Document:

Exhibit 10.3

 

March 14, 2006

 

	
   

  	
   

  	
  Jean-Jacques
  Ogier

  
	
   

  	
   

  	
  Chief
  Executive Officer

  
	
   

  	
   

  	
  Société
  Générale Americas

  
	
   

  	
   

  	
   

  
	
  Mr. Kim
  S. Fennebresque

  	
   

  	
  Tel:
  212 278 6870

  
	
  Chairman & CEO

  	
   

  	
  Fax:
  212 278 7461

  
	
  Cowen &
  Co., LLC.

  	
   

  	
  jean-jacques.ogier@sgcib.com

  
	
  1221
  Avenue of the Americas

  	
   

  	
   

  
	
  10th
  Floor

  	
   

  	
   

  
	
  New
  York, NY 10020

  	
   

  	
   

  

 

Dear Mr. Fennebresque:

 

This letter shall constitute your agreement (“Agreement”) relating to employment
with Cowen & Co., LLC. (including any successor entity or its holding
company, collectively “Cowen,” or the “Company”) effective as of January 1,
2006, and supersedes and replaces the employment agreement entered into between
you and Cowen effective January 1, 2005 (the “Prior Agreement”). The terms
and conditions of your employment and compensation are set forth below.

 

1.                                       Position, Duties and Responsibilities.

 

(a)                                  Cowen shall continue to employ you as
Chairman of the Board of Directors and Chief Executive Officer. You shall
devote your full time and efforts to the performance of all of the duties associated
with that position and title as well as any and all other related duties that
the Board of Directors of Cowen may designate or assign to you.

 

(b)                                 During your employment, you may not, without
the prior written consent of Cowen, accept an appointment, whether or not for
remuneration, as Director, Officer or Manager of a company or business that is
not affiliated with Cowen.

 

(c)                                 You shall continue to be subject to and
comply with Cowen’s Code of Conduct, Conflict of Interest Policy, Employee
Investment Policy, customary compliance policies and all other policies, rules and
practices applicable to Cowen employees of similar rank and status, as now
existing or as subsequently modified or supplemented by Cowen in its sole
discretion.

 

2.                                       Term.

 

(a)                                  Your employment shall continue through December 31,
2007 (the “Term”), subject to provisions in Paragraph 6 concerning Termination
of Employment. The Term, and the terms of this Agreement, including the
compensation provisions, will be automatically

 

Société Générale

1221 Avenue of the Americas

New York NY 10020

 

 

renewed
for one additional two-year period, the 2008 and 2009 period (the “First
Renewal Term”) and one additional one-year period, the 2010 period (the “Second
Renewal Term”) unless either party provides written notice to the other that
the Term will not be so extended. Such notice must be provided by October 1st
of the second year of the term in accordance with the provisions of Paragraph
15 (i.e., notice on or before October 1, 2007 that the Agreement will not
be renewed for 2008 and 2009, terminates the agreement as of December 31,
2007). Notwithstanding the foregoing, this Agreement (and the Term) shall
automatically terminate upon the first to occur of (i) Abandonment of the
IPO (as defined below) or (ii) December 15, 2006, provided that the
Company has not consummated an IPO (as defined below) by such date.

 

(b)                                 For purposes of this Agreement, “IPO” shall
mean the consummation of an initial public offering of shares of Cowen whereby
Societe Generale or one of its subsidiaries (“SG”) offers a certain percentage
of Cowen (or any successor entity or its holding company) to the public for
sale on a nationally recognized securities exchange.

 

(c)                                  For purposes of this Agreement, “Abandonment
of the IPO” shall mean the first to occur of any of the following events: (i) execution
of an agreement by SG to sell, transfer or otherwise convey ownership of more
than 30% of its interest in Cowen to an entity not affiliated with SG, other
than as part of an IPO, (ii) withdrawal by Cowen of any registration
statement filed with the Securities and Exchange Commission in contemplation of
an IPO, (iii) a determination by SG that it no longer intends to pursue an
IPO of Cowen or (iv) any other action indicating abandonment of the IPO.

 

(d)                                 If either party provides notice not to renew
the Term, then you will be entitled to receive your Base Salary, and have use
of an office of comparable size and your secretary until March 31st
of the year following termination. You will be further entitled to the
Severance Amount set forth in Paragraph 6(e); provided, however, that you shall
not be entitled to the Severance Amount if this Agreement is not renewed beyond
the Second Renewal Term. You will not be entitled to a pro-rata bonus under
this Agreement for the period from January 1st through March 31st
of that year.

 

3.                                       Base Salary and Annual Bonus. You will be paid a base salary at the rate
of Two Hundred Fifty Thousand Dollars ($250,000) per annum, less applicable tax
and payroll deductions, payable in accordance with Cowen’s prevailing payroll
practices. The base salary in effect at any time during the Term is referred to
herein as “Base Salary.” In addition to your Base Salary, with respect to each
of the first four years of the Term (assuming you are still employed by Cowen)
you will be paid, less applicable tax and payroll deductions, a minimum annual
bonus in the amount of One Million Seven Hundred Fifty Thousand Dollars
($1,750,000) so that your total compensation for each such fiscal year is no
less than Two

 

2

 

Million
Dollars ($2,000,000). Commencing in the fifth year of the Term (i.e., 2010),
assuming you are still employed by Cowen, you shall be entitled to receive a
minimum annual bonus equal to One Million Seven Hundred Fifty Thousand Dollars
($1,750,000), of which Seven Hundred Fifty Thousand Dollars ($750,000) shall be
paid within two-and-one-half months after the end of the fiscal year in which
such bonus was earned and One Million Dollars ($1,000,000) of which shall be
deferred in accordance with the provisions of Section 409A (“Section 409A”)
of the Internal Revenue Code of 1986, as amended, and the guidance and
regulations promulgated thereunder (the “Code”) and shall be paid to you
immediately following the six-month anniversary of your termination of
employment (or earlier, if permitted by Section 409A). In addition, in
each year in which you are employed by Cowen you shall be entitled to earn an
additional annual performance-based bonus pursuant to a Company bonus plan as
determined by the Compensation Committee of the Board of Directors of Cowen.
The total annual bonus that may be earned by you for any year during the Term
is referred to herein as the “Annual Bonus.” Your Annual Bonuses for the 2006
through the 2010 fiscal years, and for any years thereafter, may at the
discretion of the Board of Directors of Cowen, and consistent with other senior
executives of Cowen, include a certain percentage of shares, restricted shares,
options, or other form of equity ownership in Cowen.

 

4.                                       Benefits. Cowen shall continue to provide you benefits, on the same basic terms
and conditions it customarily applies to Cowen employees of similar position,
rank and status, including life insurance, medical insurance, disability
insurance, holidays, vacation, 401(k) plan (if otherwise eligible), pension and
other employee benefits more particularly described in Cowen’s summary benefits
booklets, or as subsequently modified, changed or discontinued by Cowen. All
such benefits shall be provided in accordance with the terms and eligibility
requirements of their respective plans.

 

5.                                       Expenses. All documented and verified, reasonable and necessary expenses which
you incur in connection with the performance of your duties hereunder shall be reimbursed
in accordance with Cowen’s general policies.

 

6.                                       Termination of Employment.

 

(a)                                  Death or disability. Your employment shall terminate on your
death. If you become disabled, Cowen may terminate your employment by giving
you thirty (30) days written notice of its intention to terminate this
Agreement. In such event, your employment shall be terminated
unless you return to full-time performance of your duties within such thirty
(30) day period. “Disabled”, as used herein, shall mean “Disability,” as such
term is defined in Section 409A of the Internal Revenue Code of 1986, as
amended. Disputes on the issues of disability shall be determined by an
impartial, reputable physician agreed upon by the parties or their respective
doctors. Upon termination under this Paragraph

 

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6(a),
you or your estate shall be entitled to receive only that portion of your Base
Salary and any benefits or compensation that have been earned, but unpaid, as
of the date of termination and a pro-rata share of any Annual Bonus due for the
year in which your employment terminates, taking into account the number of
days that you were employed during the year during which termination occurs and
based on actual corporate performance. In addition, any outstanding equity
awards, including but not limited to any equity awards granted under Paragraph
8 of this Agreement, shall become fully vested and exercisable and any
restrictions thereon shall lapse. Any outstanding stock options shall remain
exercisable for the remainder of the respective terms of such stock options.

