Document:

Exhibit
4.2

 

STOCKHOLDERS AGREEMENT

 

This
STOCKHOLDERS AGREEMENT, dated as of                               ,
2006 (this “Agreement”), is entered into by and between COWEN GROUP,
INC., a Delaware corporation (the “Company”), and SG AMERICAS SECURITIES
HOLDINGS, INC., a Delaware corporation (“SGASH”).

 

RECITALS

 

WHEREAS, the
Company, SGASH, Société Générale, SG Americas, Inc. and Cowen and Company, LLC
are parties to that certain Separation Agreement, dated as of                               ,
2006 (the “Separation Agreement”), pursuant to which, among other
things, the Company will issue to SGASH shares of the Company’s common stock,
par value $0.01 per share (“Common Stock”);

 

WHEREAS, the
Company has filed a registration statement on Form S-1 (File No. 333-132602)
(the “IPO Registration Statement”) with the Securities and Exchange
Commission in connection with the initial public offering (the “IPO”) of
shares of its Common Stock; and

 

WHEREAS, the
Company and SGASH desire to enter into this Agreement to clarify their
relationship following the IPO with respect to any shares of Common Stock held
by SGASH or any other Holder, on the terms and subject to the conditions set
forth herein.

 

NOW,
THEREFORE, in consideration of the mutual covenants and agreements hereinafter
contained and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:

 

ARTICLE 1

DEFINITIONS

 

SECTION 1.1  Definitions. Capitalized terms used and
not otherwise defined in this Agreement shall have the respective meanings
ascribed to such terms in the Separation Agreement. The following terms shall
have the meanings set forth in this Section 1.1:

 

“Adverse
Effect” has the meaning given to such term in Section 4.1.5.

 

“Advice”
has the meaning given to such term in Section 4.6.

 

“Advised
Offering Share Amount” has the meaning given to such term in Section
4.1.5.

 

“Affiliate”
means, with respect to any specified Person, any other Person who, directly or
indirectly, controls, is controlled by or is under common control with such
specified Person.

 

“Agreement”
has the meaning given to such term in the preamble of this Agreement.

 

 

“Award”
means individually or collectively, a grant under the Cowen Employee Ownership Plan
of options, stock appreciation rights, restricted stock, restricted stock units
or other Stock-Based Awards or Cash-Based Awards.

 

“Award
Agreement” means any written agreement, contract, or other instrument or
document evidencing an Award.

 

“Board of
Directors” has the meaning given to such term in Section 2.1(a).

 

“Cash-Based
Award” means an Award granted under the Cowen Employee Ownership Plan that
is denominated or payable in cash, including cash awarded as a bonus or upon
the attainment of performance goals or otherwise as permitted under the Cowen
Employee Ownership Plan.

 

“Common
Stock” has the meaning given to such term in the recitals of this
Agreement. 

 

“Company”
has the meaning given to such term in the preamble of this Agreement.

 

“Cowen Employee
Ownership Plan” has the meaning given to such term in Section 2.4(b)(i).

 

“Demand
Registration” has the meaning given to such term in Section 4.1.1(a).

 

“Demanding
Stockholders” has the meaning given to such term in Section 4.1.1(a).

 

“Demand
Request” has the meaning given to such term in Section 4.1.1(a). 

 

“Exchange
Act” means the Securities Exchange Act of 1934, as amended, or any similar
federal statute, and the rules and regulations promulgated by the SEC
thereunder.

 

“Fair
Market Value” means the average of the high and low sales price of shares
of the Common Stock reported on the Nasdaq National Market or such other
national securities exchange or over-the-counter market on which such shares
are principally traded, for the last date immediately preceding the date of the
Demand Request on which there was a sale of such shares on such exchange.

 

“Holder”
means (i) SGASH and (ii) any direct or indirect transferee of SGASH who shall
become a party to this Agreement in accordance with Section 6.6.

 

“Holder
Lock-Up Period” has the meaning given to such term in Section 3.2.

 

“Initial
Awards” means the Restricted Stock and Options granted concurrently with
the IPO under the 2006 Equity and Incentive Plan to then-existing employees.

 

“Inspectors”
has the meaning given to such term in Section 4.5(xii).

 

“IPO”
has the meaning given to such term in the recitals of this Agreement.

 

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“IPO
Registration Statement” has the meaning given to such term in the recitals
of this Agreement.

 

“IPO
Underwriting Agreement” means the underwriting agreement to be entered into
by and among SGASH, the Company and the managing underwriters for the IPO in
connection with the IPO.

 

“Losses”
has the meaning given to such term in Section 4.8.1.

 

“NASD”
has the meaning given to such term in Section 4.7.1.

 

“Permitted
Transfers” has the meaning given to such term in Section 3.4.

 

“Person”
or “person” means any individual, corporation, partnership, limited
liability company, joint venture, association, joint-stock company, trust,
unincorporated organization or government or other agency or political
subdivision thereof.

 

“Proposed
Offering Share Amount” means the aggregate number of Registrable Shares
and/or shares of Common Stock proposed to be sold pursuant to a registration,
including any Demand Registrations and Piggyback Registrations.

 

“Piggyback
Registration” has the meaning given to such term in Section 4.2.1.

 

“Records”
has the meaning given to such term in Section 4.5(xii).

 

“register,”
“registered” and “registration” refer to a registration effected
by preparing and filing a registration statement in compliance with the
Securities Act, and the declaration or ordering of the effectiveness of such
registration statement.

 

“Registrable
Shares” means the Common Stock owned by the Holders, whether owned on the
date hereof or acquired hereafter; provided, however, that shares
of Common Stock that, pursuant to Section 5.1, no longer have
registration rights hereunder shall not be considered Registrable Shares.

 

“Requesting
Holders” shall mean any Holder(s) requesting to have its (their)
Registrable Shares included in any Demand Registration or Shelf Registration.

 

“Required
Filing Date” has the meaning given to such term in Section 4.1.1(b).

 

“SEC”
means the Securities and Exchange Commission or any other federal agency at the
time administering the Securities Act.

 

“Securities
Act” means the Securities Act of 1933, as amended, or any similar federal
statute, and the rules and regulations promulgated by the SEC thereunder.

 

“Seller
Affiliates” has the meaning given to such term in Section 4.8.1.

 

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

 

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“SGASH”
has the meaning given to such term in the preamble of this Agreement.

 

“Shelf
Registration” has the meaning given to such term in Section 4.1.2.

 

“Stock-Based
Award” means an Award granted under the Cowen Employee Ownership Plan that
may be denominated or payable in, valued in whole or in part by reference to,
or otherwise based on, or related to, Common Stock including but not limited to
performance units, stock appreciation rights (payable in shares), restricted
stock units or dividend equivalents, each of which may be subject to the
attainment of performance goals or a period of continued employment or other
terms and conditions as permitted under the Plan

 

“Suspension
Notice” has the meaning given to such term in Section 4.6.

 

“Transfer”
has the meaning given to such term in Section 3.1.

 

ARTICLE 2

BOARD OF DIRECTORS; CLEAR MARKET; VOTING RIGHTS

 

SECTION 2.1  Board of Directors.

 

(a)           For so long as SGASH holds shares of
Common Stock representing at least forty percent (40%) of all Common Stock outstanding,
the Company’s board of directors (the “Board of Directors”) shall be
comprised of not more than eight directors, two of whom shall be designated by
SGASH.

 

(b)           For so long as SGASH holds shares of
Common Stock representing at least ten percent (10%) (but less than forty
percent (40%)) of all Common Stock outstanding, the Board of Directors shall be
comprised of not more than seven directors, one of whom shall be designated by
SGASH.

 

(c)           SGASH agrees that, so long as it has
a right to designate directors under this Section 2.1, it will not
engage in any actions (including proxy solicitations) for the purpose of
increasing the number of its designated directors on the Board of Directors in
excess of the limits set forth in Sections 2.1(a) and (b).

 

(d)           SGASH’s right to designate directors
under this Section 2.1 shall cease as of the date that its holdings of
shares of Common Stock represent less than ten percent (10%) of all Common
Stock outstanding. SGASH promptly shall cause one of its designated directors
to resign following the date that its holdings of shares of Common Stock
represent less than forty percent (40%) of all Common Stock outstanding and its
remaining designated director to resign following the date that its holdings of
shares of Common Stock represent less than ten percent (10%) of all Common
Stock outstanding.

 

(e)           The Company shall take all actions
necessary to nominate (or cause its nominating committee to nominate), or to
cause the Board of Directors to approve and appoint, the designees described
above to be members of the Board of Directors in accordance with the Company’s
nominating committee policies and procedures applicable to all nominees of the
Board of Directors, promptly after their designation by SGASH; provided
that such designee is

 

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reasonably acceptable to the Board of Directors and
its nominating committee in the exercise of its fiduciary duties. The Company
will deliver to each director designated by SGASH copies of all papers that may
be distributed from time to time to the other directors of the Company at such
time as such papers are so distributed to them.

 

(f)            In the event that a vacancy is
created on the Board of Directors at any time by the death, disability, retirement,
resignation or removal of any member of the Board of Directors who was
designated by SGASH pursuant to this Section 2.1 and, at such time,
SGASH still has the right to designate such director, the Company agrees to
promptly take such actions as will result in the nomination or appointment as a
director of an individual designated by SGASH to fill such vacancy and serve as
a director.

 

(g)           In the event that the percentage of
Cowen Inc.’s outstanding Common Stock owned by SGASH is reduced as described in
Section 2.4(a)(iv) of this Agreement, the ownership thresholds
applicable in this Section 2.1 shall be calculated without giving effect
to the issuance of Common Stock of Cowen Inc. that caused such reduction.

 

SECTION 2.2  Director Indemnification. So long as
any director designated by SGASH serves on the Board of Directors and for at
least six (6) years thereafter, the Company agrees to:

 

(a)           provide, in the certificate of
incorporation and by-laws of the Company, for the indemnification and exculpation
and reimbursement of expenses of directors and officers to the fullest extent
permitted by the General Corporation Law of Delaware; and

 

(b)           to the extent available on
commercially reasonable terms, purchase and maintain directors’ and officers’
insurance reasonably satisfactory in all respects to SGASH to provide coverage
to any member of the Board of Directors who was designated by SGASH pursuant to
Section 2.1. Such directors’ and officers’ insurance shall be deemed
reasonably satisfactory in all respects to SGASH if it provides the same
coverage to each member of the Board of Directors and is satisfactory to a
majority of the members of the Board of Directors other than those designated
by SGASH.

 

(c)           The right to indemnification,
exculpation and reimbursement and the insurance coverage set forth in Sections
2.2(a) and (b) shall be the same for all of the Company’s directors,
including directors designated by SGASH.

 

SECTION 2.3  Company Lock-Up Period; Clear Market. For
a period beginning on the date of the final prospectus for the IPO and ending
on the date which is 180 days following the IPO (or such earlier date as may be
specified in the IPO Underwriting Agreement or otherwise agreed to with lead or
managing underwriters in the IPO), the Company will not, to the extent so
required, effect any public sale or distribution of its equity securities, or
any securities convertible into or exchangeable or exercisable for such
securities; provided, however, that unless otherwise agreed by
the Company in the applicable underwriting agreement, such restriction shall
not apply to registrations on Form S-4 or Form S-8 or any successor form or any
other registrations to effect the acquisition of, or combination with, another
Person or related to any employee benefits plan or program. The Company will
not take, directly or indirectly, any

 

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action designed to or that could reasonably be
expected to cause or result in any stabilization or manipulation of the price
of the Common Stock.

 

SECTION 2.4  Other SGASH Voting Rights.

 

(a)           Until the earlier of (x) the date
that is eighteen (18) months following the
date of the final prospectus for the IPO and (y) the date as of which SGASH
ceases to hold shares of Common Stock representing at least ten percent (10%)
of all Common Stock outstanding, the Company shall not, and shall not permit
any of its Subsidiaries to, take any of the following actions without the prior
written consent of SGASH:

 

(i)            adopt
any plan or agreement for the dissolution or liquidation of the Company or any
of its Subsidiaries;

 

(ii)           adopt
any stockholder rights plan or “poison pill” that contains a “flip-in” trigger
below the lower of (i) fifteen percent (15%) and (ii) such percentage equal to
the sum of SGASH’s then current percentage ownership of the outstanding voting
securities of the Company plus three percent (3%);

 

(iii)          adopt
any trading policies or restrictions that would reasonably be expected to limit
or impede SGASH’s ability to Transfer Common Stock other than as set forth in
the Company’s trading policy in existence at the Separation Date (or any subsequent or additional
trading policy that is not more restrictive on SGASH’s ability to Transfer
Common Stock than such trading policy);

 

(iv)          issue
any shares of capital stock or options to purchase capital stock if such
issuance would result in a reduction of the percentage of Cowen Inc.’s
outstanding Common Stock owned by SGASH, or adopt any plan or agreement that
would have the effect of reducing SGASH’s ownership percentage, except in
connection with the issuance of shares of capital stock or options to purchase
capital stock in connection with (a) Cowen Inc.’s acquisition of, or
combination with, another Person that is not an Affiliate of Cowen Inc. or (b)
an equity benefit plan or program for the benefit of employees, consultants,
officers or directors of Cowen Inc. or the Cowen Subsidiaries approved by the
Board of Directors of Cowen Inc.; and

 

(v)           amend,
restate or modify the certificate of incorporation, by-laws, limited liability
company operating agreement, limited partnership agreement or equivalent
organizational documents of Cowen Inc. or any Cowen Subsidiary in a manner that
disproportionately adversely affects the voting or other rights of SGASH and/or
the economic value of the share of Common Stock held by SGASH when compared to
other stockholders of the Company.

 

(b)           The Company shall not, and shall not
permit any of its Subsidiaries to, take any of the following actions without
the prior written consent of SGASH:

 

(i)            agree
to any across the board modification, amendment or waiver of the Initial Awards
granted as part of the 2006 Equity and Incentive Plan adopted by the Company as
of the date of the IPO, the form of which is attached to the Separation

 

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Agreement
as Exhibit C thereto (the “Cowen Employee Ownership Plan”), other than a
modification, amendment or waiver that is made by the Company, with the
approval of the Board of Directors (or the Compensation Committee thereof), due
to a change in applicable law that would, in the absence of such modification,
amendment or waiver, have a material adverse impact on the Company or the Plan
Participants who hold Initial Awards;

 

(ii)           consistently
or repetitively fail to enforce the provisions of the Cowen Employee Ownership
Plan or any Award Agreements applicable to Initial Awards; and

 

(iii)          agree
to any modification, amendment or waiver, on a case-by-case basis, of the Cowen
Employee Ownership Plan or any Award Agreements applicable to Initial Awards,
other than a modification, amendment or waiver that each member of the Board of
Directors has been notified of in writing, either before or following such
modification, amendment or waiver.

