

     2.16 “Participant” means an Eligible Employee who has satisfied the conditions for
participation in Section 3 and thereby becomes eligible for Severance Benefits under the Plan.

     2.17 “Permanent Disability” means a physical or mental incapacity or disability of a
Participant which is determined by a qualified third party medical expert to render the Participant
unable to substantially perform all of the usual duties of employment with the Company (with
reasonable accommodations that do not cause an undue hardship) (i) for one-hundred twenty (120)
days in any twelve (12) month period or (ii) for a period of ninety (90) successive days.

     2.18 “Plan” means this LPL Financial Corporation Executive Severance Plan, as may be amended
from time to time.

     2.19 “Proprietary Information” means trade secrets or proprietary or confidential information
of any of the Company or its affiliates, or of any third party which any one of the Company or its
affiliates is under an obligation to keep confidential (including, but not limited to, intellectual
property rights and information related to the business of any of the Company or its affiliates and
any of their clients or representatives that (a) confers or tends to confer a competitive advantage
on any of the Company or its affiliates or (b) that has commercial value for any of the Company or
its affiliates). This includes but is not limited to: contracts; marketing materials and business
strategies; legal information; regulatory information; product information;

3

 

mark-up guidelines; client lists (including the names, addresses, telephone numbers and
account numbers of clients, the trade history with each client, and all other information on client
lists); lists of client prospects, financial advisors, business partners, brokers and/or
representatives; software programs; software source documents, financial information and
projections; and all concepts, plans, proposals or information about current, future and proposed
business or sales.

     2.20 “Qualifying Termination” means (i) an Involuntary Termination or (ii) a voluntary
termination of the Participant’s employment for Good Reason.

     2.21 “Release” means a general release agreement which contains, among other provisions, a
general release of all claims of any kind whatsoever against the Company and its affiliates, their
officers, directors and employees, known or unknown, as of the Separation Date.

     2.22 “Separation Date” means the Participant’s last active day of employment with the Company.

     2.23 “Severance Benefits” means the payment of severance compensation as provided in Section
4.2 herein.

     2.24 “Severance Period” and “Restricted Period” means one (1) year following the Separation
Date.

     2.25 “Voluntary Resignation” means any retirement or voluntary resignation from employment
other than for Good Reason.

Article 3. Participation

     3.1 Eligible Employees. Each Eligible Employee who incurs a Qualifying Termination and
satisfies the conditions of Section 3.2 shall be a Participant and shall receive the Severance
Benefits described in the Plan.

     3.2 Release. As a condition of receiving benefits hereunder, a Participant shall be required
to provide the Company with a Release. The Release shall be in the form provided by the Company
and must be executed within the time period specified by the Company, which shall not exceed sixty
(60) days following the Separation Date. Provided that the Participant has complied in all
material respects with the terms and conditions of the Release, the Company shall provide the
Participant with the payments set forth in Section 4.2.

Article 4. Severance Benefits

     4.1 Right to Severance Benefits. An Eligible Employee shall be entitled to receive from the
Company the Severance Benefits, as described in Section 4.2, if the Eligible Employee’s employment
with the Company ends on account of a Qualifying Termination, and the Eligible Employee executes,
and does not revoke, the Release. Eligible Employees shall not be entitled to receive Severance
Benefits if they are terminated for a reason that does not constitute a Qualifying Termination.

4

 

     4.2 Severance Benefits. In the event that a Participant becomes entitled to receive
Severance Benefits, the Company shall pay to the Participant the following:

	 	(a)	 	the Accrued Compensation, payable in a lump sum at the Company’s next regular
payday following the sixtieth (60th) day after the Separation Date or on such earlier
date as may be required or permitted under applicable law;
	 
	 	(b)	 	Base Salary during the Severance Period;
	 
	 	(c)	 	an amount equal to the bonus paid (or payable) to the Participant for the most
recently completed calendar year; and
	 
	 	(d)	 	an amount equal to 100% of the premium (including the additional amount, if
any, charged for administrative costs as permitted by COBRA) of continued health and
dental plan participation under COBRA for the Participant and for the Participant’s
qualified beneficiaries (as that term is defined under COBRA) for the one (1) year
period immediately following the Separation Date. Notwithstanding any provision herein
to the contrary, the premium payment shall be paid in a lump sum on the first business
day that is the earlier of (i) six (6) months following the Separation Date, or (ii) at
such time as otherwise permitted by law that would not result in additional taxation
and penalties under Code Section 409A.