 

(b)                                 Cause. Nothing herein shall prevent the Board of Directors of Cowen from
terminating your employment for any reason, including for Cause. “Cause” shall
mean:

 

(i)                                     fraud, dishonesty, gross negligence or
substantial misconduct in the performance of your duties and responsibilities;

 

(ii)                                  any wrongful act that materially adversely
affects the business or reputation of Cowen, including, but without limitation,
breach of a fiduciary duty and/or intentional material violations of Cowen
policies or any violation of law;

 

(iii)                               your failure or refusal, after written notice
of such failure or refusal has been given to you, in any material respect, to
perform faithfully or diligently, the provisions of this Agreement or the
duties of your position, including, by way of example and not of limitation,
the failure or refusal to follow instructions reasonably given in the course of
employment, or violation of any material duty to Cowen.

 

Upon termination
of your employment for Cause you shall be entitled to receive only your Base
Salary and any other benefits or compensation that have been earned or vested
in accordance with the terms of the relevant plans, if any, pursuant to which
such benefits or compensation were awarded, but unpaid, as of the date of
termination. You shall not be entitled to any unpaid Annual Bonus whatsoever
for the year of termination.

 

(c)                                  Resignation/Voluntary Termination without
Good Reason. In the event you
resign or terminate your employment with Cowen of your own volition without
Good Reason (as defined below) prior to the expiration of the Term, you shall
be entitled to receive only your Base Salary and any benefits or compensation
that have been earned or vested in accordance with the terms of the relevant
plans, if any, pursuant to which such benefits or

 

4

 

compensation
were awarded, but unpaid, as of the date of termination of your employment. You
shall not be entitled to any unpaid Annual Bonus whatsoever for the year of
termination. You shall also be required to comply with the notice provision of
Paragraph 9.

 

(d)                                 Good Reason. For purposes of this Agreement, you shall have “Good Reason” to
terminate your employment hereunder (1) upon a failure by the Company to comply
with any material provision of this Agreement which has not been cured within
thirty (30) days after written notice of such noncompliance has been given by
you to the Company, (2) upon action by the Company resulting in a material
diminution of your title, duties or authority or (3) upon the Company’s
relocation of your principal place of employment to a location more than
twenty-five (25) miles outside of New York City.

 

(e)                                  Company-initiated Termination Other Than for
Cause or Resignation/Voluntary Termination for Good Reason. Cowen, in its discretion, or you may
terminate your employment at any time and for any reason during the Term or
upon its expiration. In the event that your employment terminates during the
Term, other than for death, disability, Cause, or your resignation/voluntary
termination without Good Reason, you shall be entitled to receive a lump sum
cash payment equal to that portion of your Base Salary and any other benefits
or compensation earned but unpaid as of the date of termination plus an amount
(the “Severance Amount”) equal to two times the sum of (1) your Base
Salary plus (2) the previous year’s Annual Bonus, less applicable tax and
payroll deductions. In addition, any outstanding equity awards, including but
not limited to any equity awards granted under Paragraph 8 of this Agreement
shall become fully vested and exercisable and any restrictions thereon shall
lapse, provided you have not otherwise violated the terms of the award
agreement pursuant to which such equity awards were granted. Any outstanding
stock options shall remain exercisable for the remainder of the respective
terms of such stock options. You will also be required to sign the standard
Cowen severance agreement and release in order to receive the Severance Amount.
Such compensation shall be paid to you within thirty (30) days of the date of
termination of your employment, assuming you have signed the severance
agreement referred to in the prior sentence.

 

(f)                                    Offset. In the event of termination, Cowen may offset, to the fullest extent
permitted by law, any amounts due to Cowen from you, or advanced or loaned to
you by Cowen, from any monies owed to you or your estate by reason of your
termination.

 

(g)                                 Section 409A Compliance. Notwithstanding anything in this Agreement
to the contrary, in the event that you are deemed to be a “specified employee”
within the meaning of Section 409A, no payment that is “deferred
compensation” subject to Section 409A shall be made to the Executive prior
to the date that is six (6) months after the date of your separation from
service (as defined in Section 409A)(or such earlier date as may

 

5

 

be
permitted by Section 409A). In such event, the payments subject to the six
(6)-month delay will be paid in a lump sum on the earliest permissible payment
date.

 

7.                                       Change in Control.

 

(a)                                  Upon a Change in Control (as defined below)
at any time following an IPO, any outstanding equity awards, including but not
limited to any equity awards granted under Paragraph 8 of this Agreement, shall
become fully vested and exercisable and any restrictions thereon shall lapse.
Any outstanding stock options shall remain exercisable for the remainder of the
respective terms of such stock options.

 

(b)                                 For purposes of this Agreement, a “Change in
Control” shall be deemed to have occurred if the event set forth in any one of
the following paragraphs shall have occurred:

 

(i)                                     any Person is or becomes the beneficial
owner, directly or indirectly, of securities of the Company (not including in
the securities beneficially owned by such Person any securities acquired
directly from the Company or its Affiliates) representing more than forty
percent (40%) of the combined voting power of the Company’s then outstanding
voting securities, excluding any Person who becomes such a beneficial owner (as
defined in Rule 13d-3 under the Securities Exchange Act of 1934 (the “Exchange
Act”)) in connection with a transaction described in clause (A) of
paragraph (iii) below; or

 

(ii)                                  the following individuals cease for any
reason to constitute a majority of the number of directors then serving:
individuals who, on the IPO Date (as hereinafter defined), constitute the Board
of Directors of the Company (the “Board”) and any new director (other than a
director whose initial assumption of office is in connection with an actual or
threatened election contest, including but not limited to a consent
solicitation, relating to the election of directors of the Company) whose
appointment or election by the Board or nomination for election by the Company’s
stockholders was approved or recommended by a vote of at least two-thirds (2/3)
of the directors then still in office who either were directors on the IPO Date
or whose appointment, election or nomination for election was previously so
approved or recommended by such directors, provided, that no Change of Control
for this purpose shall be deemed to occur by virtue of (i) the
resignation, removal, retirement or other departure of any directors nominated
or designated by SG, (ii) the death, disability, retirement or voluntary
resignation of any directors, (iii) the resignation, removal or other
departure of any

 

6

 

director under circumstances involving cause or under circumstances
involving the affirmative vote, approval or acceptance of such departure by a
majority of the remaining directors; or

 

(iii)                               there is consummated a merger or
consolidation of the Company or any direct or indirect subsidiary of the
Company with any other corporation or other entity, other than (A) a
merger or consolidation which results in the voting securities of the Company
outstanding immediately prior to such merger or consolidation continuing to
represent (either by remaining outstanding or by being converted into voting
securities of the surviving entity or any parent thereof), more than fifty
percent (50%) of the combined voting power of the voting securities of the
Company or such surviving entity or any parent thereof outstanding immediately
after such merger or consolidation, or (B) a merger or consolidation
effected to implement a recapitalization of the Company (or similar
transaction) in which no Person is or becomes the beneficial owner, directly or
indirectly, of securities of the Company (not including in the securities
beneficially owned by such Person any securities acquired directly from the
Company or its Affiliates) representing more than forty percent (40%) of the
combined voting power of the Company’s then outstanding securities; or

 

(iv)                              the stockholders of the
Company approve a plan of liquidation or dissolution of the Company or there is consummated an agreement for the
sale or other disposition, directly, or indirectly, by the Company of all or
substantially all of the Company’s assets, other than such sale or other
disposition by the Company of all or substantially all of the Company’s assets
to an entity, more than fifty percent (50%) of the combined voting power of the
voting securities of which are owned by stockholders of the Company in
substantially the same proportions as their ownership of the Company
immediately prior to such sale and other than a sale.

 

Notwithstanding the foregoing, in no event shall an IPO or any
transactions or events in contemplation of an IPO constitute a Change in
Control for purposes of this Agreement.