 

SECTION 2.5  Board Approval of Modifications. Until
the earlier of (x) the date that is eighteen (18) months following
the date of the final prospectus for the IPO and (y) the date as of which SGASH
ceases to hold shares of Common Stock representing at least ten percent (10%)
of all Common Stock outstanding, the prior consent or approval of the Board of
Directors (or the Compensation Committee thereof) shall be required for any
modification, amendment or waiver of an Award made to or an Award Agreement
with any Person who (i) is an executive officer of the Company or a member of
the Company’s Office of the Chief Executive or (ii) in the aggregate, has
received Awards under the Cowen Employee Ownership Plan that, if valued as of
the time of such modification, amendment or waiver, would have a fair market
value of at least $300,000. The “fair market value” of any Stock-Based Awards
for purposes of this paragraph shall be determined pursuant to the
Black-Scholes option pricing model, using the applicable assumptions used in
calculating values of stock options in the Company’s then current annual
meeting proxy statement and/or annual report. The “fair market value” of any
Cash-Based Award for purposes of this paragraph shall be equal to the maximum
cash value payable in respect of such Cash-Based Awards, assuming all
performance goals, continued employment requirements and other conditions
applicable to such Cash-Based Awards are satisfied.

 

SECTION 2.6  Enforcement of Employee Arrangements. Cowen
Inc. shall and shall cause its Subsidiaries to, upon receipt of any reasonable
request from SG or any SG Subsidiaries, perform (including not agreeing to any
modification, amendment or waiver) and take all actions as may be reasonably
necessary to prevent the violation or breach by any Person of (i) the Cowen
Employee Ownership Plan and any Award Agreement applicable to the Initial
Awards, and (ii) any written non-competition, non-solicitation,
non-disparagement, confidentiality or similar protective covenants running in
favor of SG or any SG Subsidiaries and applicable to Cowen Inc., or any
officers or employees of Cowen Inc., or any former officers or employees whose
employment was primarily associated with Cowen LLC or any of its Subsidiaries.

 

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ARTICLE 3

RESTRICTIONS ON TRANSFER

 

SECTION 3.1  Restrictions on Transfer. Each Holder
agrees that such Holder will not, directly or indirectly, offer, sell,
transfer, assign or otherwise dispose of (or make any exchange, gift,
assignment or pledge of) (collectively, for purposes of Article 3
and Section 2.4(a)(iii) only, a “Transfer”) any Common Stock
except as permitted by this Article 3 or the other provisions of this
Agreement. In addition to the other restrictions noted in this Article 3,
each Holder agrees that it will not, directly or indirectly, Transfer any
Common Stock except as permitted under the Securities Act and other applicable
securities laws.

 

SECTION 3.2  SGASH Lock-Up Period. To the extent
prohibited by the IPO Underwriting Agreement and the underwriters, a Holder may
not offer, sell, contract to sell or grant any option to purchase or otherwise
dispose of its Common Stock to a proposed Holder other than the Company for a
period of 180 days immediately following the effective date of the IPO (or such
earlier date as may be specified in the IPO Underwriting Agreement or otherwise
agreed to with lead or managing underwriters in the IPO) (the “Holder
Lock-Up Period”).

 

SECTION 3.3. Private
Sale Restrictions. Each Holder agrees that it will not, in a single private
sale transaction or series of related private sale transactions, (a) Transfer
Common Stock representing more than five percent (5%) of all Common Stock then
outstanding to a single purchaser or group of Affiliated purchasers or (b)
Transfer Common Stock to any single purchaser or group of Affiliated purchasers
where, following such Transfer, such purchaser or group of Affiliated
purchasers would, to the knowledge of such Holder after due inquiry, beneficially
own eight percent (8%) or more of all Common Stock then outstanding.

 

SECTION 3.4  Exceptions to Restrictions. The
provisions of Article 3 shall not apply to any of the following
Transfers (collectively, “Permitted Transfers”):

 

(a)           a Transfer pursuant to a Holder’s
exercise of its registration rights after the Holder Lock-Up Period and
pursuant to this Agreement;

 

(b)           a Transfer to the underwriters of the
IPO pursuant to the IPO Underwriting Agreement;

 

(c)           a Transfer from any Holder to any of
its Affiliates; provided, however, that any such Affiliate shall
execute a counterpart of and become a party to this Agreement and shall agree
in writing in form and substance reasonably satisfactory to the Company to be
bound by the terms of this Agreement as a Holder, and, provided, further,
that no Transfer to an Affiliate shall be deemed a Permitted Transfer hereunder
if the primary purpose of such Transfer is to avoid the restrictions set forth
in this Article 3;

 

(d)           a Transfer pursuant to an
underwritten public offering of any shares of the Company’s capital stock or
any instrument convertible into shares of the Company’s capital stock or an
open market sale in accordance with Rule 144 under the Securities Act, in
each case after the Holder Lock-Up Period; and

 

(e)           subject to the restrictions
set forth in Section 3.3, a Transfer pursuant to a private sale
transaction after the date that is ninety (90) days after the IPO; provided,
however, that (i) each transferee in such private sale transaction shall
execute a lock-up agreement that
provides for the restrictions set forth in this Article 3, (ii) the
Holder has not already effected fifteen (15)

 

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such private sale
transactions and (iii) to the best knowledge of the Holder, each transferee in
such private sale transaction (A) is a qualified institutional buyer as defined
in Rule 144A of the Securities Act and (B) agrees not to sell such shares prior
to the expiration of the Holder Lock-Up Period.

 

ARTICLE 4

REGISTRATION RIGHTS

 

SECTION 4.1  Demand Registration.

 

SECTION 4.1.1  Request for Registration. (a)  Commencing on the date that is 180 days after
the effective date of the IPO Registration Statement (or such earlier date as
may be specified in the IPO Underwriting Agreement or otherwise agreed to with
lead or managing underwriters in the IPO), and subject to the termination
provisions of Section 5.1 and the terms and conditions set forth in this
Article 4, any Holder or Holders of Registrable Shares shall have the
right to require the Company to file a registration statement on Form S-1 or
S-3 or any similar or successor to such forms under the Securities Act, which
the Company is then eligible to file, for a public offering of all or part of
its or their Registrable Shares (a “Demand Registration”), by delivering
to the Company written notice stating that such right is being exercised,
naming, if applicable, the Holders whose Registrable Shares are to be included
in such registration (collectively, the “Demanding Stockholders”),
specifying the number of each such Demanding Stockholder’s Registrable Shares
to be included in such registration and, subject to Section 4.1.3
hereof, describing the intended method of distribution thereof (a “Demand
Request”). In any such Demand Registration, the Demanding Stockholders
agree to (or shall instruct the managing underwriter to) seek a broad
distribution of all shares offered in such offering. The IPO Registration
Statement shall not constitute a Demand Registration for any purpose under this
Agreement.

 

(b)           Each Demand Request shall specify the
aggregate number of Registrable Shares proposed to be sold. Subject to Section
4.1.4, the Company shall use its reasonable best efforts to file the
registration statement in respect of a Demand Registration as soon as
practicable and, in any event, within forty-five (45) days after receiving a
Demand Request (the “Required Filing Date”) and shall use commercially
reasonable efforts to cause the same to be declared effective by the SEC as
promptly as practicable after such filing; provided, however,
that:

 

(i)            the
Company shall not be obligated to effect a Demand Registration pursuant to Section
4.1.1(a) (A) within one hundred eighty (180) days after the effective date
of the IPO Registration Statement (or such earlier date as of which Section
2.3 no longer applies to the Company), or (B) within ninety (90) days after
the effective date of a previous Demand Registration, other than the Shelf
Registration pursuant to this Article 2;

 

(ii)           the
Company shall not be obligated to effect a Demand Registration pursuant to Section
4.1.1(a) unless the Demand Request is for a number of Registrable Shares
that represents, in the aggregate, a Fair Market Value of at least (A) ten
percent (10%) of the Fair Market Value of all shares of Common Stock then
outstanding or (B) $20 million; and

 

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(iii)          the
Company shall not be obligated to effect pursuant to Section 4.1.1(a)
(A) more than two Demand Registrations during the first twelve (12) months
following the date hereof or (B) more than three Demand Registrations during
any 12-month period thereafter.

 

SECTION 4.1.2  Shelf Registration. With respect to
any one (and only one) Demand Request after the date that the Company is
eligible to file a registration statement on Form S-3 or any similar successor
form, the Requesting Holders may request the Company to effect such Demand
Registration of the Common Stock under a shelf registration statement for an
offering to be made on a continuous basis pursuant to Rule 415 under the
Securities Act (or any successor rule) (the “Shelf Registration”). Upon
receiving any such request, the Company shall effect the Shelf Registration in
the manner or manners designated by such Requesting Holders (including, without
limitation, one or more underwritten offerings) and in accordance with Section
4.5. Notwithstanding anything to the contrary in this Agreement, each
underwritten sale pursuant to the Shelf Registration shall be deemed to be a
separate Demand Registration under this Agreement and shall be subject to the
limitations set forth in this Section 4.1.

 

SECTION 4.1.3  Selection of Underwriters; Deliveries by
Holders. At the request of a majority of the Requesting Holders, the
offering of Registrable Shares pursuant to a Demand Registration shall be in
the form of a “firm commitment” underwritten offering. The Company shall select
the investment banking firm or firms to manage the underwritten offering,
provided that such selection shall be subject to the consent of the Holders of
a majority of the Registrable Shares to be registered in the Demand
Registration, which consent shall not be unreasonably withheld or delayed. No
Holder may participate in any registration pursuant to Section 4.1.1
unless such Holder (x) agrees to sell such Holder’s Registrable Shares on the
basis provided in any underwriting arrangements described above and (y)
completes and executes all questionnaires, powers of attorney, indemnities,
underwriting agreements and other documents reasonably required under the terms
of such underwriting arrangements; provided, however, that:

 

(a)           no such Holder shall be required to
make any representations or warranties in connection with any such registration
other than representations and warranties as to (i) such Holder’s ownership of
his or its Registrable Shares to be transferred free and clear of all liens,
claims, and encumbrances, (ii) such Holder’s power and authority to effect such
transfer and (iii) such matters pertaining to compliance with securities laws
as may be reasonably requested; and

 

(b)           the obligation of any such Holder to
indemnify pursuant to any such underwriting arrangements shall be several, not
joint and several, among such Holders selling Registrable Shares, and the
liability of each such Holder will be in proportion and limited to the net
proceeds received by such Holder from the sale of his or its Registrable
Shares.

 

SECTION 4.1.4  Rights of Nonrequesting Holders. Upon
receipt of any Demand Request, the Company shall promptly (but in any event
within ten (10) days) give written notice of such proposed Demand Registration
to all other Holders, who shall have the right, exercisable by written notice
to the Company within twenty (20) days of their receipt of the Company’s
notice, to elect to include in such Demand Registration such portion of their
Registrable Shares as they may request. All Holders requesting to have their
Registrable Shares

 

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included in a Demand Registration in accordance with
the preceding sentence shall be deemed to be “Requesting Holders” for
purposes of this Section 4.1.

 

SECTION 4.1.5  Priority on Demand Registrations. If
the managing underwriter or underwriters shall advise the Requesting Holders
that the Proposed Offering Share Amount in respect of such Demand Registration
is sufficiently large to adversely affect the price, timing or distribution of
the offering or otherwise adversely affect its success (an “Adverse Effect”),
the Registrable Shares and shares of Common Stock to be included in such Demand
Registration shall equal the number of shares that can be sold in such offering
without an Adverse Effect, as advised by the managing underwriter or
underwriters (the “Advised Offering Share Amount”). Any securities to be
included in a Demand Registration shall be allocated on the following basis:

 

(a)           in respect of the first registration
(including any Demand Registrations and Piggyback Registrations) following
termination of the Holder Lock-Up Period, the Registrable Shares of the Holders
shall have priority over the securities of any other Persons (including the
Company) up to the Proposed Offering Share Amount; further, in the event that
the managing underwriter or underwriters provide an Advised Offering Share
Amount, such amount shall first include the Registrable Shares the Holders
elect to include in such registration and then, subject to the Advised Offering
Share Amount, include any other securities requested to be included in such
registration, including securities to be sold for the account of the Company;

 

(b)           in respect of the next registration
(including any Demand Registrations and Piggyback Registrations) immediately
following the registration in clause (a) above and in which the Company has
elected to include securities to be sold for its own account, the shares of
Common Stock of the Company shall have priority over the securities of any
other Persons (including the Holders) up to the Proposed Offering Share Amount;
further, in the event that the managing underwriter or underwriters provide an
Advised Offering Share Amount, such amount shall first include the shares of
Common Stock the Company elects to include in such registration and then,
subject to the Advised Offering Share Amount, include any other securities
requested to be included in such registration, including Registrable Shares to
be sold for the account of the Holders; and

 

(c)           except as otherwise set forth in this
Agreement, in respect of all registrations (including any Demand Registrations
and Piggyback Registrations) other than the registrations described in clauses
(a) and (b) above, Registrable Shares of the Holders, on the one hand, and the
securities to be sold for the account of the Company, on the other hand, shall,
in the event that the Holders and the Company have elected to include their
Registrable Shares or shares of Common Stock in such registration in accordance
with this Agreement, have equal priority over the securities of any other
Person and each comprise fifty percent (50%) (or such other percentage as
mutually agreed by the Holders and the Company) of the Proposed Offering Share
Amount and, if applicable, the Advised Offering Share Amount; further, in
respect of the priority between Registrable Shares of the Holders, on the one
hand, and the securities to be sold for the account of the Company, on the
other hand, each shall comprise fifty percent (50%) of the aggregate shares of
Common Stock sold pursuant to such registration, unless otherwise agreed to in
writing by each of the Holders and the Company.

 

11

 

SECTION 4.1.6  Deferral of Filing. (a)  If the Board of Directors or a committee of
the Board of Directors determines in good faith that in order to avoid
premature disclosure of a matter the Company has determined would not be in the
best interest of the Company to be disclosed at such time, the Company may
defer any filing (but not the preparation) or effectiveness of a registration
statement required by Section 4.1 or require Holders to refrain from
selling any Registrable Shares pursuant to an effective registration statement;
provided, however, that, except as set forth in Section
4.1.6(c) below:  (i) the Company may
not defer the filing or effectiveness of any registration statement required by
Section 4.1 or require Holders to refrain from selling Registrable
Shares pursuant to an effective registration statement more than two (2) times
in any twelve (12) month period; and (ii) the period of time that the Company
may defer any such filing or effectiveness or require Holders to refrain from
selling Registrable Shares pursuant to an effective registration statement of a
registration statement shall not exceed seventy-five (75) consecutive days in
any single instance. Notwithstanding the foregoing, if a “roadshow” in
connection with an offering has commenced, the period of time that the Company
may defer any filing or effectiveness of a registration statement or require
Holders to refrain from selling Registrable Shares pursuant to an effective
registration statement with respect to such offering shall not exceed fifty
(50) days in any single instance.

 

(b)          A deferral of the filing or
effectiveness of any registration statement or requirement that Holders to
refrain from selling Registrable Shares pursuant to an effective registration
statement pursuant to this Section 4.1.6 shall be lifted, and the
requested registration statement shall be filed forthwith, if the Board of
Directors or a committee of the Board of Directors determines such deferral no
longer is necessary, which the Company agrees that the Board of Directors (or
applicable committee) will consider promptly as and when appropriate under the
circumstances.

 

(c)           Without limiting the provisions of
this Section 4.1.6, the Company may defer the filing or effectiveness of
any registration statement, including a registration statement required by Section
4.1, during any period in which trading by senior executives of the Company
is prohibited under the Company’s trading policy. For the avoidance of doubt,
any deferral pursuant to this Section 4.1.6(c) shall not be included in
the determination of the period of time that the Company may defer any filing
or effectiveness or require Holders to refrain from selling Registrable Shares
pursuant to an effective registration statement of a registration statement.