Except as otherwise provided in Article 9 or elsewhere herein, any payments due under this Section
shall be payable in twelve (12) monthly installments during the Severance Period in accordance with
the Company’s normal payroll practices and shall begin at the Company’s next regular payday
following the sixtieth (60th) day after the Separation Date provided that the Participant has
executed and not revoked the Release and is compliant in all material respects with the Release
terms and conditions. For the avoidance of doubt, if the Participant does not execute a Release or
if the Participant revokes an executed Release within the time period permitted by law, the
Participant shall not be entitled to the Severance Benefits, other than the Accrued Compensation,
set forth in this Section 4.2. Except as described in this Section 4.2, neither the Company nor
any of its affiliates shall have any further obligations to the Participant under the Plan.

     4.3 Voluntary Resignation; Termination for Death or Permanent Disability. If an Eligible
Employee’s employment terminates on account of (a) Voluntary Resignation, (b) death, or (c)
Permanent Disability, then the Eligible Employee shall not be entitled to receive Severance
Benefits under this Plan and shall be entitled only to receive his or her Accrued Compensation.
Except as described in this Section 4.3, neither the Company nor any of its affiliates shall have
any further obligations to the Participant under the Plan.

     4.4 Termination for Cause. If an Eligible Employee’s employment terminates on account of
termination by the Company for Cause, the Eligible Employee shall not be entitled to receive
Severance Benefits and the Company shall pay the Eligible Employee his or her Accrued Compensation.
Notwithstanding any other provision of the Plan to the contrary, if the

5

 

Committee determines, at any time, that a Participant has engaged in conduct prior to the
Participant’s Separation Date that constitutes Cause, any Severance Benefits payable or provided to
the Participant under the Plan shall immediately cease, and the Participant shall be required to
return any Severance Benefits paid or provided to the Participant prior to such determination.
Except as described in this Section 4.4, neither the Company nor any affiliate shall have any
further obligations to such Eligible Employee or Participant, as applicable, under the Plan.

     4.5 Severance Benefits in the Event of Death. If a Participant dies while any amount would
still be payable to him or her hereunder had he or she continued to live, all such amounts, unless
otherwise provided herein, shall be paid to the Participant’s Beneficiary within sixty (60) days
from the date of the Participant’s death.

Article 5. Code Section 4999 Excise Tax.

     Anything in this Plan to the contrary notwithstanding, in the event that it shall be
determined that any payment or benefit (including any accelerated vesting of options or other
equity awards) made or provided, or to be made or provided, by the Company (or any successor
thereto or affiliate thereof) to or for the benefit of a Participant, whether pursuant to the terms
of this Plan, any other agreement, plan, program or arrangement of or with the Company (or any
successor thereto or affiliate thereof) or otherwise (a “Payment”), will be subject to the excise
tax imposed by Code Section 4999 or any comparable tax imposed by any replacement or successor
provision of United States tax law, then the aggregate present value of the Payments shall be
reduced (but not below zero) to the Reduced Amount. The “Reduced Amount” shall be an amount
expressed in present value which maximizes the aggregate present value of the Payments without
causing any Payment to be subject to the deduction limitation under Code Section 280G or the
imposition of any excise tax under Code Section 4999. For this purpose, “present value” shall be
determined in accordance with Code Section 280G(d)(4). In the event that it is determined that the
amount of the Payments will be reduced in accordance with this Section, the Payments shall be
reduced on a nondiscretionary basis in such a way as to minimize the reduction in the economic
value deliverable to the Participant. In applying this principle, the reduction shall be made in a
manner consistent with the requirements of Code Section 409A, and where more than one payment has
the same value for this purpose and they are payable at different times, they will be reduced on a
pro-rata basis. All determinations to be made under this Section shall be made by the nationally
recognized independent public accounting firm used by the Company immediately prior to the change
in control (“Accounting Firm”), which Accounting Firm shall provide its determinations and any
supporting calculations to the Company and the Participant within ten
(10) days of the Separation Date.
Any such determination by the Accounting Firm shall be binding upon the Company and the
Participant. All of the fees and expenses of the Accounting Firm in performing the determinations
referred to in this Section shall be borne solely by the Company.