 

“Person” shall have the meaning set forth in Section 3(a)(9) of
the Exchange Act, as modified and used in Sections 13(d) and 14(d) thereof,
except that such

 

7

 

 

term shall not include (1) the Company or any subsidiary
corporation, (2) a trustee or other fiduciary holding securities under an
employee benefit plan of the Company or any subsidiary corporation, (3) an
underwriter temporarily holding securities pursuant to an offering of such
securities, (4) a corporation owned, directly or indirectly, by the
stockholders of the Company in substantially the same proportions as their
ownership of stock of the Company, (5) SG or any affiliate of SG or (6) an
individual, entity or group which, pursuant to Rule 13d-l promulgated
pursuant to the Exchange Act, is permitted to, and actually does, report its
beneficial ownership of securities of the Company on Schedule 13G (or any
successor Schedule); provided that, if any such individual, entity or group
subsequently becomes required to or does report its beneficial ownership on Schedule 13D
(or any successor Schedule), then, for purposes of this paragraph, such
individual, entity or group shall thereupon become a “Person” and shall be
deemed to have first acquired, on the first date on which such individual,
entity or group becomes required to or does so report, beneficial ownership of
all of the Company securities beneficially owned by it on such date.

 

8.                                       IPO of Cowen: If there is an IPO of Cowen while you are
employed by Cowen during the Term, you shall be entitled to the following:

 

(a)                                  Shares of Cowen: You be entitled to shares of Cowen, in an
amount set forth below, that vest on December 31, 2010. (the “IPO Date”).
The number of shares you receive will be valued at 6.5% of the Value of Cowen. It
is understood that the shares of Cowen awarded to you pursuant to this
Paragraph 8(a) shall be subject to the terms and conditions of an award
agreement, the terms of which, to the extent covered in this Agreement shall
not be materially different than those set herein.

 

(b)                                 Value of Cowen: For purposes of this paragraph, the Value
of Cowen is determined by multiplying the offering share price for the IPO,
times the number of shares outstanding, plus any outstanding debt. All Cowen
stock granted to you under the preceding paragraph will be valued at the
offering price for the IPO.

 

8

 

(c)                                  Vesting of Cowen Shares: In order to vest in your Cowen shares you
must be employed by Cowen on December 31, 2010, provided, that your shares
of Cowen will become fully vested if your employment terminates by reason of
death or Disability, if you are terminated by Cowen without Cause or if you
terminate employment for Good Reason prior to that date. However, if you
voluntarily terminate your employment without Good Reason, or are terminated
with Cause, prior to December 31, 2010, you shall not be entitled to vest
in any of the shares of Cowen you received pursuant to this Paragraph 8.

 

9.                                       Notice of Retirement, Resignation or
Termination of Employment.
During the Term of this Agreement, you will not voluntarily retire, resign or
otherwise terminate your employment relationship with Cowen or any of its
affiliates, except for Good Reason as set forth in Paragraph 6(d), without
first giving Cowen at least 180 days prior written notice of the effective day
of your retirement, resignation or other termination. Such written notice shall
be sent, by certified mail, to Cowen & Co., LLC, Attn: General
Counsel, 1221 Avenue of the Americas, New York, NY 10020.

 

Cowen retains the right to waive the notice requirement in whole or in
part. Cowen may, but shall not be obligated to, provide you with work at any
time after such notice is given pursuant to this paragraph and the Cowen may,
in its discretion, in respect of all or part of an unexpired period of notice: (i) require
you to comply with such conditions as it may specify in relation to
transitioning your duties and responsibilities, (ii) assign you other
duties or (iii) withdraw any powers vested in, or duties assigned to, you.

 

10.                                 Non-Solicitation.

 

(a)                                  You agree that if you are terminated during
the Term or within one year following the expiration of the Term of this
Agreement, other than a termination of your employment from Cowen due to a
Change in Control, as defined in Paragraph 7(b), you will not, for a period of
six (6) months, without the Cowen’s prior written consent, directly or indirectly,
(a) solicit or induce, or cause others to solicit or induce, any employees
of the Cowen to leave Cowen, or in any way modify their relationship with Cowen
(except your current secretary), (b) hire or cause others to hire any
employees of Cowen, (c) encourage or assist in the hiring process of any
employees of the Cowen or in the modification of any such employee’s
relationship with Cowen, or cause others to participate, encourage or assist in
the hiring process of any employees of Cowen.

 

(b)                                 In addition, you agree that if you are
terminated during the Term or within one year following the expiration of the
Term of this Agreement, other than a termination of your

 

9

 

employment
from Cowen due to a Change in Control, as defined in Paragraph 7(b), you will
not, for a period of 90 days, directly or indirectly solicit the trade or
patronage of any clients or customers or any prospective clients or customers
of Cowen with respect to any products, services, trade secrets or other matters
in which Cowen is active.

 

11.                                 Non-Disclosure of Confidential Information. You will not at any time, whether during your
employment or following the termination or expiration of your employment, for
any reason whatsoever, and forever hereafter, directly or indirectly disclose or
furnish to any firm, corporation or person, except as otherwise required by
law, any confidential or proprietary information of Cowen with respect to any
respect of its operations or affairs. “Confidential or proprietary information”
shall mean information generally unknown to the public to which you gain access
by reason of your employment by Cowen and includes, but is not limited to,
information relating to all present or potential customers, business and
marketing plans, sales, trading and financial data and strategies, salaries and
employment benefits, and operational costs. This provision survives the
expiration of the term of this Agreement.

 

12.                                 Return of Company Property and Company Work
Product. All records, files,
memoranda, reports, customer information, client lists, documents, equipment,
and the like, relating to the business of SG or Cowen which you prepared or
came into contact with while you were an employee of SG and Cowen, shall remain
the sole property of Cowen. You agree that on request by SG or Cowen, and in
any event upon the termination of your employment, you shall turn over to Cowen
all documents, papers, or other material in your possession and under your
control which may contain or be derived from confidential information, together
with all documents, notes, or other work product which is connected with or
derived from your services to Cowen whether or not such material is in your possession.
You agree you shall have no proprietary interest in any work product developed or
used by you and arising out of employment by Cowen. This provision survives the
expiration of the term of this Agreement.

 

13.                                 Remedies and Rights to Injunctive Relief. In the event of a breach by you of your
obligation under this Agreement, Cowen, in addition to being entitled to
exercise all rights granted by law, including recovery of damages, will be entitled
to specific performance of its rights under this Agreement. You acknowledge
that Cowen shall suffer irreparable harm in the event of a breach or
prospective breach of Paragraphs 9, 10, 11 and 12 hereof and monetary damages
would not be adequate compensation. Accordingly, Cowen shall be entitled to
seek injunctive relief in any federal or state court of competent jurisdiction
located in New York County. You waive the defense that a remedy at law would be
adequate. You further agree that Cowen and its affiliates shall be entitled to
recover all costs and expenses

 

10

 

(including
attorney’s fees) incurred in connection with the enforcement of Cowen’s rights
under this Agreement.

 

14.                                 Arbitration.

 

(a)                                  Other than as may be permitted by current
securities industry regulations, any disagreement or controversy arising out of
or relating to the terms of your employment as specified herein shall be
submitted for resolution to arbitration before three arbitrators in accordance
with the then prevailing Rules of the New York Stock Exchange, the NASD.
The arbitration shall be held in the City of New York. The award rendered in
said proceeding shall be final and binding upon both parties, and judgment upon
the award may be entered in any court having jurisdiction thereof.

 

(b)                                 The arbitrators shall not have authority to
amend, alter, modify, add to or subtract from the provisions hereof. The award
of the arbitrators, in addition to granting the relief prescribed above and
such other relief as the arbitrators may deem proper, may contain provisions
commanding or restraining acts or conduct of the parties or their representatives
and may further provide for the arbitrators to retain jurisdiction over this Agreement
and the enforcement thereof. If either party shall deliberately default in
appearing before the arbitrators, the arbitrators are empowered, nonetheless,
to take the proof of the party appearing and render an award thereon.

 

(c)                                  Following a Change in Control, you shall be
entitled to reimbursement for all reasonable attorneys’ fees and expenses in
connection with any dispute proceedings to the extent the arbitrator determines
that you are entitled to such reimbursement.