 

(d)          In order to defer (or extend the
deferral of) the filing or effectiveness or require Holders to refrain from
selling Registrable Shares pursuant to an effective registration statement of a
registration statement pursuant to this Section 4.1.6, the Company shall
promptly (but in any event within ten (10) days), upon determining to seek such
deferral (or extension), deliver to each Requesting Holder or Holder selling
any Registrable Shares pursuant to an effective registration statement a
certificate signed by an executive officer of the Company stating that the
Company is deferring such filing or effectiveness or require Holders to refrain
from selling Registrable Shares pursuant to an effective registration statement
pursuant to this Section 4.1.6. Within twenty (20) days after receiving
such certificate, the holders of a majority of the Registrable Shares held by
the Requesting Holders and for which registration was previously requested may
withdraw such Demand Request by giving notice to the Company; if withdrawn, the
Demand Request shall be deemed not to have been made for all purposes of this
Agreement.

 

12

 

SECTION 4.2  Piggyback Rights.

 

SECTION 4.2.1  Right
to Piggyback. Each time the Company proposes to register any of its equity
securities under the Securities Act (excluding (i) securities registered on
Forms S-4 or S-8 or any similar successor forms and (ii) securities registered
to effect the acquisition of, or combination with, another Person or related to
any employee benefits plan or program), whether for the account of the Company
or the account of any securityholder of the Company, (a “Piggyback
Registration”), the Company shall give prompt written notice (which notice
in no event shall be given fewer than thirty (30) days prior to the anticipated
filing date of the Company’s registration statement) to each Holder of
Registrable Shares. Such notice shall offer each such Holder the opportunity to
include any or all of its Registrable Shares in such registration statement,
subject to the limitations contained in Section 4.2.2 hereof. Each
Holder who desires to have its Registrable Shares included in such registration
statement shall notify the Company in writing (which notice shall specify the
number of shares the Holder desires to have included in the registration
statement) within twenty (20) days after receiving the notice from the Company.
Any Holder shall have the right to withdraw such Holder’s request for inclusion
of such Holder’s Registrable Shares in any registration statement pursuant to
this Section 4.2.1 by giving written notice to the Company of such
withdrawal. Subject to Section 4.2.2, the Company shall include all such
Registrable Shares so requested to be included in such registration statement
and shall have the right to include any securities the Company proposes to sell
therein; provided, however, that the Company may at any time
withdraw or cease proceeding with any such registration if it shall at the same
time withdraw or cease proceeding with the registration of all other equity
securities originally proposed to be registered.

 

SECTION 4.2.2  Priority on Piggyback Registrations.

 

(a)           If a Piggyback Registration is an
underwritten offering and was initiated by the Company or any Holder, any
securities to be included in such Piggyback Registration shall be allocated on
the following basis:

 

(i)            in
respect of the first registration (including any Demand Registrations and
Piggyback Registrations) following termination of the Holder Lock-Up Period,
the Registrable Shares of the Holders shall have priority over the securities
of any other Persons (including the Company) up to the Proposed Offering Share
Amount; further, in the event that the managing underwriter or underwriters
provide an Advised Offering Share Amount, such amount shall first include the
Registrable Shares the Holders elect to include in such registration and then,
subject to the Advised Offering Share Amount, include any other securities
requested to be included in such registration, including securities to be sold
for the account of the Company;

 

(ii)           in
respect of the next registration (including any Demand Registrations and
Piggyback Registrations) immediately following the registration in clause (i)
above and in which the Company has elected to include securities to be sold for
its own account, the shares of Common Stock of the Company shall have priority
over the

 

13

 

securities
of any other Persons (including the Holders) up to the Proposed Offering Share
Amount; further, in the event that the managing underwriter or underwriters
provide an Advised Offering Share Amount, such amount shall first include the
shares of Common Stock the Company elects to include in such registration and
then, subject to the Advised Offering Share Amount, include any other
securities requested to be included in such registration, including Registrable
Shares to be sold for the account of the Holders; and

 

(iii)          except
as otherwise set forth in this Agreement, in respect of all registrations
(including any Demand Registrations and Piggyback Registrations) other than the
registrations described in clauses (i) and (ii) above, Registrable Shares of
the Holders, on the one hand, and securities to be sold for the account of the
Company, on the other hand, shall, in the event that the Holders and the
Company have elected to include their Registrable Shares or shares of Common
Stock in such registration in accordance with this Agreement, have equal
priority over the securities of any other Person and each comprise fifty
percent (50%) of the Proposed Offering Share Amount and, if applicable, the
Advised Offering Share Amount; further, in respect of the priority between
Registrable Shares of the Holders, on the one hand, and the securities to be
sold for the account of the Company, on the other hand, each shall comprise fifty
percent (50%) of the aggregate shares of Common Stock sold pursuant to such
registration, unless otherwise agreed to in writing by each of the Holders and
the Company.

 

(b)           No Holder may participate in any
registration statement in respect of a Piggyback Registration hereunder unless
such Holder (x) agrees to sell such Holder’s Registrable Shares on the basis
provided in any underwriting arrangements approved by the Company and (y)
completes and executes all questionnaires, powers of attorney, indemnities,
underwriting agreements and other documents, each in customary form, reasonably
required under the terms of such underwriting arrangements; provided, however,
that:

 

(i)            no
such Holder shall be required to make any representations or warranties in
connection with any such registration other than representations and warranties
as to (A) such Holder’s ownership of his or its Registrable Shares to be sold
or transferred free and clear of all liens, claims, and encumbrances, (B) such
Holder’s power and authority to effect such transfer and (C) such matters
pertaining to compliance with securities laws as may be reasonably requested
(it being understood that, in a Piggyback Registration, if the lead or managing
underwriters in any such registration require any of the provisions identified
in clauses (A) through (C) above and any such Holder is unwilling to agree to
such provisions, the Company shall be obligated to cooperate with such Holder
and use its reasonable best efforts to negotiate in good faith with the lead or
managing underwriters to reach a compromise in respect of such requirement but
shall not be obligated to continue with the registration of such Holder’s
shares if it fails to reach a compromise with the lead or managing underwriters
and may continue the registration of any other shares proposed to be included
in such registration (including any shares proposed to be sold by the
Company)); and

 

(ii)           the
obligation of any such Holder to indemnify pursuant to any such underwriting
arrangements shall be several, not joint and several, among such Holders
selling Registrable Shares, and the liability of each such Holder will be in
proportion and

 

14

 

limited
to the net proceeds received by such Holder from the sale of his or its
Registrable Shares pursuant to such registration.

 

SECTION 4.2.3  Selection of Underwriters. If any
Piggyback Registration is an underwritten offering and any of the investment
banking firms selected to manage the offering was not one of the managers of
the IPO, any such investment banking firm shall not administer such offering if
the Holders of a majority of the Registrable Shares included in such Piggyback
Registration are SGASH or Affiliates thereof and such Holders reasonably object
thereto.

 

SECTION 4.3  SEC Form S-3. The Company shall use
its commercially reasonable efforts to cause Demand Registrations to be
registered on Form S-3 (or any successor form) once the Company becomes
eligible to use Form S-3, and if the Company is not then eligible under the
Securities Act to use Form S-3, Demand Registrations shall be registered on the
form for which the Company then qualifies. The Company shall use its
commercially reasonable efforts to become eligible to use Form S-3 and, after
becoming eligible to use Form S-3, shall use its commercially reasonable
efforts to remain so eligible.

 

SECTION 4.4  Holdback Agreements. (a)  The Company shall not effect any public sale
or distribution of its equity securities, or any securities convertible into or
exchangeable or exercisable for such securities, during the ten (10) days prior to and during the ninety (90)-day period (or
such lesser period as the lead or managing underwriters may require) beginning
on the effective date of any registration statement in connection with a Demand
Registration (other than the Shelf Registration) or a Piggyback Registration,
except as part of such underwritten offering or pursuant to registrations on
Form S-4 or Form S-8 or any successor form or any other registrations to effect
the acquisition of, or combination with, another Person or related to any
employee benefits plan or program or unless the Holders of a majority of the
Registrable Shares included in such registration statement otherwise agree.

 

(b)           Each Holder agrees, in the event of
an underwritten offering by the Company (whether for the account of the Company
or otherwise), not to offer, sell, contract to sell or otherwise dispose of any
Registrable Securities, or any securities convertible into or exchangeable or
exercisable for such securities, including any sale pursuant to Rule 144 under
the Securities Act (except as part of such underwritten offering), during the
ten (10) days prior to, and during the ninety (90)-day period (or such lesser
period as the lead or managing underwriters may require) beginning on, the
effective date of the registration statement for such underwritten offering
(or, in the case of an offering pursuant to an effective shelf registration
statement pursuant to Rule 415, the pricing date for such underwritten
offering).

 

SECTION 4.5  Registration Procedures. Whenever any
Holder has requested that any Registrable Shares be registered pursuant to this
Agreement, the Company will use its commercially reasonable efforts to effect
the registration and the sale of such Registrable Shares in accordance with the
intended method of disposition thereof as promptly as is practicable, and
pursuant thereto the Company will as expeditiously as practicable:

 

(i)            prepare
and file with the SEC, pursuant to Section 4.1.1(b) with respect to any
Demand Registration, a registration statement on any appropriate form under the
Securities Act with respect to such Registrable Shares and use its commercially

 

15

 

reasonable
efforts to cause such registration statement to become effective, provided that
as far in advance as the Company deems practicable before filing such
registration statement or any amendment thereto, the Company will furnish to
the selling Holders copies of reasonably complete drafts of all such documents
prepared to be filed (including exhibits), and any such Holder shall have the
opportunity to object to any information relating to such Holder contained
therein and the Company will make corrections reasonably requested by such
Holder that are reasonably acceptable to the Company with respect to such
information prior to filing any such registration statement or amendment;

 

(ii)           except
in the case of the Shelf Registration, prepare and file with the SEC such
amendments, post-effective amendments, and supplements to such registration
statement and the prospectus used in connection therewith as may be necessary
to keep such registration statement effective for a period of one hundred
eighty (180) days (or such lesser period, if any, ending on the date the date
on which all the Registrable Shares subject thereto have been sold in the
manner set forth and as contemplated in such registration statement) and comply
with the provisions of the Securities Act with respect to the disposition of
all securities covered by such registration statement during such period in
accordance with the intended methods of disposition by the sellers thereof set
forth in such registration statement;

 

(iii)          in
the case of the Shelf Registration, prepare and file with the SEC such
amendments and supplements to such registration statement and the prospectus
used in connection therewith as may be necessary to keep such registration
statement effective and to comply with the provisions of the Securities Act
with respect to the disposition of all Registrable Shares subject thereto for a
period ending on the earlier of (x) 24 months after the effective date of such
registration statement and (y) the date on which all the Registrable Shares
subject thereto have been sold in the manner set forth and as contemplated in
such registration statement; provided, however, that
notwithstanding the foregoing, the Company may terminate the Shelf Registration
at any time after 120 days from the date that the number of Registrable Shares
in the Shelf Registration cease to have a market value of at least $10 million,
based on the average of the last reported trading prices of the Company’s
Common Stock on the Nasdaq National Market (or other securities exchange or
over-the-counter market on which the Company’s Common Stock is then traded)
over the ten (10) trading days prior to the applicable date of determination;
and, provided, further, that the Demanding Stockholders shall
notify the Company in writing at least ten (10) days prior to any sale pursuant
to such Shelf Registration;

 

(iv)          if
requested by the managing underwriter or any seller promptly incorporate in a
prospectus supplement or post-effective amendment such information as the
managing underwriter or any seller reasonably requests to be included therein,
including, without limitation, with respect to the Registrable Shares being
sold by such seller, the purchase price being paid therefor by the underwriters
and with respect to any other terms of the underwritten offering of the
Registrable Shares to be sold in such offering, and promptly make all required
filings of such prospectus supplement or post-effective amendment;

 

16

 

(v)           furnish
to each seller of Registrable Shares and the underwriters of the securities
being registered such number of copies of such registration statement, each
amendment and supplement thereto, the prospectus included in such registration
statement (including each preliminary prospectus), any documents incorporated
by reference therein and such other documents as such seller or underwriters
may reasonably request in order to facilitate the disposition of the
Registrable Shares owned by such seller or the sale of such securities by such
underwriters (it being understood that, subject to Section 4.6 and the
requirements of the Securities Act and applicable state securities laws, the
Company consents to the use of the prospectus and any amendment or supplement
thereto by each seller and the underwriters in connection with the offering and
sale of the Registrable Shares covered by the registration statement of which
such prospectus, amendment or supplement is a part);

 

(vi)          use
its commercially reasonable efforts to register or qualify such Registrable
Shares under such other securities or blue sky laws of such jurisdictions as
the managing underwriter reasonably requests (or, in the event the registration
statement does not relate to an underwritten offering, as the holders of a
majority of such Registrable Shares may reasonably request); use its
commercially reasonable efforts to keep each such registration or qualification
(or exemption therefrom) effective during the period in which such registration
statement is required to be kept effective; and do any and all other acts and
things which may be reasonably necessary or advisable to enable each seller to
consummate the disposition of the Registrable Shares owned by such seller in
such jurisdictions;

 

(vii)         promptly
notify (either orally or in writing) each seller and each underwriter and (if
requested by any such Person) confirm such notice in writing (A) when a
prospectus or any prospectus supplement or post-effective amendment has been
filed and, with respect to a registration statement or any post-effective
amendment, when the same has become effective, (B) of the issuance by any state
securities or other regulatory authority of any order suspending the
qualification or exemption from qualification of any of the Registrable Shares
under state securities or “blue sky” laws or the initiation of any proceedings
for that purpose, and (C) of the happening of any event which requires the
making of any changes in such registration statement, prospectus or documents
so that they will not contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary to make
the statements therein not misleading, and, as promptly as practicable
thereafter, prepare and file with the SEC and furnish a supplement or amendment
to such prospectus so that, as thereafter deliverable to the purchasers of such
Registrable Shares, such prospectus will not contain any untrue statement of a
material fact or omit a material fact necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading;

 

(viii)        permit
any selling Holder, which in such Holder’s sole and exclusive judgment, might
reasonably be deemed to be an underwriter or a controlling person of the
Company, to participate in the preparation of such registration or comparable
statement and to require the insertion therein of material, furnished to the
Company in writing,

 

17

 

relating
to such selling Holder and which in the reasonable judgment of such Holder and
its counsel should be included;

 

(ix)           make
reasonably available members of management of the Company, as reasonably
requested by the Holders of a majority of the Registrable Shares included in such
registration, for assistance in the selling effort relating to the Registrable
Shares covered by such registration, including, but not limited to, the
participation of members of the Company’s management in road show
presentations; provided, however, that no member of the Company’s
management shall be required to so assist or participate to the extent that
such assistance or participate materially interferes with such member’s
exercise of his or her duties and day-to-day obligations as an officer or employee
of the Company;

 