Article 6. Restrictive Covenants

     As consideration for the Company’s offer of coverage under this Plan to Eligible Employees and
for other good and valuable consideration, during his or her employment and upon termination of
employment for any reason, each Eligible Employee agrees to comply with the restrictive covenants
contained herein. In addition, receipt of Severance Benefits other than

6

 

Accrued Compensation is expressly conditioned upon such Participant’s continued compliance
with such restrictive covenants.

     6.1 Non-Competition. During the Restricted Period, regardless of the reason for the
separation and to the extent enforceable under applicable law, an Eligible Employee may not
provide, directly or indirectly, alone or as principal, agent, employee, employer, consultant,
investor or partner of, or assist in the management of, or provide advisory, sales, marketing,
recruiting or any other services to a business or entity that competes in any respect with a
business in which the Company and its affiliates were engaged (including, specifically, services
related to financial advisors), or any material products and/or services that the Company or its
affiliates were actively developing or designing as of the date such Eligible Employee’s employment
with the Company terminated, provided that, prior to such termination, such Eligible Employee knew
of such other business or such material product or such service under active development or design.

     6.2 Non-Solicitation.

     (a) During the Restricted Period, regardless of the reason for the separation and to the
extent enforceable under applicable law, each Eligible Employee may not, directly or indirectly,
solicit, persuade or induce: (i) any financial advisor licensed with the Company or its affiliates
or any clients of such financial advisor; (ii) any financial advisor licensed with the Company or
its affiliates during the twelve (12) month period prior to such Eligible Employee’s Separation
Date or any clients of such financial advisors; (iii) any financial advisors who such Eligible
Employee, by virtue of his or her position, knew or should have known to be in discussions with the
Company or its affiliates regarding licensure with the Company or its affiliates; (iv) any
institution with a contract with the Company or its affiliates; (v) any institution with a contract
with the Company or its affiliates during the twelve (12) month period prior to such Eligible
Employee’s Separation Date; or (vi) any institution who such Eligible Employee, by virtue of his or
her position, knew or should have known to be in discussions with the Company or its affiliates
regarding business relations with the Company or its affiliates.

     (b) During the Restricted Period, regardless of the reason for the separation and to the
extent enforceable under applicable law, each Eligible Employee may not, directly or indirectly,
solicit, seek to hire, or persuade or induce any employee or consultant of the Company or its
affiliates (or any person who was an employee or consultant of the Company or its affiliates during
the twelve (12) month period prior to such Eligible Employee’s Separation Date) to discontinue his
or her employment or other association with the Company or its affiliates.

     6.3 Confidentiality. Each Eligible Employee agrees and covenants not to disclose or use for
his or her own benefit, or the benefit of any other person or entity, any Proprietary Information,
unless or until the Proprietary Information is or becomes known or available to the public other
than because of a breach of this agreement by such Eligible Employee, or such disclosure is or
becomes required by law or valid legal process or is necessary to carry out the duties of his or
her employment, each Eligible Employee shall not disclose or reveal to any unauthorized person any
Proprietary Information relating to one or more of the Company or its affiliates, and each Eligible
Employee confirms that the Proprietary Information constitutes the exclusive property of one or
more of the Company or its affiliates.

7

 

     6.4 Specific Remedy. Each Eligible Employee acknowledges and agrees that if he or she commits
a material breach of the restrictive covenants in Sections 6.1, 6.2 or 6.3, the Company shall have
the right to have the covenant specifically enforced through an injunction or otherwise, without
any obligation that the Company post a bond or prove actual damages, by any court having
appropriate jurisdiction on the grounds that any such breach will cause irreparable injury to the
Company, without prejudice to any other rights and remedies that Company may have for a breach of
this Plan, and that money damages will not provide an adequate remedy to the Company. Each
Eligible Employee further acknowledges and agrees that the restrictive covenants contained in
Section 6.1, 6.2 or 6.3 are intended to protect the Company’s business interests and goodwill, are
fair, do not unreasonably restrict his or her future employment and business opportunities, and are
commensurate with the arrangements set out in this Plan and with the other terms and conditions of
the Eligible Employee’s employment.

Article 7. Withholding of Taxes; Funding

     7.1 Withholding of Taxes; Taxes. The Company shall be entitled to withhold from any amounts
payable under the Plan all taxes as legally shall be required (including, without limitation, any
United States federal taxes, and any other state, city, or local taxes). Each Participant shall be
solely responsible for the payment of all taxes that become due as a result of a payment to the
Participant under this Plan.