 

15.                                 Notices. Any notice to be given hereunder shall be in writing and delivered personally
or sent by certified mail, postage prepaid, return receipt requested, addressed
to the party concerned at the address indicated below or to such other address
as such party may designate in writing.

 

	
  To:

  	
   

  	
  To:

  
	
  Mr. Kim S. Fennebresque

  	
   

  	
  Cowen & Co., LLC.

  
	
  800 Park Avenue

  	
   

  	
  General Counsel

  
	
  New York, NY 10021

  	
   

  	
  1221 Avenue of the Americas

  
	
    And

  	
   

  	
  New York, NY 10020

  
	
  Cowen & Co., LLC.

  1221 Avenue of the Americas

  New York, NY 10020

  	
   

  	
   

  

 

11

 

Any notice delivered personally under this Paragraph shall be deemed
given on the date delivered, and any notice set by certified mail, postage
prepaid, return receipt requested, shall be deemed given on the dated mailed.

 

16.                                 Severability. Should any provision herein be rendered or
declared legally invalid or unenforceable by a court of competent jurisdiction
or by the decision of an authorized governmental agency, such invalidation of
such part shall not invalidate the remaining portions thereof.

 

17.                                 Other Agreements. You represent and warrant that you are not
a party to any agreement or bound by an obligation which would prohibit you
from accepting and agreeing hereto or fully performing the obligations
hereunder.

 

18.                                 Complete Agreement. The provisions herein contain the entire
agreement and understanding of the parties and fully supersede any and all
prior agreements or understandings between them pertaining to the subject
matter hereof, including the Prior Agreement. There have been no
representations, inducements, promises or agreements of any kind which have
been made by either party, or by any person acting on behalf of either party, which
are not embodied herein. The provisions hereof may not be changed or altered
except in writing duly executed by you and a duly authorized agent of Cowen.

 

19.                                 No Rule of Strict Construction. The language contained herein shall be deemed
to be that approved by all parties hereto and no rules of strict
construction shall be applied against any party hereto.

 

20.                                 Applicable Law. The interpretation and application of the
terms herein shall be governed by the laws of the State of New York without
regard to principles of conflict of laws.

 

21.                                 No Waiver. Any failure by either party to exercise its rights to terminate this Agreement
or to enforce any of its provisions shall not prejudice such party’s rights of termination
or enforcement for any subsequent or further violations or defaults by the
other party.

 

22.                                 Titles. Titles to the paragraphs in this Agreement are intended solely for convenience
and no provision of this Agreement is to be construed by reference to the title
of any paragraph.

 

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

 

12

 

24.                                 Section 409A. This Agreement is intended to comply with
the requirements of Section 409A and shall be interpreted accordingly. In
the event that any provision of this Agreement would or may cause this
Agreement to fail to comply with Section 409A, such provision may be
deemed null and void and you and the Company agree to amend or restructure this
Agreement, to the extent necessary and appropriate to avoid adverse tax consequences
under Section 409A.

 

25.                                 Successors and Assigns. This Agreement shall inure to the benefit
of, and shall be binding upon your heirs, executors, administrators, successors
and legal representatives and shall inure to the benefit of, and be binding
upon Cowen and its successors and assigns. You shall not assign, delegate,
subdelegate, transfer, pledge, encumber, hypothecate, or otherwise dispose of
this Agreement, or any rights, obligations or duties hereunder, and any such
attempted delegation or disposition shall be null and void and without any
force or effect; provided, however, that nothing contained herein shall prevent
you from designating beneficiaries for insurance, death or retirement benefits.

 

13

 

If you agree to the terms set forth in this Agreement please
acknowledge your agreement by signing the signature line set forth below.

 

 

	
   

  	
  Sincerely,

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Cowen & Co.,
  LLC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  BY:

  	
   /s/ JEAN-JACQUES OGIER

  
	
   

  	
   

  
	
  AGREED AND ACCEPTED

  	
   

  
	
   

  	
   

  
	
  Signed:

  	
  /s/ Kim S. Fennebresque

  	
   

  	
   

  
	
   

  	
  Kim
  S. Fennebresque

  	
   

  
	
   

  	
   

  	
   

  
	
  Date:

  	
  March 14,
  2006

  	
   

  
					

 

14Exhibit 10.4

COWEN GROUP, INC.

2006 EQUITY AND INCENTIVE PLAN

1.                                       PURPOSE; TYPES OF AWARDS;
CONSTRUCTION.

The
purposes of the 2006 Equity and Incentive Plan of Cowen Group, Inc. are to
attract, motivate and retain (a) employees of the Company and any of its
Subsidiaries and Affiliates, (b) independent contractors who provide
significant services to the Company or any of its Subsidiaries or Affiliates
and (c) non-employee directors of the Company or any of its Subsidiaries or
Affiliates.  The Plan is also designed to
encourage stock ownership by such persons, thereby aligning their interest with
those of the Company’s shareholders.

2.                                       DEFINITIONS.  For purposes of the Plan, the following terms
shall be defined as set forth below:

(a)                                   “Affiliate” with respect to any Person, means an affiliate
of such Person, as defined in Rule 12b-2 promulgated under Section 12 of the
Exchange Act.

(b)                                 “Award” means individually or collectively, a grant under the
Plan of Options, Stock Appreciation Rights, Restricted Stock, Restricted Stock
Units or Other Stock-Based Awards or Other Cash-Based Awards.

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

(d)                                 “Beneficial Owner” shall have the meaning set forth in Rule
13d-3 under the Exchange Act.

(e)                                  “Board” means the Board of Directors of the Company.

(f)                                    “Cause” shall have the meaning set forth in the Grantee’s
applicable Award Agreement.

(g)                                 “Change in Control” shall have the meaning set forth in
Section 7(b) hereof.

(h)                                 “Code” means the Internal Revenue Code of 1986, as amended
from time to time.

(i)                                     “Committee” means the committee established by the Board to
administer the Plan.  To the extent
required by applicable law or the listing requirements of the national securities
exchange on which the Stock may be listed, or to the extent deemed desirable by
the Board, the Committee shall consist of not less than two directors who shall
be appointed from time to time by, and shall

 

serve at the pleasure of, the Board
and who are (a) “non-employee directors” under Rule 16b-3 of the Exchange Act,
(b) “outside directors” under Section 162(m) of the Code and (c) “independent
directors” pursuant to the national securities exchange on which the Stock may
be listed, as applicable.

(j)                                     “Company” means Cowen Group, Inc., a corporation organized
under the laws of the State of Delaware, or any successor corporation.

(k)                                  “Covered Employee” shall have the meaning set forth in
Section 162(m)(3) of the Code.

(l)                                     “Disability” shall have the meaning set forth in the Grantee’s
applicable Award Agreement.

(m)                               “Effective Date” means the date that the Plan was adopted by
the Board of Directors of the Company, subject to stockholder approval and
consummation of the IPO.

(n)                                 “Exchange Act” means the Securities Exchange Act of 1934, as
amended from time to time, and as now or hereafter construed, interpreted and
applied by regulations, rulings and cases.

(o)                                 “Fair Market Value”  as
of a particular date shall mean, (i) the average of the high and low sales
price of the Stock reported on the national securities exchange on which the
Stock is principally traded, for the last preceding date on which there was a
sale of such Stock on such exchange, or (ii) if the shares of Stock are then
traded in an over-the-counter market, the average of the closing bid and asked
prices for the shares of Stock in such over-the-counter market for the last
preceding date on which there was a sale of such Stock in such market, or (iii)
if the shares of Stock are not then listed on a national securities exchange or
traded in an over-the-counter market, such value as the Committee, in its sole
discretion, shall determine in good faith, taking into account the valuation of
the Company performed not less frequently than annually by an independent third
party valuation firm.  In the case of
Awards granted in connection with the IPO, “Fair Market Value” shall mean the
per share “price to public” of Stock in the IPO as set forth in the final
prospectus of the Company dated the effective date of the IPO and filed with
the Securities and Exchange Commission.

(p)                                 “Grantee” means a person who, as an employee of or
independent contractor or non-employee director with respect to the Company

 

2

or a Subsidiary or an Affiliate of
the Company, has been granted an Award under the Plan.

(q)                                 “IPO” means the initial public offering of the Stock.