(x)            otherwise
use its reasonable best efforts to comply with all applicable rules and
regulations of the SEC, including the Securities Act and the Exchange Act and
the rules and regulations promulgated thereunder, and make generally available
to the Company’s securityholders an earnings statement satisfying the
provisions of Section 11(a) of the Securities Act as soon as practicable
covering at least a twelve (12) month period after the effective date of a
registration statement, which earnings statement shall cover at least a twelve
(12) month period, and which requirement will be deemed to be satisfied if the
Company complies with Rule 158 under the Securities Act;

 

(xi)           cooperate
with the sellers and the managing underwriter to facilitate the timely
preparation and delivery of certificates (which shall not bear any restrictive
legends unless required under applicable law) representing securities sold
under any registration statement, and enable such securities to be in such
denominations and registered in such names as the managing underwriter or such
sellers may request and keep available and make available to the Company’s
transfer agent prior to the effectiveness of such registration statement a
supply of such certificates;

 

(xii)          promptly
make available for inspection by any seller, any underwriter participating in
any disposition pursuant to any registration statement, and any attorney,
accountant or other agent or representative retained by any such seller or
underwriter (collectively, the “Inspectors”), all financial and other
records, pertinent corporate documents and properties of the Company
(collectively, the “Records”), as shall be reasonably necessary to
enable them to exercise their due diligence responsibility, and cause the
Company’s officers, directors and employees to supply all information
reasonably requested by any such Inspector in connection with such registration
statement; provided, however, that, unless the disclosure of such
Records is necessary to avoid or correct a misstatement or omission in the
registration statement or the release of such Records is ordered pursuant to a
subpoena or other order from a court of competent jurisdiction, the Company
shall not be required to provide any information under this subparagraph
(xii) if the Company believes, after consultation with counsel for the
Company, that to do so would cause the Company to forfeit an attorney-client
privilege that was applicable to such information; and provided further,
however, that each Holder of Registrable Shares agrees that it will,
upon learning that disclosure of such Records is sought in a court of competent
jurisdiction, give notice to the Company and allow the

 

18

 

Company,
at its expense, to undertake appropriate action and to prevent disclosure of
the Records deemed confidential and, in connection therewith, each such Holder
of Registrable Shares agrees to cooperate with the Company and accede to the
Company’s reasonable requests;

 

(xiii)         cause
the Registrable Shares included in any registration statement to be (A) listed
on each securities exchange, if any, on which similar securities issued by the
Company are then listed, or (B) quoted on the National Association of
Securities Dealers, Inc. Automated Quotation System or the Nasdaq National
Market if similar securities issued by the Company are quoted thereon;

 

(xiv)        provide
a transfer agent and registrar for all Registrable Securities registered
hereunder;

 

(xv)         cooperate
with each seller and each underwriter participating in the disposition of such
Registrable Shares and their respective counsel in connection with any filings
required to be made with the National Association of Securities Dealers, Inc.;

 

(xvi)        during
the period when the prospectus is required to be delivered under the Securities
Act, promptly file all documents required to be filed with the SEC pursuant to
Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act;

 

(xvii)       notify
each seller of Registrable Shares promptly of any request by the SEC for the
amending or supplementing of such registration statement or prospectus or for
additional information;

 

(xviii)      enter
into such agreements (including underwriting agreements in the managing
underwriter’s customary form) as are customary in connection with an
underwritten registration; and

 

(xix)         advise
each seller of such Registrable Shares, promptly after it shall receive notice
or obtain knowledge thereof, of the issuance of any stop order by the SEC
suspending the effectiveness of such registration statement or the initiation
or threatening of any proceeding for such purpose and promptly use its
commercially reasonable efforts to prevent the issuance of any stop order or to
obtain its withdrawal at the earliest possible moment if such stop order should
be issued.

 

SECTION 4.6  Suspension of Dispositions. Each
Holder agrees by acquisition of any Registrable Shares that, upon receipt of
any notice (a “Suspension Notice”) from the Company of the happening of
any event of the kind described in Section 4.5(vii)(C) such Holder will
forthwith discontinue disposition of Registrable Shares until such Holder’s
receipt of the copies of the supplemented or amended prospectus, or until it is
advised in writing (the “Advice”) by the Company that the use of the
prospectus may be resumed, and has received copies of any additional or
supplemental filings which are incorporated by reference in the prospectus. In
the event the Company shall give any such notice, the time period regarding the
effectiveness of registration statements set forth in Sections 4.5(ii)
and 4.5(iii) hereof shall be extended by the number of days during the
period from and including the date of the giving of the Suspension Notice to
and including the date when each seller of Registrable Shares covered by such

 

19

 

registration statement shall have received the copies
of the supplemented or amended prospectus or the Advice. The Company shall use
its commercially reasonable efforts and take such actions as are reasonably
necessary to render the Advice as promptly as practicable.

 

SECTION 4.7  Registration Expenses.

 

SECTION 4.7.1  Demand
Registrations. All reasonable, out-of-pocket fees and expenses incident to
any Demand Registration including, without limitation, the Company’s
performance of or compliance with this Article 4, all registration and
filing fees, all fees and expenses associated with filings required to be made
with the National Association of Securities Dealers, Inc. (“NASD”)
(including, if applicable, the reasonable fees and expenses of any “qualified
independent underwriter” as such term is defined in Schedule E of the By-Laws
of the NASD, and of its counsel), as may be required by the rules and
regulations of the NASD, fees and expenses of compliance with securities or “blue
sky” laws (including reasonable fees and disbursements of counsel in connection
with “blue sky” qualifications of the Registrable Shares), rating agency fees,
printing expenses (including expenses of printing certificates for the
Registrable Shares in a form eligible for deposit with Depository Trust Company
and of printing prospectuses if the printing of prospectuses is requested by a
Holder of Registrable Shares), messenger and delivery expenses, the fees and
expenses incurred in connection with any listing or quotation of the
Registrable Shares, fees and expenses of counsel for the Company and its
independent certified public accountants (including the expenses of any special
audit or “cold comfort” letters required by or incident to such performance),
the fees and expenses of any special experts retained by the Company in
connection with such registration, and any underwriting discounts, commissions,
or fees attributable to the sale of the Registrable Shares, will be borne by
the Holders pro rata on the basis of the number of shares so registered whether
or not any registration statement becomes effective, and the fees and expenses
of any counsel, accountants, or other persons retained or employed by any
Holder will be borne by such Holder.

 

SECTION 4.7.2  Piggyback
Registrations. All fees and expenses incident to any Piggyback Registration
including, without limitation, the Company’s performance of or compliance with
this Article 4, all registration and filing fees, all fees and expenses
associated with filings required to be made with the NASD (including, if
applicable, the reasonable fees and expenses of any “qualified independent
underwriter” as such term is defined in Schedule E of the By-Laws of the NASD,
and of its counsel), as may be required by the rules and regulations of the
NASD, fees and expenses of compliance with securities or “blue sky” laws
(including reasonable fees and disbursements of counsel in connection with “blue
sky” qualifications of the Registrable Shares), rating agency fees, printing
expenses (including expenses of printing certificates for the Registrable
Shares in a form eligible for deposit with Depository Trust Company and of
printing prospectuses), messenger and delivery expenses, the fees and expenses
incurred in connection with any listing or quotation of the Registrable Shares,
fees and expenses of counsel for the Company and its independent certified
public accountants (including the expenses of any special audit or “cold
comfort” letters required by or incident to

 

20

 

such
performance), the fees and expenses of any special experts retained by the
Company in connection with such registration, and the fees and expenses of
other persons retained by the Company will be borne by the Company (unless paid
by a security holder that is not a Holder for whose account the registration is
being effected), whether or not any registration statement becomes effective; provided,
however, that any underwriting discounts, commissions, or fees
attributable to the sale of the Registrable Shares will be borne by the Holders
pro rata on the basis of the number of shares so registered and the fees and
expenses of any counsel, accountants, or other persons retained or employed by
any Holder will be borne by such Holder.

 

SECTION 4.8  Indemnification.

 

SECTION 4.8.1 
The Company agrees to indemnify and reimburse, to the fullest extent
permitted by law, each seller of Registrable Shares, and each of its employees,
partners, officers, and directors and each Person who controls such seller
(within the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act) (collectively, the “Seller Affiliates”) (A) against any
and all losses, claims, damages (including settlement costs), liabilities, and
expenses, joint or several (including, without limitation, reasonable attorneys’
fees and disbursements except as limited by Section 4.8.3),
(collectively, “Losses”) to which any of the foregoing Persons may
become subject, under the Securities Act, Exchange Act or otherwise, insofar as
such Losses (or actions in respect thereof) are based upon, arise out of,
relate to or result from any of the following: 
(i) any untrue or alleged untrue statement of a material fact contained
in any registration statement, prospectus, or preliminary prospectus or any
amendment thereof or supplement thereto, or (ii) any omission or alleged
omission of a material fact required to be stated in any registration
statement, prospectus, or preliminary prospectus or any amendment thereof or
supplement thereto, or necessary to make the statements therein not misleading,
or (iii) any violation by the Company of the Securities Act, Exchange Act or
any state securities or blue sky laws (or any rule or regulation promulgated
under the Securities Act, Exchanges Act or any state securities or blue sky
laws) and relating to action or inaction required of the Company (but excluding
any action or inaction of any seller or any Seller Affiliates) in connection
with such registration or qualification under such state securities or blue sky
laws; (B) against any and all Losses whatsoever, as incurred, to the extent of
the aggregate amount paid in settlement of any litigation or investigation or
proceeding by any governmental agency or body, commenced or threatened, or of
any claim whatsoever based upon, arising out of, related to or resulting from
any such untrue statement, omission or alleged untrue statement or omission, or
violation; and (C) against any and all costs and expenses (including reasonable
fees and disbursements of counsel) as may be incurred in investigating,
preparing, or defending against any litigation, or investigation or proceeding
by any governmental agency or body, commenced or threatened, or any claim
whatsoever based upon, arising out of, related to or resulting from any such
untrue statement or omission, alleged untrue statement or omission, or such
violation, to the extent that any such expense or cost is not paid under subparagraph
(A) or (B) above; except in each case insofar as any such statements

 

21

 

are
made in reliance upon and in conformity with information furnished in writing
to the Company by or on behalf of such seller or any Seller Affiliate for use
therein. The reimbursements required by this Section 4.8.1 will be made
by periodic payments during the course of the investigation or defense, as and
when expenses are incurred.

 

SECTION 4.8.2 
In connection with any registration statement in which a seller of
Registrable Shares is participating, each such seller will furnish to the
Company in writing such information and affidavits as the Company reasonably
requests for use in connection with any such registration statement or
prospectus and, to the fullest extent permitted by law, each such seller will
indemnify the Company and each of its employees, partners, officers and
directors and each Person who controls the Company (within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act) against any
and all Losses insofar as such Losses (or actions in respect thereof) are based
upon, arise out of, relate to or result from any of the following:  (A) any untrue statement or alleged untrue
statement of a material fact contained in the registration statement,
prospectus, or any preliminary prospectus or any amendment thereof or
supplement thereto or any omission or alleged omission of a material fact
required to be stated therein or necessary to make the statements therein not
misleading, but only to the extent that such untrue statement or alleged untrue
statement or omission or alleged omission is contained in any information or
affidavit so furnished in writing by such seller or any of its Seller
Affiliates specifically for inclusion in the registration statement; (B)
against any and all Losses whatsoever, as incurred, to the extent of the
aggregate amount paid in settlement of any litigation or investigation or
proceeding by any governmental agency or body, commenced or threatened, or of
any claim whatsoever based upon, arising out of, related to or resulting from
any such untrue statement, omission or alleged untrue statement or omission, or
violation; and (C) against any and all costs and expenses (including reasonable
fees and disbursements of counsel) as may be incurred in investigating,
preparing, or defending against any litigation, or investigation or proceeding
by any governmental agency or body, commenced or threatened, or any claim
whatsoever based upon, arising out of, related to or resulting from any such
untrue statement or omission, alleged untrue statement or omission, or such
violation, to the extent that any such expense or cost is not paid under subparagraph
(A) or (B) above; provided, however, that the
obligation to indemnify will, subject to Section 6.6, be several, not
joint and several, among such sellers of Registrable Shares, and the liability
of each such seller of Registrable Shares will be in proportion and limited to
the net proceeds received by such seller from the sale of Registrable Shares
pursuant to such registration statement; provided, further, that
such seller of Registrable Shares shall not be liable in any such case to the
extent that prior to the filing of any such registration statement or
prospectus or amendment thereof or supplement thereto, such seller has
furnished in writing to the Company information expressly for use in such
registration statement or prospectus or any amendment thereof or supplement
thereto which corrected or made not misleading information previously furnished
to the Company.

 

22

 

SECTION 4.8.3 
Any Person entitled to indemnification hereunder will (A) give prompt
written notice to the indemnifying party of any claim with respect to which it
seeks indemnification (provided that the failure to give such notice shall not
limit the rights of such Person unless such failure to give notice prejudices
in any material respect the indemnifying party) and (B) unless a conflict of
interest between such indemnified and indemnifying parties exists with respect
to such claim, permit such indemnifying party to assume the defense of such
claim with counsel reasonably satisfactory to the indemnified party; provided,
however, that any person entitled to indemnification hereunder shall
have the right to employ separate counsel and to participate in the defense of
such claim, but the fees and expenses of such counsel shall be at the expense
of such person unless (X) the indemnifying party has agreed to pay such fees or
expenses, or (Y) the indemnifying party shall have failed to notify the
indemnified party that it was assuming the defense of such claim within thirty
(30) days after receipt of the notice from the indemnified party. If such
defense is not assumed by the indemnifying party as permitted hereunder, the
indemnifying party will not be subject to any liability for any settlement made
by the indemnified party without its consent (but such consent will not be
unreasonably withheld). If such defense is assumed by the indemnifying party
pursuant to the provisions hereof, such indemnifying party shall not settle or
otherwise compromise the applicable claim unless (1) such settlement or
compromise contains a full and unconditional release of the indemnified party
or (2) the indemnified party otherwise consents in writing. An indemnifying
party who is not entitled to, or elects not to, assume the defense of a claim
will not be obligated to pay the fees and expenses of more than one counsel for
all parties indemnified by such indemnifying party with respect to such claim,
unless in the reasonable judgment of any indemnified party, a conflict of
interest may exist between such indemnified party and any other of such
indemnified parties with respect to such claim, in which event the indemnifying
party shall be obligated to pay the reasonable fees and disbursements of such
additional counsel or counsels.