     7.2 Funding. The Plan shall be funded out of the general assets of the Company as and when
severance benefits are payable under the Plan. All Participants shall be solely general creditors
of the Company.

Article 8. Successors and Assignment

     8.1 Successors to the Company. The Company will require any successor (whether direct or
indirect, by purchase, merger, consolidation, or otherwise) of all or substantially all of the
business and/or assets of the Company or of any division or subsidiary thereof to expressly assume
and agree to perform the Company’s obligations under the Plan in the same manner and to the same
extent that the Company would be required to perform them if no such succession had taken place.

     8.2 Assignment by the Participant. Except in the event of death, a Participant does not have
the power to transfer, assign, anticipate, mortgage or otherwise encumber any rights or any amounts
payable under this Plan; nor will any such rights or amounts payable under this Plan be subject to
seizure, attachment, execution, garnishment or other legal or equitable process, or for the payment
of any debts, judgments, alimony, or separate maintenance, or be transferable by operation of law
in the event of bankruptcy, insolvency, or otherwise. In the event a Participant attempts to
assign, transfer or dispose of such right, or if an attempt is made to subject such right to such
process, such assignment, transfer or disposition will be null and void.

Article 9. Code Section 409A

     Notwithstanding the other provisions hereof, this Plan is intended to comply with the
requirements of Code Section 409A, to the extent applicable, and this Plan shall be interpreted to
avoid any penalty sanctions under Code Section 409A. Accordingly, all provisions herein, or

8

 

incorporated by reference, shall be construed and interpreted to comply with Code Section 409A
and, if necessary, any such provision shall be deemed amended to comply with Code Section 409A and
regulations thereunder. If any payment or benefit cannot be provided or made at the time specified
herein without incurring sanctions under Code Section 409A, then such benefit or payment shall be
provided in full at the earliest time thereafter when such sanctions will not be imposed. All
payments to be made upon a termination of employment under this Agreement may only be made upon a
“separation from service” under Code Section 409A to the extent required under Code Section 409A.
For purposes of Code Section 409A, each payment made under this Plan shall be treated as a separate
payment. In no event may a Participant, directly or indirectly, designate the calendar year of
payment.

     Reimbursements provided under this Plan, if any, shall be made or provided in accordance with
the requirements of Code Section 409A including, where applicable, the requirement that (i) any
reimbursement is for expenses incurred during a limited period of time; (ii) the amount of expenses
eligible for reimbursement during a calendar year may not affect the expenses eligible for
reimbursement in any other calendar year; (iii) the reimbursement of an eligible expense will be
made no later than the last day of the calendar year following the year in which the expense is
incurred; and (iv) the right to reimbursement is not subject to liquidation or exchange for another
benefit.

     To the maximum extent permitted under Code Section 409A, the severance benefits payable under
this Plan are intended to comply with the “short-term deferral exception” under Treas. Reg.
§1.409A-1(b)(4), and any remaining amount is intended to comply with the “separation pay exception”
under Treas. Reg. §1.409A-1(b)(9)(iii); provided, however, any portion of the severance benefits
that are payable under the Plan to a Participant during the six (6) month period following the
Participant’s Separation Date that does not qualify within either of the foregoing exceptions and
constitutes deferred compensation subject to the requirements of Code Section 409A, then such
amount shall hereinafter be referred to as the “Excess Amount.” If at the time of the
Participant’s separation from service, the Company’s (or any entity required to be aggregated with
the Company under Code Section 409A) stock is publicly-traded on an established securities market
or otherwise and the Participant is a “specified employee” (as defined in Code Section 409A and
determined in the sole discretion of the Company (or any successor thereto) in accordance with the
Company’s (or any successor thereto) “specified employee” determination policy), then the Company
shall postpone the commencement of the payment of the portion of the Excess Amount that is payable
within the six (6) month period following the Participant’s Separation Date with the Company (or
any successor thereto) for six (6) months following the Participant’s Separation Date with the
Company (or any successor thereto). The delayed Excess Amount shall be paid in a lump sum to the
Participant within ten (10) days following the date that is six (6) months following the
Participant’s Separation Date with the Company (or any successor thereto) and any remaining
installments shall continue to be paid to the Participant on their original schedule. If the
Participant dies during such six (6) month period and prior to the payment of the portion of the
Excess Amount that is required to be delayed on account of Code Section 409A, such Excess Amount
shall be paid to the personal representative of the Participant’s Beneficiary within sixty (60)
days after the Participant’s death.