(r)                                    “NQSO” means any Option that is designated as a nonqualified
stock option.

(s)                                  “Option” means a right, granted to a Grantee under Section
6(b)(i), to purchase shares of Stock. 
Only NQSOs may be granted under the Plan.

(t)                                    “Other Cash-Based Award” means an Award granted to a Grantee
under Section 6(b)(v) hereof, including cash awarded as a bonus or upon the
attainment of Performance Goals or otherwise as permitted under the Plan.

(u)                                 “Other Stock-Based Award” means an Award granted to a Grantee
pursuant to Section 6(b)(v) hereof, that may be denominated or payable in,
valued in whole or in part by reference to, or otherwise based on, or related
to, 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.

(v)                                 “Parent” shall mean SG Americas Securities Holdings, Inc.

(w)                               “Performance Goals” means performance goals based on one or
more of the following criteria: (i) earnings including operating income,
earnings before or after taxes, earnings before or after interest,
depreciation, amortization, or extraordinary or special items or book value per
share (which may exclude nonrecurring items); (ii) pre-tax income or after-tax
income; (iii) earnings per common share (basic or diluted); (iv) operating
profit; (v) revenue, revenue growth or rate of revenue growth; (vi) return on
assets (gross or net), return on investment, return on capital, or return on
equity; (vii) returns on sales or revenues; (viii) operating expenses; (ix)
stock price appreciation; (x) cash flow, free cash flow, cash flow return on
investment (discounted or otherwise), net cash provided by operations, or cash
flow in excess of cost of capital; (xi) implementation or completion of
critical projects or processes; (xii) economic value created; (xiii) cumulative
earnings per share growth; (xiv) operating margin or profit margin; (xv) common
stock price or total stockholder return; (xvi) cost targets, reductions and
savings, productivity and efficiencies; (xvii) strategic business

 

3

criteria, consisting of one or more
objectives based on meeting specified market penetration, geographic business
expansion, customer satisfaction, employee satisfaction, human resources
management, supervision of litigation, information technology, and goals
relating to acquisitions, divestitures, joint ventures and similar
transactions, and budget comparisons; (xviii) personal professional objectives,
including any of the foregoing performance goals, the implementation of
policies and plans, the negotiation of transactions, the development of long
term business goals, formation of joint ventures, research or development collaborations,
and the completion of other corporate transactions; and (xix) any combination
of, or a specified increase in, any of the foregoing.  Where applicable, the Performance Goals may
be expressed in terms of attaining a specified level of the particular criteria
or the attainment of a percentage increase or decrease in the particular
criteria, and may be applied to one or more of the Company or a Subsidiary or
Affiliate of the Company, or a division or strategic business unit of the
Company, or may be applied to the performance of the Company relative to a
market index, a group of other companies or a combination thereof, all as
determined by the Committee.  The
Performance Goals may include a threshold level of performance below which no
payment will be made (or no vesting will occur), levels of performance at which
specified payments will be made (or specified vesting will occur), and a
maximum level of performance above which no additional payment will be made (or
at which full vesting will occur).  Each
of the foregoing Performance Goals shall be determined in accordance with
generally accepted accounting principles and shall be subject to certification
by the Committee; provided that the Committee shall have the authority to make
equitable adjustments to the Performance Goals in recognition of unusual or
non-recurring events affecting the Company or any Subsidiary or Affiliate of
the Company or the financial statements of the Company or any Subsidiary or
Affiliate of the Company, in response to changes in applicable laws or
regulations, or to account for items of gain, loss or expense determined to be
extraordinary or unusual in nature or infrequent in occurrence or related to
the disposal of a segment of a business or related to a change in accounting
principles.

(x)                                   “Person” shall have the meaning set forth in Section 3(a)(9)
of the Exchange Act, as modified and used in Sections 13(d) and 14(d) thereof,
except that such term shall not include (1) the Company or any of its
Subsidiaries, (2) a trustee or other fiduciary holding securities under an
employee benefit plan of the Company or any of its Subsidiaries, (3) an
underwriter temporarily holding securities pursuant to an offering of such
securities, (4) a corporation

4

owned, directly or indirectly, by
the stockholders of the Company in substantially the same proportions as their
ownership of stock of the Company, (5) Parent or any Affiliate of Parent or (6)
any person or entity who is eligible, pursuant to Rule 13d-1(b) of the Exchange
Act, to file a statement on Schedule 13G with respect to its beneficial
ownership of the Company’s Stock, whether or not such person or entity shall
have filed a Schedule 13G, unless such person or entity shall have filed a
Schedule 13D with respect to beneficial ownership of the Company’s Stock.

(y)                                 “Plan” means this Cowen Group, Inc. 2006 Equity and Incentive
Plan, as amended from time to time.

(z)                                   “Restricted Stock” means a share of Stock that is subject to
restrictions set forth in the Plan or any Award Agreement.

(aa)                            “Restricted Stock Unit” means a right granted to a Grantee
under Section 6(b)(iv) to receive Stock or cash at the end of a specified
deferral period, which right may be conditioned on the satisfaction of specified
performance or other criteria.

(bb)                          “Rule 16b-3” means Rule 16b-3, as from time to time in effect
promulgated by the Securities and Exchange Commission under Section 16 of the
Exchange Act, including any successor to such Rule.

(cc)                            “Stock” means shares of common stock, par value $0.01 per
share, of the Company.

(dd)                          “Stock Appreciation Right” or “SAR” means the right, granted
to a Grantee under Section 6(b)(ii), to be paid an amount measured by the
appreciation in the Fair Market Value of Stock from the date of grant to the
date of exercise of the right.

(ee)                            “Subsidiary” means a “subsidiary corporation,” whether now or
hereafter existing, as defined in Section 424(f) of the Code.

 

5

3.                                       ADMINISTRATION.

(a)           At the discretion of the Board, the Plan shall be
administered either (i) by the Board or (ii) by the Committee.  In the event the Board is the administrator
of the Plan, references herein to the Committee shall be deemed to include the
Board.  The Board may from time to time
appoint a member or members of the Committee in substitution for or in addition
to the member or members then in office and may fill vacancies on the Committee
however caused.  The Committee shall
choose one of its members as chairman and shall hold meetings at such times and
places as it shall deem advisable.  A
majority of the members of the Committee shall constitute a quorum and any
action may be taken by a majority of those present and voting at any
meeting.  The Board or the Committee may
appoint and delegate to another committee (“Management Committee”) any or all
of the authority of the Board or the Committee, as applicable, with respect to
Awards to Grantees other than Grantees who are subject to potential liability
under Section 16(b) of the 1934 Act with respect to transactions involving
equity securities of the Company at the time any such delegated authority is
exercised.  With respect to Awards that
are intended to meet the performance-based compensation exception of Section
162(m) of the Code and that are made to a Grantee who is expected to be a
Covered Employee, such delegation shall not include any authority which, if
exercised by the Management Committee rather than by the Committee, would cause
the Grantee’s Award to fail to meet such exception.

(b)           Any
action may also be taken without the necessity of a meeting by a written
instrument signed by a majority of the Committee.  The decision of the Committee as to all
questions of interpretation and application of the Plan shall be final, binding
and conclusive on all persons.  The
Committee shall have the authority in its discretion, subject to and not
inconsistent with the express provisions of the Plan, to administer the Plan and
to exercise all the power and authority either specifically granted to it under
the Plan or necessary or advisable in the administration of the Plan, including
without limitation, the authority to grant Awards, to determine the persons to
whom and the time or times at which Awards shall be granted, to determine the
type and number of Awards to be granted, the number of shares of Stock to which
an Award may relate and the terms, conditions, restrictions and Performance
Goals relating to any Award; to determine Performance Goals no later than such
time as is required to ensure that an underlying Award which is intended to
comply with the requirements of Section 162(m) of the Code so complies; to
determine whether, to what extent, and under what circumstances an Award may be
settled, cancelled, forfeited, accelerated, exchanged, or surrendered; to make
adjustments in the terms and conditions (including Performance Goals)
applicable to Awards; to construe and interpret the Plan and any Award; to
prescribe, amend and rescind rules and regulations relating to the Plan; to
determine the terms and provisions of the Award Agreements (which need not be
identical for each Grantee); and to make all other determinations deemed
necessary or advisable for the administration of the Plan.  Notwithstanding the foregoing and except as
otherwise provided in Section 5(b) hereof, the Committee shall not have the
power or authority to lower the exercise price of an outstanding Option or SAR,
nor shall the Committee have the power or authority to settle, cancel or exchange
any outstanding Option or SAR in consideration for the grant of a new Option or
SAR with a lower exercise price nor may

 

6

any Option be granted with a
reload mechanism allowing for an automatic grant of a new Option upon exercise
of an outstanding Option.  The Committee
may correct any defect or supply any omission or reconcile any inconsistency in
the Plan or in any Award Agreement granted hereunder in the manner and to the
extent it shall deem expedient to carry the Plan into effect and shall be the
sole and final judge of such expediency. 
No Committee member (or member of the Management Committee) shall be
liable for any action or determination made with respect to the Plan or any
Award.