 

SECTION 4.8.4 
Each party hereto agrees that, if for any reason the indemnification
provisions contemplated by Section 4.8.1 or Section 4.8.2 are
unavailable to or insufficient to hold harmless an indemnified party in respect
of any losses, claims, damages, liabilities, or expenses (or actions in respect
thereof) referred to therein, then each indemnifying party shall contribute to
the amount paid or payable by such indemnified party as a result of such
losses, claims, liabilities, or expenses (or actions in respect thereof) (a) in
such proportion as is appropriate to reflect the relative fault of the
indemnifying party and the indemnified party in connection with the actions
which resulted in the losses, claims, damages, liabilities or expenses as well
as any other relevant equitable considerations or (b) if the allocation
provided by clause (a) above is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative fault referred to
in clause (a) above but also the relative benefits of the of the indemnifying
party and the indemnified party in connection with the actions which resulted
in the losses, claims, damages, liabilities or expenses as well as any other
relevant equitable considerations. The relative fault of such indemnifying
party and indemnified party shall be determined by reference to, among other
things, whether the untrue or

 

23

 

alleged
untrue statement of a material fact or omission or alleged omission to state a
material fact relates to information supplied by such indemnifying party or
indemnified party, and the parties’ relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission. The
parties hereto agree that it would not be just and equitable if contribution
pursuant to this Section 4.8.4 were determined by pro rata allocation
(even if the Holders or any underwriters or all of them were treated as one
entity for such purpose) or by any other method of allocation which does not
take account of the equitable considerations referred to in this Section
4.8.4. The amount paid or payable by an indemnified party as a result of
the losses, claims, damages, liabilities, or expenses (or actions in respect
thereof) referred to above shall be deemed to include any legal or other fees
or expenses reasonably incurred by such indemnified party in connection with
investigating or, except as provided in Section 4.8.3, defending any
such action or claim. Notwithstanding the provisions of this Section 4.8.4,
no Holder shall be required to contribute an amount greater than the dollar
amount by which the net proceeds received by such Holder with respect to the
sale of any Registrable Shares exceeds the amount of damages which such Holder
has otherwise been required to pay by reason of any and all untrue or alleged
untrue statements of material fact or omissions or alleged omissions of
material fact made in any registration statement, prospectus or preliminary
prospectus or any amendment thereof or supplement thereto related to such sale
of Registrable Shares. No person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The Holders’ obligations in this Section 4.8.4 to
contribute shall be several in proportion to the amount of Registrable Shares
registered by them and not joint.

 

If
indemnification is available under this Section 4.8, the indemnifying
parties shall indemnify each indemnified party to the full extent provided in Section
4.8.1 and Section 4.8.2 without regard to the relative fault of said
indemnifying party or indemnified party or any other equitable consideration
provided for in this Section 4.8.4 subject, in the case of the Holders,
to the limited dollar amounts set forth in Section 4.8.2.

 

SECTION 4.8.5 
The indemnification and contribution provided for under this Agreement
will remain in full force and effect regardless of any investigation made by or
on behalf of the indemnified party or any officer, director, or controlling
Person of such indemnified party and will survive the transfer of securities.

 

SECTION 4.9  Reports; Rule 144 and Form S-3. With a
view to making available to the Holders the benefits of SEC Rule 144
promulgated under the Securities Act and any other rule or regulation of the
SEC that may at any time permit a Holder to sell securities of the Company to
the public without registration or pursuant to a registration on Form S-3, the
Company will use commercially reasonable efforts to:

 

(i)            file
the reports required to be filed by it under the Securities Act and the
Exchange Act and the rules and regulations adopted by the SEC thereunder (or,
if the Company is not required to file such reports, will, upon the request of
the Holders, make

 

24

 

publicly
available other information) and will take such further action as the Holders
may reasonably request, all to the extent required from time to time to enable
the Holders to sell Common Stock without registration under the Securities Act
within the limitation of the exemptions provided by (A) Rule 144 under the
Securities Act, as such rule may be amended from time to time or (B) any
similar rule or regulation hereafter adopted by the SEC;

 

(ii)           take
such action as is necessary to enable the Holders to utilize Form S-3 for the
sale of their Registrable Securities, such action to be taken as soon as
practicable after the end of the fiscal year in which the first registration
statement filed by the Company for the offering of its securities to the
general public is declared effective;

 

(iii)          upon
the request of any Holder, deliver to such parties a written statement as to
whether it has complied with such requirements or that it qualifies as a
registrant whose securities may be resold pursuant to Form S-3;

 

(iv)          at
its expense, forthwith upon the request of any such Holder, deliver to such
Holder (A) a certificate, signed by the Company’s principal financial officer,
stating (1) the Company’s name, address and telephone number (including area
code), (2) the Company’s Internal Revenue Service identification number, (3)
the Company’s SEC file number, (4) the number of shares of each class of
capital stock outstanding as shown by the most recent report or statement
published by the Company, and (5) whether the Company has filed the reports
required to be filed under the Exchange Act for a period of at least ninety
(90) days prior to the date of such certificate and in addition has filed the
most recent annual report required to be filed thereunder; and (B) such other
information that may be reasonably requested in availing any Holder of any rule
or regulation of the SEC that permits the selling of any such securities,
without registration or pursuant to Form S-3.

 

SECTION 4.10  Preservation of Rights. The Company
will not (i) grant any registration rights to third parties which are more
favorable than or inconsistent with the rights granted hereunder or (ii) enter
into any agreement, take any action, or permit any change to occur, with
respect to its securities that violates or subordinates the rights expressly
granted to the Holders in this Agreement.

 

ARTICLE 5

TERMINATION

 

SECTION 5.1  Termination. The Holders may exercise
the registration rights granted hereunder in such manner and proportions as
they shall agree among themselves. The registration rights hereunder shall
cease to apply to any particular Registrable Share when: (a) a registration
statement with respect to the sale of such shares of Common Stock shall have
become effective under the Securities Act and such shares of Common Stock shall
have been disposed of in accordance with such registration statement; (b) such
shares of Common Stock shall have been sold to the public pursuant to Rule 144
under the Securities Act (or any successor provision); (c) such shares of
Common Stock shall have been otherwise transferred, new certificates for them
not bearing a legend restricting further transfer shall have been

 

25

 

delivered by the Company and subsequent public
distribution of them shall not require registration or qualification of them
under the Securities Act or any similar state law then in force; or (d) such
shares shall have ceased to be outstanding. In addition, the registration
rights hereunder shall cease to apply to any particular Holder if the total
number of Registrable Shares held by such Holder is such that they could be
sold in their entirety in a single three-month period or without reference to
any time period pursuant to Rule 144 under the Securities Act (or any successor
provision). The Company shall promptly upon the request of any Holder furnish
to such Holder evidence of the number of Registrable Shares then outstanding.

 

ARTICLE 6

MISCELLANEOUS

 

SECTION 6.1  Standstill Agreement. SGASH agrees
that, until the earlier of the date that is thirty (30) months following the
date of the closing of the IPO or the date on which it holds less than five
percent (5%) of the outstanding Common Stock of Cowen Inc., neither SGASH nor
any of its Affiliates will in any manner, directly or indirectly, unless the
same shall have been specifically invited in writing by the Company:

 

(a)           effect, or seek, offer or propose
(whether publicly or otherwise) to effect, cause or participate in (other than
by voting or tendering its shares of Common Stock), or in any way assist any
other Person to effect or seek, offer or propose (whether publicly or
otherwise) to effect or participate in (other than by voting or tendering its
shares of Common Stock), (i) any acquisition of any securities (or beneficial
ownership thereof) of the Company or any Cowen Subsidiary, (ii) any tender or
exchange offer, merger or other business combination involving the Company or
any Cowen Subsidiary, (iii) any recapitalization, restructuring, liquidation,
dissolution or other extraordinary transaction with respect to the Company or
any Cowen Subsidiary, or (iv) any “solicitation” of “proxies” (as such terms
are used in the proxy rules of the Securities and Exchange Commission) or
consents to vote any voting securities of the Company;

 

(b)           form, join or in any way participate
in (other than by voting or tendering its shares of Common Stock) a “group” (as
defined under the Exchange Act) that proposes to do any of the foregoing with
respect the Company;

 

(c)           otherwise act, alone or in concert
with others, to seek to control the Board of Directors or the Company (other
than as contemplated by Section 2.1); or

 

(d)           initiate any discussions or enter
into any arrangements with any third party with respect to any of the
foregoing; provided, however, that nothing in this Section 6.1
shall limit ordinary course activities of SGASH or its wholly-owned
Subsidiaries that do not have the effect or intent of circumventing the
foregoing.

 

SECTION 6.2  Notices. All notices or other
communications under this Agreement (except as otherwise provided therein) must
be in writing and shall be deemed to be duly given: (a) when delivered in
person; (b) upon transmission via confirmed facsimile transmission, provided
that such transmission is followed by delivery of a physical copy thereof in
person, via

 

26

 

U.S. first class mail, or via a private express mail
courier; or (c) two days after deposit with a private express mail courier, in
any such case addressed as follows:

 

If to SGASH:

 

Société
Générale

1221 Avenue of
the Americas

New York, New York 10020

Attn:  General Counsel, SG Americas

Facsimile:  (212)
278-7432

 

With a copy
to:

 

Mayer, Brown,
Rowe & Maw LLP

1675 Broadway

New York, New York  10019

Attn:  James B. Carlson

Facsimile:  (212) 262-1910

 

If to Cowen
Inc.:

 

Cowen Group, Inc.

1221 Avenue of the Americas

New York, New York 10020

Attn:  General Counsel 

Facsimile:  (646) 562-1861

 

With a copy
to:

 

Skadden, Arps,
Slate, Meagher & Flom LLP

Four Times Square

New York, NY  10036-6522

Attn:       Lou R. Kling
                Thomas W. Greenberg

Facsimile: (212) 735-2000

 

If to any
other Holder, the address indicated for such Holder in the Company’s stock
transfer records with copies, so long as SGASH owns any Registrable Shares, to
SGASH as provided above.

 

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

 

SECTION 6.3  Entire Agreement; No Third Party
Beneficiaries. This Agreement contains the entire agreement between the
parties with respect to the subject matter hereof and supersedes all previous
agreements, negotiations, discussions, writings, understandings, commitments
and conversations with respect to such subject matter, and there are no
agreements

 

27

 

or understandings between the parties other than those
set forth or referred to herein or in the Separation Agreement. Notwithstanding
any other provisions in this Agreement to the contrary, in the event and to the
extent that there is a conflict between the provisions of this Agreement and
the provisions of the Separation Agreement, the provisions of this Agreement
shall control. This Agreement is not intended to confer any rights or remedies
hereunder upon any person other than the parties hereto.

 

SECTION 6.4  Authority. Each of the parties hereto
represents to the other that (i) it has the corporate power and authority to
execute, deliver and perform this Agreement, (ii) the execution, delivery and
performance of this Agreement by it has been duly authorized by all necessary
corporate action and no such further action is required, (iii) it has duly and
validly executed and delivered this Agreement, and (iv) this Agreement is a
legal, valid and binding obligation, enforceable against it in accordance with
its terms subject to applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting creditors’ rights generally and
general equity principles.

 

SECTION 6.5  Governing Law. This Agreement shall be
governed by and construed and interpreted in accordance with the laws of the
State of New York, irrespective of the choice of laws principles of the State
of New York, as to all matters, including matters of validity, construction,
effect, enforceability, performance and remedies.

 

SECTION 6.6  Successors and Assigns. Except as
otherwise expressly provided herein, this Agreement shall be binding upon and
benefit the Company, each Holder, and their respective successors and assigns. SGASH
may assign any and all of its rights under this Agreement to any Affiliate of
SGASH who agrees in writing (in form and substance reasonably satisfactory to
the Company) to be subject to and bound by all the terms and conditions of this
Agreement; provided, however, that all such Affiliates must
designate a single Affiliate of SG (and such Affiliate must agree to act) as
their representative for purposes of any communication vis-à-vis the Company
relating to the exercise any of their rights and the receipt of any notices
hereunder. Any Holder may assign any and all of its rights under this Agreement
(excluding Sections 2.1, 2.4, 2.5 and 2.6) to any
direct or indirect transferee of such Holder’s Common Stock who agrees in
writing (in form and substance reasonably satisfactory to the Company) to be
subject to and bound by all the terms and conditions of this Agreement.

 

SECTION 6.7  Severability. If any provision of this
Agreement or the application thereof to any Person or circumstance is
determined by a court of competent jurisdiction to be invalid, void or
unenforceable, the remaining provisions hereof, or the application of such
provision to Persons or circumstances or in jurisdictions other than those as
to which it has been held invalid or unenforceable, shall remain in full force
and effect and shall in no way be affected, impaired or invalidated thereby, so
long as the economic or legal substance of the transactions contemplated hereby
is not affected in any manner adverse to any party to this Agreement. Upon such
determination, the parties to this Agreement shall negotiate in good faith in
an effort to agree upon a suitable and equitable provision to effect the
original intent of the parties hereto.

 

SECTION 6.8  Remedies. Any dispute, controversy or
claim arising out of, or relating to, the transactions contemplated by this
Agreement, or the validity, interpretation, breach or

 

28

 

termination of any provision of this Agreement shall
be resolved in accordance with Article VI of the Separation Agreement.

 

SECTION 6.9  Waivers. The observance of any term of
this Agreement may be waived (either generally or in a particular instance and
either retroactively or prospectively) by the party entitled to enforce such
term, but such waiver shall be effective only if it is in a writing signed by
the party against whom the existence of such waiver is asserted. Unless
otherwise expressly provided in this Agreement, no delay or omission on the
part of any party in exercising any right or privilege under this Agreement
shall operate as a waiver thereof, nor shall any waiver on the part of any
party of any right or privilege under this Agreement operate as a waiver of any
other right or privilege under this Agreement nor shall any single or partial
exercise of any right or privilege preclude any other or further exercise
thereof or the exercise of any other right or privilege under this Agreement. No
failure by either party to take any action or assert any right or privilege
hereunder shall be deemed to be a waiver of such right or privilege in the
event of the continuation or repetition of the circumstances giving rise to
such right unless expressly waived in writing by the party against whom the
existence of such waiver is asserted.

 

SECTION 6.10  Amendment. No provision of this
Agreement shall be deemed amended, supplemented or modified in any respect
except by a written agreement signed by the Company, SGASH (so long as SGASH
owns any Common Stock) and the Holders of a majority of the then outstanding
Registrable Shares.

 

SECTION 6.11  Interpretation. Words in the singular
shall be deemed to include the plural and vice versa and words of one gender
shall be deemed to include the other genders as the context requires. The terms
“hereof,” “herein,” and “herewith” and words of similar import shall, unless
otherwise stated, be construed to refer to this Agreement as a whole and not to
any particular provision of this Agreement. Article, Section, Exhibit and
Schedule references are to the Articles, Sections, Exhibits, and Schedules to
this Agreement unless otherwise specified. Unless otherwise stated, all
references to any agreement shall be deemed to include the exhibits, schedules
and annexes to such agreement. The word “including” and words of similar import
when used in this Agreement shall mean “including, without limitation,” unless
the context otherwise requires or unless otherwise specified. The word “or”
shall not be exclusive. Unless otherwise specified in a particular case, the
word “days” refers to calendar days. References herein to this Agreement shall
be deemed to refer to this Agreement as of the date hereof and as it may be
amended hereafter, unless otherwise specified. References to the performance,
discharge or fulfillment of any liability in accordance with its terms shall
have meaning only to the extent such liability has terms; if the liability does
not have terms, the reference shall mean performance, discharge or fulfillment
of such liability.

 

SECTION 6.12  Headings. The article, section and
paragraph headings contained in this Agreement are for reference purposes only
and shall not affect in any way the meaning or interpretation of this
Agreement.

 

SECTION 6.13  Counterparts. This Agreement may be
executed in one or more counterparts, each of which when executed shall be
deemed to be an original but all of which taken together shall constitute one
and the same agreement. Delivery of an executed counterpart

 

29

 

of a signature page to this Agreement by facsimile
shall be as effective as delivery of a manually executed counterpart of any
such Agreement.