9

 

Article 10. Claims Procedures

     Any request or claim for severance benefits under the Plan shall be deemed to be filed when a
written request is made by the claimant or the claimant’s authorized representative which is
reasonably calculated to bring the claim to the attention of the Committee.

     The Committee, or its designee, shall advise the claimant or such claimant’s representative,
in writing or in electronic form, of its decision within ninety (90) days of receipt of the claim
for severance benefits under the Plan, unless special circumstances require an extension of such
ninety (90) day period for not more than an additional ninety (90) days. Where such extension is
necessary, the claimant shall be given written notice of the delay before the expiration of the
initial ninety (90) day period, which notice shall set forth the reasons for the delay and the date
the Committee expects to render its decision. If the extension is necessary because the claimant
has failed to submit the information necessary to decide the claim, the Committee’s period for
responding to such claim shall be tolled until the date the claimant responds to the request for
additional information. The response shall (i) be in writing or in electronic form; (ii) be
written in a manner calculated to be understood by the claimant; and (iii) in the case of an
adverse benefit determination: (a) set forth the specific reason(s) for the denial of benefits; (b)
contain specific references to Plan provisions on which the denial is based; (c) describe any
additional material and information, if any, necessary for the claim for benefits to be perfected,
and an explanation of why such material or information is necessary; and (d) describe the Plan’s
review procedures and the time limits applicable to such procedures, and include a statement of the
claimant’s right to bring a civil action under section 502(a) of ERISA following an adverse benefit
determination on review.

     If the claimant fails to appeal the Committee’s adverse benefit determination, in writing,
within sixty (60) days after its receipt by the claimant, the Committee’s determination shall
become final and conclusive.

     If the claimant appeals the Committee’s adverse benefit determination in a timely fashion, the
Committee shall reexamine all issues relevant to the original denial of benefits. Any such
claimant or his or her duly authorized representative may review any relevant documents and
records, free of charge, including documents and records that were relied upon in making the
benefit determination, documents submitted, considered or generated in the course of making the
benefit determination (even if such documents were not relied upon in making the benefit
determination), and documents that demonstrate compliance, in making the benefit determination,
with the Plan’s required administrative processes and safeguards. In addition, the claimant or his
duly authorized representative may submit, in writing, any documents, records, comments or other
information relating to such claim for benefits. In the course of the review, the Committee shall
take into account all comments, documents, records and other information submitted by the claimant
or his duly authorized representative relating to such claim, regardless of whether it was
submitted or considered as part of the initial benefit determination.

     The Committee shall advise the claimant or such claimant’s representative, in writing or in
electronic form, of its decision within sixty (60) days of receipt of the written appeal, unless
special circumstances require an extension of such sixty (60) day period for not more than an
additional sixty (60) days. Where such extension is necessary, the claimant shall be given

10

 

written notice of the delay before the expiration of the initial sixty (60) day period, which
notice shall set forth the reasons for the delay and the date the Committee expects to render its
decision. In the event of an adverse benefit determination on appeal, the Committee shall advise
the claimant, in a manner calculated to be understood by the claimant of: (i) the specific
reason(s) for the adverse benefit determination; (ii) the specific Plan provisions on which the
decision was based; (iii) the claimant’s right to receive, upon request and free of charge, and
reasonable access to, copies of all documents, records and other information relevant to such
claim; and (iv) a statement describing any voluntary appeals procedures offered by the Plan, the
claimant’s right to obtain information about such procedures, and a statement of the claimant’s
right to bring an action under section 502(a) of ERISA.

     No person may bring an action for any alleged wrongful denial of Plan benefits in a court of
law unless the claims procedures set forth above are exhausted and a final determination is made by
the Committee. If a Participant or other interested person challenges a decision of the Committee,
a review by the court of law will be limited to the facts, evidence and issues presented to the
Committee during the claims procedure set forth above. Facts and evidence that become known to the
Participant or other interested person after having exhausted the claims procedure must be brought
to the attention of the Committee for reconsideration of the claims determination. Issues not
raised with the Committee will be deemed waived.