4.                                       ELIGIBILITY.

Awards
may be granted to officers, independent contractors, employees and non-employee
directors of the Company or of any of its Subsidiaries and Affiliates.

5.                                       STOCK SUBJECT TO THE PLAN.

(a)           The maximum number of shares of Stock
reserved for the grant or settlement of Awards under the Plan (the “Share Limit”)
shall be 4,725,000, and shall be subject to adjustment as provided in section
(b) herein.  Awards made other than
Awards granted in connection with the IPO (the “Post-IPO Awards”) are primarily
to be granted for compensation purposes beginning in 2007 for compensation
earned in 2006.  The Post-IPO Awards
shall only be granted in a fair and reasonable manner to a broad selection of
Grantees, as determined by the Committee.  The aggregate Awards granted during any fiscal
year to any single individual shall not exceed (i) 1,500,000 shares subject to
Options or Stock Appreciation Rights and (ii) 1,500,000 shares subject to
Restricted Stock or Other Stock-Based Awards (other than Stock Appreciation
Rights), in each case subject to adjustment as provided in subsection (b)
herein.  Determinations made in respect
of the limitation set forth in the preceding sentence shall be made in a manner
consistent with Section 162(m) of the Code. 
Such shares may, in whole or in part, be authorized but unissued shares
or treasury shares.  If any shares
subject to an Award are forfeited, cancelled, exchanged or surrendered or if an
Award otherwise terminates or expires without a distribution of shares to the
Grantee, the shares of stock with respect to such Award shall, to the extent of
any such forfeiture, cancellation, exchange, surrender, termination or
expiration, again be available for Awards under the Plan.  Notwithstanding the foregoing, shares of
Stock that are exchanged by a Grantee or withheld by the Company as full or
partial payment in connection with any Award under the Plan, as well as any
shares of Stock exchanged by a Grantee or withheld by the Company or any of its
Subsidiaries to satisfy the tax withholding obligations related to any Award
under the Plan, shall not be available for subsequent Awards under the
Plan.  Upon the exercise of any Award
granted in tandem with any other Awards, such related Awards shall be cancelled
to the extent of the number of shares of Stock as to which the Award is
exercised and, notwithstanding the foregoing, such number of shares shall no
longer be available for Awards under the Plan.

(b)           Except
as provided in an Award Agreement or as otherwise provided in the Plan, in the
event that the Committee shall determine that any dividend or other
distribution (whether in the form of cash, Stock, or other property),
recapitalization, Stock split, reverse split, reorganization, merger,
consolidation, spin-off, combination,

 

7

repurchase, or share
exchange, or other similar corporate transaction or event, affects the Stock
such that an adjustment is appropriate in order to prevent dilution or
enlargement of the rights of Grantees under the Plan, then the Committee shall
make such equitable changes or adjustments as it deems necessary or appropriate
to any or all of (i) the number and kind of shares of Stock or other property
(including cash) that may thereafter be issued in connection with Awards or the
total number of Awards issuable under the Plan, (ii) the number and kind of
shares of Stock or other property issued or issuable in respect of outstanding
Awards, (iii) the exercise price, grant price or purchase price relating to any
Award, (iv) the Performance Goals and (v) the individual limitations applicable
to Awards; provided that, no such adjustment shall cause any Award hereunder
which is subject to Section 409A of the Code (“Section 409A”) to fail to comply
with the requirements of such section or otherwise cause any award that does
not otherwise provide for a deferral of compensation under Section 409A to
become subject to Section 409A.

6.                                       SPECIFIC TERMS OF AWARDS.

(a)           General.  The term of each Award shall be for such
period as may be determined by the Committee. 
Subject to the terms of the Plan and any applicable Award Agreement,
payments to be made by the Company or a Subsidiary or Affiliate of the Company
upon the grant, maturation, or exercise of an Award may be made in such forms as
the Committee shall determine at the date of grant or thereafter, including,
without limitation, cash, Stock, or other property, and may be made in a single
payment or transfer, in installments, or on a deferred basis subject to
compliance with Section 409A.

(b)           Awards.  The Committee is authorized to grant to
Grantees the following Awards, as deemed by the Committee to be consistent with
the purposes of the Plan.  The Committee
shall determine the terms and conditions of such Awards at the date of grant or
thereafter.

(i)                                     Options.  The Committee is authorized to grant Options to
Grantees on the following terms and conditions:

(A)                              Type of Award.  The Award Agreement evidencing the grant of
an Option under the Plan shall designate that the  Option is an NQSO.

(B)                                Exercise Price.  The exercise price per share of Stock
purchasable under an Option shall be determined by the Committee, but in no
event shall the exercise price of an Option per share of Stock be less than the
Fair Market Value of a share of Stock as of the date of grant of such
Option.  The purchase price of Stock as
to which an Option is exercised shall be paid in full at the time of exercise;
payment may be made in cash, which may be paid by check, or other instrument
acceptable to the Company, or,

 

8

with the consent of the Committee,
in shares of Stock, valued at the Fair Market Value on the date of exercise
(including shares of Stock that otherwise would be distributed to the Grantee
upon exercise of the Option) or by surrender of outstanding Awards under the
Plan, or the Committee may permit such payment of exercise price by any other
method it deems satisfactory in its discretion. 
In addition, subject to applicable law and pursuant to procedures
approved by the Committee, payment of the exercise price may be made through
the sale of Stock acquired on exercise of the Option, valued at Fair Market
Value on the date of exercise, sufficient to pay for such Stock (together with,
if requested by the Company, the amount of federal, state or local withholding
taxes payable by Grantee by reason of such exercise).  Any amount necessary to satisfy applicable
federal, state or local tax withholding requirements shall be paid promptly
upon notification of the amount due.

(C)                                Term and Exercisability of Options.  Options shall be
exercisable over the exercise period (which exercise period shall not exceed
ten years from the date of grant) at such times and upon such conditions as the
Committee may determine, as reflected in the Award Agreement; provided that,
the Committee shall have the authority to accelerate the exercisability of any
outstanding Option at such time and under such circumstances as it, in its sole
discretion, deems appropriate. 
Notwithstanding the foregoing and subject to accelerated vesting, no
Option may be exercisable prior to the first anniversary of the date of grant
of such Option.

(D)                               Termination of Employment.
Upon termination of employment with or service to the Company or any Affiliate
or Subsidiary of the Company (or any other entity for which the Stock
constitutes “service recipient Stock” within the meaning of Section 409A), all
unvested Options shall immediately terminate and be forfeited; provided, that
the Award Agreement may provide that such forfeiture conditions relating to the
Options will be waived in whole or in part in the event of terminations
resulting from specified causes.

(E)                                 Other Provisions.  Options may be subject to such other
conditions including, but not limited to, restrictions on transferability of
the shares acquired upon exercise of such Options (or proceeds of sale
thereof), as the Committee

 

9

may prescribe in its discretion or
as may be required by applicable law.

(ii)                                  SARs.

(A)                  Independent or Tandem Awards.  SARs may be granted independently or in
tandem with an Option. An SAR granted in tandem with an Option shall be
exercisable only to the extent the underlying Option is exercisable.  Payment of an SAR may be made in cash, Stock,
or property as specified in the Award Agreement or determined by the Committee.