 

SECTION 6.14  Mutual Drafting. This Agreement shall
be deemed to be the joint work product of the parties hereto and any rule of
construction that a document shall be interpreted or construed against a
drafter of such document shall not be applicable.

 

* * * * *

 

30

 

IN WITNESS
WHEREOF, the parties hereto have caused this Agreement to be duly executed as
of the date first written above.

 

 

	
   

  	
  COWEN
  GROUP, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  SG AMERICAS
  SECURITIES HOLDINGS,

  INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:Exhibit 10.2

TAX MATTERS AGREEMENT

 

THIS TAX MATTERS
AGREEMENT, dated as of ________________, 2006 among SG Americas,
Inc., a Delaware corporation (“SGAI”), SG Americas Securities Holdings, Inc., a
Delaware corporation (“SGASH”), Cowen and Company, LLC, a Delaware limited
liability company (“Cowen LLC”), and Cowen Group, Inc., a Delaware corporation
(“Cowen Inc.”) (each of SGAI, Cowen LLC, SGASH and Cowen Inc. are referred to
herein collectively as the “Parties”, and individually, as a “Party”).

RECITALS

WHEREAS, pursuant to the Separation Agreement dated as
of _____________, 2006 among Societe Generale, a French banking corporation,
SGAI, SGASH, Cowen LLC and Cowen Inc. (the “Separation Agreement”), Cowen Inc.
has agreed, on the terms and subject to the conditions set forth in the
Separation Agreement, to acquire (the “Acquisition”), directly or indirectly,
all the outstanding membership interests of Cowen LLC, all of the capital stock
of Cowen UK and certain other assets of the Parties or their respective Subsidiaries
(the Cowen LLC membership interests, the Cowen UK stock and such other assets,
the “Cowen Assets”) in a transaction that will constitute a taxable disposition
of the Cowen Assets by SGASH to Cowen Inc. for United States federal income tax
purposes.

WHEREAS, immediately following completion of the
transfer of Assets described above, SGASH will sell, pursuant to a firm
commitment underwriting, more than 20% of the common stock of Cowen Inc.
received in the transfer described above pursuant to the IPO.

WHEREAS, SGAI, SGASH, Cowen Inc. and certain other
Affiliates (as defined in Section 1 below) of SGAI have been members of
an affiliated group of corporations of which SGAI is the common parent (the
“SGAI Affiliated Group”) within the meaning of Section 1504(a) of the Code, and
the members of the SGAI Affiliated Group have heretofore filed or will file
United States federal income tax returns on a consolidated basis (the “SGAI
Consolidated Returns”) pursuant to Section 1501 of the Code.

WHEREAS, certain of SGAI, SGASH, Cowen Inc. and its
Affiliates have heretofore joined (or will join) in the filing of certain
combined, consolidated, or other similar United States state, local, or other
governmental or foreign income or franchise tax returns (the “SGAI Combined
Returns”), and each group filing such a return is designated a “Combined
Group.”

WHEREAS, as a consequence of the acquisition of the
Cowen Assets and the IPO, Cowen Inc. and the business comprised of the Cowen
Assets will no longer be part of the SGAI Affiliated Group or be members of a
Combined Group.

WHEREAS, the Parties to this Agreement desire to make
certain covenants with respect to tax matters, to allocate the liability for
certain United States and foreign federal, state, local,

 

 

 

and other
taxes that may be owed to or asserted by United States or foreign federal,
state, local Tax Authority, and to provide for certain payments in respect of
tax benefits.

NOW, THEREFORE, in consideration of the mutual
promises and covenants set forth below and for other good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged, and
intending to be legally bound, the Parties agree as follows:

SECTION 1.  Certain Defined Terms. 
For the purposes of this Agreement, unless the context requires otherwise, the
following terms shall have the following meanings:

“Acceleration Assumption Date” shall mean the
date of any Acceleration Notice or an Asset Transfer Date.

“Acceleration Assumptions” shall mean, as of an
Acceleration Assumption Date, the assumptions that (1) in each Covered Taxable
Year ending after such Acceleration Assumption Date Cowen Inc. will have
taxable income sufficient to fully utilize the deductions arising from the
Basis Adjustment and the Imputed Interest during such Covered Taxable Year and
(2) the federal, state and local income Tax rates in effect for each such
Covered Taxable Year will be the maximum rates applicable to Cowen Inc. as in
effect on the Acceleration Assumption Date.

“Acceleration Payment” shall have the meaning
set forth in Section 14(d)(i).

“Acceleration Notice” shall have the meaning
set forth in Section 14(c).

“Acceleration Rate” shall mean nine (9)
percent.

“Acquisition Price” shall mean, the fair market
value of the Cowen Assets on the Separation Date, determined as provided in Section
4 hereof.

“Actual Tax Liability” shall have the meaning
set forth in Section 13(a).

“Affiliate” shall mean, with respect to any
Person, any other Person that directly or indirectly, through one or more
intermediaries, controls, is controlled by or is under common control with such
first Person.  The term “control” (including its correlative meanings
“controlled by” and “under common control with”) shall mean possession,
directly or indirectly, of power to direct or cause the direction of management
or policies (whether through ownership of securities or partnership or other
ownership interests, by contract or otherwise).

“Asset Transfer Date” shall have the meaning
set forth in Section 14(e).

“Basis Adjustment” shall have the meaning set
forth in Section 4(a).

“Beginning Basis” shall have the meaning set
forth in Section 4(a).

“Change of Control” shall mean (a) the
acquisition by any Person or Persons of direct or indirect beneficial ownership
of securities representing fifty percent (50%) or more of the combined voting
power of Cowen Inc.’s then outstanding securities; or (b) a merger,
consolidation, reorganization or other business combination, however effected,
resulting in the

 

2

 

securities
of Cowen Inc. outstanding immediately prior thereto failing to continue to
represent at least fifty percent (50%) of the combined voting power of the
outstanding securities of Cowen Inc. or the surviving Person outstanding immediately
after such combination.

“Change of Control Acceleration Payment” shall
have the meaning set forth in Section 14(b).

“Covered Taxable Year” shall mean any Taxable
Year of Cowen Inc. ending after the IPO Closing Date and on or before the end
of the Taxable Year including the date which is the twentieth (20th)
anniversary of the IPO Closing Date.

“DAP Interest” shall mean interest on all
unpaid Deferred Acceleration Payments accruing at a rate equal to nine (9)
percent compounded annually.

“Deferred Acceleration Payments” shall have the
meaning set forth in Section 14(d)(ii).

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

“Hypothetical Tax Liability” shall have the
meaning set forth in Section 13(b).

“Imputed Interest” shall mean, any interest imputed
under Section 1272, 1274 or 483 or any other provision of the Code and the
similar provision of state, local or foreign law with respect to Cowen Inc.’s
payment obligations under this Agreement, as reasonably determined by SGAI in
good faith.

“IPO Closing Date” shall mean the date on which
the IPO closes.

“Non —Cowen Stock Compensation” shall have the
meaning set forth in Section 11(b).

“Original Payment” shall have the meaning set
forth in Section 13(c).

“Partial Acceleration Payment” shall mean the payment
by Cowen Inc. to SGASH described in Section 14(e).

“Partial Acceleration Payment Notice” shall
have the meaning set forth in Section 14(e).

“Preliminary Determination” shall have the
meaning set forth in Section 13(b).

“Recomputed Tax Benefit Payment” shall have the
meaning set forth in Section 13(d).

“Recomputing Event” shall have the meaning set
forth in Section 13(d).

“Reconciliation Procedures” shall mean those
procedures set forth in Section 17 of this Agreement.

“Redetermined Tax Basis” shall have the meaning
set forth in Section 4(a).

 

3

 

“Relevant States” shall mean (i) Massachusetts,
New Jersey, New York and Ohio and (ii) any states to which the operations or
businesses located in the foregoing states as of the IPO Closing Date are
thereafter moved, to the extent such movement of assets is made for a
significant purpose of reducing the Tax Benefit Payments to be made by Cowen
Inc. under to this Agreement.

“Scheduled Termination Date” shall have the
meaning set forth in Section 14(d).

“Straddle Period” shall mean any taxable period
that begins on or before and ends after the IPO Closing Date.

“Tax Benefit Payment” shall mean, with respect
to any Covered Taxable Year, the net aggregate payments, if any made by Cowen
Inc. to SGAI pursuant to Sections 13, with respect to such Covered
Taxable Year.

“Taxable Year” shall mean a taxable year as
defined in Section 441(b) of the Code (and thus may include a period of less
than 12 months for which a return is made).

“Tax Return” or “Return” shall mean any
return, declaration, report, claim for refund, information return or similar
statement filed or required to be filed with respect to any Taxes or by any Tax
Authority, including any schedule or attachment thereto, and including any
amendment thereof.

“Vesting Event” shall have the meaning set
forth in Section 11(b).

Capitalized terms not otherwise defined herein shall
have the meaning set forth in the Separation Agreement and Ancillary Documents.

SECTION 2.  Filing of Tax Returns.

(a)          
(i) SGAI shall prepare (or cause to be prepared) and file (or cause to be
filed) all necessary SGAI Consolidated Returns for all Taxable Years (whether
ending before, on, or after the IPO Closing Date) and all necessary SGAI
Combined Returns for all Taxable Years (whether ending before, on, or after the
IPO Closing Date) which reflect income or operations of Cowen LLC or Cowen Inc.
SGAI shall prepare (or cause to be prepared) and file (or cause to be filed),
all Tax Returns required to be filed by or with respect to Cowen LLC and Cowen
Inc. with respect to all periods ending on or before the IPO Closing Date and
any Straddle Period, as well as any Tax Returns described in Section 3(c). 
SGAI’s preparation and filing obligations with respect to Tax Returns described
in this Section 2(a) shall apply without regard to whether the
obligation to file such Tax Return arises prior to, on or after the IPO Closing
Date.  SGAI shall pay any Taxes for which it is responsible pursuant to Sections
3(a) and (c) of this Agreement.  SGAI shall permit Cowen Inc. to
review and comment on each Tax Return for which Cowen Inc. may be liable under
this Agreement, and shall make such revisions to such Tax Returns as are
reasonably requested by Cowen Inc.  Cowen Inc. shall pay to SGAI an amount
equal to the Taxes for which it is liable pursuant to Sections 3(b) and (c)
but which are payable with Tax Returns to be filed by SGAI pursuant to this Section
2(a) within 10 days prior to the due date for the filing of such Tax
Returns.

 

4

 

(b)          
Cowen Inc. shall, except to the extent that filing such Tax Returns is the
responsibility of SGAI under Section 2(a), prepare (or cause to be
prepared) and file (or cause to be filed), all Tax Returns relating to Cowen
LLC and Cowen Inc.  Cowen Inc. shall permit SGAI to review and comment on
each Tax Return for which SGAI may be liable under this Agreement, and shall
make such revisions to such Tax Returns as are reasonably requested by
SGAI.  SGAI shall pay to Cowen Inc. an amount equal to the Taxes for which
it is liable pursuant to Section 3(a) but which are payable with Tax
Returns to be filed by Cowen Inc. pursuant to the previous sentence within 10
days prior to the due date for the filing of such Tax Returns.  Cowen Inc.
shall pay or cause to be paid to the applicable Tax Authority all Taxes due and
payable in respect of all Tax Returns required to be prepared by Cowen Inc.
pursuant to this Section 2(b).

SECTION 3.  Responsibility for Taxes. 
(a)  Except as provided in Section 3(c) SGAI shall be liable for
and will indemnify Cowen Inc. and all of its Subsidiaries for all Taxes
attributable to, imposed on, or for which Cowen LLC or Cowen Inc. may otherwise
be liable, for events occurring or periods ending on or before the IPO Closing
Date and, with respect to any Straddle Period, the portion of such Straddle
Period ending on the IPO Closing Date.  SGAI shall be entitled to any
refund of Taxes of Cowen LLC or Cowen Inc. attributable to Taxes paid with
respect to such periods.  Except as provided in Section 3(c) SGAI
shall also indemnify and hold harmless Cowen LLC and Cowen Inc. for (i) any
Taxes (“SGAI Consolidated Taxes”) with respect to SGAI Consolidated Returns,
and (ii) any Taxes (“SGAI Combined Taxes”) with respect to SGAI Combined
Returns.

(b)          
Cowen Inc. shall be liable for and will indemnify SGAI and its Affiliates for
all Taxes attributable to, imposed on, or for which Cowen LLC or Cowen Inc. may
otherwise be liable for any Taxable Year or period that begins after the
Closing and, with respect to any Straddle Period, the portion of such Straddle
Period beginning the day after the IPO Closing Date.  Cowen Inc. shall be
entitled to any refund of Taxes of Cowen Inc. or any of its Subsidiaries
attributable to Taxes paid with respect to such periods.

(c)          
In the case of certain state or local Tax Returns filed by SGASH or Cowen LLC
for which no Tax Return would have been filed but for the activities of the
Cowen Business (whether or not such Tax Returns have been filed as of this
date), such Tax Returns being identified on Schedule 3(c) hereof: 
(i) to the extent such Tax Returns have not been filed as of the IPO Closing
Date, SGASH will pay the amount of Taxes shown as due and payable on such Tax
Returns filed or to be filed for Taxable Years ending on or before the IPO
Closing Date and, with respect to any Straddle Period, the portion of such
Straddle Period ending on or before the IPO Closing Date, and (ii) SGASH and
Cowen Inc. shall bear equally the costs of any Taxes arising from a Final
Determination from any audits or examinations of such Tax Returns relating to
such periods (or portion thereof).  SGAI shall be entitled to any refund
of Taxes of Cowen LLC or Cowen Inc. attributable to Taxes paid with respect to
such periods; provided, however, SGAI and Cowen Inc. shall share
equally in any refund of such Taxes, if and to the extent such refund is
attributable to Taxes incurred and borne equally by SGAI and Cowen Inc.
pursuant to this Section 3(c).  SGASH and Cowen Inc. shall bear
equally the costs associated with SGAI’s preparation and defense of any Tax
Returns to be filed pursuant to this Section 3(c) (as such costs are
incurred).

 

5

 

(d)          
In order to apportion appropriately any Taxes relating to a Straddle Period
between the portion of such Straddle Period ending on and including the IPO
Closing Date and the portion of such Straddle Period beginning after the IPO
Closing Date, the Parties shall, to the extent permitted under applicable law,
elect with the relevant Tax Authority to treat for all Tax purposes the IPO
Closing Date as the last day of a taxable period.  In the case of any other
Taxes for a Straddle Period for which such election to close the taxable period
is not permitted, the portion of such Taxes that are allocable to the portion
of the Straddle Period ending on and including the IPO Closing Date shall
be:  (i) in the case of ad valorem or similar Taxes that are imposed
on a periodic basis, an amount equal to the amount of such Taxes for the entire
period (or, in the case of such Taxes determined on an arrears basis (such as
real property Taxes), the amount of such Taxes for the immediately preceding
period) multiplied by a fraction the numerator of which is the number of days
in the Straddle Period prior to and including the IPO Closing Date and the
denominator of which is the number of days in the entire relevant Straddle
Period; and (ii) in the case of Taxes not described in (i) (such as Taxes
that are either (A) based upon or related to income, receipts or premiums, or
(B) imposed in connection with any sale or other transfer or assignment of
property (real or personal, tangible or intangible)), deemed equal to the
amount that would be payable if the taxable period ended on and included the
IPO Closing Date.