Article 11. Administration

     The Committee will be the plan administrator of the Plan and the named fiduciary of the Plan
for purposes of ERISA. The Committee may, however, delegate to any person, committee or entity any
of its power or duties under the Plan. The Committee will be the sole judge of the application and
interpretation of the Plan, and will have the discretionary authority to construe the provisions of
the Plan and to resolve disputed issues of fact. The Committee will have the sole authority to
make determinations regarding eligibility for benefits. The decisions of the Committee in all
matters relating to the Plan that are within the scope of its authority (including, but not limited
to, eligibility for benefits, Plan interpretations, and disputed issues of fact) will be final and
binding on all parties.

Article 12. Miscellaneous

     12.1 Notice of Termination. Any termination for Cause covered by this Plan shall be
communicated by a Notice of Termination. For purposes of the Plan, a “Notice of Termination” shall
mean a written notice which shall indicate the specific termination provision in the Plan relied
upon, and shall set forth in reasonable detail the facts and circumstances claimed to provide a
basis for termination of the Participant’s employment under the provision so indicated.

     12.2 Employment Status. Except as may be provided under any other agreement between a
Participant and the Company, the employment of the Participant by the Company is “at will”, and may
be terminated by either the Participant or the Company at any time, subject to applicable law.
Nothing contained herein shall constitute an employment contract or guarantee of employment or
confer any other rights except as set forth herein.

11

 

     12.3 Other Payments. Except as otherwise provided in this Plan, no Participant shall be
entitled to any cash payments or other severance benefits under any of the Company’s or any
affiliate’s then current severance pay policies for a termination that is covered by this Plan for
the Participant.

     12.4 No Mitigation. Participants shall not be required to mitigate the amount of any Severance
Benefit provided for in this Plan by seeking other employment or otherwise, nor shall the amount of
any Severance Benefit provided for herein be reduced by any compensation earned by other employment
or otherwise, except if the Participant is re-employed by the Company or an affiliate, in which
case Severance Benefits shall cease.

     12.5 Gender and Number. Except where otherwise indicated by the context, any masculine term
used herein also shall include the feminine; the plural shall include the singular, and the
singular shall include the plural.

     12.6 Amendment or Termination. The Board and the Committee may, in their sole discretion,
amend or terminate the Plan, in whole or in part, at any time and for any reason or no reason
without the consent of Participants. An amendment to the Plan may not discontinue or change any
payments to a Participant who commenced receiving severance benefits under the Plan prior to the
effective date of the amendment or termination of the Plan. If the Plan is terminated, no further
severance benefits will be payable under the Plan to any Participant who has not commenced
receiving severance benefits under the Plan prior to the effective date of such termination.

     12.7 Governing Law. To the extent not preempted by the laws of the United States, this Plan
shall be construed and enforced under and be governed in all respects by the laws of the
Commonwealth of Massachusetts, without regard to the conflict of laws principles thereof.

     12.8 Liability. No member of the Committee and no officer, director or employee of the Company
or any affiliate shall be liable for any inaction with respect to his or her functions under the
Plan unless such action or inaction is adjudged to be due to gross negligence, willful misconduct
or fraud. Further, no member of the Committee shall be personally liable merely by virtue of any
instrument executed by him or her or on his or her behalf as a member of the Committee.

     12.9 Indemnification. The Company shall indemnify, to the fullest extent permitted by law and
its Certificate of Incorporation and By-laws (but only to the extent not covered by insurance) its
officers and directors (and any employee involved in carrying out the functions of the Company
under the Plan) and each member of the Committee against any expenses, including amounts paid in
settlement of a liability, which are reasonably incurred in connection with any legal action to
which such person is a party by reason of his or her duties or responsibilities with respect to the
Plan, except with regard to matters as to which he or she shall be adjudged in such action to be
liable for gross negligence, willful misconduct or fraud in the performance of his or her duties.

     12.10 Headings. The headings of the Plan are inserted for convenience of reference only and
shall have no effect upon the meaning of provisions hereof.

12

 

     12.11 Incompetency. In the event that the Committee finds that a Participant is unable to care
for his or her affairs because of illness or accident, then benefits payable hereunder, unless
claim has been made therefor by a duly appointed guardian, committee, or other legal
representative, may be paid in such manner as the Committee shall determine, and the application
thereof shall be a complete discharge of all liability for any payments or benefits to which such
Participant was or would have been otherwise entitled under the Plan.

     IN
WITNESS WHEREOF, the Company has caused this instrument to be executed this                      day of                     , 2010.

	 	 	 	 	 
	 
	 	LPL FINANCIAL CORPORATION

 	 
	 	By:  	 	 
	 	 	Its: 	 

13

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