(B)                    Terms.  An SAR shall confer on the Grantee a right to
receive an amount with respect to each share subject thereto, upon exercise
thereof, equal to the excess of (1) the Fair Market Value of one share of Stock
on the date of exercise over (2) the grant price of the SAR (which in the case
of an SAR granted in tandem with an Option shall be equal to the exercise price
of the underlying Option, and which in the case of any other SAR shall be such
price as the Committee may determine but not less than Fair market Value on the
date of grant).

(iii)                               Restricted Stock.

(A)                              Terms.  The Committee may grant Awards of Restricted
Stock, alone or in tandem with other Awards under the Plan, subject to such
restrictions, terms and conditions, as the Committee shall determine in its
sole discretion and as shall be evidenced by the applicable Award Agreement
(provided that any such Award is subject to the vesting requirements described
herein).  The vesting of a Restricted
Stock Award granted under the Plan may be conditioned upon the completion of a
specified period of employment or service with the Company or any Subsidiary or
Affiliate of the Company, upon the attainment of specified Performance Goals,
and/or upon such other criteria as the Committee may determine in its sole
discretion.

(B)                                Price.  The Committee shall determine the price, if
any, to be paid by the Grantee for each share of Restricted Stock or
unrestricted stock or stock units subject to the Award.  Each Award Agreement with respect to such
stock award shall set forth the amount (if any) to be paid by the Grantee with
respect to such Award and when and under what in circumstances such payment is
required to be made.

 

10

 

(C)                                Non-Transferability.  The Committee may, upon such terms and
conditions as the Committee determines, provide that a certificate or
certificates representing the shares underlying a Restricted Stock Award shall
be registered in the Grantee’s name and bear an appropriate legend specifying
that such shares are not transferable and are subject to the provisions of the
Plan and the restrictions, terms and conditions set forth in the applicable Award
Agreement, or that such certificate or certificates shall be held in escrow by
the Company on behalf of the Grantee until such shares become vested or are
forfeited.  Except as provided in the
applicable Award Agreement, no shares of Stock underlying a Restricted Stock
Award may be assigned, transferred, or otherwise encumbered or disposed of by
the Grantee until such shares of Stock have vested in accordance with the terms
of such Award.

(D)                               Voting and Dividends.  If and to the extent that the applicable
Award Agreement may so provide, a Grantee shall have the right to vote and
receive dividends on Restricted Stock granted under the Plan, including cash
dividends.  Unless otherwise provided in
the applicable Award Agreement, any Stock received as a dividend on or in
connection with a stock split of the shares of Stock underlying a Restricted
Stock Award shall be subject to the same restrictions as the shares of Stock
underlying such Restricted Stock Award.

(E)                                 Termination of Employment.  Upon termination of employment with or
service to the Company or any Affiliate or Subsidiary of the Company (including
by reason of such Subsidiary or Affiliate ceasing to be a Subsidiary or
Affiliate of the Company), during the applicable restriction period, Restricted
Stock shall be forfeited; provided, that the Award Agreement may provide that
restrictions or forfeiture conditions relating to Restricted Stock will be
waived in whole or in part in the event of terminations resulting from
specified causes, and the Committee may in other cases waive in whole or in
part the forfeiture of Restricted Stock.

(iv)                              Restricted Stock Units.

(A)                              Terms.  The Committee is authorized to grant
Restricted Stock Units to the Grantees which shall be subject to a deferral
period as set forth in the applicable Award Agreement.    Delivery of Stock or cash, as determined by

 

11

the Committee, will occur upon
expiration of the deferral period specified for Restricted Stock Units in the
Award Agreement.  In addition, the
Committee may determine that the deferral period shall expire only upon the
attainment of Performance Goals.  The
Grantee shall be entitled to receive dividend equivalents which shall accrue
and be paid to the Grantee at the end of the Company’s fiscal quarter in which
such dividend is paid to the stockholders of the Company.

(B)                                Separation from Service.  Upon a “separation from service” (as defined
under Section 409A and guidance promulgated thereunder) with the Company or any
Subsidiary or Affiliate of the Company (or with any other entity for which the
Stock constitutes “service recipient stock” within the meaning of Section
409A), during the applicable deferral period or portion thereof to which
forfeiture conditions apply, or upon failure to satisfy any other conditions
precedent to the delivery of Stock or cash to which such Restricted Stock Units
relate, all Restricted Stock Units and any accrued but unpaid dividend
equivalents that are then subject to deferral or restriction shall be
forfeited; provided, that the Award Agreement 
may provide that restrictions or forfeiture conditions relating to
Restricted Stock Units will be waived in whole or in part in the event of
termination resulting from specified causes, and the Committee may in other
cases waive in whole or in part the forfeiture of Restricted Stock Units.

(v)                                 Other Stock-Based or Cash-Based Awards.

(A)                              Terms.  The Committee is authorized to grant Awards
to Grantees in the form of Other Stock-Based Awards or Other Cash-Based Awards,
as deemed by the Committee to be consistent with the purposes of the Plan.  The Committee shall determine the terms and
conditions of such Awards, consistent with the terms of the Plan, at the date
of grant or thereafter, including the Performance Goals and performance
periods.

(B)                                Maximum Payment Value.  With respect to a Covered Employee, the
maximum value of the aggregate payment that any Grantee may receive with
respect to Other Cash-Based Awards pursuant to this Section 6(b)(v) in respect
of any annual performance period is $10 million and for any other performance period in excess of one year,
such

 

12

amount multiplied by a fraction,
the numerator of which is the number of months in the performance period and
the denominator of which is twelve.  No
payment shall be made to a Covered Employee prior to the certification by the
Committee that the Performance Goals have been attained.  The Committee may establish such other rules
applicable to the Other Stock- or Cash-Based Awards to the extent not
inconsistent with Section 162(m) of the Code.

(C)                                Adjustment of Payments.  Payments earned in respect of any Cash-Based
Award may be decreased or, with respect to any Grantee who is not a Covered
Employee, increased in the sole discretion of the Committee based on such
factors as it deems appropriate. 
Notwithstanding the foregoing, any Awards may be adjusted in accordance
with Section 5(b) hereof.

7.                                       CHANGE IN CONTROL
PROVISIONS.

(a)           Unless otherwise determined by the
Committee, upon the occurrence of a Change in Control subsequent to the IPO,
all outstanding Awards shall become fully vested and exercisable and all
restrictions, forfeiture conditions or deferral periods on any outstanding
Awards shall immediately lapse and payment under any Awards shall become due,
as applicable.

(b)           A “Change
in Control” shall be deemed to have occurred if the event set forth in any one
of the following paragraphs shall have occurred:

(i)                                     any Person is or becomes the Beneficial Owner, directly or
indirectly, of securities of the Company (not including in the securities
beneficially owned by such Person any securities acquired directly from the
Company or its Affiliates) representing more than forty percent (40%) of the combined
voting power of the Company’s then outstanding voting securities, excluding any
Person who becomes such a Beneficial Owner in connection with a transaction
described in clause (A) of paragraph (iii) below; or

(ii)                                  the following individuals cease for any reason to constitute
a majority of the number of directors then serving: individuals who, on the
first trading day of the Stock following the IPO (the “IPO Date”), constitute
the Board and any new director (other than a director whose initial assumption
of office is in connection with an actual or threatened election contest,
including, but not limited to, a consent solicitation, relating to the election
of directors of the Company) whose appointment or election by the Board or
nomination for election by the Company’s stockholders was approved or
recommended by a vote of at least two-thirds (2/3) of

 

13

the directors then still in office who either were directors
on the IPO Date or whose appointment, election or nomination for election was
previously so approved or recommended by such directors, provided, however,
that no Change in Control for this purpose shall be deemed to occur by virtue
of (A) the resignation, removal, retirement or other departure of any directors
nominated or designated by Parent, (B) the death, disability, retirement or
voluntary resignation of any directors, or (C) the resignation, removal or
other departure of any director under circumstances involving cause or under
circumstances involving the affirmative vote, approval or acceptance of such
departure by a majority of the remaining directors; or

(iii)                               there is consummated a merger or consolidation of the Company
or any direct or indirect subsidiary of the Company with any other corporation
or other entity, other than (A) a merger or consolidation which results in the
voting securities of the Company outstanding immediately prior to such merger
or consolidation continuing to represent (either by remaining outstanding or by
being converted into voting securities of the surviving entity or any parent
thereof) more than fifty percent (50%) of the combined voting power of the
voting securities of the Company or such surviving entity or any parent thereof
outstanding immediately after such merger or consolidation, or (B) a merger or
consolidation effected to implement a recapitalization of the Company (or
similar transaction) in which no Person is or becomes the Beneficial Owner,
directly or indirectly, of securities of the Company (not including in the
securities Beneficially Owned by such Person any securities acquired directly
from the Company or its Affiliates) representing more than forty percent (40%)
of the combined voting power of the Company’s then outstanding securities; or

(iv)                              the stockholders of the Company approve a plan of liquidation
or dissolution of the Company or there is consummated an agreement for the sale
or other disposition, directly or indirectly, by the Company of all or
substantially all of the Company’s assets, other than such sale or other
disposition by the Company of all or substantially all of the Company’s assets
to an entity, more than fifty percent (50%) of the combined voting power of the
voting securities of which are owned by stockholders of the Company in
substantially the same proportions as their ownership of the Company
immediately prior to such sale and other than a sale.