(e)          
Indemnification payments under this Section 3 shall be made in
immediately available funds within 30 days after receipt by the indemnifying
Party of a written request therefor.

SECTION 4.  Determination and Allocation of
Acquisition Price; Treatment of the Separation.

(a)          
SGAI and Cowen Inc. shall determine the Acquisition Price by adding the amount
of the Cowen Liabilities assumed in the Separation to the value of the Cowen
stock received by SGASH in exchange for the Cowen Assets pursuant to Section
2.02(e) of the Separation Agreement (as determined by the price at which
Cowen stock is sold in the IPO).  SGAI and Cowen Inc. shall allocate the
Acquisition Price to each Cowen Asset or class of Cowen Assets  as set
forth on Final Allocation Schedule attached to this Agreement.  The
Acquisition Price allocation made pursuant to this Section 4 is intended
to comply with the allocation method required by Section 1060 of the Code and
applicable Treasury regulations and the Parties hereto shall cooperate to
comply with all procedural requirements of Section 1060 of the Code and
applicable Treasury regulations.  The Final Allocation Schedule shall also
include (i) the Tax basis of each Cowen Asset or class of Cowen Assets as
recorded on Cowen LLC’s Tax books and records immediately before the
Acquisition (the “Beginning Basis”), (ii) with respect to each Cowen Asset or
class of Cowen Assets, the amount of the Acquisition Price (as adjusted
pursuant to clause (b)) allocated to such Cowen Asset or class of Cowen
Assets (pursuant to this Section 4(a)) (the “Redetermined Tax Basis”)
and (iii) with respect to each Cowen Asset or class of Cowen Assets, the
excess, if any, of the Redetermined Tax Basis over the Beginning Basis (the
“Basis Adjustment”), all as determined by SGAI and Cowen Inc. in good faith.

(b)          
As promptly as practicable following the payment of any amount pursuant to Section
13 hereunder, SGAI shall deliver to Cowen Inc. an amended Final Allocation
Schedule that takes into account the amount of such payment (other than Imputed
Interest) as an

 

6

 

adjustment
to the Acquisition Price and recomputes the Redetermined Tax Basis of each
Cowen Asset or class of Cowen Assets according to the principles set forth in Section
4(a).

(c)          
If either Party is unable to agree as any item reflected on the Final
Allocation Schedule, such Party shall notify the other Parties of such
disagreement and its reasons for so disagreeing, in which case the Parties
shall attempt to resolve the disagreement.  To the extent the Parties
cannot agree on a mutually acceptable determination and/or allocation of the
Acquisition Price, such determination and/or allocation shall be made pursuant
to the Reconciliation Procedures.  The Parties hereto agree to file all
Tax Returns and claims and other statements consistent with such allocation,
including Internal Revenue Service Form 8594 (or any equivalent statement), and
shall not make any written statement or take any position inconsistent with
such allocation on any return, on any refund or other claim, during the course of
any Internal Revenue Service or other audit or appeal, for any other financial
or regulatory purpose, in any litigation, investigation, proceeding or
otherwise.

(d)          
The Parties agree that the transactions constituting the Separation shall for United
States federal income tax purposes be treated as a taxable transfer of the
Cowen Assets to Cowen Inc. for consideration equal to the Acquisition
Price.  Absent a Final Determination to the contrary, the Parties shall
file or cause to be filed all Tax Returns in a manner consistent with this Section
4, including the Final Allocation Schedule, and shall not take, or permit
any Affiliate to take, any position inconsistent therewith.

(e)          
In accordance with the applicable provisions of the Code and the regulations
thereunder, SGAI will retain the benefit of all the net operating loss
carryforwards and tax credit carryforwards generated by the business of Cowen
LLC for all periods prior to and through the IPO Closing Date.

SECTION 5.  Cooperation; Exchange of
Information.  The Parties will cooperate fully with each other and
shall cause their respective Affiliates, officers, employees, agents, auditors
and representatives to cooperate fully in connection with (a) the preparation
and filing of any federal, state, local or foreign Tax Returns that include the
business and operations of the Cowen Inc. or its Subsidiaries or otherwise
relating to the Cowen Business and (b) any audit examination by any Tax
Authority of the Tax Returns referred to in clause (a).  Such
cooperation shall include, without limitation, the furnishing or making
available of records, books of account or other materials of Cowen Inc. and its
Subsidiaries necessary or helpful for the defense against and resolving
assertions of any Tax Authority as to any Tax Returns referred to in clause (a)
and obtaining the signatures of appropriate entities for applicable Tax
Returns.  Each Party shall provide timely notice to the other Party in
writing of any pending or threatened tax audits or assessments of Cowen Inc. or
any of its Subsidiaries for taxable periods for which the other may have a
liability under this Agreement and shall furnish the other Party with copies of
all correspondence received from any Tax Authority in connection with any Tax
audit or information request with respect to any such audit or
assessment.  Cowen Inc. shall, and shall cause each Subsidiary and
Affiliate to, prepare any response to a taxing authority in respect of a
dispute, audit or other controversy on a basis consistent with past practices
of the relevant entity.  SGAI and its Affiliates will need access, from
time to time, after the IPO Closing Date, to certain accounting and Tax records
and information held by Cowen Inc., and its Subsidiaries to the extent such
records and information pertain to events occurring prior to the IPO Closing
Date;

 

7

 

therefore,
Cowen Inc. shall, and shall cause Cowen LLC and each Subsidiary to, (i) retain
and maintain such records until such time as SGAI agree that such retention and
maintenance is no longer necessary, and (ii) allow SGAI and their agents and
representatives (and agents or representatives of any of their Affiliates), at
times and dates mutually and reasonably acceptable to the Parties, to inspect,
review and make copies of such records as SGAI may deem necessary or
appropriate from time to time, such activities to be conducted during normal
business hours and at SGAI’s expense (except to the extent provided in Section
3(c)).

SECTION 6.  Control.

(a)          
Unless SGAI in its sole discretion elects otherwise, SGAI will have the
exclusive right to file any amended Tax Returns and to control any audit or
other administrative or judicial proceeding with respect to SGAI Consolidated
Taxes, SGAI Combined Taxes and/or the allocation shown on the Final Allocation
Schedule, and any other audit or other administrative or judicial proceeding
regarding any other matter that may result in any Tax liability for which SGAI
or a Subsidiary thereof is responsible under this Agreement; provided, however,
that (i) SGAI shall provide Cowen Inc. an opportunity to review and comment
upon any such amended Tax Return or written communication regarding any audit
or other administrative or judicial proceeding if and to the extent any such
communication relates to the Final Allocation Schedule, Cowen Inc., or any
Subsidiary thereof and (ii) SGAI will not settle or compromise any such
proceeding in a manner that would adversely affect Cowen Inc. without the
consent of Cowen Inc., which consent may not be unreasonably withheld.

(b)          
Subject to Section 6(a), SGAI will keep Cowen Inc. informed of, consult
with Cowen Inc. regarding, and permit Cowen Inc. to participate in (at Cowen
Inc.’s own expense), any such filing, audit, or other judicial or
administrative proceeding relating to the Final Allocation Schedule or that may
otherwise affect Cowen Inc. or any Affiliate of Cowen Inc.

(c)          
Except as otherwise provided in Section 6(a), Cowen Inc. will have the
exclusive right to control any audit or other administrative or judicial
proceeding with respect to the Tax liability of Cowen Inc. or its
Subsidiaries.  Cowen Inc. will keep SGAI informed of, consult with SGAI
regarding, and permit SGAI to participate in (at SGAI’s own expense), any such
filing, audit, or other judicial or administrative proceeding that may affect
SGAI or any Affiliate of SGAI.

SECTION 7.  Tax Sharing Agreements. 
Notwithstanding anything in any other agreement to the contrary, all
liabilities and obligations between SGAI or any of its Affiliates (other than
the Cowen Inc. and its Subsidiaries), on the one hand, and the Cowen Inc. and
its Subsidiaries, on the other hand, under any Tax allocation or Tax sharing
agreement in effect prior to the IPO Closing Date (other than this Agreement)
shall cease and terminate as of the IPO Closing Date.

SECTION 8.  Consolidated and Combined Return
Status.  On or prior to the IPO Closing Date, neither Cowen Inc. nor
any Subsidiary thereof, nor any director, officer, employee or agent thereof
will take any action or fail to act (including without limitation engaging in
an extraordinary transaction after the IPO closing on the IPO Closing Date),
without the consent of

 

8

 

SGAI,
that could reasonably be expected to adversely affect the tax treatment, tax
status or overall tax liability of SGAI or any of its Affiliates.

SECTION 9.  Transfer and Similar Taxes. 
All transfer Taxes assessed as a result of the transactions contemplated hereby
shall be borne equally by SGAI and Cowen Inc. and the Party upon which the Tax
is imposed shall be responsible for any filing of Tax Returns required in
connection therewith.  The Parties agree to cooperate and take such
reasonable actions as are necessary to minimize the amount of transfer Taxes
imposed as a consequence of the transactions contemplated herein.

SECTION 10.  Purchase Price Adjustment. 
Any payment by SGAI or Cowen Inc. under this Agreement or Section 2.06 of the
Separation Agreement shall be treated as an adjustment to the Acquisition
Price.

SECTION 11.  [Reserved]

SECTION 12.  Litigation Reserve and Escrow
Fund.  The Parties hereby agree that notwithstanding the terms of the
Separation Agreement or any other Ancillary Agreement, solely for United States
federal income tax purposes SGASH shall constitute the obligor with respect to
all liabilities associated with the Final Litigation Reserve and be treated as
the owner of the Escrow Fund assets.  Accordingly, SGASH shall include in
its Tax Returns all income, gain, losses, deductions and credits with respect
to the Escrow Fund and shall be entitled to all federal, state and local income
tax deductions arising in connection with payments relating to the Final
Litigation Reserve.  To the extent SGASH is not directly involved in the
settlement or resolution of any matter for which the Final Litigation Reserve
relates, following the payment of any amounts in connection with the settlement
or resolution of such matter, Cowen Inc. shall promptly notify SGASH in writing
of each such payment.  Based on the foregoing, unless and until there has
been a Final Determination to the contrary, neither Cowen Inc. nor any of its
Subsidiaries shall claim a federal, state or local income Tax deduction for the
payment of any amounts in connection with the settlement or resolution of any
matter relating to the Final Litigation Reserve and neither Cowen Inc. nor any
of its Subsidiaries shall take any action inconsistent therewith.

SECTION 13.  Tax Benefit Payments.

(a)          
The provisions of Section 13(b), (c), (d) and Section
14 below shall be effective only in the event that the aggregate
Redetermined Tax Basis exceeds the aggregate Beginning Basis.

(b)          
Within ten (10) calendar days following the date Cowen Inc. actually files its
United States federal income tax return for any Covered Taxable Year, Cowen
Inc. shall submit to SGASH a preliminary determination (the “Preliminary
Determination”) of (A) the liability for Taxes that would be due on such date
assuming the same facts and using the same methods, elections, conventions and
practices used in determining the actual liability for Taxes for such Covered
Taxable Year; provided, however, that such liability shall be calculated (i)
with reference to the Beginning Tax Basis instead of the Redetermined Tax Basis
of each Cowen Asset or class of Cowen Assets and (ii) excluding any deduction
attributable to Imputed Interest

 

9

 

(“Hypothetical
Tax Liability”) and (B) the actual liability for Taxes due on such date with
respect to such Tax Return (“Actual Tax Liability”) and shall pay to SGASH
fifty percent (50%) of the excess, if any, of the Hypothetical Tax Liability
over the Actual Tax Liability as shown in the Preliminary Determination. 
For purposes of calculating the Hypothetical Tax Liability and the Actual Tax
Liability pursuant to this Section 13(b), the Parties shall assume that
Cowen Inc. and its Subsidiaries file state Tax Returns only in the Relevant
States.

(c)          
Within thirty (30) calendar days after its receipt of the Preliminary
Determination, SGASH shall notify Cowen Inc. in writing of any proposed
adjustments thereto.  Promptly thereafter, Cowen Inc. shall make such
adjustments to the Preliminary Determination to the extent reasonably requested
in good faith by SGASH.  If the Parties, using their best efforts, are
unable to successfully resolve the issues raised by SGASH within 60 calendar
days after delivery of the Preliminary Determination to SGASH, Cowen Inc. and
SGASH shall employ the Reconciliation Procedures.  Within five (5) days
after finalizing such determination, (i) Cowen Inc. shall pay to SGASH the
excess, if any, of (A) fifty percent (50%) of the excess of such Hypothetical
Tax Liability over such Actual Tax Liability over (B) the aggregate amount
previously paid by Cowen Inc. to SGASH under Section 13(b) with respect
to such Covered Taxable Year, or (ii) SGASH shall pay to Cowen Inc. the excess,
if any, of (A) the aggregate amount previously paid by Cowen Inc. to SGASH
under Section 13(b) with respect to such Taxable Year over (B) fifty
percent (50%) of the excess, if any, of such Hypothetical Tax Liability over
such Actual Tax Liability.  For purposes of calculating the Hypothetical
Tax Liability and the Actual Tax Liability pursuant to this Section 13(c),
the Parties shall assume that Cowen Inc. and its Subsidiaries only file state
Tax Returns in the Relevant States.

(d)          
If, the amount of any Tax Benefit Payment with respect to a Covered Taxable
Year (an “Original Payment”) would have been different if calculated based upon
(i) a Final Determination relating to such Covered Taxable Year, (ii) an
amended Tax Return filed for such Covered Taxable Year for which SGAI has been
previously provided an opportunity to review and comment upon and consent to
the filing thereof, which consent may not be unreasonably withheld, (iii) a
correction of inaccuracies in the Hypothetical Tax Liability calculation
identified as a result of factual information relating to such Covered Taxable
Year in the original Final Allocation Schedule identified after the Closing
Date as a result of the receipt of additional information relating to facts or circumstances
on or prior to the IPO Closing Date, or (iv) the carryback of a loss or other
tax item to such Covered Taxable Year (each, a “Recomputing Event” and the Tax
Benefit Payment as so calculated, a “Recomputed Tax Benefit Payment”), then
SGASH shall pay to Cowen Inc. the excess, if any, of the Original Payment over
the Recomputed Tax Benefit Payment together (in the case of Recomputing Events
described in (i), (ii) or (iii) above) with any interest thereon, computed at
the rate set forth in Section 15 commencing from the date the Original
Payment was due and payable, and Cowen Inc. shall pay to SGASH the excess, if
any, of the Recomputed Tax Benefit Payment over the Original Payment together
(in the case of Recomputing Events described in (i), (ii) or (iii) above) with
any interest thereon, computed at the rate set forth in Section 15
commencing from the date the Original Payment was due and payable.  If
Cowen Inc. receives notice of or otherwise becomes aware of any Recomputing
Event that could result in any difference between an Original Payment and a
Recomputed Tax Benefit Payment, it shall promptly notify SGASH in writing and
shall provide SGASH with any related information reasonably requested by
SGASH.  Within thirty (30) days following notice of any such Recomputing
Event, Cowen Inc. shall

 

10

 

deliver
a notice to SGASH setting forth the amount of the Recomputed Tax Benefit
Payment, and, upon review by SGASH, shall promptly make adjustments to such calculation
to the extent reasonably requested in good faith by SGASH.  If the
Parties, using their best efforts, are unable to successfully resolve the
issues raised by SGASH within 60 calendar days after delivery of the notice of
the Recomputing Event to SGASH, Cowen Inc. and SGASH shall employ the
Reconciliation Procedures.  Within five (5) days of finalizing the
Recomputed Tax benefit Payment, the Party required to make a payment hereunder
with respect to such Recomputed Tax Benefit Payment shall make such payment to
the other Party except, however, that SGASH shall not be required to make any
payment resulting from a Recomputation Event arising as a result of the
carryback of a loss or other tax attribute until ten (10) days after the filing
of the income Tax Return for the Taxable Year from which the loss or other tax
attribute was carried back.