 

14

8.                                       GENERAL
PROVISIONS.

(a)           Nontransferability,
Deferrals and Settlements.  Unless
otherwise provided in an Award Agreement, Awards shall not be transferable by a
Grantee except by will or the laws of descent and distribution or a transfer to
a family member or family-related trust pursuant to a gift or domestic
relations order.  Except with respect to
Options, SARs and restricted Stock, the Committee may require or permit
Grantees to elect to defer the issuance of shares of Stock, or the settlement
of Awards in cash under such rules and procedures as established under the Plan
to the extent that such deferral complies with Section 409A of the Code and any
regulations or guidance promulgated thereunder. 
It may also provide that deferred settlements include the payment or
crediting of interest on the deferral amounts.

(b)           No
Right to Continued Employment, etc. 
Nothing in the Plan or in any Award granted or any Award Agreement,
promissory note or other agreement entered into pursuant hereto shall confer
upon any Grantee the right to continue in the employ or service of the Company
or any of its Subsidiaries or Affiliates or to be entitled to any remuneration
or benefits not set forth in the Plan or such Award Agreement, promissory note
or other agreement or to interfere with or limit in any way the right of the
Company or any such Subsidiary or Affiliate to terminate such Grantee’s
employment or service.

(c)           Taxes.  The Company or any Subsidiary or Affiliate of
the Company is authorized to withhold from any Award granted, any payment
relating to an Award under the Plan, including from a distribution of Stock, or
any other payment to a Grantee, amounts of withholding and other taxes due in
connection with any transaction involving an Award, and to take such other
action as the Committee may deem advisable to enable the Company and Grantees to
satisfy obligations for the payment of withholding taxes and other tax
obligations relating to any Award.  This
authority shall include authority to withhold or receive Stock or other
property with a Fair Market Value not in excess of the minimum amount required
to be withheld and to make cash payments in respect thereof in satisfaction of
a Grantee’s tax obligations.

(d)           Stockholder
Approval; Amendment and Termination. 
The Plan shall be approved prior to the IPO by Parent, the sole
stockholder of the Company, and shall take effect on the Effective Date, but
the Plan shall be subject to consummation of the IPO.  In the event that the IPO is not consummated
for any reason or no reason, including but not limited to a decision by Parent
to withdraw such offering, then upon such event the Plan and all rights
hereunder shall immediately terminate and become null and void and no Grantee
(or any permitted transferee thereof) shall have any remaining rights under the
Plan or any Award Agreement entered into in connection herewith.  The Board may amend, alter or discontinue the
Plan, provided that no amendment, alteration, waiver or discontinuation shall
be made that would impair the rights of a Grantee under any Award theretofore
granted without such Grantee’s consent; and provided further that no amendment
that requires stockholder approval under any applicable law or the regulations
of any stock exchange shall be effective unless and until such stockholder
approval is obtained.  Notwithstanding
anything herein to the contrary, the Company shall not agree to any across the
board modification, amendment or waiver of any Award

 

15

Agreement
with respect to options and restricted stock that has been granted concurrently
with the IPO (“Initial Awards”), other than a modification, amendment or
waiver that is made by the Company, with the approval of the Board or the
Committee, 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 Grantees who hold Initial Awards; provided further, the Company
shall not agree to any modification, amendment or waiver, on a case-by-case
basis, of the Plan or any Award Agreements applicable to Initial Awards, other
than a modification, amendment or waiver that each member of the Board has been
notified of in writing, either before or following such modification, amendment
or waiver.  The Company shall not
consistently or repetitively fail to enforce the provisions of the Plan or any
Award Agreements applicable to Initial Awards.  Unless earlier terminated by the Board
pursuant to the provisions of the Plan, the Plan shall terminate on the tenth
anniversary of its Effective Date.  No
Awards shall be granted under the Plan after such termination date.

(e)           No
Rights to Awards; No Stockholder Rights. 
No Grantee shall have any claim to be granted any Award under the Plan,
and there is no obligation for uniformity of treatment of Grantees.  Except as provided specifically herein, a
Grantee or a transferee of an Award shall have no rights as a stockholder with
respect to any shares covered by the Award until the date of the issuance of a
stock certificate to him or her for such shares.

(f)            Unfunded
Status of Awards.  The Plan is
intended to constitute an “unfunded” plan for incentive and deferred
compensation.  With respect to any
payments not yet made to a Grantee pursuant to an Award, nothing contained in
the Plan or any Award shall give any such Grantee any rights that are greater
than those of a general creditor of the Company.

(g)           No
Fractional Shares.  No fractional
shares of Stock shall be issued or delivered pursuant to the Plan or any
Award.  The Committee shall determine
whether cash, other Awards, or other property shall be issued or paid in lieu
of such fractional shares or whether such fractional shares or any rights
thereto shall be forfeited or otherwise eliminated.

(h)           Regulations
and Other Approvals or Requirements.

(i)                                     The obligation of the Company to sell or deliver Stock with
respect to any Award granted under the Plan shall be subject to all applicable
laws, rules and regulations, including all applicable federal and state
securities laws, and the obtaining of all such approvals by governmental
agencies as may be deemed necessary or appropriate by the Committee.

(ii)                                  Each Award is subject to the requirement that, if at any time
the Committee determines, in its absolute discretion, that the listing,
registration or qualification of Stock issuable pursuant to the Plan is
required by any securities exchange or under any state or federal

16

law, or the consent or approval of
any governmental regulatory body is necessary or desirable as a condition of,
or in connection with, the grant of an Award or the issuance of Stock, no such
Award shall be granted or payment made or Stock issued, in whole or in part,
unless listing, registration, qualification, consent or approval has been
effected or obtained free of any conditions not acceptable to the Committee.

(iii)                               In the event that the disposition of Stock acquired pursuant
to the Plan is not covered by a then current registration statement under the
Securities Act of 1933, as amended (the “Securities Act”), and is not otherwise
exempt from such registration, such Stock shall be restricted against transfer
to the extent required by the Securities Act or regulations thereunder, and the
Committee may require a Grantee receiving Stock pursuant to the Plan, as a condition
precedent to receipt of such Stock, to represent to the Company in writing that
the Stock acquired by such Grantee is acquired for investment only and not with
a view to distribution.

(i)            Governing
Law.  The Plan and all determinations
made and actions taken pursuant hereto shall be governed by the laws of the
State of Delaware without giving effect to the conflict of laws principles
thereof.

(j)            Compliance
with Laws.

(i)                                     The Plan is intended to comply with the requirements of
Section 409A of the Code and shall be interpreted accordingly.  In the event that any provision of this Plan
would or may cause any Award under the Plan to fail to comply with Section
409A, such provision may be deemed null and void and the Company and the
Grantee agree to amend or restructure any Award Agreement, to the extent
necessary and appropriate to avoid adverse tax consequences under Section 409A.

(ii)                                  The Plan is intended to comply with the requirements of
Section 162(m) and Rule 16b-3 of the Exchange Act and shall be interpreted
accordingly.

 

17

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