(e)          
Each payment hereunder shall be made by wire transfer of immediately available
funds to a bank account of the recipient previously designated by it.

SECTION 14.  Change of Control; Asset
Transfers; Termination.

(a)          
Cowen Inc. may terminate this Agreement at any time by paying to SGASH the
Acceleration Payment.  If Cowen Inc. chooses to exercise its right of
early termination under this Section 14(a), Cowen Inc. shall make such
Acceleration Payment pursuant to the requirements set forth in Sections 14
(c) and (d) hereof.  Upon payment of the Acceleration Payment
by Cowen Inc., neither SGASH nor Cowen Inc. shall have any further payment
obligations under Section 13 of this Agreement, other than for any (i)
Tax Benefit Payment agreed to by Cowen Inc. and SGASH as due and payable but
unpaid as of the Acceleration Payment Notice and (ii) Tax Benefit Payment due
for the Covered Taxable Year ending with or including the date of the
Acceleration Payment Notice (except to the extent that the amount described in
clause (i) or (ii) is included in the Acceleration Payment).

(b)          
In the event of a Change in Control, notwithstanding anything to the contrary
contained in this Agreement, Cowen Inc. shall have the option to pay to SGASH
an amount of cash equal to (i) seventy percent (70%) of the Acceleration
Payment (the “Change of Control Acceleration Payment”) or (ii) the Deferred
Acceleration Payments.  Cowen Inc. shall pay either the Change of Control
Acceleration Payment or the Deferred Acceleration Payments described in this
subsection (b) to SGASH pursuant to the requirements set forth in Sections
14(c) and (d) hereof.  Upon payment of such Change of Control Acceleration
Payment or the final installment of the Deferred Acceleration Payments by Cowen
Inc., neither SGASH nor Cowen Inc. shall have any further payment obligations
under Section 13 of this Agreement, other than for any (i) Tax Benefit Payment
agreed to by Cowen Inc. and SGASH as due and payable but unpaid as of the
Acceleration Notice and (ii) Tax Benefit Payment due for the Covered Taxable
Year ending with or including the date of the Acceleration Notice (except to
the extent that the amount described in clause (i) or (ii) is included in the
Change of Control Acceleration Payment or the Deferred Acceleration Payments).

(c)          
In the event an Acceleration Payment, Change of Control Acceleration Payment or
Deferred Acceleration Payments are to be made pursuant to this Section 14,
Cowen Inc. shall promptly deliver to SGASH, and in any event no later than ten
(10) days prior to a Change in Control, a written notice (the “Acceleration
Notice”) specifying Cowen Inc.’s intention to make

 

11

 

the
Acceleration Payment, Change of Control Acceleration Payment or the Deferred
Acceleration Payments and showing in reasonable detail the calculation of the
Acceleration Payment, Change of Control Acceleration Payment or the Deferred
Acceleration Payments, as the case may be.  At the time Cowen Inc.
delivers the Acceleration Notice to SGASH it shall deliver to SGASH schedules
and work papers providing reasonable detail regarding the calculation of the Acceleration
Payment, Change of Control Acceleration Payment or the Deferred Acceleration
Payments, as applicable, in a manner consistent with the guidelines set forth
in Section 14(d) hereof.  The Acceleration Notice shall become
final and binding on the Parties unless SGASH, within 30 calendar days after
receiving such Acceleration Notice, provides Cowen Inc. with notice of a
material objection to such Acceleration Notice made in good faith.  If the
Parties, using their best efforts, are unable to successfully resolve the
issues raised in such notice within 60 calendar days after such Acceleration
Notice was delivered to SGASH, Cowen Inc. and SGASH shall employ the
Reconciliation Procedures.  Except as provided in Section 14(d)
below, within five (5) calendar days of the delivery to SGASH of the
Acceleration Notice or any amendment to the Acceleration Notice, Cowen Inc.
shall pay to SGASH an amount equal to the Acceleration Payment, Change of
Control Acceleration Payment or the first installment of the Deferred
Acceleration Payments.  Such payment shall be made by wire transfer of
immediately available funds to a bank account designated by SGASH.

(d)          
(i)            An
Acceleration Payment shall be calculated as of the date of an Acceleration
Notice and shall be equal the present value, discounted at the Acceleration
Rate, of all Tax Benefit Payments that would be required to be paid by Cowen
Inc. to SGASH during the period from the date of the Acceleration Notice
through the end of the first Taxable Year ending on the twentieth (20th)
anniversary of the IPO Closing Date (the “Scheduled Termination Date”) assuming
(A) the Acceleration Assumptions are applied and (B) any loss carryovers or the
Imputed Interest generated by the Basis Adjustment and available as of the date
of the Acceleration Notice will be utilized by Cowen Inc. on pro rata basis
from the date of the Acceleration Notice through the Scheduled Termination
Date.

(ii)          
The Deferred Acceleration Payments shall be calculated as of the date of an
Acceleration Notice and shall be payable by Cowen Inc. to SGASH annually
beginning on the date of the first installment required to be paid as set forth
in Section 14(c) hereof and on each anniversary of the date of the Change of
Control thereafter through and including the Scheduled Termination Date (each
such date a “Deferred Acceleration Payment Date”).  Each Deferred
Acceleration Payment to be made shall be equal to:  (A) seventy percent
(70%) of an amount equal to the present value, discounted at the Acceleration
Rate, of all Tax Benefit Payments that would be required to be paid by Cowen
Inc. to SGASH during the period from the date of the Acceleration Notice
through the end of the first Taxable Year ending on the twentieth (20th)
anniversary of the IPO Closing Date assuming (x) the Acceleration Assumptions
are applied and (y) any loss carryovers or the Imputed interest generated by
the Basis Adjustment and available as of the date of the Acceleration Notice
will be utilized by Cowen Inc. on pro rata basis from the date of the
Acceleration Notice through the Scheduled Termination Date divided by (B) the
aggregate number of Deferred Acceleration Payment Dates including the date of
the Change of Control.  To each such payment obligation described in the
preceding sentence shall be added all unpaid DAP Interest as of such Deferred
Acceleration Payment date.  In the event all Tax Benefit Payments payable
(based on the assumptions set forth in the preceding sentence) have

 

12

 

not
been paid as of the Scheduled Termination Date, all remaining amounts payable
shall be paid by Cowen Inc. to SGASH on such date.

(e)          
In the event that Cowen Inc. transfers all or any material portion of the Cowen
Assets in a transaction in which the full amount of gain or loss is not
recognized for federal income tax purposes and such transfer is not a Change in
Control, then, within thirty (30) days of such transfer, Cowen Inc. shall
notify SGASH, in sufficient written detail, of the Cowen Asset transfer and the
date thereof (the “Asset Transfer Date”), and as soon as practicable
thereafter, Cowen Inc. shall deliver to SGASH in writing a good faith
determination of the reduction in Tax Benefit Payments attributable to such
transfer (the “Partial Acceleration Payment Notice”) calculated in a manner
consistent with the principles of Section 14(d)(i).  The Partial
Acceleration Payment Notice shall identify the amount of the Partial
Acceleration Payment which shall be an amount equal to the product of: (i)
seventy percent (70%) of the Acceleration Payment (calculated as of the Asset
Transfer Date) and (ii) a fraction the numerator of which is the adjusted basis
(determined as of the Asset Transfer Date) of the amortizable and/or
depreciable Cowen Assets transferred and the denominator of which is the
adjusted basis (determined as of the Asset Transfer Date) of all of the
amortizable and depreciable Cowen Assets.  The Partial Acceleration
Payment Notice shall become final and binding on the Parties unless SGASH,
within 30 calendar days after receiving such Partial Acceleration Payment
Notice, provides Cowen Inc. with notice of a material objection to such Partial
Acceleration Payment Notice made in good faith.  If the Parties, using
their best efforts, are unable to successfully resolve the issues raised in
such notice within 60 calendar days after such Acceleration Payment Notice was
delivered to SGASH, Cowen Inc. and SGASH shall employ the Reconciliation
Procedures.  Within five (5) calendar days of the delivery to SGASH of the
Partial Acceleration Payment Notice or any amendment to the Partial
Acceleration Payment Notice, Cowen Inc. shall pay to SGASH an amount equal to
the Partial Acceleration Payment.

SECTION 15.  Interest.  In the event
that any payment required to be made under this Agreement is made after the
date on which such payment is due, interest will accrue on the amount of such
payment from (but not including) the due date of such payment to (and
including) the date such payment is actually made at nine percent (9%),
compounded on a daily basis.

SECTION 16.  Survival of Obligations. 
Except to the extent inconsistent with applicable law, the indemnity and
payment obligations set forth in this Agreement will survive until the date
which is six months after the date of expiration of the applicable statute of
limitations (including any extensions or waivers thereof).  The right to
indemnification with respect to claims of which notice was given prior to the
expiration of the applicable survival period will survive such expiration until
such claim is finally resolved and any obligations with respect thereto are
fully satisfied.

SECTION 17.  Reconciliation Procedures. In
the event that Cowen Inc. and SGASH are unable to resolve a disagreement within
the relevant period designated in this Agreement, the matter shall be submitted
for determination to a nationally recognized expert in the particular area of
disagreement mutually acceptable to both Parties.  The expert shall be
employed by a nationally recognized accounting firm or a law firm, and the
expert shall not, and the firm that employs the expert shall not, have any
material relationship with either Cowen Inc. or SGASH or

 

13

 

other
actual or potential conflict of interest.  If the matter is not resolved
before any payment that is the subject of a disagreement is due or any Tax
Return reflecting the subject of a disagreement is due, such payment shall be
made on the date prescribed by this Agreement and such Tax Return may be filed
as prepared by Cowen Inc. or its affiliate, subject to adjustment or amendment
upon resolution.  The costs and expenses relating to the engagement of
such expert or amending any return shall be borne by the Party who did not have
the prevailing position, or if a compromise is reached by Cowen Inc. and SGASH,
the costs and expenses shall be borne equally by the Parties. The expert shall
determine which Party prevails. The determinations of the expert pursuant to
this Section 17 shall be binding on the Parties absent manifest error.

SECTION 18.  Notices.  Any notices
given pursuant to this Agreement shall be made in accordance with the notice
provisions of the Separation Agreement.

SECTION 19.  Waivers. 
     The observance of any term of this Agreement may be
waived (either generally or in a particular instance and either retroactively
or prospectively) by the Party entitled to enforce such term, but such waiver
shall be effective only if it is in a writing signed by the Party against whom
the existence of such waiver is asserted.  Unless otherwise expressly
provided in this Agreement, no delay or omission on the part of any Party in
exercising any right or privilege under this Agreement shall operate as a
waiver thereof, nor shall any waiver on the part of any Party of any right or
privilege under this Agreement operate as a waiver of any other right or
privilege under this Agreement nor shall any single or partial exercise of any
right or privilege preclude any other or further exercise thereof or the
exercise of any other right or privilege under this Agreement.  No failure
by any Party to take any action or assert any right or privilege hereunder
shall be deemed to be a waiver of such right or privilege in the event of the
continuation or repetition of the circumstances giving rise to such right
unless expressly waived in writing by the Party against whom the existence of
such waiver is asserted.

SECTION 20.  Assignment.  No Party
may assign its duties and obligations under this Agreement without the prior
written consent of all other Parties.  Notwithstanding the foregoing, this
Agreement shall be assignable in whole in connection with a merger or
consolidation or the sale of all or substantially all of the Assets of a Party
so long as the resulting, surviving or transferee Person assumes all the
obligations of the relevant party thereto by operation of law or pursuant to an
agreement in form and substance reasonably satisfactory to the other Party. 
This Agreement shall be binding on, and shall inure to the benefit of, the
Parties hereto and to their respective successors and permitted assigns.

SECTION 21.  Governing Law.  This
Agreement shall be governed by and construed in accordance with the laws of the
State of New York, irrespective of
the choice of laws principles of the State of New York, as to all matters,
including matters of validity, construction, effect, enforceability,
performance and remedies.

SECTION 22.  Amendment.  No
provisions of this Agreement shall be deemed amended, supplemented or modified
unless such amendment, supplement or modification is in writing and signed by
an authorized representative of each of the Parties.  .

SECTION 23.  Severability.  If any
provision of this Agreement or the application thereof to any Person or
circumstance is determined by a court of competent jurisdiction to be invalid,

 

14

 

void or
unenforceable, the remaining provisions hereof, or the application of such
provision to Persons or circumstances or in jurisdictions other than those as
to which it has been held invalid or unenforceable, shall remain in full force
and effect and shall in no way be affected, impaired or invalidated thereby, so
long as the economic or legal substance of the transactions contemplated hereby
is not affected in any manner adverse to any Party.  Upon such
determination, the Parties shall negotiate in good faith in an effort to agree
upon a suitable and equitable provision to effect the original intent of the
Parties.

SECTION 24.  Entire Agreement; No Third Party
Beneficiaries.  This Agreement contains the entire agreement between
the Parties with respect to the subject matter hereof and supersedes all
previous agreements, negotiations, discussions, writings, understandings,
commitments and conversations with respect to such subject matter, and there
are no agreements or understandings between the Parties other than those set
forth or referred to herein or in the Separation Agreement. 
Notwithstanding any other provisions in this Agreement to the contrary, in the
event and to the extent that there is a conflict between the provisions of this
Agreement and the provisions of the Separation Agreement, the provisions of
this Agreement shall control.  This Agreement is not intended to confer
any rights or remedies hereunder upon any person other than the Parties hereto.

SECTION 25.  Counterparts; Headings;
Interpretation.  This Agreement may be executed in counterparts, each
of which when so executed shall be deemed an original but all of which taken
together shall constitute one and the same agreement.  Delivery of an
executed counterpart of a signature page to this Agreement by facsimile shall
be as effective as delivery of an executed original of such counterpart to this
Agreement.  The Section headings are inserted for convenience only and are
not to be construed as part of this Agreement.  All provisions of this
Agreement shall be interpreted so as to give effect to the intent of the Parties.

SECTION 26.  Mutual Drafting.  This
Agreement shall be deemed to be the joint work product of the Parties and any
rule of construction that a document shall be interpreted or construed against
a drafter of such document shall not be applicable.

 

15

 

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

 

	
   

  	
  SOCIÉTÉ
  GÉNÉRALE

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  SG
  AMERICAS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  SG
  AMERICAS SECURITIES HOLDINGS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  COWEN
  AND COMPANY, LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  COWEN
  GROUP, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

16

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